Tweeters Beware

What you know can indeed hurt you. Twitter has not only coined a new verb, to tweet (tweet, tweeting) and a new noun, Tweeter, one who tweets, but also created an environment for snoops to learn far more about you than you may ever want learned….

With the crazy popularity of Twitter and Facebook, private investigators are no longer needed to dig up the goods. The Financial Times interviewed divorce attorney, Linda Lea Viken who is apparently a fan of the services.

“We used to use PIs, and occasionally got incriminating pictures. Now we just look on Facebook. It’s cheaper, and it’s usually better. Instead of getting pictures taken from outside the houses, I get pictures taken inside.”

Facebook dirt even came up on the most recent season of the Bachelorette – Justin, the crazy Wrestler dude, had told his girlfriend at home to stay off Facebook . . . apparently he had another gf on Facebook. And both ladies knew he was “chasing” Ali on the show . . . um, hello . . . red flag anyone? Anyway, when non-Facebook gf signed into the service she discovered the ruse. Justin hobbled off the show through shrubbery to avoid Ali’s wrath.
Justin into the shrubbery, 40s

If you think that private message are not admissible . . . think again. That’s why the attorneys are having a field day with social networking sites. Most of the information is super public – as in, anyone can see it at anytime – even if you have a privacy setting (“only show wall to friends,” etc.) and what is not super public requires very little work to uncover. All of it is considered admissible in court should you ever need know that….

But, you’re not worried about having an affair discovered, you’re just a regular joe or jane working to pay the bills, trying to make a good life, right?

It’s even worse for you!

HR departments are using the sites as well. If you have hopes of executive level appointments, you’d better be particularly careful. Look at what happened with Mark Hurd, the former CEO of Hewlett Packard. He was accused of misconduct and relieved of his post when it hit social sites. The fiasco started in April and agreement was reached by both sides by June without any fanfare – the Board was already well aware of the situation. But it was leaked to the media and then spread like wildfire in July. Miraculously, the Board was no longer able to see Mark as credible . . . I can’t see that Board as credible, but that’s a different bone to pick for a different day.

What you say, can and will be copied and pasted across the kingdom.

Thinking about Retirement Income?

It’s been a rough couple of year, but those of us hanging on to jobs of some form may be looking at our savings and investments and wondering,

What have you done for me lately . . .

If you are someone else’s employee, there isn’t much you can do. But, if you have your own company . . . or you care to create your own company either for the consulting advice you give or for the items you sell on etsy, you have options.

One of those options is a Defined Benefit plan. Nick Paleveda is the kingpin of DB plans and was kind enough to sit down with me for a few questions. In brief, the DB plan is great for those who have profits greater than $49,000 (after salaries). But with less than that . . . stick with your 401k and IRAs.

The reason I was turned on to DB plans? Great way to legally stash $300,000 a year, tax free. Also allows significantly more flexibility in your investment options for the funds. You can invest in private equity positions, your local dry cleaner for example, or regular publicly traded funds – much great range of options than your corporate 401k most likely.

First, a word of warning, you must own your own business to set up a Defined Benefit plan. A defined benefit plan must be set up by the corporation, LLC or sole proprietor who OWNS the business. An employee cannot set up one for themselves.

The main deterrent has been the perceived cost. As it turns out, you can set up a DB for yourself for approximately $600/year. Without further adieu, the interview with Nick:

Hi Nick, let’s dial into the needs of my Miss Mentor crowd. Most are Age 24-35, mostly pre-graduate school, some recently post grad school, many with significant educational debt.  Almost all are employed in relatively high paying positions (large law firms, consulting firms, Investment banks, $125k+), but have received scant knowledge (with entirely too much information) on personal finance. Some also have their own consulting practices or would like to . . . many make the financial decisions of the household – mix of married and unmarried.

1. What exactly is a Defined Benefit (DB) plan? I’ve heard about Keogh plans, but only know enough to be moderately dangerous.

From 1974-1986 the primary retirement plan in the USA was a defined benefit plan. This plan allowed tax deductible contributions, earnings to accumulate tax deferred and lifetime income or lump sums at retirement. In 1986, the Tax Reform Act of 1986 placed severe limitations on funding these plans, and hence, plan sponsors discontinued these plans. In 2001, EGTTRA brought back the tax and retirement benefits for these plans. These plans are NOT for everyone. They are for people who can afford to put away more than $49,000 for retirement. If you plan to put away less, use a profit sharing plan. Defined benefit plans are more expensive to set up and maintain than the profit sharing plan and are more regulated. The DB plan is regulated by the IRS, Department of Labor and PBGC.
2. How will a Keogh give me flexibility to handle life events: going back to school, getting married, buying house, having baby?

It will not help.

3. Does this create conflicts with spousal income, what if my status changes married-to-single or single-to-married?

No conflict with spousal income, but if you create a DB plan and become a participant, the spouse has certain rights to the plan that cannot be alienated using pre and post nuptial agreements.

4.Can this help me retire any portion of student loan obligations faster?

No.

5. If I set up a DB plan for my consulting practice, can my spouse participate even though he has a plan at his place of work?

Only if the spouse also works in your company.

6. Is there a good rule of thumb for when to chose DB over other investment options?

A DB plan is not an investment. It is akin to opening a very huge IRA that must be funded ear year.

7. Are there any other considerations I have over-looked?
Yes- DB plans are very technical and very regulated. Many people in this age group would not be suitable for this plan.

8. Would this conflict with existing 401ks/IRAs/pensions?

Today you can have your 401(k) and defined benefit and profit sharing plan and deduct all three. This was result of a change in the Pension Protection Act of 2006.

9. Is there an optimal time to start a DB plan? Is that triggered by an income generation point or something else?

A defined benefit plan you should look at if you have profits after salary of $49,000 or greater.

10. How do you expect the power of the DB plan to play out over the next 5 years?

Defined benefit plans will become more popular in the small plan market as income taxes increase for people making over $200,000. The real popularity will depend on a persons desire to reduce taxes and increase retirement assets.

Learn more about small firm retirement plans from <a href=”http://www.journalofaccountancy.com/Issues/2009/May/20081255″>Nicholas Paleveda</a> in his May 2009 Journal of Accountancy Article.

New grads and finding a career part 2

So, yesterday I posed the question of how much is it the school’s responsibility versus the student’s own when it comes to finding a job after graduation. If you missed the blog, click here to get the back story.

It seems the general consensus is to know what you want before you enter college, and then to take the appropriate steps after to make sure you are choosing courses that will benefit you in finding a job.  After graduation, many college students finally realize this all too late. Not to fear, according to Usnews.com , there are real reasons why some new grads find jobs successfully while others don’t – and it’s based on more than just luck or networking.

It comes down to two very simple things: strategy and a positive mindset. Strategy being defined as setting a goal and monitoring its progress along the way. Makes sense.  You have to know what you are looking for before you find it.  And the positive mindset? Makes double sense.  With the rough job market, positive thinking provides a cushion and helps the job seeker bounce back after being faced with rejection or failure.

This is becoming a very clear pattern that I’m seeing. Successful people think positively. My interview with April Braswell (only 2 more days until it’s reveal!) further proves this point. People who accomplish, people who succeed, people who find jobs – all these people are relentless in reaching their goal. To have that drive and ambition, it takes the ability to see a picture bigger than the one currently in front of you. On top of that, it takes the courage to believe in it.

Finding a job after graduation is no doubt difficult. Having the ability to stick it out and stay motivated, though, is a skill which will not only benefit your job search, but also your path to success.

Do you agree or disagree? Why/Why not?  When you face rejection or failure, what do you do to bounce back?

Behind the scenes of being an entrepreneur

I recently interviewed April Braswell – Dating Expert and Online Dating Coach – as well as lost my IPOD. These may seem like 2 unrelated events, but with the loss of my IPOD I’ve been consequently listening to music less. I really do miss having a soundtrack to my life, but with less music blaring in my ears, my brain has made room for more thoughts. Substantial thoughts -thoughts that I had previously pushed to the back of my mind so I could blast more CSS in my ears and work out.

The main thought has been planting seeds.

Not the farming kind, but the figurative kind. Seeds that you plant today (mini-wealth building projects, acquiring new skills, building relationships with others, etc..) that will one day lead to bear fruit or not. In my interview with April, I aimed to pick the mind of an entrepreneur and see how she viewed herself as well her path to success. Her humble and warm nature made her easy to relate to, and she really showed that the word “CEO” or “President” are just words for people who’ve failed constantly but kept going.

She also emphasized the benefits of sowing many seeds. Plenty of seeds give you more chance of bearing more fruit, and like farming, not all seeds will turnout worth while. The ones that do will be the wealth builders, and the ones that don’t will be the learning experiences.

I love this philosophy, but applying it is a different thing. Her words definitely gave me some lingering thoughts. For instance, after I’ve chosen my “seeds” and planted them, how do I know when to keep going and when to see that the seed just won’t produce? I can be too persistent at times, but I guess that is part of the learning process.

I think I may just wait a bit longer to get a new IPOD. One because I am allowing myself a proper mourning  for my music. And two so that I can keep these thoughts growing and come up with a formula to success which will work for me. In the meantime, keep a look out for April’s interview and her advice on how to be an entrepreneur and her path to success – coming Tuesday, October 6th!