How To Enable Auto Sweep on Paypal Accounts (2018)

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If you use PayPal to accept credit cards for your small business (eBay, Etsy, e-store, freelance, etc), you may not want to keep your money sitting at PayPal (especially if you are earning higher interest in your bank account). There is a feature called Auto Sweep that checks daily and automatically “sweeps” any money that arrives in your PayPal account into your bank account overnight.

The Auto Sweep feature used to be easily found in their settings. Then they moved it into a dim corner of their website that was harder to find. Last week, I couldn’t find it at all. After digging through several outdated articles, it turns out that as of 2018 you can’t access the feature at all unless you call in and ask for it explicitly. Not exactly customer-friendly behavior, but PayPal makes money off your idle balances… (The PayPal Money Market fund that offered higher interest shut down in July 2011.)

Here’s how to enable Auto Sweep on your PayPal account as of 2018. This is another post for the benefit for others searching online. First, make sure you meet these requirements:

  • You must have a Business PayPal account in good standing.
  • You must have a bank account linked to your PayPal account.
  • You must have lifted your withdrawal limit and verified your PayPal Account.

Next, you must call PayPal directly via phone.

  • Once logged into your PayPal account click Contact at the bottom of the page.
  • Choose the Call Us option and call the number listed for your account. Use the unique code to quickly identify yourself to them.
  • When you reach a human, explicitly ask for “Auto Sweep” to be enabled on your account.

After that, they will flip a switch on their end, and you should finally be able to see the option enabled on your online account. Log back into your PayPal account and follow these instructions:

  • Click Profile beside “Log Out” and select Profile and settings.
  • Click My money.
  • Click Set near “Automatic transfers.”
  • Click Edit.
  • Click Yes, select the bank you want your money transferred to, and click Save.

Here’s what you should see after Auto Sweep has successfully been turned on:

There you go. Note that if you ever manually request a cash transfer from a bank account to your PayPal balance, that this would automatically turn off Auto Sweep. I guess the money running around in circles causes a tear in the time-space continuum or something. (You can go back an turn Auto Sweep back on manually.)

If you activate this feature, it may also change your how you use the PayPal Business Debit card, as there will no longer be any cash balance in your account to draw from. For non-PIN signature purchases, these will still work if you first link a bank account as a backup source, and then the debit card charges will pull from your designated backup source. You can also link up certain PayPal credit cards (source), but not just any credit card as backup. For ATM withdrawals, you will not be able to make ATM withdrawals with a zero PayPal balance (source).

I wouldn’t really recommend using the debit card anyway, there are much better small business card options with no annual fee.

Modern Newspaper Delivery Boy = Kid’s YouTube Channel?

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paperboyWhile reading the intriguing autobiography of successful investor and mathematician Edward Thorp, it was mentioned that he was a newspaper delivery boy. Warren Buffett was famously a newspaper delivery boy, and still conducts a newspaper-throwing contest at annual Berkshire shareholder meetings. Coincidence?

Newspaper delivery boys and girls had to develop responsibility, dependability, self-motivated, and people skills (they often had to do the bill collecting). I don’t know if there are any such paperboys/papergirl positions left in the country. Here’s a nostalgic write-up about what it was like: Whatever Happened to the Newspaper Delivery Boy?

According to various sources, these famous business leaders, actors, activists, scientists, and even presidents were also paperboys. (I guess gender stereotypes applied? Kathy Ireland is the only girl on the list.)

  • Walt Disney
  • H. Ross Perot
  • Bob Hope
  • Ed Sullivan
  • Danny Thomas
  • John Wayne
  • Bing Crosby
  • Dwight D. Eisenhower
  • Herbert Hoover
  • Martin Luther King Jr.
  • Harry S. Truman
  • Ed Sullivan
  • Isaac Asimov
  • Tom Brokaw
  • Wayne Gretzky
  • Jackie Robinson
  • Kathy Ireland
  • Tom Cruise

I wasn’t a paperboy, or especially entrepreneurial when I grew up. Sometimes I would hoard my lunch money and just go hungry until I got home in the afternoon, but that was about it. I suppose I didn’t have a lot of wants, so I didn’t need a lot of money. I do remember being impressed by the kid in our class who bought candy in bulk from Sam’s Club and sold it individually to students.

What is the modern equivalent of a paperboy? I propose the YouTube video channel. If you are an entrepreneurial kid who wants to develop the skills that will help you navigate the business world in the way that newspaper carriers did in the 1970s, these days you probably have a YouTube channel. A lot of them seem to review toys, but others act out skits, cover travel destinations, or discuss current events. Here are the applicable skills:

  • Responsibility and dependability. You may not have to show up every day at 5am, but if you don’t create content regularly, you won’t grow an audience.
  • Self-motivation. There are probably some pushy parents out there, but I think your passion for the subject will show through in the videos.
  • Media creation skills. You will learn the technical skills required to set up equipment, edit audio/video, and all that behind-the-scenes stuff.
  • Talking in front on a camera. You must communicate clearly with your audience. This is similar to talking in front of a group of people.
  • Advertising negotiations? Some of the bigger channels have brand sponsors beyond just the pre-roll YouTube ads. The kids may have to get involved with these discussions.

There is a lot of inconsistent information about YouTube revenue. From the shocking This 6-year-old makes $11 million a year reviewing toys on YouTube to the more balanced Can Vloggers Really Make a Fortune? to the buzzkill ‘Success’ on YouTube Still Means a Life of Poverty. I’m sure a small percentage are doing awesome, but most are not. Isn’t that how it always works for creative pursuits? JK Rowling is rich, but most fantasy authors are not. But hey, if you’re a kid and making $100 a month and having fun creating something (all while learning useful skills shhhhh), isn’t that a pretty nice accomplishment?

Any readers out there with children who have earned money from YouTube?

Charlie Munger’s Life as a Financial Independence Blueprint

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blueprintCharles Munger is probably best known as the Vice Chairman of Berkshire Hathaway and partner of Warren Buffett. The University of Michigan Ross School of Business recently shared a hour-long talk with Munger on YouTube (embedded below). Munger has plenty of mentions on this site already, but my main takeaway from this talk was a more nuanced overview of his early years and how he personally achieved financial independence before really getting involved with Warren Buffett.

Here is a summary of my notes from the talk:

  • He was not born poor, but he was also not born into exceptional wealth. Munger wanted to go to Stanford for undergrad, but his father encouraged him to go to the University of Michigan as it was still an excellent school but more affordable. He ended up dropping out after only one year in 1943 to serve in the US Army Air Corps.
  • Military service, then law school. After World War II, he took college courses with the GI Bill and eventually went to Harvard Law School (getting accepted even though he never earned an undergraduate degree).
  • Successful law career. He practiced as a successful real estate lawyer until he achieved about $300,000 in assets. This was 10 years of living expenses for his family at the time (he now had a wife and multiple kids). At this point, he started doing real estate development at the same time. When this took off, he stopped practicing law.
  • Successful real estate development. When he achieved about $3 to $4 million in assets, he also wound down his real estate development firm. He was now “financially independent” but still mostly anonymous.
  • At this point, he decided to become a “full-time capitalist”. This last stage is what led him to his current status as a billionaire philanthropist. Along with his work with Warren Buffett and Berkshire Hathaway, he was also the chairman of Wesco Financial, which also grew to be a conglomerate of different wholly-owned businesses along with a carefully-run stock portfolio. Wesco Financial eventually became a wholly-owned subsidiary of Berkshire Hathaway.

Using Charlie Munger’s life as a blueprint, here’s a pathway towards financial independence.

  • Work hard, get an education, develop a valuable skill. Munger didn’t start Facebook from his dorm room or trade penny stocks in high school. He served in the military, earned a law degree, and went to work everyday for years. At this point, work means exchanging your time for money, but hopefully at a good hourly rate.
  • Use that work career and save up 10x living expenses. Munger called himself a “cautious little squirrel” saving up a pile of nuts. He dutifully saved his salary while supporting a family and kids (and some other personal family drama that a luckier person wouldn’t have to deal with). I don’t think you’ll need 10x if you don’t have a family to support.
  • To accelerate wealth accumulation, you can now take some more risk and start some sort of business. You need something that scales, something that’s not paid per hour. Munger did real estate development. If you look at people who got wealthy quickly, nearly all of them are business owners of some type.
  • At some point, your investments will enough money to support your living expenses. This is financial independence. It doesn’t matter what you do during the day, as you earn enough money while you’re sleeping. However, many people choose to continue doing one of the paths above: (1) employee-based career, (2) active business management, or (3) actively managing their investments.

Bottom line. Charlie Munger offers up great words of wisdom in this talk. He reminds us that our choice in marriage is much more important than our choice in career. He reminds us that just showing up every day and plugging away will yield great dividends over time. He reminds us that easy wealth without work is not a good thing for society. (He also says to give Bitcoin a wide berth.)

However, you can also learn a lot by noting and observing his actions. Munger was not a huge risk-taker. He grew his wealth in steps and never exposed his family to possible ruin. He worked hard for a long time and only became extraordinarily rich and famous later in his life. He primarily wanted to be independent “and just overshot”.

Scott’s Pizza Tours: Unconventional Entrepreneur Turns Passion into Business

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sptmovieI’m a sucker for people turning their unique interests into a profitable small business, especially a quirky one-person business (like this person who farms food from other people’s yards). My newest discovery came from watching the Scott’s Pizza Tours documentary about Scott Wiener, who turned his passion for pizza into a successful tour business and more. Below is a more bio and the trailer (direct link):

He runs a successful tour business in NYC, where he leads visitors to some of the best and most historic pizzerias in the world, teaching the history and science of pizza making. He writes a monthly column in Pizza Today magazine, is a legend in the pizza industry, judges pizza competitions, eats 15 slices per week, and–oh, yeah–he’s the Guinness World Record holder for the largest collection of pizza boxes, now numbering nearly 1,000 different boxes from 55 countries, selections of which are currently touring through gallery spaces in the U.S. and Europe, with tentative exhibitions planned for Asia and Latin America. In his spare time, he founded and organizes Slice Out Hunger, an annual event, which has raised over $70,000 for hunger relief organizations in NYC.

Are you happy with the path are you on? In one scene, Scott describes how he used to have a desk job with the government. After his first year, they had a little celebration and said “Hurray, only 24 years left until retirement!”. That statement really shook him, and he put in his resignation notice the next day.

“Follow Your Passion”: Too idealistic… or actually practical advice? You can’t make good money at something unless you’re good at it, and it’s very hard to get good at something if you don’t like it. That means passion fuels 2 out 3 parts of the pie (pun intended). If you can figure out how to make it well-compensated, you’re golden. Here’s a quote from Charlie Munger:

I have never succeeded very much in anything in which I was not very interested. If you can’t somehow find yourself very interested in something, I don’t think you’ll succeed very much, even if you’re fairly smart. I think that having this deep interest in something is part of the game. If your only interest is Chinese calligraphy I think that’s what you’re going to have to do. I don’t see how you can succeed in astrophysics if you’re only interested in calligraphy.

Dream job: Goal vs. Journey. Did Scott Wiener write down one day that his dream job would be to teach tourists about pizza history? No, it was a result of incremental daily movements. I’m reminded of the High Fidelity movie scene where John Cusack’s character makes a list of his top 5 dream jobs if “qualifications, history, time, and salary were no object.” After going through them, he realizes that he is already doing one of his dream jobs, owning his own record store.

I saw Scott’s Pizza Tours on the Viceland cable TV channel, but you might also be able to see it for free on Hoopla if supported by your local library. Otherwise, you can buy/rent on Amazon/iTunes/YouTube.

p.s. If you live in the NYC area, the 2017 edition of Slice Out Hunger’s $1 Pizza Party is on Wednesday, October 4, 2017. I’m impressed he even leverages his passion to raise money for a good cause (over $70,000 so far).

The Rise of Sole Proprietorships, LLCs, and S-Corporations

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The Tax Foundation has an interesting article on pass-through businesses, where the business income “passed-through” to the individual income tax return of the business owner. Pass-through businesses include sole-proprietorships, partnerships, S-corporations, and LLCs designated to be treated as sole-prop/S-corp/partnerships for tax purposes. These usually represent small businesses started by an individual, couple, or very small group of people.

You may be surprised to know that 9 out of every 10 companies in the US are pass-through businesses. These aren’t just dinky lemonade stands, either. Pass-through businesses combined earn over half of all business income, and they employ the majority of the private-sector workforce.

soleprop1

soleprop2

The ranks of solo entrepreneurs are growing. If this path sounds attractive to you, you won’t be alone! Being an entrepreneur is not a requirement for financial independence, but I believe that enjoying what you do everyday does help a lot. Some people are quite happy being an employee of a large corporation or government entity. Some might yearn for increased autonomy. Still others do both with a side business, aka “side hustle”.

soleprop3

A sole-proprietorship is the default business type for a US individual. You got paid for mowing someone’s lawn? You’re a sole-proprietorship. You decided to drive for Uber? You’re a sole-proprietorship. This website started out as a sole-proprietorship and later became an S-Corporation to save money on self-employment taxes.

Solo 401k – Best Retirement Plan for Self-Employed Business Owners

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solo401kThe wealth management group Del Monte published a whitepaper on Solo 401k plans, calling it the “financial industry’s best kept secret” and a “powerful and underutilized” retirement plan for self-employed business owners. The 4-page PDF does a good job at summarizing the benefits of a Solo 401k, aka Self-Employed 401k. Perhaps most importantly, the Solo 401k allows the maximum annual tax-sheltered contribution (or ties for the max) for all income levels and ages.

se_max

Here’a a quick benefit comparison against the SEP-IRA and SIMPLE IRA:

se_max2

The key difference is the Solo 401k allows an $18,000 salary deferral at any income (i.e. if you make $18k or under, you can put aside all of it) for 2017 and then adds on a profit-sharing component. In addition, Solo 401ks a larger additional “catch-up” contributions at age 50.

I’ve had a Self-Employed 401k through Fidelity for several years, and I have been quite happy with it. The paperwork has been minimal, although you must start filing IRS Form 5500-EZ once your asset exceed $250,000 or face significant penalties. (It’s one page long.) It has been quite flexible – I am able to purchase mutual funds, ETFs, individual stocks, CDs, and individual Treasury and TIPS bonds. There is no annual fee and I’ve only had to pay trade commissions. Fidelity also accepts rollovers from outside IRAs and 401k plans.

Vanguard, Schwab, and TD Ameritrade also offer cheap in-house Solo 401k plans that work well for low-cost DIY investors. There are now several independent providers with “custom” 401k plans which can offer features like 401k loans the ability to invest in alternative asset classes (precious metals, tax liens, real estate, private equity, etc.) at additional cost. Vanguard and TD Ameritrade offer a Roth option; Fidelity and Schwab are only available with “traditional” pre-tax contributions.

Another option to consider is the Solo Defined-Benefit Plan, or “Solo Pension”. The annual maintenance fees are higher and the IRA requirements are significantly more complex, but you can make much larger amounts of tax-deferred contributions (dependent on age and income). The most affordable option appears to be the Schwab Defined-Benefit Plan. If anyone has any experience with this plan, I’d like to hear about it and would be open to a guest post.

Work + Skill + Luck + Risk = Big Success

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barking

A new book called Barking Up the Wrong Tree by Eric Barker promises to reveal surprising facts about what really determines success. The publicity tour has generated several articles about how high school valedictorians are less successful than you might think:

Beyond the clickbait, what really happened? I haven’t read the book, but I did learn that Dr. Karen Arnold of Boston College tracked 81 high school valedictorians and salutatorians for 14 years after graduation. Here are some of the findings of this study:

  • 95% went on to graduate college.
  • The average college GPA was 3.6.
  • 60% went on to receive graduate degrees.
  • 90% were in professional careers.
  • 40% are in highest tier jobs (not exactly sure what this means).

Apparently, none of the subjects became billionaires or “changed the world” in a meaningful way. Why not?

The theory is that high grades are a product of conformity and obedience, while being “successful” is about mastering a unique skill and non-comformity. Research has found that high grades are only loosely correlated with intelligence. In addition, out of a survey of 700 millionaires, the average GPA was only 2.9. If you are devoted to a single passion, it can be hard to have good grades in all subjects; thus you tend to struggle in high school.

My question is – How you define “success”? If it’s a respectable career with above-average income, it seems that being valedictorian gives you a much higher chance for that. There’s a reason why many parents want their kids to get good grades and become an engineer, doctor, accountant, or lawyer. You are playing the odds. There are many starving artists and writers, but not many starving nurses.

If “success” is becoming a billionaire, then yes it seems that being a valedictorian may not match up with that. If you want to get rich quickly, you’ll need to start your own business and take some sort of ownership stake. The richest people all own something – music copyrights, book copyrights, businesses, real estate, something.

The difference is taking risks. By definition taking a risk means there is the chance of failure. A small business can make you rich, but most small businesses end up failing. However, you’ll only get graduation speeches from the winners. This is called survivorship bias, as this XKCD comic explains:

survivorship_bias

There is no direct formula for success, but you can still break it down into the required parts:

Work + Skill + Bad Luck + High Risk = Failure + Experience

Work + Skill + Good Luck + High Risk = Success + Experience

No Work + Good Luck = Failure

The takeaway is that you need hard work, valuable skills, taking a risk, and some luck. Luck plays a role, but you need the other three or you have no chance at all.

If you can be a high school valedictorian, I feel you are able to do hard work and thus have the ability to develop valuable skills. That’s a good base. The difference is… will you take the risk? Will you risk putting all your time and energy into developing a skill or a company that may or may not result in something valuable? Will you accept that chance of failure? Or would you rather go with the odds and do something with more reliable results? Perhaps statistically valedictorians take less risk than other groups.

I plan on advising my kids to take calculated risks when they are young and can devote 70 hours a week to a single task. That’s possible when you aren’t taking care of your kids (or your parents). However, I would also teach them that a reliable stream of above-average income a high savings rate equals financial freedom, aka early retirement in 10-20 years. (Getting rich via ownership just accelerates the process even further.) Once you have that financial freedom, you can do whatever you want with your life. Start a charity, write a novel, spend time with family, travel the world. Living a lifestyle aligned with your values certainly sounds like “success” to me.

Frugal Entrepreneur Earns $5,600 a Month Farming Other People’s Yards

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Here’s a cool story at the intersection of entrepreneurship, frugal living, and sustainable farming. Jim Kovaleski is a one-man farm, growing produce and selling it at local farmers markets, earning over $5,000 a month. What’s unique is that he doesn’t have a central plot of land – he grows his plants on other people’s residential yards in Florida and Maine. Some stories say he “leases” the land but in the interview below he says he doesn’t pay in cash, only in veggies.

He’s profiled above on the Justin Rhodes YouTube channel. Found via Kottke.org.

This nomadic gardener travels between Maine to Florida gardening leased front yards. With a frugal lifestyle and revenues as high as $1.5K a week, he’s living the dream.

It’s not an easy job, but he gets to work on his own terms while developing a unique set of skills. I’m impressed both by the yield he gets from relatively little space, and how he keeps people’s front yards looking relatively nice (as opposed to industrial or commercial). If you live in a neighborhood with the right vibe (like my old one in SE Portland), this idea could probably be replicated.

Shelter Institute: Learn How to Build Your Own House in 2 Weeks

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siframeWhile listening to a Tim Ferriss podcast with guest Mr. Money Mustache, I came across this quote from John Taylor Gatto in the comments. Apparently Gatto was not a fan of compulsory schooling and offered this instead:

I want to give you a yardstick, a gold standard, by which to measure good schooling. The Shelter Institute in Bath, Maine will teach you how to build a three thousand square-foot, multi-level Cape Cod home in three weeks’ time, whatever your age. If you stay another week, it will show you how to make your own posts and beams; you’ll actually cut them out and set them up. You’ll learn wiring, plumbing, insulation, the works. Twenty thousand people have learned how to build a house there for about the cost of one month’s tuition in public school.

The idea of building your own home is certainly romantic. I was pleased to learn that the Shelter Institute is still going strong, offering a 2-week Design and Build Class that costs $1,500 for one person ($2,500 for a couple) on their 68-acre campus in Maine. I guess people drive or fly there and stay nearby; they have housing options starting at $100 a week. Classes run from 8am to 5:30pm every day:

Intensive courses that provide you with extensive home building knowledge from site planning to foundations, insulation, engineering, design, wiring, plumbing, tool knowledge and the ability to Design and Build. Whether you have been dreaming of building a home or are already heavily involved in the building industry; the Design Build course or the Contract-It-Yourself course will provide a new understanding of construction and confidence in your ability to complete a project.

I gained some additional insight into the general concept of building your own home in Building a Home of Your Own, an article at the Federal Reserve Bank of Boston for some reason:

For those who desire more individual instruction, the Shelter Institute offers intensive one- to three-week classes on all aspects of house construction. In business since 1974, the Shelter Institute has taught 25,000 students who have gone on to build 8,000 homes. “A lot of people come here thinking that there’s some magic thing they have to learn to know how to build a house,” reported Patsy Hennin, the Institute’s co-founder, in a recent interview with Down East magazine, “but there aren’t any secrets. Perseverance is the biggest thing. Gadgets aren’t the answer. It’s not about how to use a hammer; it’s about how to use your head.”

There are many books and “courses” that about building your own home, but I doubt it can replace an interactive environment where you are handling the tools and watching actual houses being built in person. A few similar schools will teach you to build your own log cabin in 5 days or build your own tiny house in a week.

According to 2016 data from the US Census, only about 6% of new single-family homes are “owner-built”, which means built entirely by the landowner or by the landowner acting as his/her own general contractor. A former manager of mine was the general contractor on his own new construction and also did the electrical wiring and other parts himself. I don’t know if I’ll ever build my own home, but I’m happy that there are still DIY folk out there doing such things. These intensive courses sound like a cool vacation idea actually (if someone could watch the kids).

HBO Documentary: Becoming Warren Buffett

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HBO has a new documentary film called Becoming Warren Buffett that includes a more personal look at his life, including “never-before-released home videos, family photographs, archival footage and interviews with family and friends.” I just watched it on using the HBO Now 30-day free trial. Here’s the HBO trailer:

My notes:

Warren Buffett does have a folksy exterior. He drives around in his own car, eats at McDonald’s, drinks Coke, and still lives in the same house he bought in 1957 for $31,500. He doesn’t have a personal stylist or fashionable clothes. He likes to say things that sound like common sense.

Some people think this is a fake exterior. I don’t think so. Some people take this to mean that “anyone” can get rich buying and selling stocks. I also don’t think so.

Warren Buffett is also extraordinarily intelligent and competitive. His net worth is one of his scorecards. His skill is capital allocation and that involves extreme emotional detachment and rationality. These are features that aren’t visible, and he’s better at it than you are.

Warren Buffett is always learning and improving. Buffett skipped grades, finished high school at age 16, and finished his undergraduate degree in 3 years. However, instead of any degree hanging on his office walls, he has a certificate from a Dale Carnegie course on public speaking. Buffett realized his weaknesses and worked to improve himself.

Charlie Munger shared an analogy with someone who can juggle 15 balls in the air. How did that happen? Well, at some point they started with one ball, practiced, and then two balls, and then practiced some more…

The film does explore his personal life, albeit in a very sensitive and respectful manner. His emotionally volatile mother is mentioned but not explored deeply. His father was a great influence and Warren keeps a picture of his dad on the wall in his office. His late first wife, Susan, was shown as a very kind, considerate person. In her interviews, she came off as very well-spoken, fair, and intelligent. She definitely played a huge part in his overall development. She is also a huge reason that eventually $100 billion is going to charitable causes to improve the world.

Buffett has said many times that he won the “ovarian lottery”. He was born in the United States. He was born a male. He had many opportunities to succeed and support structures if he failed.

As a relatively new and clueless parent, I wonder about his kids. Warren Buffett spent most of his time working and not much time raising the kids. I wonder what they would have been like if their father didn’t become famous and rich. (Supposedly when they were young, Warren really wasn’t all that rich or famous yet.) Today, all three of them appear to be well-adjusted adults, but everyone’s job is to give away their parent’s money. Do they do this out of obligation to their parents? Out of obligation to make sure the money is well spent? Is this the “job they would get if they didn’t need a job”?

Warren attributes his financial success to “Focus”. Was that laser focus detrimental to his family and other personal relationships? What if he had just stopped when he reached $10 million or whatever?

Warren Buffett is worth over $60 billion, yet he doesn’t meet certain definitions of “retirement”. What Buffett has always been keen on is constructing a life that fits him. His version of financial freedom includes sitting by himself and reading 5-6 hours a day and thinking. He’s loved being his own boss since filing his first income tax return at age 13 and taking a $35 tax deduction for the use of his bicycle and watch on his paper route.

I think hero-worshipping can be dangerous when you simply try to follow everything about someone else. Every human has their flaws. We should extract the qualities that we admire, and try to emulate those qualities. Warren Buffett has a lot of worthy attributes and I value his shareholder letters, but I certainly don’t want to “be just like Warren Buffett”. For me, I respect that he basically figured out how he wanted to live his life (no bosses, lots of reading) and that he achieved it an early age. The eventual billionaire status doesn’t really excite me, other than the fact that he managed to remain “grounded” and relatable.

Overall, the film does offer some new personal glimpses but not much new deep material for those that have read his biographies – The Snowball: Warren Buffett and the Business of Life by Alice Schroder and Buffett: The Making of an American Capitalist by Roger Lowenstein.

IRS Estimated Taxes Due Dates 2017

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irsclipIf you have significant self-employment or other income outside of your W-2 paycheck that is not subject to witholding (interest, rents, dividends, alimony), you may need to send the IRS some money before the usual tax-filing time. This is my annual reminder to either slide in a last-minute payment for 2016 if needed, or plan ahead for four equal installments in 2017.

Here are the due dates for paying quarterly estimated taxes in 2017; one last one for 2016 tax year and four quarterly installments for 2017 tax year. This is for federal taxes only, state and local tax due dates may be different.

IRS Estimated Tax Payment Calendar for Individuals

Tax Year / Quarter Due Date
2016 Fourth Quarter January 17, 2017* (Tuesday)
2017 First Quarter April 18, 2017 (Tuesday)
2017 Second Quarter June 15, 2017 (Thursday)
2017 Third Quarter September 15, 2017 (Friday)
2017 Fourth Quarter January 16, 2018 * (Tuesday)

 
* You do not have to make the payment due January 17, 2017, if you file your 2016 tax return by January 31, 2017, and pay the entire balance due with your return. You do not have to make the payment due January 16, 2018, if you file your 2016 tax return by January 31, 2018, and pay the entire balance due with your return.

Who needs to pay estimated taxes?
In general, you must pay estimated tax for 2017 if both of the following apply:

  1. You expect to owe at least $1,000 in tax for 2017, after subtracting your withholding and refundable credits.
  2. You expect your withholding and credits to be less than the smaller of
    • 90% of the tax to be shown on your 2017 tax return, or
    • 100% of the tax shown on your 2016 tax return. Your 2016 tax return must cover all 12 months.

If you forget to pay (like I’ve done before), then you should make a payment as soon as possible even though it is late. This will minimize any penalty assessed.

How do I pay? When does the payment count?

  • By check. Fill out the appropriate IRS Form 1040-ES voucher (last page of the PDF) and snail mail to the indicated address. The date of the U.S. postmark is considered the date of payment. No fees besides postage.
  • By online bank transfer. You can store your bank account information and pay via electronic funds transfer at EFTPS.gov or call 1-800-555-4477. It takes a little while to set up an online account initially, so you’ll need to plan ahead. For a one-time payment, you can also use IRS Direct Pay which does not require a sign-up but it also doesn’t store your bank account information for future payments. Both are free (no convenience fees). The date of payment will be noted online.
  • By debit or credit card. Here is page of IRS-approved payment processors. Pay by phone or online. Fees will apply, but the payment will count as paid as soon as you charge the card. You may also earn rewards on your credit card.

The following credit cards currently have the ability to offer rewards equal or greater than 1.87%, meaning you could theortically make money by paying your taxes with them. Please read my card-specific reviews for details.

How much should you pay in estimated taxes? You’ll need to come up with an expected gross income and then estimate your taxes, deductions, and credits for the year. The PDF of Form 1040-ES includes a paper worksheet to calculate how much in quarterly estimated taxes you should pay. You can also try online tax calculators like this one from H&R Block to estimate your 2016 tax liability, and divide by four quarters.

How To Become a Venture Capitalist for $100

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

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How would you like to add “Venture Capitalist” to your social media profiles?

Indiegogo and Microventures have teamed up to offer equity stakes in startups to virtually anyone for as little as $100. Here is an Indiegogo blog post and a NY Times article covering the announcement. Previously, only accredited investors were allowed access in such markets, and that required an annual income of $200,000+ or a net worth of $1 million+.

This is different from Kickstarter crowdfunding where you put up monetary support and at most get an early product sample or some form of personal recognition. This is an actual investment with the opportunity to earn a significant return. (Or you might never see it again.)

I decided to look more closely at one of the available investments. Republic Restoratives is an urban, small batch distillery and craft cocktail bar in Washington, D.C. You can invest as little as $100, which will get you the perk of being “periodically invited to special parties, happy hours and previews”. If you invest at least $250, you’ll also get a founders signed bottle of CIVIC Vodka.

In terms of financial upside, you have to look closely at the investment terms:

Security Type: Secured Promissory Notes
Round Size: Min: $50,000; Max: $300,000
Interest Rate: Revenue sharing agreement which provides the investors 10% of the Company’s gross revenue, up to the repayment amount of 1.5x of their investment
Length of Term: Until the repayment amount of 1.5x investment is repaid
Conversion Provisions: None

In this case, you don’t actually get equity. You have a promissory note that says you have dibs on part of future gross revenue, but only up to 150% of your initial investment. For example, if they raise $100,000 and they manage to bring in $1,500,000 in gross revenue, they’ll pay out $150,000. If you invested $100, you’ll then get at most $150 back. Even if they take over the world and become the next Pappy Van Winkle brand, you’ll get the same amount back. Too bad, I’d rather be able to say that I am partial owner of a bar. 😉

A brief look at another investment option, BeatStars, shows that you have the possibility of owning preferred shares of the business if the note converts.

Bottom line. In financial terms, equity crowdfunding is very risky. The businesses available are unproven and have decided not to go the traditional VC route. To put it bluntly, you really shouldn’t expect to see your money again. In my opinion, the benefits are mostly psychological. You get to feel good about supporting a business you want to succeed. You may get personal recognition via your name on a wall or a signed bottle of vodka. I like the idea of telling people that I “provide venture capital to startups” instead of my real job.

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