Are Americans going back to work?

It’s official—Americans aren’t going back to work.

Even though there were 10 million job openings in June of 2021.¹

If you’ve been out and about, you’ve seen firsthand that jobs aren’t getting filled.

You may have noticed the signs at your local grocery store. Or the longer wait at your favorite restaurant. Or slower service from businesses you depend on.

They all stem from the same source. Americans aren’t rushing back to work.

But why? The COVID-19 pandemic caused mass unemployment and havoc for millions of American families. Wouldn’t they want to start earning money again, ASAP?

It’s not the unemployment benefits holding them back. Those dried up months ago, and the numbers still haven’t budged.

And again, it’s not that there aren’t jobs. There are millions of opportunities out there!

Here’s an idea—many people have woken up to the fact that most jobs suck.

Most jobs leave you completely at the mercy of your boss. If they mismanage the business, your job’s in danger. If you want a bigger bonus, your job’s in danger. If another pandemic breaks out, your job’s in danger.

They give you no control over your hours, your income, your location, or your future.

Who would want to go back to that?

Instead, Americans are looking for a better opportunity. They want control of their future, their wealth, and their hours. They want to replace the insecurity of a 9 to 5 with more reliable sources of income.

If they see an opportunity that checks those boxes, they’ll be willing to re-enter the workforce.

Americans are looking for a better path. The million-dollar question is, who will provide it for them?

M.Amos

Millionaire Mindset

¹ “Many Americans aren’t going back to work, but it’s not for the reason you might expect,” Paul Brandus, MarketWatch Aug 14, 2021, https://www.marketwatch.com/story/many-americans-arent-going-back-to-work-but-its-not-for-the-reason-you-might-expect-11628772985
² “What states are ending federal unemployment benefits early? See who has cut the extra $300 a week,” Charisse Jones, USA Today, Jul 1, 2021, https://www.usatoday.com/story/money/2021/07/01/unemployment-benefits-covid-federal-aid-ending-early-many-states/7815341002/

 

Three waves in the next Real Estate market shift

The next Real Estate market shift is Imminent.

What will this market shift look like?

The next real estate market shift in the residential sector will come in three different waves, so PREPARE yourself now.

The first wave will be people losing their houses after their forbearance has ended through the beginning of the foreclosure process.

With homeowners losing their jobs or being furloughed, their income has been reduced or eliminated because of the Covid19 pandemic.

The second wave will be a huge increase in the number of foreclosures being called out on the courthouse steps of each county in America.  These “call outs” are religiously done on the first Tuesday of each month.

The third wave will be vacant homes all throughout the country.  These homes have now been foreclosed upon and now sit empty.  Drive through any neighborhood USA and you will see home after beautiful home just sitting empty.  This third wave will be where many folks will finally try to “catch up” and at this point, it will already be almost too late.

What can we do now to prepare for these imminent waves?

Wave 1 of 3

Wave one will be people desperately trying to stop the foreclosure of their property. Initially there will be noticeable signage all over town saying “I stop foreclosures”. These organizations (or investors) can and do prevent and stop foreclosures through a process called “Subject to”.

Let’s explain how it works in a little more detail:

The homeowner falls behind with his mortgage and cannot catch up and the homeowner starts receiving strongly written letters indicating foreclosure is imminent.  These organizations then catch the arrearage payments for the homeowner and take possession of the home through a Quit Claim Deed.  Many times the investor may allow the homeowner to remain in the property and assist with making improvements on the property during that time.

Once the improvements are completed, the investor will usually rent the property out. This prevents the foreclosure on the home and maintains the homeowners mortgage payment history from negative impact that a foreclosure would cause.

Wave 2 of 3

The second wave is what is called the actual foreclosure process.   For example, in the state of Georgia from start to finish is approximately eight months.  Basically, from the time that the first mortgage payment is missed to the property being foreclosed on the courthouse steps is a very long and arduous eight months. The attorney that processes the (foreclosure) closing on the property represents the mortgage company that has been defaulted upon. It is normally a sixteen (16) step process to go through all the way through to the courthouse steps. There are two possible outcomes if the homeowner has not filed for bankruptcy during the foreclosure process or caught up the arrears mortgage payments prior to the foreclosure. If the homeowner has not done one of those two things then the property will be “called out” on the county courthouse steps that next first Tuesday of the month.

The “called out” process will end in one of two ways.  Either the property is purchased by the highest bidder on the courthouse steps or nobody bids high enough to satisfy the mortgage company and the mortgage company keeps it, which takes us to the third wave.

Wave 3 of 3

What happens if the property is not or does not change hands at the foreclosure process on the courthouse steps?  If the property is not sold on the courthouse steps then the mortgage company or lender keeps the property and puts it on the market for sale. This is what the general public typically sees or talks about or remembers when they think of the foreclosure crisis. Houses all over town in every subdivision with for sale signs that are vacant (and most of the time in disrepair) and end up selling below the values of typical houses in that subdivision which lowers values and equity for homeowners within that same subdivision.

If you’re an investor in residential real estate you can take advantage in these investments in either of the three waves mentioned:

Obtaining property through Wave 1:

After catching up the arearage you then obtain ownership through a Quit Claim Deed.  This is typically called the “subject to” process.

Obtaining property through Wave 2:

When the mortgage company or lender presents the property at the courthouse steps, which is typically called the “call out”, you bring either cashiers checks or cash.  You then obtain ownership through a Quit Claim Deed.

Obtaining property through Wave 3:

Obviously, the final way to obtain the ownership is when the foreclosure has actually occured and you can then buy the property directly from an REO (Real Estate Owned) agent.  This is the listing agent that represents the mortgage company or lender.

 

These three ways are exactly how investors made a lot of money during the last foreclosure crisis. Obviously, we are hopeful that we could have sustained the booming real estate market that we have all experienced prior to Covid19, however it doesn’t look good at this point.

Either prepare yourself for these three waves or depend on our expertise to get you through it.

Either as an investor or a current homeowner.  Being educated in the forefront of a crisis is the key to getting through it successfully.

Reggie Moon

Broker of Eclipse USA Realty

404-Eclipse

Train your brain for efficiency

Chances are you have cooked some pretty elaborate plans to trick yourself into being more productive.

Have you considered the role your surroundings play in your everyday life? It turns out that one of the easiest ways to bring about change in our lives is to actually change our environments. What if the layout of your bedroom or the distance from your desk to the kitchen was impacting your productivity and decision making? There is plenty of room for each of us to improve. Here is how and why making some changes to your environment works.

Your brain is efficient
Making decisions is draining. (Heard of “decision fatigue”? It’s real!) We can only make so many choices per day before we start to run out of steam and need a rest. But we are faced with countless choices every time we wake up! Should I go back to sleep? Should I shower or brush my teeth first? What will I wear to work? Should I try out that new shortcut to the office? It can become stressful for your brain to struggle with a choice every time one of these little prompts presents itself. That is why we rely on decision shortcuts called habits.

A habit is just a routine that you regularly perform. Most of the time we don’t even notice that we are engaging in a habit because it’s second nature to us. And there is a reason for that. It is your brain saving energy by going on autopilot to perform an action without having to make a decision. That way you can use the bulk of your mental power on unique and important problems that might pop up during the day, not on thinking about when you should brush your teeth!

Trick yourself into making wise decisions
What does your brain’s love of shortcuts have to do with your environment? Let us look at an example.

Your alarm clock is right next to your bed. It goes off every morning at 7:30am. It does not take you long to figure out that you can smack the snooze button and go straight back to sleep with hardly any effort. Before long you have hitting the snooze button every time the alarm goes off without even thinking about it. You have trained yourself to sleep in later by making your alarm easier to turn off. But what if your alarm was on the other side of your room? What if to silence it you had to stand up, walk over, and hit a button? That simple change could give you the jolt that you need to wake up and get your day started on time!

Take a look at your surroundings and ask yourself what kind of behavior it encourages. Is it more convenient for you to grab a soda from the fridge or fill up your water bottle? When you work at home, are you in the middle of distractions like the kids playing or too close to the TV? At work, does your office layout lend itself to productivity or socializing with your co-workers?

It might take some legwork to get started but try to arrange your life in a way that makes wise decisions easier. You might be surprised by the results!

Are Annuities Taxable?

The answer is complicated (but generally, yes they are)

Let’s assume that you have already done your research on the workings of an Annuity and you are almost convinced that it is a good investment for you and your future plans.  Now, let’s consider if the taxability of this product is what you are looking for.

First, if you purchase an annuity with pre-tax dollars, payments from the annuity are fully taxable as income. But, if you buy an annuity with after-tax funds, you are required to pay taxes only on the earnings (ie, profit).  Annuities offer tax-deferred growth, which means taxes on annuities are not due until you withdraw money from the annuity.  One of the main tax advantages of annuities is they allow investments to grow tax-free until the funds are withdrawn.  This includes dividends, interest and capital gains, all of which may be fully reinvested while they remain in the annuity.  This allows your investment to grow without being reduced by tax payments.

But this seemingly simple perk is accompanied by a raft of complicated rules about what funds are taxed, how they are taxed and when they are taxed.

Because of the complexity, it is best to consult with a tax professional when purchasing an annuity and before withdrawing any funds.

Are Annuities Taxable?

Annuities are tax deferred.  But that does not mean they are a way to avoid taxes completely.  What this means is taxes are not due until you receive income payments from your annuity.  Withdrawals and lump sum distributions from an annuity are taxed as ordinary income.  They do not receive the benefit of being taxed as capital gains.

How are Annuities Taxed?

When it comes to taxes, the most important piece of information about your annuity is whether it is held in a qualified or non-qualified account. Remember, qualified is that the taxes are behind the tax wall and are allowed by IRS to be deferred.  Non-qualified means that the taxes have already been paid. In this case, the earnings (or profits) are taxable.

Qualified Annuity Taxation

If an annuity is funded with money on which no taxes have been previously paid, then it is considered a qualified annuity.  Typically, these annuities are funded with money from 401ks or other tax-deferred retirement accounts, such as IRAs.

When you receive payments from a qualified annuity, those payments are fully taxable as income.  That is because no taxes have been paid on that money.

But annuities purchased with a Roth IRA or Roth 401k are completely tax free if certain requirements are met.

Non-Qualified Annuity Taxation

If the annuity was purchased with after-tax funds, then it is non-qualifed.  Non-qualifed annuities require tax payments on only the earnings (or profits).

The amount of taxes on non-qualifed annuities is determined by something called the exclusion ratio.  The exclusion ratio is used to determine what percentage of annuity income payments is taxable and which is not.  The idea is to determine the amount of a withdrawal or payment from an annuity is from the already-taxed principal and how much is considered taxable earnings.

The exclusion ratio involves the principal that was used to purchase the annuity, the amount of time the annuity has existed and the interest earnings.

If an annuitant lives longer than his or her actuarial life expectancy, any annuity payments received after that age are fully taxable.

That is because the exclusion ratio is calculated to spread principal withdrawals over the annuitant’s life expectancy.  Once all the principal has been accounted for, any remaining income payments or withdrawals are considered to be from earnings.

Exclusion Ratio Example

  • Your life expectancy is 10 years at retirement.
  • You have an annuity purchased for $40,000 with after-tax money.
  • Annual payments of $4,000 – 10 percent of your original investment – is non-taxable.
  • You live longer than 10 years.
  • The money you receive beyond that 10-year-life expectation will be taxed as income.

Annuity Withdrawal Taxation

How and when you withdraw funds from your annuity also affects your tax bill.

In general, if you take money out of your annuity before your turn 59 ½, you may owe a 10 percent penalty on the taxable portion of the withdrawal.

After that age, if you take your withdrawal as a lump sum, you have to pay income taxes that year on the entire taxable portion of the funds.  If money is left in your annuity account, the IRS considers the first and subsequent withdrawals to be interest and subject to taxes.

Annuity Payout Taxation

According to the General Rule for Pensions and Annuities by the Internal Revenue Service as a general rule each monthly annuity income payment from a non-qualified plan is made up of two parts.  The tax-free part is considered the return of your net cost for purchasing the annuity.  The rest is the taxable balance, or the earnings.

When you receive income payments from your annuity, as opposed to withdrawals, the idea is to evenly divide the principal amount – and its tax exclusions – out over the expected number of payments. The rest of the amount in each payment is considered earnings subject to income taxes.

Inherited Annuity Taxation

If you are the beneficiary and inherit an annuity, the same tax rules apply.  The main rule about taxation with an inherited annuity or one that is purchased is that any principal that is funded with money that was already subject to taxes will not be taxed.  Principal that was not taxed and earnings will be subject to taxation as income.  The amount of previously taxed principal included in each annuity income payment is considered excluded from federal income tax requirements.  This is known as the exclusion amount.

In Summary

If you just take the opinion of Mom, Dad, Gramma, Uncle Joe, Preacher Mike, Mr. Ramsey, Mr. Howard or even simply the Web then you are not making the best, most educated decision.  Do your due diligence and ensure that you talk to an industry professional.  What happens if Uncle Joe tells you what happened to him 30 years ago and you should “never invest in one of those annuity things”. Well, first of all what is his profession and how old was the product he purchased at that time.  Could things have changed in those years?  How about being at a family reunion and Gramma tells you that she just heard Mr. Howard talking about how some people lost money when they annuities a few years ago.  Even though you love Gramma, is she a financial professional with current experience and education.  So, in summary, annuities can be taxable in the right situation.  This is definitely something that you need to have reviewed by your Financial Professional.  Best of luck on your investment.