Five Awesome Questions From You
Today we answer five awesome questions from you about LLCs, winning the lottery, budgeting an irregular income, Roth rollovers, and buying quality.
We get a lot of questions from listeners, and sometimes they are so good, we want to share them with everyone. Today we picked five questions we thought everyone would like an answer to.
Love listening to your podcast and you guys have helped me so much and given me so many great new ideas. In fact, I’m writing to you about one of them. I remember you said that when buying a rental property, to buy it as an LLC. My question is, do I set up a new LLC for each new rental property? If my goal is to own 10, do I then have 10 LLCs?
Entrepreneur Jane in the making
A purist might use individual LLCs, but that can be a lot of aggravation and cost. Instead, we use the $250,000 threshold. If you have a single property valued at that or higher, it should have its own LLC. If you have two properties, one valued at $100,000 and the other at $150,000, they could be under a single LLC.
Owning rental property under an LLC insulates your personal assets from risk. There are also lots of everyday tax benefits to having an LLC!
Huge fan of the podcast. Wednesday is the CT Powerball up to $1.3 billion (Jan 2016). If you won what would you do with it all?
Andrew and Thomas both agree that they don’t want money they haven’t earned so they would give the money away to charity and use it to fund research.
And they may be onto something. Lottery winners don’t tend to live happily ever after having responsibly invested their winnings. They often end up back where they were before they won or even worse off.
My question is about budgeting without a regular paycheck. Our income is seasonal (fishing in Alaska and self-employment), and we don’t really know how much we are going to make until it’s made, how should I modify the budgeting tools to work with this and how best to make that money last all year?
When your income is seasonal, you need to make your budget based on a longer time scale than is traditional. Most people can budget month by month but for you, budgeting for a year makes more sense.
Take a look at how much you have made for the past five years and get an average. Let’s use $50,000. Take that amount and divide it by 12. That gives you a number for a montly budget. You have $4,166 to spend each month.
If your income varies wildly, one month you make $10,000 and the next $500, it doesn’t matter. You still spend the same $4,166.
It may help to put up spending firewalls for yourself. Everything over a specific dollar amount (set by you) gets put on a 30-day list. At the end of 30 days, if you still want it, you can buy it. Chances are though; you won’t even remember that you wanted whatever you put on the list.
Another good firewall is to lock up some money in a six month CD. You’re making a little more than you would get with a savings account and the money is harder to get to. You can withdraw it early, but you will pay a penalty.
Hi Andrew and Thomas,
I have been listening to your show now for almost a year. It has really helped me get on an even better page when it comes to my personal finances.
I am 25, and I am in a long-term relationship and working on managing our finances. I had a financial adviser through a friend with an internship at a firm a few years ago.