Description
Book SynopsisDiscover how the Tax Cuts and Jobs Act of 2017 will change your journey to financial independence and what you need to do now to take advantage of the new law
Financial Independence (Getting to Point X) offers practical, time-tested advice for reaching your financial goalswhatever they may be. Whether you're recovering from debt, putting kids through college, planning for retirement, starting your own business, or just seeking a healthier financial outlook, this book shows you how to get it done. No platitudes or empty advice herejust a clear roadmap to your goals, based on the effective management of the 10 Key Wealth Management Issues that threaten to derail us all.
This new second edition has been updated to reflect President Trump's massive income tax changes. These historic changes will reduce the tax obligation of most Americans, but not all. This is the most significant tax reform in over 30 years, rendering old advice obsolete while opening new op
Table of Contents
Foreword by Todd Mackay xi
Preface xiii
Acknowledgments xv
Introduction Getting to Point X 1
Financial Literacy and the Move Away from Capitalism 2
Point X: Our Fundamental Financial Goal 4
Ten Key Issues to Comprehensive Wealth Management 5
Our Biggest Expense 6
Take a Financial Planning Checkup 8
The Power of This Book 10
What’s New in the Second Edition 11
Chapter 1 Committing to Living Within Your Means 13
The American Dream Becomes the American Nightmare 13
Living Within Your Means: The Essential Step 14
Simple Saving 18
Chapter 2 Understanding Taxes 23
A Brief History of the US Tax System 24
Organizing and Retaining Your Records 27
Tax-Preparation Services 28
Accumulating Wealth Through Tax Planning 31
Chapter 3 Determining Your Financial Position 37
Figuring Your Financial Net Worth 38
Case Study: How One Couple Learned They Were Spending More Than They Earned 38
Making Sense of Cash Flow 49
Establishing Your Financial Goals 71
Finding Trusted Advisors 75
Chapter 4 Managing Debt 83
Case Study: How Two Doctors Went Bankrupt in Only a Few Years – What Not to Do 83
Basic Principles for Managing Debt 87
Good Debt Versus Bad Debt 89
Credit Card Debt 90
Auto Loans 96
Student Loans 97
Home Mortgage Loans 98
Business and Investment Loans 103
Understanding Credit 104
Your Credit Report and Your Credit Score 105
Preventing Identity Theft 110
The Equifax Breach 111
Analyzing Your Debt 112
Chapter 5 Insuring Your Health and Life 119
Choosing a Health Insurance Plan 120
Long-Term Care Insurance 135
Disability Insurance 142
Life Insurance 146
Buying Insurance Policies 152
Chapter 6 Protecting Your Property with Insurance 157
Case Study: How a Lack of Insurance Wiped Out One Woman’s Life Savings 158
Homeowners Insurance 160
Automobile Insurance 164
Umbrella Liability Insurance 167
Buying Insurance Policies 170
Chapter 7 Paying for College 175
Is College the Best Choice for You and Your Child? 175
The Cost of College and What You Can Expect to Pay 179
Case Study: How Not Saving for Your Child’s Education Can Ruin Your Finances – and Your Child’s 181
Conducting a “Needs Analysis” for Your Children’s College Educations 185
Strategies for Saving Money for College Education 189
Education Tax Breaks and Credits 204
Chapter 8 Planning for Retirement 213
Case Study: Saving Versus Not Saving for Retirement: The $1.7 Million Difference 213
Retirement Equation: Calculating Your Personal Point X 217
The High Cost of Waiting to Save for Retirement 219
What You Can Expect to Receive from Social Security 222
Qualified Retirement Plans 225
The Difference Between Traditional IRAs and Roth IRAs 229
Fixed and Variable Annuities 235
Retirement Funding: “Needs Analysis” 239
Chapter 9 Managing Your Investments 249
Analyzing Your Ability and Willingness to Take Risk 250
Stocks, Bonds, Hybrid Securities, Mutual Funds, and Exchange-Traded Funds 255
Diversification, Asset Allocation, and Rebalancing 264
Dollar-Cost Averaging 275
Inflation and Taxes: The Biggest Drains on Investment Return 276
Medicare Surtax on Net Investment Income 277
Cryptocurrency and Its Tax Treatment 278
Chapter 10 Preserving Your Estate 283
The Federal Gift and Estate Tax System 284
Legal Documents to Consider for Estate Planning 284
The Probate and Administration Process and Why You May Want to Avoid It 289
Using a Planned Gifting Strategy 293
Ownership of Property and How It is Transferred 294
Reasons for Creating a Trust 297
Benefit from a Family Limited Partnership 309
Estate Tax Planning and Life Insurance 310
Asset Protection and Long-Term Care 313
Chapter 11 Starting Your Own Business 319
How Starting Your Own Business Can Lead to Financial Independence 319
The Three Pillars of Establishing a Successful Business 320
Sobering Statistics on Business Success Rates 321
Business Plan 321
Establishing and Operating a Successful Business 323
Entity Choices 326
Tax Identification Number 333
Accounting Methods 333
Reporting Business Income and Expenses 336
What is the Number-One Expense in Operating a Business? 338
Employee Versus Independent Contractor 338
Business Tax Deduction Versus Business Tax Credit 340
“Ordinary and Necessary” Test 341
Deductible Business Expenses 342
Nondeductible Business Expenses 344
Home Office Deduction 344
Travel Expense As a Business Deduction 347
Deducting Automobile Expenses 348
Depreciation Deductions 350
Choosing the Right Retirement Plan for Your Business 352
Recordkeeping 361
Financial Statements 362
Financial Management Team 366
What the Tax Cuts and Jobs Act of 2017 Means for Your Small Business 367
Chapter 12 The Time Value of Money 379
Appendix A: Selecting a Trusted Advisor 395
Appendix B: 101 Ways to Save $20 or More per Week 405
Appendix C: Basic Concepts and Definitions of Various Types of Taxes 415
About the Author 435
Index 437
