Welcome to my New Website!

Welcome to my New Website!

By Keith Bunn Jr.

February 14, 2014

A Long Time Coming!

I would like to welcome you all to my new website. Cavus Financial Coaching. This has been a long time coming! If you have followed me from May 2011, you know that my blogs have been living on a free Blogger page. Which was fine, but I felt it was time to grow my blog onto a full fledged website.

My Past Blogs

So far, I have transferred all my blogs that were posted on the Blogger page in 2011 and 2014 over to this website. I will continue to transfer the ones from 2012, and 2013 as well as continuing to post all my new ones as time goes on. I'm hoping to have all my past blogs transferred by April of this year. So if you're new to Cavu$, keep checking in, not only to read my new blogs, but to also read the past ones. This will be my last blog posting on this page. Thank you for following me here.

I welcome any comments you may have about my blog posts as well as about the website itself. Thanks for checking out Cavu$ Financial Coaching!

Toujours Prêt!

Diversify Your Diversification

Diversify Your Diversification

By Keith Bunn Jr.

February 10, 2014

Recent events have made me realize that I've talked about mutual funds, stocks and bonds, 401K's, Roth's, etc... but I haven't really talked about what percentages we do, in our own investing. Whether it is in our 401K's or anything else. It is all the same percentage.

Diversify, Knowledge, and Long Term

Remember, whenever you are going to invest into anything, there are 3 things you need to do every single time without exception.

1) Diversify Your Investments: By diversifying your investments, you help lower your risk. Because if one of your investments go down in value, others maybe going up to counter the drop.

2) Don't Invest into Anything You Don't Understand: If you invest into something you have no clue about, that just leaves the door wide open for you to lose all your money. Don't do something just because I, or anyone else told you to do something. Learn for yourself if it's a good investment or not.

3) Be a Long Term Investor: Don't do any investing, of any kind, unless you are willing to leave the investments alone for 5 years or longer. The people that lose their shirts more often are the ones who are contently pulling their money out of the investments because there was a dip in the market.

Investments and Percentages

With that being said, I'm not going to tell you specific investments we're investing in. You need to learn and decide for yourself what kind of investments are right for you and your family. But I will tell you the types and the percentages we are investing in.

In a blog series I wrote last April, Investing: How to Lower the Risk, part 1-5, I talked about all the different kinds of investments we can invest in, as well as why or why I didn't think, they were good ones to invest in. If you read that series, you already know that we invest only in mutual funds. For the most part, a good portion have a good to great long term track records and in each fund, there are roughly 90 to 200 companies you're investing in, which makes just one fund well diversified. And in the open market, there are hundreds of different types of mutual funds to choose from.

So out of hundreds, which ones do we choose? We only invest into 4 types of mutual funds. 25% into Growth (Mid Cap), 25% into Growth & Income (Large Cap), 25% into Aggressive Growth ( Small Cap), and 25% into International (Global). Now "Cap" means Capital or company. So when I say "Large Cap", that means that you are investing into large companies.

Growth or Growth Stock funds are medium size companies that have had some growth to them and are still expanding. Growth & Income funds are large companies that are more established. Aggressive Growth funds are small companies that are the most volatile. International means exactly what it says, you are investing into companies that are owned overseas. Global, means that not only are you investing in companies that are overseas, but there are some U.S. companies mixed in there also.

With your investments spread out into these 4 types of mutual funds, slow, steady, aggressive, and overseas, you are diversifying your diversification and you can find them in all kinds of retirement programs, from 401k's to Roth IRA's. But remember, investing in the stock market is like a roller coaster ride. There are going to be some ups and downs, as well as some loop-to-loops from time to time. Don't freak out when you start to go down that big hill. It will go back up. They always do! Enjoy the ride!! 

Special Announcement 

This will probably be my last blog posting here on this blogger page. I'm in the process of setting up a NEW website that will now host my blogs from now on.

I have been and will continue to transfer all my old postings over to my new site. I have 8 more posts that I want to transfer over before publishing my website. 

My new site address is www.cavusfinancialcoaching.com. I will continue to transfer my old postings over as well as add new ones, so visit often. I'd also appreciate any feed back on my new website in order to make it as useful as possible.

Thank you all for your loyalty over the past 3 years. My goal is to continue to do better in order to help as many people as possible with their finances!

Follow me!

If you like my posts, and you find the information helpful, please pass it on to others. You can also find more money news, facts and ideas, on my Facebook and/or Twitter pages. I'd be grateful if you followed me there too. Thank you!

Traditional IRA vs Roth IRA: part 2

Traditional IRA vs Roth IRA: part 2

By Keith Bunn Jr

February 3, 2014

Review From Last Week

Let's take a moment and briefly review what an IRA is.

An IRA means Individual Retirement Arrangement according the current tax codes. The IRA itself is NOT the investment. "IRA" tells the IRS how the investments inside the IRA are going to be treated. You have to have an earned income to contribute to an IRA, and are only allowed to have a maximum contribution of $5,500 ($6,500 if you're over 50) per year or up to you yearly income if you make under $5,500 per year. 

What is a Roth IRA?

The Roth IRA was named after Senator William Roth, who was a major advocate for IRA reform. So the Roth IRA was established as part of the Taxpayer Relief Act of 1997.

 IRA's and Roth IRA's are almost identical with a couple important differences. 

1) There are income limits: If you are married Filing jointly, making $188,000 per year or more. Or a single making $127,000 per year or more, you can not contribute to a Roth IRA.

2) Tax free growth: Unlike the traditional IRA, a Roth IRA is not taxed as you start taking the money at retirement. That's because you are taxed as you are putting the money into the Roth. That means the whole time you are contributing into a Roth and the investments start to grow, they are growing TAX FREE! That's a big deal! Because in all investments, it's not what we put into them that makes up the majority of the investment. It's the growth!

How Important is it Really?

Let's just say you couldn't put in the maximum contribution of $5,500 into either a traditional IRA, or a Roth IRA, but you could do half... $2,750. If you contribute that amount each year from the age 18 to 65 at a 10% rate of return, that would be $2,880,304.72. Not too shabby!

Now at current capital gains rates, if this was in a traditional IRA, that $2,880,304.72 would be taxed at 20%. Which means you would have lost over a half a million dollars in taxes, but in the Roth, you would have the whole $2,880,304.72.

Now here's the kicker... That whole time you were putting $2,750 into either the traditional IRA, or a Roth IRA, you only contributed $129,251.88. The rest, ($2,748,302.84) was growth. So this is a big deal. It is important!

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You can also find more money news, facts and ideas, on my Facebook and/or Twitter pages. I'd be grateful if you followed me there too. Thank you!

Traditional IRA vs Roth IRA: part 1

Traditional IRA vs Roth IRA: part 1

By Keith Bunn Jr.

January 27, 2014

Planning for Your Retirement in 2014

As we entered the New Year, some people may or may not be thinking about their retirements. If you haven't started thinking about it yet, you should start. Especially if you're young! I can't stress how important it is!!

Two years ago, I blogged about the difference between a traditional 401K vs. Roth 401K. Now I'd like to talk about the difference between a traditional IRA vs Roth IRA.

What is an IRA?

An IRA means Individual Retirement Arrangement according the current tax codes. The IRA itself is NOT the investment. The abbreviation "IRA" tells the IRS how the investments inside the IRA are going to be treated.

The IRA was introduced in 1974 as part of the Employee Retirement Income Security Act. It was intended to help people save for retirement. It is a tax deferred program, meaning, the money you put into an IRA does not get taxed until you start pulling the money out before or after 70 1/2 years old. I say after 70 1/2, because after that age, anyone who has an IRA will have to take out mandatory and government-calculated distributions from their IRA's.

 Even though you can take out withdrawals from your IRA early, under certain situations, if you are younger than 59 1/2, I do not recommend doing that. By taking early withdrawals, you will be hit with fees and the money you take out will be taxed heavily. So unless you are looking at your home being foreclosed on or a bankruptcy, I do not recommend taking early withdrawals from ANY retirement accounts. Including work related accounts like 401K's and 403B's.

Earned Income Only

Under current tax law, only those with an earned income are eligible to start an IRA. As of 2013, an But if your income is LESS than what the maximum contribution could be, you can not contribute more than what your total household income is. 

So in other words, you have to have a job to have an IRA, with the exception of a non-working spouse. If you and your spouse file your taxes jointly, you can both contribute up to the maximum $5,500 ($6,500 if you're over 50) even if one of you is not earning an income. 

Example: the working spouse can contribute $5,500 and the non-working spouse can contribute $5,500 for a total of $11,000 ($13,000 if you both are over 50) per year, or whatever your maximum household income is.

Part 2

Seeing that this is getting long, I'm going to explain what a Roth IRA is next week. I hope this blog gives you a better understanding on what an IRA really is. If you have any question, please don't hesitate to ask.

Announcement

With some extra training this past week, I am happy to announce that I am now an Independent Dave Ramsey Financial Coach! And I'm looking forward to using what I've learned to help you all with your finance issues! 

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If you like my postings, I'd be honored if you follow me, so please sign up. Also, if you find this information helpful, please pass it on to others. 

You can also find more money news, facts and ideas, on my Facebook and/or Twitter pages. I'd be grateful if you followed me there too. Thank you!

Having Two Incomes, but Living on One

Having Two Incomes, but Living on One

By Keith Bunn Jr.

January 20, 2014

Question From Facebook

Two weeks ago, I was asked by a Facebook follower what I thought of live on one income and save the other one (their spouse's). Here is what I had to say...

I think if you can do that, that would be AWESOME! 

I think you should absolutely do this IF... 

1) You guys are debt free. No credit cards, car loans, student loans, etc... 

2) Have 3 to 6 months worth of expenses saved up in a SEPARATE account for a fully funded emergency fund.

3) You guys are already putting 15% of your household income into some kind of retirement funds. 401K's, 403B's, Roth's, etc...

4) You guys are fully funding your kids' college funds each year.

5) If you have a mortgage on your home, I would get that paid off a.s.a.p.

Once those things are done, I would do that in a heart beat! If you guys did that, you would have an unbelievable retirement! I'm a little jealous, LOL! Good for you guys!!!

Can You Do This?

Now, not everyone can do this. I just so happen to know some of their back ground story and I think they can do it. But the ones who can't, are the ones who still have debt. We would LOVE to do this ourselves, but we still have debt we need to pay off. Once that is done, it will free up our largest wealth building tool, which is our income. 

But as long as people keep believing they have to have a credit score, that debt, in any form, is what is needed to have a life in this culture, then your incomes will continue to be held down and you will continue to be a slave to the lender. 

Again, there is nothing credit can buy you that cash can't except a FICO Score, Instant Gratification, Risk, and Stress. And none of those things are worth jeopardizing your future for.

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The Ever Wise Yoda

The Ever Wise Yoda

By Keith Bunn Jr.

January 13, 2014

Yoda

Are you a Star Wars fan? I've been a HUGE fan ever since the first movie came out in 1977 (Yes I know I'm showing my age). As I was watching The Empire Strikes Back for the millionth time, it was during the scene where Yoda, the ever wise Jedi Master, used the Force to pull Luke Skywalker's X-Wing fighter out of the a swamp on Dagobah. Luke, astounded by this amazing feat, ran over to the 2' tall Jedi and said, "I don't... I don't believe it!" and Yoda replied, "That is why you fail."

"That is Why You Fail"

I know, I know. What does this have to do with finance? Well you got me. Star Wars has nothing to do with finance. Except for the two lines from Luke and Yoda. You see, I hear things like that all the time when I talk to others about personal finance. "You have to have a credit card today. How are you going to get stuff?", "How am I going to get a car if I don't get a loan?", "You have to have a credit score." I could go on and on, but doesn't that sound like "Normal" people? And all I can say is, if you're struggling with money, if all your money is going out as fast as it's coming in because you think debt is the ONLY way that you can live your life today, then you will continue to struggle because you simply just don't believe it can be done any other way. And that's why you are failing with money.

Marketed To

People in the U.S., are marketed to more than any other culture on the planet. And it has caused this very rich country to have some very poor people. The biggest and most marketed product today is Debt. It's true! While watching TV, reading a magazine or news paper, listing to the radio, how many times do you see, hear, or read some kind of debt being marketed to you. See if this rings any bells... "$199 down, $300 per month and you can lease this brand new car.", "Life takes Visa.", "You can get an extra 10% off if you sign up for (home improvement store) credit card", "If you consolidate your loans, you can get a lower interest rate and a lower payment." These are the things we see and hear all the time and we have to stop letting things like these influence our behaviors and lives.

We Have to Believe

To win with money, we, as a culture, have to start believing in something different. We have to believe that debt is NOT the way to prosperity. Not even close. Having cash is. And we can't get to that belief if all our money is going out the door with other people's name on it as fast as it's coming in. If you're financially hurting, I'd be happy to help you, but in order for you to get help from me or anyone else, you have to believe that there is another way to live, and that's without debt. BELIEVE!

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The Target Data Breach. What to do if You're a Victim

The Target Data Breach. What to do if You're a Victim

By Keith Bunn Jr.

January 6, 2014

The Happy Beginning of a New Year... or is It?

First off, I just want to say that I hope you all started this New Year off on the right foot! 

Unfortunately, I know that some of you didn't. Because a Facebook follower asked me about the Target data breach issue that happened late last year. I asked if I could answer their question on here and the said, yes. So let's get started.

Target's Data Breach

As we've all heard on the news, the large retailer, Target, had a massive data breach of their customer's info. This breach started on Nov. 27, 2013 and lasted until Dec. 15, 2013. The data that was stolen was of about 40 million credit and debit cards used by customers, on and in between the dates mentioned. And now, we've also just learned that the encrypted pin numbers to the customer's debit cards were also taken, but Target officials says, that it is highly unlikely the encryption can be broken.

Right now, the Who, Where, and Why this happened isn't really important. If you're a victim, what's important right now is, What should you do if you find out your information was taken at this time.

The Difference Between Credit Cards and Debit Cards

Before we get started on what you need to do, you need to know where you stand on this breach. The myth floating around out there is that credit cards are more safe than debit cards, that's not 100% true. If a debit card is used the same way a credit card is used, it has the very same I.D. theft protection as a credit card does and you should have very little issue getting this matter cleared up, once you prove you are one of the 40 million victims and provided a bunch of documentation to creditors.

Now, if you use a debit card as a debit card, meaning you put your pin number in the card swipe machine, that's different, and you are not protected by the same I.D. theft protection policy as credit cards are. So if you used your debit card at Target on those dates, but you haven't seen any suspicious activity on your accounts, more than likely you're safe. If later you have some issues or you want to make double sure you're safe anyway, you can always call up your bank and cancel your debit cards and get issued new ones. It's a bit of a hassle waiting on new cards, but at least you know you're safe.

What to do if You Are a Victim

If you discover that your information was stolen, the first thing you need to do is place a temporary fraud victim alert on your credit bureau reports and you can do that for free online at the following links... Experian, Equifax, & Transunion.

The next thing you need to do is call the police and get a police report. When you get a copy of the police report, you need to give each of the credit bureaus a copy, that will make the temporary fraud victim alert permanent. If you don’t give them a copy, the fraud victim alert will only stay on your credit bureau 90 days.

The next thing you need to do is call the fraud victim division of all the creditors where your stolen I.D. was used at and provide them with all the information you have, including a copy of the police report showing that your I.D. has been stolen. Now these creditors may act like you are trying to get out of paying a bill, so don’t let them pressure you into paying something you don’t owe.

You Now Have a New Hobby

The bad thing is, there isn't anything you can do to 100% prevent I.D. theft from happening to you. If you've had your I.D. stolen, you now have a new hobby. On average, it takes people who have had their I.D. stolen, 600 hours to clean up this kind of mess. In 2008 alone, 15 million people had their identity stolen. Identity theft is the number one Blue Collar crime in the U.S to date and it's growing each year. So this is a big deal. 

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If you like my postings, I'd be honored if you follow me, so please sign up. You can also find more money news, facts and ideas, on my Facebook and/or Twitter pages. I'd be grateful if you followed me there too. Thank you!