Of course it does, right?

Well I’d say that depends on where you focus your attention.

Will he help the economy?  Will he end US health care problems?  Will he provide jobs?  Will he end the War in Iraq?  Will he help the US to regain world respect?  Will he help the Environment?

Those are some tough questions that will soon be answered when President Elect Obama takes office.

Yes, policies will be different with Obama vs. McCain. Reactions to world events will be different. Reactions to present pressures facing the country will be different with Obama.

Depending on how you voted, you may see those facts as positive statements or negative statements.

Now lets take a look at Obama’s presidential win from another point of view:

Will he make you a happier person?  Will he make you a richer person?  Will he write your new best selling novel for you?  Will he create your new Fortune 500 company and hire you as president?  Will he be responsible for giving you the ideas for your next joint venture project?

I’ll venture to say that you answered all of those questions with a NO.

For the stuff that really matters, Obama can’t really make that much difference. How fickle would your happiness be if it depended on any circumstances outside of yourself?

A Successful Mindset Doesn’t Worry about the Weather

Successful people learn something that the rest of us don’t get. You can only get to your goals by focusing on the desired results, not by focusing on the circumstances along the way.

The policies and decisions made by the president, are simply waves and wind on the ocean. Becoming rich (or achieving any goal) is a matter of paying attention to the wind and waves, but ultimately doing whatever it takes, and following whatever is the best path for you, to get to your ultimate goal.

Every ocean has waves and wind. The real question is whether or not the captain of your boat has a plan, a direction and a set of proven strategies to achieve that goal.

If you do, then the day to day circumstances of who is president will be interesting entertainment, but Obama won’t be a determining factor in the success or failure of your life in general.

…this post was is featured in The Carnival of Personal Finance on The Digerati Life

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Here are the 5 biggest lies people tell themselves to get out of making budgets (and the reasons why the lies don’t – or at least shouldn’t – work).

1. I Don’t Need to Budget

This is obviously the biggest lie and it covers all the other lies. Many people believe that they don’t need a budget. They think they make enough money and they save enough money so that they don’t need to budget.

Well, no matter how much money you make, you do need a budget.

A budget will ensure that you are living the life you want to live now, so that you can always live the life you want to live.

And a budget will ensure that you’re making the most of your money.

2. I Have a Secure Job

Unfortunately, there’s no job that’s completely secure. Jobs can vanish in a second. And strange things happen.

So don’t make the mistake of thinking that you have a great job that’s very secure, because not job is completely secure.

3. Nothing Will Happen to Me

People always think that bad things won’t happen to them. Bad things only happen to everyone else.

So you think you don’t need to have a budget because you don’t need to save for anything.

Well, rain comes into everyone’s life at one time or another. At some point you will have a tough time and you will suddenly need a safety net. A budget can give you that much needed net.

4. I’m Free of Debt

It’s great if you are debt free, In fact, this puts you in the fortunate minority.

But this doesn’t mean that you shouldn’t plan to save.

You still need to make the most of your money and it doesn’t mean that you shouldn’t plan for a bad time. Because when that bad time hits, you don’t want it to throw you into debt.

So be sure to budget even if you are debt free.

5. I Don’t Want to Live Like I’m Poor

This is probably one of the biggest reasons people who make a decent income don’t budget. They don’t want to live modestly when they work so hard. However, they don’t need to live like they’re poor.

In fact, you can still spend your money and buy things that you want.

However, a budget will help you spend it more wisely. It will help you see where you can save more and how you can save more. Exactly how much you want to save is still up to you.

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Here’s a look at 6 huge money mistakes celebrities have made over the past couple of years.

He Get’s Half of What?

That just might be what Madonna is saying in a few weeks. Reports are that she and husband Guy Richie are on the verge of calling it quits.

And you know what? There was no pre-nuptial agreement. So that means Mr. Richie will get half of everything Madonna has.

Just ask Paul McCartney how that feels. He paid his ex-wife, Heather Mills, nearly 49 million dollars.

This is Too Sad

The early death of Heath Ledger was bad enough.

But to make matters even worse, he hadn’t updated his will in nearly 5 years. So his daughter and his girlfriend Michelle Williams, who is also the mother of his child, received no money from him.

Ledger failed to update his will to include these loved ones whom he didn’t even know when his last will was written.

I Don’t Make Enough Money to Save Anything

Recently Britney Spears’ father had to take over control of her finances. Apparently Brittany loves to spend money. In fact, it must burn a hole in her Louis Vuitton because she has not saved one cent of her earnings.

That’s right. She makes roughly $738,000 a month, but she spends every last penny of that money, every single month.

Say what you want, but that takes a lot of work.

The Tax Man Cometh

But Wesley Snipes must not have remembered his taxes or the tax man.

Because he failed to pay an estimated 15 million dollars in taxes.

Now he’s doing three years in prison for his lack of good judgment.

Stars Get Scammed Too

Hopefully you haven’t been taken by the Nigerian email scam or the phone call scam that asks for your bank account number.

If you have fallen for such a scam then you have something in common with Larry King.

Recently King lost millions of dollars on a complex insurance investing scam.

It’s horrible how these scam artists prey on the elderly.

I Bet You Can’t Lose More Money then These Guys

An estimated 9,000,000 people have an addiction to gambling. Ex-sports stars make up a portion of that 9,000,000.

The best basketball player ever, Michael Jordan, reportedly lost a cool $1,000,000 on just one game of golf. Another basketball player, Charles Barkley, admits he’s lost about $10,000,000 to gambling in the past year. Golfer John Daly claims to have lost between $50 and $60 million.

Wow. Perhaps these guys should join some type of softball league or something.

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At least a decent portion of the economy is based on consumer confidence. And what is biggest factor that contributes to consumer confidence (or lack thereof)… the media. That’s right!

If the evening news is talking about the price of gas rising, the cost of food rising, layoffs, and overall gloom and doom in the economy then you’d have to be an idiot to continue to have confidence in the economy. Or you’d have to be so flippin’ rich that you just don’t care.

So of course the media is to blame for consumer confidence and somewhat for the economy too. But that’s not to say they are wrong or that it’s their fault. After all, they do have to report the news, right?

But there is one other little thing that I do completely fault the media for.

And that is the way they report on credit card debit.

We are a nation buried to our eyeballs in credit card debt. Yet we can’t seem to dig our way out or even pretend to try.

And why is this? Because of the media, of course.

Let me explain…

For years the media has been reporting on the alarming trend of credit card debt in this country. In fact, as far back as I can remember the media has been letting us all know what the average credit card debt is per family. And they’ve also been letting us know the percentage of families that are in debt.

Of course both those numbers (the average debt and the percentage of families) have always been huge. But instead of families being horrified, I think it’s had the opposite effect.

People saw those numbers (and continue to see those numbers) and they felt (and still feel) better. Misery loves company, right? So when people see it constantly reported how far in debt everyone else is too, they feel better about themselves.

I know this may sound crazy but think about it.

Really, it’s the same effect that happens when anything like this is reported. I mean, I may be 10 pounds overweight but when I hear the average American is 20 pounds overweight (or whatever) then I smile and get-up and grab another piece of cake.

The media reporting on credit card debt has the same effect. Every time the evening news reports how filthy America is with credit card debt, people all over smile and begin planning their next shopping sprees.

Of course they won’t be smiling for long, but the credit card companies will be. Because the major credit card companies are the only real winners here. They rake in massive profits at the expense of all the hardworking families.

But as for families held hostage by credit cards, losing to the credit card companies isn’t so bad when so many people are losing with them. Right?

Well, at least it doesn’t feel too bad. And every time the media reports on it, it feels just a little bit better.

[this article was featured in the Carnival of Personal Finance, 173rd Edition, on Girls Just Wanna Have Funds]

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America is a nation of debt. With credit cards offering to give us “free” money we are all conditioned to buy now and worry later.

Of course there is no such thing as “free” money. We all pay – and pay dearly - for swiping that plastic credit card.

So why do we bury ourselves in debt?

Well, there are hundreds of answers to that question, and the answers change from person to person. But one answer that applies to everyone is that it’s so easy to swipe a card and it doesn’t even feel like you’re spending any money.

Credit cards are just like the chips at a casino. Casinos give out chips so that it doesn’t even feel like your playing with real money. Therefore gamblers run through their chips without giving it a second thought.

Credit cards accomplish the same thing.

They are just a little plastic square (and with the new key chain cards they’re sometimes even smaller rectangles!). The credit card debt racks up and builds and builds and we’re all pretty much oblivious to it.

Well, if you want to turn things around, and if you want to begin to dig yourself out of debt then you have to pay off those credit cards.

And a great way to do that is to use a visual helper.

Let’s face it: We love visuals.

That’s why the radio is pretty much obsolete and televisions are the source of entertainment for all families. But just a television isn’t good enough. The screen has to be the size of the side of your house. And the it has to be flat. And the transmission has to be in high definition.

And using a cell phone for just texting or making phone calls isn’t enough. There has to be a colorful, high resolution screen on that cell phone.

We love visuals!

So why not use that to your advantage?

Right now figure out how much credit card debt you have. Then for every $50 or $100 take a crayon, or a toothpick, or maybe a straw and place it in a glass jar or a similar container that is see-through (a sandwich bag with crayons works great too). You should have one crayon, toothpick, or whatever for every $50 or $100 (your choice).

So if you have $5000 in credit card debt, and you’re using the $100 mark then you’d have 50 crayons, toothpicks, or whatever in your container. Place that container on your kitchen window sill or some other place where you’ll always see it.

Then every time you drop your credit card debt by $100 you should take out one crayon, toothpick, or whatever your chosen item might be. And every time you increase that debt by $100 you need to add your chosen item.

So the pile will either grow or shrink.

But just taking or putting in items will allow you to realize what you’re doing to your debt. And by seeing that stack of crayons (or whatever your item is) you will see how much debt you truly have. Then you’ll think twice before going deeper in debt.

You will have that visual there until your debt is completely paid off.

And when you have your credit cards paid off, then you can go ahead and place your empty container in your trophy case. If you don’t have one, go ahead and buy one.

Just make sure you pay cash for it.

[this article was featured at The Personal Financier]

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Celebrity charity.

Am I alone here?

Sure, celebrities do their fair share of good things. They show-up at charity events and raise money. They give their money to worthy organizations around the world. But how much good are they really doing?

More importantly, how much more could they be doing?

What really got me thinking about this is when Brad Pitt went down to New Orleans to build 150 Green Homes for those who lost their home because of Hurricane Katrina.

Brad Pitt held a press conference and said: “To build those 150 homes, we need the help of the American people. We need to all join together to do this. There is no reason why we can’t do a thousand homes.”

He was right and wrong at the same time. He was right that “there is no reason why we can’t do a thousand homes” but he was wrong when he said “we need the help of the American people.”

Do they really?

Seriously, all Mr. Pitt needs is the help of a few of his friends. In fact, just take the cast of Ocean’s Eleven (or any of the Ocean’s movies) and he would have more than enough to build 1,000 homes at $150,000 per home.

I don’t even need a calculator to come-up with the sum of $150,000,000.

Yes, that’s 150 million. And that is a lot of money.

But you know what? If just half the cast of Ocean’s Eleven – Brad Pitt, George Clooney, Matt Damon, Andy Garcia, and Julia Roberts – chipped in they could’ve easily footed the bill.

Together they probably make more than $150,000,000 with just one movie.

So why does Mr. Pitt need the help of the American people? Haven’t they already helped enough by going to the movies?

I’m kidding, of course. The American people do need to help others. But the stars in Hollywood need to do a whole lot more.

Because Brad Pitt is one of the good guys. He’s one of the more generous stars. (In all fairness he did give $5,000,000 for the Green Homes.)

There are many other celebrities who blow their money on $10,000 dinners while homeless children starve mere blocks away.

I don’t mean to be a downer, and I’m truly sorry if I’ve offended you in any way.

But I’m just sick of hearing about “Celebrity Charities”. It’s an oxymoron.

If Brad Pitt and all the rest would really give an amount of money that would cause them even a small amount of discomfort then they could really make major changes in the world.

They could really make a positive change.

Sadly, I don’t think it will ever happen. And I fear that “Celebrity Charity” will forever be an oxymoron.

[this post was featured in: Carnival of Personal Finance #168 at thatonecaveman.com]

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“Using an offshore bank account legally; paying your taxes and reporting your transactions, you can legally enjoy passive income 2, 3 or even 4 times greater than what you can earn in the U.S.”

I’m sure you’ll find it very informative and fascinating, as I did.

If it weren’t for the lies, distortions, and self-serving propaganda distributed by the Government, the I.R.S., and the Bankers, you wouldn’t cringe every time you hear the term “Offshore Banking.”

Why? - Because most people haven’t the foggiest idea of what Offshore Banking is, they simply accept the distortions they read in the controlled media and ASSUME that Offshore Banking is some form of criminal activity. Or, they ask their lawyer, accountant or financial planner and he, being as uninformed as they are, advises that it is too risky, illegal, immoral, or unethical.

The fear and suspicion surrounding Offshore Banking is really only a matter of “Lack of Knowledge & Information”. Very few people, including both those who condemn it and those who promote it, really KNOW what offshore banking is. BUT, the Government, the I.R.S., and the Bankers do know that money held outside the U.S. is money they cannot legally control, tax, or use for their purposes. That’s why they are adamant in their defamation and condemnation. They don’t know what it is, but they know it takes money out of their hands.

Unfortunately, those who promote offshore banking have done little, or nothing, to alleviate or satisfy the fears and suspicions of the public. As a matter of fact, because they themselves do not know what offshore banking really is, these promoters have given the Government, the I.R.S., and the Bankers the ammunition needed to keep the public in a state of fear and suspicion regarding offshore banking, investments, and opportunities. Helping keep your money in U.S. banks; paying you less and taxing what little you do earn.

So… before we go any further… lets define Offshore Banking. Then, unlike the politicians, bureaucrats, bankers, and promoters, YOU will know what the term means.

What is offshore banking?

The term “offshore banking” actually has TWO (2) different and very distinct definitions; but, I couldn’t find either one of them in any of my dictionaries. One meaning is “MECHANICAL” and the other is “FUNCTIONAL”.

Only by knowing both definitions and understanding the relationship, yet distinct differences, between the two, will you be able to make a decision based on KNOWLEDGE rather than ASSUMPTION.

Since the “Mechanical” and the “Functional” definitions of offshore banking have been so intermingled and confused by almost everyone, it will be necessary to, first define them separately and distinctly, and then explain why the confusion exists.

Mechanical Definition

In the “legal” community (lawyers, governments, etc.) the term Offshore Banking is: A bank “licensed” to do business only outside the jurisdiction in which it is chartered & licensed.

That means: A bank holding an offshore banking “license” may engage in most, some, or all activities (including but not limited to checking, savings, loans, etc.) normally carried on by any other bank — but — that bank CAN NOT offer or provide those services to the “residents” of the jurisdiction in which the bank is chartered and licensed.

An example: A bank, “licensed offshore,” in the Bahamas may offer its banking services to anyone outside of the Bahamas — but — that bank CAN NOT offer or provide those services to the residents of the Bahamas.

Some jurisdictions allow offshore “licensed” banks to provide any and all services normally provided by any other bank. Other jurisdictions (such as the United States) limit an offshore “licensed” bank to providing some few specified services.

YES — the United States, through the Federal Reserve Board, does authorize offshore banking — but — so U.S. bankers can continue to defame and condemn offshore banking, the Federal Reserve Board has decided to call the U.S. Offshore Banks by the officious title, “International Banking Facilities (IBF).”

“International Banking Facility” or “IBF” means a set of asset and liability accounts segregated on the books and records of a depository institution, United States branch or agency of a foreign bank, or an Edge Act or Agreement Corporation that includes only international banking facility time deposits and international bank facility extensions of credit. — 12 C.F.R 204.8(a)(a) published at Fed. Reg. 32429 (1981).

The U.S. law, although it does not call itself offshore banking, contains the very elements under which offshore banks are licensed in other jurisdictions — i.e. the IBF must be licensed as a bank; maintain a set of asset and liability accounts on the books; and CAN NOT provide services to residents of the United States.

As you can see from the U.S. law authorizing IBF’s offshore “licensed” banks are most often (but not always) A BOOKKEEPING SYSTEM ONLY.

Offshore “licensed” banks, by and large, are BOOKKEEPING SYSTEMS ONLY. For that reason, they have a very, very low overhead cost in doing their business. They do not spend their depositors money on fancy buildings; redundant employee’s wages; or the expensive, non- productive accoutrements found in most U.S. banks. Therefore, an offshore “licensed” bank is in a position to pay higher interest to its depositors by virtue of the fact that less money is spent on fancy and expensive non-productive frills.

Because offshore licensed banks are, by and large, Bookkeeping Systems Only, they keep and maintain their operational cash accounts in “checking accounts” with other commercial banks. Checks drawn on the account are used by the offshore licensed bank to pay its debts, make loans, invest, pay interest, or any other normal business purpose.

The Bookkeeping System of an offshore licensed bank, which records the assets, liabilities, income and expense of the bank, maintains the records of the bank’s depositors and allows the officers of the bank to make investments and loans from the public deposits held. The yield from those investments and loans are the earnings of the bank, which are used to pay the expenses of the bank and interest to the depositors and the net operating profit to the bank are much, much higher than in a commercial bank with all of its expensive, non-productive costs.

Functional Definition

To the “depositor public” at large, an Offshore Bank is: ANY BANK OUTSIDE THE COUNTRY IN WHICH THE DEPOSITOR LIVES.

That means: Any bank outside the United States is an offshore bank, if you are a resident of the United States.

An example: If a U.S. resident maintains an account of any kind in a bank in Canada; that bank is an offshore bank for that account holder/depositor. And, the same holds true for a Canadian having an account in a U.S. bank.

Any time you have money deposited in, or invested with, a bank in a country outside of the country in which you live and work, you are “Banking Offshore,” even if that bank is just across the imaginary borderline between the U.S. and Canada.

Throughout this report, the terms “Offshore Bank” and “Offshore Banking” shall be used for any bank or banking service that qualifies under the FUNCTIONAL DEFINITION, — at anytime we refer to a bank under the MECHANICAL DEFINITION, it shall be referred to as an “Offshore Licensed Bank.” Of course, any bank situated in the country where you live and work shall be referred to as a “Domestic Bank.”

Why the confusion?

A Bank is a Bank is a Bank is a Bank — whether that bank be a Domestic Bank, an Offshore Bank, or an Offshore Licensed Bank.

No matter how a bank is structured, where it is licensed & chartered, or where it does business, ALL BANKS use the same channels (exchanges, clearing houses, etc.) to facilitate the movement of funds internationally and/or domestically. Therefore, since all of the banks in the world are indirectly connected through their correspondent and inter-bank relationships, there is no real confusion arising from the transacting of banking business.

The confusion regarding Offshore Banking is only a matter of “legal jurisdiction,” arising from the fact that no country may impose its laws in another country without the country’s consent and cooperation.

Because of the wide variety of laws around the world, what is illegal in one country may be entirely legal in another country. Any country can, through its various policing agencies, investigate any person residing in their country for a violation of their laws. That same country, however, has no legal right to investigate the activities of any person in any other country without first obtaining the consent and cooperation of the country in which the investigation is to be conducted. Even then, the investigation must be conducted under the law of the country in which the investigation is to take place, not under the laws of the country conducting the investigation.

As an example: The U.S. can not investigate anything in Canada, without the consent and cooperation of the Canadian government, and the Canadian Government is totally within its international rights to refuse to consent or cooperate in the investigation.

Further, countries will not (usually), without a specific treaty or agreement, assist another country in enforcing or investigating a crime that is not a crime in their country.

As an example: income tax evasion is a crime in the U.S., however, in countries that do not impose an income tax, income tax evasion is not a crime. Therefore, those countries are not obligated (and usually don’t) assist the U.S., or any other country, in enforcing or investigation a tax law which does not exist in their own jurisdiction.

THEREIN lies the confusion — Offshore Banks, and Offshore Licensed Banks, located in countries that do not have income tax laws do not (usually) assist the U.S. Internal Revenue Service in enforcing, or investigation violations of U.S. tax laws. Therefore, without the consent and cooperation of those countries, the I.R.S. cannot (in most cases) get information regarding financial transactions conducted in those countries by Tax Evaders in the U.S.

Since the I.R.S. is the tax-collecting arm of the U.S. Government; upon which the Government depends to collect moneys for its self-serving purposes, the Government readily and willingly supports the I.R.S. in its condemnation of Offshore Banking. But, why do the Bankers join in the condemnation?

The reason is simple. If you take your savings account out of a U.S. bank and place it, offshore, in a bank in another country, the U.S. bank doesn’t have your money to use any more. To keep you from doing that, the Bankers jump on the bandwagon to condemn Offshore Banking; even though a good many of them do have deposits from other countries and do, therefore, benefit from Offshore Banking themselves. As long as they can keep YOU confused, fearful and suspicious about Offshore Banking, they have YOUR MONEY in their banks to use for this purpose.

Not Illegal!

The U.S. DOES NOT and WILL NEVER have a law forbidding the taking of money out of this country.

WHY? No country that depends upon international commerce for its existence can write such a law without destroying its own economy. And, if you will notice, the U.S. has consistently and continuously had an international trade deficit; which simply means we “buy” more internationally than we “sell”.

If the U.S. had a law forbidding or restricting the movement of U.S. Dollars outside this country, we would have NO international trade. Companies overseas would not be able to buy U.S. goods because they wouldn’t have any U.S. dollars, and companies in the U.S. would not be able to buy goods overseas, because the companies in those countries wouldn’t be able to accept U.S. dollars.

Therefore, you, as a resident of the U.S., may legally move your money anywhere in the world you want. There is NO RESTRICTION on the amount you move, where you move it, or how you move it.

The ONLY REQUIREMENT imposed upon you by the U.S. Government is that you must “REPORT” any movement of cash or certain monetary instruments out of this country of $5,000 or more.

If you’ve ever been on an international flight of the U.S., you can probably remember being given a form to complete that asked you if you were carrying cash or bearer form negotiable instruments over $10,000 in value. If you read the complete form, it told you that it was NOT ILLEGAL to have the money with you, or to take it out of the country, but it was illegal not to report it.

Reporting Requirements

How many times have you been told that, if you send a deposit of more than $10,000 to an offshore bank, you MUST report it to the Government?

THAT’S WRONG!
The law (P.L. 91-508, 31 USC 5316) requires ONLY the reporting of the transportation of “currency or certain monetary instruments” in an amount exceeding $10,000. That means:

You may move as much money as you want offshore, at any time, WITHOUT REPORTING IT TO ANYONE, as long as you don’t send “currency or certain monetary instruments.”

You probably know what “currency” is, but what are the “certain monetary instruments” referred to in the law? Both “currency” and the “certain monetary instruments” are defined at law 1 CFR 103.11, as amended), and those definitions are repeated here:

CURRENCY:

The coin and currency of the United States or of any other country, which circulate in and are customarily used and accepted as money in the country in which issued. It includes U.S. silver certificates, U.S. notes and Federal Reserve notes, but does not include bank checks or other negotiable instruments no customarily accepted as money.

MONETARY INSTRUMENTS:

Coin or currency of the United States or of any other country, travelers’ checks, money orders, investment securities in bearer form or otherwise in such form that title thereto passes upon delivery, and negotiable instruments (except warehouse receipts or bills of lading) in bearer form or otherwise in such form that title thereto passes upon delivery. The term includes bank checks, travelers checks and money orders which are signed but on which the name of the payee has been omitted, but does not include bank checks, travelers’ check or money orders made payable to the order of a named person which have not been endorsed or which bear restrictive endorsements.

If you will notice, the last phrase of the definition of “Monetary Instruments”: clearly states, “does not include bank checks, travelers’ checks or money orders made payable to the order of a named person which have not been endorsed or which bear restrictive endorsements.”

(By the way, a “person” under the law includes any individual such as you or me, and any legal entity such as a corporation or bank.)

So… if you make a check or money order payable to an offshore bank (which is a “person” under the law), even if it is for over $10,000, you DO NOT have to “report” the transaction to anyone.

Or… if you have a check or money order which is payable to you, you can endorse it with a restrictive endorsement — i.e., “Pay To The Order Of: XYZ Bank” — and you DO NOT have to report the transaction to anyone.

By the way, the U.S. Customs Service has published a circular (Circular: ENF-4-$:E:P) for its employees which clearly defines and illustrates (with drawings and pictures) exactly which monetary instruments must be reported and which ones are “exempt” from reporting requirements.

Although you DO NOT have to report your transactions to anyone — no matter how much money you send for deposit offshore unless you send “currency” or the “certain monetary instruments”) - - you will still have to file a “Report of Foreign Bank and Financial Accounts”. (Treasury Form 90.22.1) on or before June 30 each year — but — if you have 25 or more foreign accounts, you won’t have to report where those accounts are or how much money you have in each account; unless the Department of Treasury specifically asks you for that information at a later date.

Update 2006: Owing to the various “terrorist” acts initiated since 9/11/2001, there have been some updating and changes in most of the rules and regulations regarding the movement of money worldwide. For that reason, you may want to a search for “P.L. 91-508, 31 USC 5316” on Google. Although I didn’t find any major changes, there are some new rules and regulations of which you should be aware.

Using An Offshore Account Legally

Anyone who holds a Checking or Savings Account in a U.S. Bank may, legally, move that account to any other bank, anywhere in the world (offshore).

If you have a Savings Account in a U.S. Bank, the odds are that you have already paid your income tax on that money; before putting it in your Savings Account. Therefore, your only further tax obligation on that money is to pay the income tax on the interest you earn.

As an example: If you are a tax-paying, law-abiding person, and have saved $100 from your paycheck, you have already paid the taxes on your income. The $100 is your after-tax money, therefore you don’t pay taxes on it again. At the end of the year, when the bank sends you your Savings Account statement, you add your interest earnings to your income tax statement and pay your taxes on that earned income.

The same thing holds true if you have your savings account in an offshore bank. At the end of the year, when you get your statement, you simply add the amount of interest earned to your income tax and pay the taxes on that earned income.

Higher Earnings

Statistically, Eurodollar (offshore) accounts pay at least 20%more than domestic U.S. dollar accounts. You can prove it for yourself by simply comparing the current U.S. T-Bill rate to the Euro-Dollar Bond rate; as published in the financial section of your daily newspaper. The Euro-Dollar Bond rate is ALWAYS higher by at least 20% or more.

Beyond that statistical difference, Offshore Banks can usually offer much higher interest rates than their U.S. counterparts because one of the highest non-recoverable costs of doing business in the U.S. is taxes (income, property, ad valorem, etc..), significantly reducing the earnings available for distribution to their depositors and investors. Banks operating in, or from, tax haven jurisdictions; not being burdened with those non-recoverable tax costs, can offer their depositors a much higher return.

As a matter of fact, in some jurisdictions (outside the U.S.), banking establishments are tax exempt on their earnings, or they are allowed certain exceptional write-downs of earnings, in order to protect the bank’s depositors.

With the huge drop in interest rates in the U.S., Offshore Banking opportunities have become even more attractive. At this writing, interest rates offered in the Offshore Banking community are as much as 2 to 4 times the interest rates available from U.S. Banks. (And, some offshore investment opportunities are averaging as high as 6 to 8 times the interest earnings available from U.S. Banks.)

MYTHS & FACTS

MYTH: Offshore Banks can’t really pay the high interest rates they offer because, if banks could really pay those rates, U.S. banks would try to meet the competition and do the same.

FACT: Take a closer look at the financial statements of any U.S. Bank. You will find that their “gross” profits against public deposits can range from 25% to 40% — but — they have written laws to limit the amount of interest they can pay you on your deposit. The U.S. banks put their earnings into unnecessary and non-productive accouterments, while offshore banks do without the fancy buildings and unnecessary frills and share their profits with their customers.

MYTH: Offshore Banks aren’t regulated, so you run the risk of losing all your money.

FACT: Nothing could be further from the truth. Every country in the free world has laws, rules and regulations governing banks and financial institutions. Those laws, rules, and regulations, however, are far less restrictive than the “protectionist” U.S. banking laws, rules, and regulations, allowing those banks greater latitude in earning much greater profits for their depositors and investors.

MYTH: Offshore Banks are not insured by the F.D.I.C.

FACT: Some of them are but, thank God, not that many. If they are, they must comply with the same protectionist banking rules and regulations as any other F.D.I.C. insured bank. But, the vast majority of offshore banks are insured; one way or another.

Some countries have established depositor insurance programs similar to the F.D.I.C. program, by which the banks in those countries have their deposits insured. Other banks in other countries have their deposits insured by independent insurance companies who, unlike the F.D.I.C., insure 100% of the banks deposits; not just those under $100,000. (By the way, many banks in the U.S. are not F.D.I.C. insured, and some of them insure their deposits with independent insurance companies.)

For the most part, offshore banks are “self-insured.” That means those banks maintain a liquidity factor equal to 100% (or more) of their public deposits. For every $1 held in public deposits, those banks have $1 (or more) in liquid assets with which they can cover any depositor demand.

Self-insured offshore banks are actually more secure than F.D.I.C. insured U.S. banks. The reason being, F.D.I.C. insured U.S. banks are allowed to maintain a liquidity factor equal to about 10% of their public deposits. (Ever wonder why they U.S. has more bank failures each year than any other country?)

Which would you feel more secure dealing with? — A. U.S. bank that has 10 cents in cash for every dollar on deposit? Or, an offshore bank that has $1 in cash for every dollar on deposit?

MYTH: Offshore Banks aren’t as big or strong as U.S. banks.

FACT: Of the largest and strongest leading banks in the world (in assets), ONLY one is located in the U.S.

(Back in 1986) The leading banks in the world, according to a survey done by American Banker, were, in order:

Dai-Ichi Kangyo Bank - Tokyo
Fuji Bank Ltd. - Tokyo
Sumitomo Bank Ltd. - Osaka (Japan)
Mitsubishi Bank Ltd. - Tokyo
Citibank NA - New York, U.S.A.
Banque National de Paris - France
Credit Agricole Mutual - France
Sanwa Bank Ltd. - Osaka (Japan)
Credit Lyonnais - France
Norinchukin Bank - Tokyo

Update 2006: Only the names have change.

MYTH: Offshore Banks can’t be too good, or they would advertise their interest rates and services in the U.S. publications.

FACT: Offshore Banks are restricted by law from advertising in U.S. publications; unless they subject themselves to the very same protectionist rules and regulations imposed on U.S. banks. For that reason, you should be wary of any offshore bank that publicly advertises in U.S. publications. They have sold-out to the U.S. banking establishment and may subject you to their sell-out.

MYTH: Offshore Banking is only for people with a lot of money.

FACT: Some 20 years ago, that may have been true. Today, an offshore savings or checking account can be opened with a minimum deposit as low as $100. (Back in 1986) I know of one offshore bank paying 9%, compounded daily, on regular quarterly-statement savings accounts with a minimum deposit of $100.

Update 2006: In 2001, Bank of America in the Bahamas was paying 5.5% on Savings Accounts while Bank of America in the U.S. was paying only .5% (one-half of one percent).

MYTH: Opening an offshore account is complex, and you can’t get your money back when you need it.

FACT: Opening an offshore account is no more complex than opening an account with a money market fund (or ordering from the Sear’s catalog), by mail. Getting your money back is just as simple.

Opening An Offshore Account
There are organizations in the U.S. that will assist you in opening an offshore bank account (in Switzerland and other countries). Their “fees” for helping you open an account can range from a few hundred dollars to a thousand dollars (and, in some cases, much more) — BUT — don’t waste your money. You don’t need them.

To open an offshore bank account, all you need to do is write to an offshore bank and request information about opening an account. The bank will send you all of the necessary forms; tell you what their minimum deposit requirements are for various accounts; and their materials will explain how to open an account and how to make your withdrawals.

Making a withdrawal from your offshore account is just as simple. Depending upon the type of account you open, you write a check or draft to deposit in your U.S. bank account; send a withdrawal form direct to the offshore bank; or send your certificate to the offshore bank for redemption. The time it will take for you to get your money probably won’t be much longer than the 10 to 15 days hold most U.S. banks are now placing on your deposits.

Today, with instantaneous international communications, the world is getting smaller every day. Now, you can enjoy the exceptional interest earnings available from offshore banks as easily as you deal with your local bank, stock broker, money market fund, or Sears Roebuck — by mail, telephone, or telex.

Check It Out — First

Before dealing with ANY banking facility, check it out first.

When dealing with an internationally known and recognized banking institution, such as Barclays or Citibank, you can forego much of your investigation. However, I would still recommend that for your complete peace of mind, you request and receive a copy of their annual report before opening your account. (It is a matter of good, sound practice to ALWAYS keep yourself informed about he banks you deal with.)

If the offshore banking institution you are anticipating dealing with is lesser known, you should ALWAYS request, and receive, a copy of their annual report before making any deposits. Any “reputable” bank will ALWAYS be able to provide you with adequate information upon which to base your investigation.

“Private” offshore, and offshore licensed, banks are a completely different animal.

Before dealing with a “private” banking operation you should request from them their latest financial statements (preferably audited) — AND — the names and addresses of their principals and promoters.

Inevitably, when I speak on offshore banking and investments, I am asked, “How can I go about investigating these companies?”

My answer is, “Don’t investigate the company; investigate the principals and promoters. Know the principals and you will know the company.”

You should be extremely wary of any “private” banking operation that cannot, or will not, provide you with the information you need to satisfy yourself as to the credentials and credibility of its principals and promoters.

The wise investor must deny the separateness of business and come to the realization that behind each business entity there are real, flesh-and-blood people who pull the strings and control the works.

By the way — when was the last time you looked at the financial statements of your local bank, or spent the time to learn who the principals (people) are who are controlling your money?

Borrowing Offshore

The internationally accepted definition of a “bank” is an institution specifically established and licensed for the purpose of “accepting deposits and making loans.” If it does one, or the other, but not both, it is usually referred to as a “non-bank bank.”

That being the case, any “bank” that accepts deposits ALSO makes loans.

Having published Offshore Banking News from January 1983 until the early 1990’s, I have been asked countless times, “Why don’t you publish the names and addresses of offshore lenders?” We did; every month. The problem is, their ads go around disguised as ads seeking depositors.

Remember this: If a “bank” accepts deposits, it ALSO makes loans.

Therefore, to borrow offshore all you need do is follow the same procedure you would follow in seeking a lending source in the U.S. Simply write a “short” (not more than 1 page) letter of inquiry to the offshore bank of your choice. Explain your funding requirements, and ask the bank if they would be interested in seeing a full financing package on your project. (Have your “package” ready to go should one or more of the banks indicate an interest.)

But — don’t think because the banks are offshore they are “easy” or “stupid”. Just like any bank in the U.S., an offshore bank will require all of the documentation, background, and financial information normally required. As a poorly presented project will be rejected in the U.S., it will also be rejected offshore.

The major advantage to borrowing offshore is the same advantage in banking offshore — the interest rates. As there are jurisdictions where you can get the highest interest rates for your deposits, there are other jurisdictions where you can borrow at the lowest possible interest rates.

As an example: Switzerland is well known for its banking secrecy, but it is notorious for its low interest rates.

Borrowing offshore should only be considered when you have a good, solid, bankable funding situation — but — you are looking for the very lowest interest rate possible. If your funding requirement will not meet the standards of the U.S. banking community, the chances are it will not meet the standards in the offshore banking community either.

Personal Privacy

Without a doubt, the greatest violator of the privacy of U.S. residents is the U.S. government itself. The various and many U.S. government agencies maintain a staggering total of over 3.5 billion files on U.S. citizens.

Considering the country’s population, of 230 million people, the U.S. government agencies maintain an average of 15 files on every man, woman, and child in this country. When you consider that children, and other dependents probably don’t have separate files of their own, the average number of files on adults rises even higher. Is it any wonder Americans worry about their personal privacy?

Update 2006: That was in 1986 … today it is even worse.

Files and information maintained outside the U.S. are neither part of, nor subject to, the scrutiny of the U.S. government agencies. The U.S. government can (under normal circumstances) only gain knowledge about your offshore activities if you tell them about it — or — if you are involved in some form of criminal activity in the U.S., and their investigation in this country reveals to them evidence of your offshore activities.

Beyond the prying eyes of the government, your nosey neighbors, business competitors, ex- spouses, and other snoopy people may well attempt to keep track of your financial activities for their own purpose. In this country, even some of the more inept private detectives can easily gain access to your most personal records. However, records and files on your activities outside the U.S. are impossible for these snoops to get their hands (or eyes) on.

Banking offshore and maintaining your financial records and files outside the U.S. allows you the maximum Personal Privacy available.

Tax Advantages of Offshore Banking

As you are well aware, in the U.S., there are a multitude of totally legitimate, and legal, “tax shelter” opportunities available. The same kinds of “tax shelter” opportunities are also available in almost every country in the free world.

Since the various I.R.S., Treasury, and Securities Regulators governing “tax shelter” opportunities are constantly changing, I will not attempt to give you specific advice regarding such opportunities. But, by realizing that legitimate and legal “tax shelters” exist both in the U.S. and in other countries, you can better understand that you can legally and legitimately shelter your income from taxes; either here in this country or through a tax-shelter opportunity in another country.

When you find a “tax shelter” opportunity, whether in the U.S. or offshore, have your accountant or other tax professional check it out to see if it conforms with governing regulations. Those professionals are in a position to keep on top of the governing regulations in effect at that time and advise you as to the legality and tax advantage to be gained.

Scoff-Law Applications

As the government (any government) writes more and more laws regulating the personal activities of the citizenry (especially if those laws infringe the citizen’s earning capacity), more and more of the citizens will violate those laws without compunction, guilt or remorse. As an example: How many people do you know who have driven faster than 55-miles-per-hour on a Federally funded highway?

Scoff-laws are, by definition, people who scoff at, or flout, the law. They have no compunction about violating those petty laws, rules or regulations that they feel are unreasonable, unrealistic, or infringe their personal right to life, liberty, and the pursuit of happiness.

These people know that a government that writes that many laws can’t possibly expect to catch the vast majority of people who violate them. Besides, even if they get caught, unless they are a major offender, the penalties aren’t that severe or the powers-that-be may simply choose to overlook the offense. As an example: Most police officers simply overlook people driving faster than 55 m.p.h., but do stop those people driving recklessly at any speed.

Because of the multitude of federal, state, county, city and township tax laws in this country, the vast majority of people in the U.S. have become tax scoff-laws. It is physically impossible for any one person to know (or understand) all of the various and many tax laws, rules, and regulations. And, the people all know that it is impossible to be in 100% compliance with all of those laws and, it is just as impossible, for the government at its many levels to know who is, or who isn’t, paying which taxes under which laws, rules and regulations. So… most people just report the earnings, and pay the taxes, they absolutely have to, and feel no remorse if they don’t report some of the income they know they should. If they do get caught, the penalties aren’t that severe (usually just a fine) and the odds are they won’t be caught.

In the article entitled, “Offshore Tax Havens Lure Main Street Money,” which appeared in the July 1, 2007, issue of The New York Times, an assistant regional commissioner for the I.R.S. in New York was asked about the risk involved in tax cheating. His answer was, “It would be an unfortunate happenstance if you were caught. You would be a very unlucky person.”

The article continued with some examples of the ways modern-day scoff-laws use offshore bank accounts to cheat the U.S. tax collectors:

A doctor received a payment from a patient and deposited the check in his offshore bank account. Since the deposit doesn’t appear in his business records, the chances are it would never be found, even if the doctor is audited.

One couple sold a piece of art work and had the buyer send the payment direct to their offshore bank account. Later, the couple used that money to enjoy a vacation outside the U.S. Mr. Mirshberger with the I.R.S. said, “There’s no way we would ever discover that.”

Another example told of a bank customer who got his “unscrupulous” banker to transfer large amounts of cash to an offshore bank account without reporting the transaction to the I.R.S. Then, the customer borrowed the money back from the offshore bank. Since loan proceeds are not taxable, no taxes were paid.

But these examples are only the tip of the iceberg. It is no longer just the wealthy with art works to sell or the professionals and businessmen with extra income to hide. There are hundreds of thousands (maybe even millions) of blue collar and middle-management white collar workers using offshore bank accounts to reduce the unbearable tax load imposed by the federal, state, and local governments.

To assist these tax scoff laws, literally hundreds of professional advisors in the U.S. and offshore are busy teaching tax scoff-law techniques; organizing methods and techniques to make discovery impossible (or, at least, highly improbable), and actually providing the services necessary to implement those methods and techniques. Some are purely tax evasion. Others tread the fine line between tax evasion and tax avoidance. While others are legal and legitimate tax shelter opportunities.

Americans have simply never liked being taxed. In 1776, the tax scoff-laws of that time revolted against unreasonable taxation. In the 1980’s, the modern-day tax scoff-laws, with instantaneous communications and high-speed international mobility, have chosen to avoid and evade rather than take up arms against the tax oppressor.

How long this trend will last, before the modern-day tax scoff-laws choose to follow the example set by their forebears and take up arms to defend against tax tyranny, is a question that should be in the mind of every government official.

Offshore Banking Is Not Evil

As you have now learned, Offshore Banking, in and of itself, IS NOT evil, illegal, immoral or unethical.

The scandalous defamation and condemnations of Offshore Banking is only another ruse foisted upon the gullible American public by the U.S. government and the U.S. banking establishment. Their purposes, not offshore banking, are evil in that the intent is to maintain control over YOUR MONEY for their own self-serving uses.

No matter what the government and bankers tell you, their purposes are not intended to restrain the criminal element. They know, as well as you do, that criminals will do their evil deeds no matter what laws they have to violate; it is the nature of their endeavors. The true purpose of the government is to keep YOUR MONEY within their jurisdiction. The true purpose of the bankers is to keep YOUR MONEY in their banks.

Using an offshore bank account legally; paying your taxes and reporting your transactions, you can legally enjoy passive income 2, 3 or even 4 times greater than what you can earn in the U.S.

If you choose to use your offshore bank account for tax scoff-law purposes, the matter will be between you and your conscience. But, remember, your illegal use of an offshore bank account does not make offshore banking illegal. If you get caught, you, not the offshore bank, will be at fault.

For many years, moneyed people have known about and used offshore banking opportunities in order to increase their earnings, protect their assets, legally avoid taxation, and gain personal privacy for their financial affairs. Now, anyone with a good income, or modest savings, can enjoy the same exceptional advantages and free themselves from the negative forces active in this country,

Conclusion

Don’t pass up the exceptional interest earnings available to you simply because you have blindly accepted, without question, the myths regarding offshore banking.

The fears and suspicions you may have held regarding offshore banking are nothing more than the protectionist scare-tactics used by the Government, the I.R.S., and the Bankers to keep your money within their grasp; limiting your earnings, by law (allowing them to keep the lion’s share for themselves), while taxing the paltry earnings they do allow.

Why settle for the paltry earnings available to you through the restrictive, protectionist Federal Reserve System?

The offshore banking community is available to you for your use. NO matter how small your savings ability may be, there is a place for you to earn maximum returns… all you need do, now that you know how Offshore Banking really works, is find the offshore situation that will work for you.

About the Author: Having spent over 50 years in business; doing business successfully, J.F. (Jim) Straw now shares “Practical Instruction in the Arts & Sciences of Making Money” at the Business Lyceum. — http://www.businesslyceum.com

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In honor of the Olympics I thought it would be fun to explore the idea of money in sports. So I headed over to Forbes’ list of the 10 highest paid male athletes.

This list is based on earning for the period of June 1, 2007, and June 1, 2008. Some things that are interesting to me about the list. Michael Jordan has been retired since 1999 and earns all of his money from endorsements. It shows just how big of a star he was, that 9 years later he is still the #3 earning athlete.

Also interesting is that Tiger Woods earned more than double the #2 on the list David Beckham and almost equaled the entire top 10 earning female athletes combined ($118 million).

	#1.Tiger Woods Sport: Golf Estimated Earnings: $115 million
	#2. David Beckham Sport: Soccer Estimated Earnings: $50 million
	#3. Michael Jordan Sport: Basketball Estimated Earnings: $45 million
	#4. Phil Mickelson Sport: Golf Estimated Earnings: $45 million
	#5. Kimi Raikkonen Sport: Auto Racing Estimated Earnings: $44 million
	#6. Kobe Bryant Sport: Basketball Estimated Earnings: $39 million
	#7 LeBron James Sport: Basketball Earnings: $38 million
	#8. Ronaldinho Sport: Soccer Estimated Earnings: $37 million
	#9. Valentino Rossi Sport: Motorcycle Racing Estimated Earnings: $35 million
	#10. Roger Federer Sport: Tennis Estimated Earnings: $35 million

When you see these kind of earnings associated with sports stars, basically young men playing a game that they love, does it seem right?

Worth whatever they can get?

A popular argument, and one every capitalist holds dear, is that something or someone is worth whatever a free market will pay them.

But wait, aren’t we supposed to be rewarded based on the amount of value we contribute to society?

Since I believe that both statements are true, then it is interesting to try and understand the value that mega star athletes provide to society.

ROI

Another factor to consider is simple return on investment, many of the families of Olympians list the costs of raising a child to become an Olympic or elite athlete in the hundreds of thousands of dollars. It makes sense that if the costs are this high, possible return would need to be astronomical for the system to make sense. After all the risks are also very high, as only a very few will make the kind of money that the guys on the list above are pulling in.

Certainly there is the adrenaline rush of watching someone pull of some feat of sport that seems impossible, and to do it consistently.

I’d have to say that the real value created by these type of star athletes is to inspire us. To create images that inspire us to believe that anything is possible, that we can be “amazing” at something, or just that we can appreciate someone else’s dedication to being the best and having such a great love for their sport that they sacrificed so many other things that we take for granted to get to the top.

How about you, do you find the money these guys are paid “fair” or outrageous?

Photo Credits: Tiger, David, Michael, Phil, Kimi, Kobe, LeBron, Ronaldinho, Valentino, Roger

Resources: Top 10 Richest Male Athletes & in Pictures

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The idea of marrying for money is something that very few would admit to, but yet it happens all the time. It’s considered a “negative” thing to do, but yet is probably as old as marriage itself.

When Bill and I got married his relaxed attitude to money amused me. He’s a teacher and enjoys his job. I work in medical sales: more stressful, but it pays well. I have, however, become secretly, overwhelmingly, envious of my friends, who can rely on their husbands as the breadwinners.

A simple search on reveals hundreds of people grappling with the same idea.

2/3 of Women & 1/2 of Men Willing to Marry for Money

I’m a little shocked at the numbers,” said sociologist Pamela Smock of the results of a recent survey of 1,134 median-income Americans, among whom “two-thirds of women and half of the men said they were ‘very’ or ‘extremely’ willing to marry for money.

The Price to Marry for Money = $1.5 Million

According to a survey by Prince & Associates, a Connecticut-based wealth-research firm, the average “price” that men and women demand to marry for money these days is $1.5 million.

The survey polled 1,134 people nationwide with incomes ranging between $30,000 to $60,000 (squarely in the median range for nationwide incomes). The survey asked: “How willing are you to marry an average-looking person that you liked, if they had money?”

Second Thoughts Down the Road

I married an electrician who earns a little bit more than I do.

I had many opportunities to marry much richer men but I was not attracted to them. So I married for love.

But now we have money problems - we can’t afford to have a baby, we can’t afford to go on holidays, we can’t afford god damn curtains for our house! Argh would it have been better to have married one of the rich men instead!

For me there are a couple important things to realize around the topic of marrying for money.

Money problems can create incredible stress.

That someone who is married can actually look back and think that they should have married someone else, illustrates the power of financial issues can have on people.

It is also an interesting to see how getting married is seen as the most important financial decision that a woman can make. For example in the quote above, we don’t hear the woman lamenting the choice see made for her career, or the fact that she didn’t educate herself about how to create more wealth for herself.

From my experience, it is almost always easier to blame external factors and people, than to take responsibility for our own fate.

What did they marry for?

As someone who has been married for 9 years, I have to ask what the people who are regretting their marriage decisions actually did marry for (if it wasn’t money)?

I find it unlikely that is was true love. Here’s a list of 14 reasons that people get married:

1. Want to be free from parents.
2. To have sex.
3. To ease loneliness.
4. To be happy.
5. To be an adult.
6. Because of a pregnancy.
7. He or she loves you.
8. For money.
9. For immigration purposes
10. You are in love with one another.
11. A desire to share your life with another.
12. To have a lifetime companion.
13. Realistic expectations.
14. Willingness to fulfill one another’s needs and desires.

I remember reading a study that suggested most people get married, simply because “it was time.”

If you aren’t going to marry someone with whom you have a real bond that grows more fulfilling over time, then I would probably go with getting married for me.

Money can take care of almost all of life’s requirements… except love, of course.

References:

• Family secrets
• Get Married For Money, How Does $1.5 Million Sound?
• Why People Get Married

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What follows are the stories of 10 billionaires who started with nothing and now have it all.

Ingvar Kamprad

Net worth: $31 billion

World’s richest retailer and founder of furniture store Ikea.

Kamprad began to develop a business as a young boy, selling matches to neighbors from his bicycle. He found that he could buy matches in bulk very cheaply from Stockholm, sell them individually at a low price and still make a good profit. From matches, he expanded to selling fish, Christmas tree decorations, seeds and later ball-point pens and pencils. When Kamprad was 17, his father gave him a reward for succeeding in his studies. He used this money to establish what has grown into IKEA.

The acronym IKEA is made up of the initials of his name (Ingvar Kamprad) plus those of Elmtaryd, the family farm where he was born; and the nearby village Agunnaryd.

Kamprad has admitted that his dyslexia played a large part in the inner workings of the company. For example, the Swedish-sounding names of the furniture sold by IKEA were originally chosen by Kamprad because he had difficulty remembering numeral stock-keeping units.

Reputed to be quite frugal: flies economy class, frequents inexpensive restaurants, furnishes his home with Ikea ware.

Li Ka-shing

Net worth: $26.5 billion

Li fled turbulent China in 1940 and resettled in Hong Kong. Li’s father died in Hong Kong.

Shouldering the responsibility of looking after the livelihood of the family, Li was forced to leave school before the age of 15 and found a job in a plastics trading company where he labored 16 hours a day.

By 1950, his hard work, prudence and his pursuit of excellence had enabled him to start his own company, Cheung Kong Industries. From manufacturing plastics, Li led and developed his company into a leading real estate investment company in Hong Kong that was listed on the Hong Kong Stock Exchange in 1972.

Roman Abramovich

Net worth: $23.5 billion

Orphaned at age 4, Abramovich was raised by his uncle and grandmother. He dropped out of college and eventually made a fortune after taking over Russian oil giant Sibneft, which he later sold.

Roman, was gifted with a talent for business and being in the right place at the right time as he started his career as an entrepreneur just as Soviet premier Mikhail Gorbachev’s reforms permitted the opening of small private businesses.

He began his business career selling plastic ducks from a grim Moscow apartment but, within a few years, Abramovich’s vast wealth spread from oil conglomerates to pig farms, and secured his place within Yeltsin’s inner circle. However, even today, his task force of bodyguards and armoured Mercedes testify to the high-risk nature of capitalism in post-Soviet Russia.

Sheldon Adelson

Net worth: $26 billion

The son of a Boston cabdriver, he borrowed $200 from an uncle to sell newspapers at age 12. Later, he dropped out of college to become a court reporter. Now a casino and hotel magnate, Adelson took his Las Vegas Sands public in December 2004.

He worked at a young age selling newspapers on local street corners and owned his first business by the time he was twelve. In the years that followed, he worked as a mortgage broker, investment adviser and financial consultant. He started a business selling toiletry kits, and in the 1960s he started a charter tours business with two friends. He went to college at City College of New York but did not complete a degree there.

The basis for Adelson’s wealth and current investments was the computer trade show COMDEX, which he and his partners developed for the computer industry; the first show was in 1979. It was the premier computer trade show through much of the 1980s and 1990s.

In 1988, Adelson and his partners purchased the Sands Hotel & Casino in Las Vegas, Nevada, the former hangout of Frank Sinatra and the Rat Pack, in order to bring Las Vegas to a new phase of business centricity through the exhibition industry.

Amancio Ortega

Net worth: $20.2 billion

Son of a railway worker Ortega apparently got started as a clerk in a shirt store. With $25 and help from his then wife Rosalia Mera, now also a billionaire, he began making gowns in his living room.

In 1975 he opened the first store in what would grow into the enormously popular chain of fashion stores called Zara.

Kirk Kerkorian

Net worth: $16 billion

Son of Armenian immigrants, he dropped out of school in the eighth grade and took up boxing.

Kirk Kerkorian was born on June 6, 1917 in Fresno, California, to Armenian immigrant parents. Dropping out of school in 8th grade, he became a fairly skilled amateur boxer under the tutelage of his older brother, fighting under the name “Rifle Right Kerkorian” to win the Pacific amateur welterweight champion.

After the war, having saved most of his wages, Kerkorian spent $5,000 on a Cessna. He worked as a general aviation pilot, and made his first visit to Las Vegas in 1944. After spending much time in Las Vegas during the 1940s, Kerkorian quit gambling and in 1947 paid $60,000 for Trans International Airlines, which was a small air-charter service which flew gamblers from Los Angeles to Las Vegas.

He then bid on some war surplus bombers, using money on loan from the Seagrams family. Gasoline, and especially airplane fuel, was in short supply at the time, so he sold the fuel from the planes’ tanks, paid off his loan - and still had the airplanes. He operated the airline until 1968 when he sold it for $104 million to the Transamerica Corporation.

Later, he made billions buying and selling movie studio MGM. Today his MGM Mirage owns more than half the hotel rooms on the Las Vegas Strip.

“I just lucked into things. I used to think that if I made $50,000 I’d be the happiest guy in the world.” Kirk Kerkorian

Oprah Winfrey

Net worth: $2.5 billion

Born in rural Mississippi to a poor unwed teenaged mother, and later raised in an inner city Milwaukee neighborhood, Winfrey was raped at the age of nine, and at fourteen, gave birth to a son who died in infancy. Sent to live with the man she calls her father, a barber in Tennessee, Winfrey landed a job in radio while still in high school and began co-anchoring the local evening news at the age of 19.

Her emotional ad-lib delivery eventually got her transferred to the daytime talk show arena, and after boosting a third-rated local Chicago talk show to first place, she launched her own production company and became internationally syndicated.

Winfrey became a millionaire at age 32 when her talk show went national. Because of the amount of revenue the show generated, Winfrey was in a position to negotiate ownership of the show and start her own production company. By 1994 the show’s ratings were still thriving and Winfrey negotiated a contract that earned her nine figures a year.

Considered the richest woman in entertainment by the early 1990s, at age 41 Winfrey’s wealth crossed another milestone when with a net worth of $340 million, she replaced Bill Cosby as the only African American on the Forbes 400. Although blacks are 12% of the U.S. population, Winfrey has remained the only black person wealthy enough to rank among America’s 400 richest people nearly every year since 1995.

Micky Jagtiani

Net worth: $2.5 billion

Jagtiani flunked out of accounting school in London and took up driving taxis and cleaning hotel rooms to pay the bills and support a bottle of whiskey a day habit. He then lost his entire family to illness in the span of one year.

Just 21 and alone in Bahrain with $6,000 of his and his family’s savings, he took over the retail space his brother had leased before dying of cancer and started selling baby products. Chain is now one of the most profitable retail groups in the Middle East.

Thirty years after he landed up in Bahrain the Dubai-based CEO of Landmark group has built himself one the largest and most profitable retail chains in the Middle East, with more than 280 stores, 6,000 employees and an estimated $650 million in revenues.

Richard Desmond

Net worth: $2 billion

After his parents divorced, Desmond lived with his mother in a garage apartment. Quit school at age 14 to become a drummer and worked in a coat-check room to help pay the bills.

His first job was for Thomson Newspapers, working in classified advertisements. He moved on to another company and by the age of 21 he owned two record shops. He acquired an interest in publishing and in 1974 published a magazine called International Musician and Recording World.

Started his first magazine at age 22 and now owns dozens of titles, including celebrity rag OK!.

J.K. Rowling

Net worth: $1 billion

British writer and author of the Harry Potter fantasy series.

Rowling moved to Portugal after the death of her mother from multiple sclerosis. She returned to the U.K. a single mother and lived on welfare while finishing her first Harry Potter story. Now one of the world’s most successful authors, she published the seventh and final installment of the boy wizard series last July.

She progressed from living on welfare to multi-millionaire status within five years.

I hope you found these stories inspiring. It is difficult for me to relate to people who are wealthy but started out with family money or won the lottery. But these stories prove that anything is possible and it is interesting to see how each rags to riches story is unique.

This article was based on the Forbes story In Pictures: Rags to Riches Billionaires. And was featured in the Carnival of Personnal Finance at the Budgeting Babe.

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A stupid question right, of course everyone wants to be rich. Have you ever thought about what it really means to be wealthy?

This week in the Washington Post there was an article that could make the idea of being rich, much less attractive:

Nobel Prize-winning behavioral economist Daniel Kahneman has found, however, that being wealthy is often a powerful predictor that people spend less time doing pleasurable things, and more time doing compulsory things and feeling stressed.

People who make less than $20,000 a year, for example, told Kahneman and his colleagues that they spend more than a third of their time in passive leisure — watching television, for example. Those making more than $100,000 spent less than one-fifth of their time in this way — putting their legs up and relaxing. Rich people spent much more time commuting and engaging in activities that were required as opposed to optional.

There are a couple things that I find interesting about his findings.

1.) Is Passive Leisure Time a Result of Having Less Money, or the Cause of It?

Since I’ve heard many successful people mention that they don’t watch TV or do many other time wasting activities, my first thought when reading this article was that maybe the author had it backwards.

It was the desire to be lazy and waste time that was actually keeping many of the subjects from making more money!

Note that the article says engaged in passive leisure. I don’t know very much about being rich, but I’m thinking that being passive isn’t one of the best ways to achieve that goal.

2.) The Rich Don’t Seem any More Satisfied With Their Lives

Given the lack of relax time and the added stress levels of the people making over $100,000 a year in the article, it’s hard to decide whether it is more desirable to earn more, or stick with the lower salary.

How about you, would you take the six figure salary if you knew that it came with a whole lot less time to enjoy that added bank?

The Real Truth

I guess the real point of this story is that $100,000 a year is no longer “rich” by any means.

It seems to me that like the term “millionaire” a six figure income has succumbed to inflation and no longer comes even close to providing a lavish or carefree life.

I would probably put the price tag of financial freedom at about $10 million net worth or $300,000 net income.

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