Archive for March, 2010

Why we continue to contribute to a non-deductible IRA

Personal finance

Doing taxes every year always makes me reflect on our investment vehicles and allocation strategy. I certainly don’t have it all down pat, but one particular area that I’ve been looking at is our IRA situation, particularly given the recent change in rules that by lifting the income limitation that was previously in place.

We’ve decided that in our case, converting to a in 2010 is probably not ideal (one reason being that, we live in CA and may not be here our entire lives, so it’s not clear there’s a benefit to paying that extra ~10% tax). In all fairness, the varieties and possible combinations of IRAs that you can possess, convert, and roll over is impressively complex, and it takes a long time (and/or the assistance of a financial planner) to figure out what’s right for your particular situation. If you’re interested in learning about the 2010 Roth IRA conversion, there’s literature-a-plenty to be found, but I found a pretty straightforward explanation about 2010 IRA conversion rules and tax implications that should get you started.

What’s more, we are fortunate (in a sense) to both exceed the limit for being able to contribute to either a Roth IRA or to be able to take a tax deduction for contributing to a traditional IRA. But we’ve decided to continue making yearly contributions to a traditional but for the following reasons:

Read the rest of this entry »

Better value than an MBA: Warren Buffett’s letter to shareholders

Personal finance

Warren Buffett recently published his annual (links to a PDF file), which is always worth a read. If you’ve never read it before, Buffett’s candid and easy-to-understand style and the amount of transparency he gives to Berkshire Hathaway’s operations is unlike anything you’d expect. It’s obvious that the words he chooses to describe his operations are carefully considered and intended to depict accuracy in an approachable manner rather than out of fear of bearing responsibility, which tends to be the reason business people spend time poring over verbiage (think business speak jargon).

Read the rest of this entry »

Financial checklist for disaster preparedness

Personal finance

(Note: This is a re-post of an article I wrote a couple of years ago regarding how to be financially prepared for disasters like earthquakes, which I thought appropriate to given the recent events in Haiti and Chile. Though written a while ago, its content remains up-to-date and relevant especially to those of us who live in the Bay Area, Los Angeles, or any large metropolitan area in the US prone to wide-scale disasters. You can call it common sense but not common practice, and worth a read.)

This past weekend, San Mateo County held a Day, which I attended. We live in a pretty seismic area, but I was still impressed that the county went so far as to create such an opportunity for a cheap weekend (free parking, free admission, free hotdog and softdrink, and a free first aid kit for virtually all attendees), thereby encouraging families to attend and learn.

A local bank held a 30-minute seminar on a topic I hadn’t considered at all but then realized was an important aspect of preparing for a disaster: how should you best prepare for a disaster financially? And no, this isn’t about buying the right insurance policy but something far more basic. I don’t mean to write a Chicken Little post here, but I suppose after Katrina, plenty of metropolitan areas have reevaluated and updated their disaster preparedness plans.

So much so that if you’re like me, you haven’t given much thought to preparing for a time when there might not be any electricity, ATMs, etc. I learned a lot from the seminar, so I thought I’d pass on the information. Most of it is taken from the bank’s presentation.

Preparing before a disaster strikes

It’s worth emphasizing over and over again that we now live in what’s essentially become a cashless society. But when disaster strikes, the conveniences and things we take for granted might not be around. What should you do?

Read the rest of this entry »