Test 3 Flashcards
What are the different taxes you pay when you work?
Employment Taxes
FICA- 7.65%
Medicare- 1.45% to employer and 1.45% to employee
Unemployment- 0.5-1% of payroll
Income Taxes
Federal- up to 43.8%
State/Local- up to 15%
What are the different taxes you pay when you spend money?
1) Sales tax (state and local)- 8-10% of purchase
2) Room tax/lodging taxes- 15-20% of stay
3) Fuel taxes $0.30-0.65 per gallon
What are the different taxes when you save?
- Capital gains tax (short and long term gains)
- Estate tax (federal and state)
How to avoid the tax man?
Focus on tax efficiency!
- Municipal bonds (tax free income)
- Passive index investing
- Buy and hold investing
How do PAW’s outpace UAW’s over time?
PAW’s like lawyers often have to appear as if they live a lavish lifestyle. UAW’s like the owner of the janitorial business saves their income and live below their means.
Why you don’t let the government invest for you?
Pay rates from Roth IRA outmatch whatever you could provide for yourself by saving.
Why is it important to educate your kids?
- kids learn their habits from their parents
- there’s a stability that comes from living in a supportive environment
- Parenting is a full contact sport but worth every minute!
What are The Great Eight?
- Be tough, life is
- Never say poor me or feel sorry for yourself
- Take care of your possessions they will last longer
- Close the door, don’t waste your parent’s money
- Put things back where you got them
- Say yes to those who need help before they ask
- Say yes sir and yes ma’am
- Rainy days will come… save your money!
What are the 7 Habits of Highly Effective People?
- Be proactive
- Begin with the end in mind
- Put first things first
- Think win-win
- Seek first to understand… then to be understood
- Synergize
- Take time to sharpen the saw
What’s the best thing to protect your family when you are young?
Life insurance is a cheap way to protect your family while you are young.
What are the rules of thimb when it comes to planning for your family?
- Buy enough insurance to cover 80% of your net pay.
- Buy a rider that allows you to increase your coverage as you make more money
- Understand what “total disability” and “own occupation” coverages are… failure to do so can be catastrophic
What is the best long term care insurance?
Health savings account (HSA) is the best LTC insurance because it grows tax free and be invested in the market. it’s not use it or lose it like LTC insurance. Key is time to build it.
What do most coverages not cover?
- High value/rare items (jewelry/firearms/collectibles)
- ATV’s/UTV’s
- Antique cars
- Art
What are the basics of estate planning?
- The Will- outlines your wishes and is the key document in a plan
- Power of attorney- are done for healthcare/financial reasons. Speaks for you when you cannot
- Advanced directive- expresses your wishes in regard to end of life matters.
“an ounce of prevention is worth a pound of cure”
What should you assume when estate planning?
- Assume you can die early
- Assume that your spouse will remarry
- Assume your kids will get divorced
- Assume your kids will fight with each other over your estate
- Assume the government will get more aggressive if you are able to accumulate substantial assets.
