Your Retirement Savings Account: Things you must grasp about it well before you retire

Do you understand whether or not your retirement savings will ever get taxed, or when that happens?  What exactly are mandatory withdrawals, and when do they start?  How to best leave retirement savings to your heirs?  If your grasp is fuzzy on any of these questions, then read on:

TAXES:  Unless your tax-sheltered retirement savings account is a ROTH type, then any money that you withdraw from it definitely will be taxed.  The government set this deal up for you (and it is a good deal, because it allows your money to grow faster) to encourage you to save…but eventually Uncle Sam wants his share, since your contributions were made with untaxed income.   (With a ROTH account, however, you’ve contributed net income, not gross.  Since you’ve already paid taxes, you won’t pay any more when you withdraw.)

MANDATORY WITHDRAWALS:  Once you hit age 70½, you must start withdrawing—and paying taxes on any money you’ve withdrawn (unless it’s a ROTH).   The minimum withdrawal at that age is only 3.65% of the total balance, but it increases gradually with each year.  However if you live to be 100, the minimum withdrawal is still only 15.87% of the total.  (No mandatory withdrawals are required for ROTH accounts.)

LEAVING $$ TO HEIRS:  Therefore, if you only withdraw the required minimum over the years, you can leave the rest to your children—who will then have to pay tax on their withdrawals.  Before Congress recently changed the law, your children were able to spread the withdrawals over their lifetimes, but now they must drain the accounts completely within ten years of inheriting it.  (Your children will not have to pay any taxes on withdrawals from a ROTH account.)

ROTH:  These accounts have definite advantages, and if you can afford to contribute net rather than gross income you may prefer to do that.  (Ask your tax professional if it makes sense for you.) However if you decide not to go with a Roth, know that traditional non-Roth savings accounts are still wonderful vehicles for saving for your retirement. 

For more details, read Liz Weston’s complete article:


Reasons to Buy a Cheaper House than the One You Qualify For

When beginning to shop for your first home, start with the options at the lower end of your budget.  If you find homes you like in that price bracket, then stop there. 

Let’s say you qualify for loan to purchase a 3,800 square foot home with a pool.  Very tempting, but deep down you realize that a 2,000 square foot home would be big enough for you.   For every additional $1,000 that you pay for the bigger house, you will be paying $1,000 plus interest.  By the time you’ve paid off the loan, you may well have paid double that.  Remember that buying a bigger house means bigger ongoing expenses, too: utilities, maintenance (roof repairs, painting, etc.)–and property taxes.

That’s money that might be better spent on other important goals over time, such as education, establishing an emergency fund, and saving toward retirement.

Many will argue that your house is a great investment and you should therefore push the limits of your spending ability a bit when buying.  Housing has certainly does appreciate nicely over the years, but the averaged stock values of the S&P500 have easily outpaced them over the past 50 years.  Just don’t allow yourself to be lured into spending more than you are financially comfortable doing.  Go for less than you can afford.  You can make improvements to your modest home, when you’re ready, thereby bumping up your equity in a safer, incremental way.

And do try to put 20% down on your house.  It will save you from wasting money on private mortgage insurance (PMI) and will help keep you from getting “under water” if the value of your home declines.  Aiming to put 20% down also helps you gauge whether or not you can really afford a particular house, too.  If you can’t afford 20% for that house, consider looking for a less expensive one, or else waiting—and saving up for that down payment.

Most Americans hold a deep-rooted belief in home ownership.  Its size, quality, and location are all status symbols.  We tend to say of families with a flashy car and a big, fancy house:  “They must have a lot of money!”  

Because this family is spending a lot of money on items that go beyond basic comfort levels—including the big house–we assume they’re in a great financial position.  But deep down, we know this isn’t rational.  To build wealth, you must spend less than you earn. 

Top SoCal real estate agent can help you buy real estate in Long Beach, Seal Beach, and San Diego. Find a house for sale that you will love.

To read David Weliver’s complete article, visit:


5 Credit Myths for First-Time Homebuyers

The Real Estate industry can be intimidating to first-time homebuyers, especially when they begin the preapproval and prequalification process.  Below we’ll refute the most popular credit myths in today’s real estate market.

Myth #1: Closing an Old Account Will Help Your Credit 

This is a very common misconception about credit impact.  Lenders mainly review a real estate agent’s client’s credit history by looking at how long accounts have been open.  Typically, lenders average out all of your current and past accounts to get an accurate, standard length of time.  Therefore, the longer your accounts have been open, the better.  

Myth #2: All Debt is Treated Equally 

There are many different kinds of debt, and each one has a different risk and purpose.  These risks are what lenders evaluate when examining your credit.  For example, short-term accounts (credit cards) are viewed as more risky if the account has a high amount of revolving debt.  In contrast, a long term debt (a 30 year mortgage) is viewed as less risky because of the extended amount of time you have to pay off your debt.  Basically, if you have a maxed out credit card and a car loan with a high balance, the credit card is more detrimental to your credit. 

Myth #3: Your Credit Can Be Improved With the Help of Credit Repair Companies 

Popular companies, such as Credit Karma, Credit Sesame, Equifax, Experian, and TransUnion advertise their ability to supposedly improve your credit.  But before you buy into all of their promises and craft a utopian view of your credit, remember the saying, “if it looks too good to be true, it probably is.”  These companies can only help you establish a plan to consolidate your debt.  They cannot reverse your debt, nor magically make it disappear.  To put it simply, in order to reduce your debt, you need to pay off your account.  If homebuyers want to create this plan by themselves, they need to make a spreadsheet with their periodic expenses along with their monthly income to map out a timeline for debt payments. 

Myth #4: When You Pay Off Your Debt, It Gets Removed From Your Credit Report 

False.  A missed payment or a collection has the ability to remain on your credit report for up to 7 years.  Even though paying off this debt will stop banks from trying to collect on it, there is no possible way to remove a derogatory mark from your credit history unless it was reported incorrectly. 

Myth #5: Your Credit Report Reflects Your Relationship Status 

Questions regarding information like employment, income, and relationship status are not reported to credit bureaus and will only come up during the credit application process.  Your relationships, whether past or present, do not appear on your credit report.  Therefore, if one partner does not pay a debt and you are on the account, you will both be impacted negatively. 

As a homebuyer, you should schedule consultations with lenders about entering the preapproval process for a loan and to formulate a plan for debt payment that allows you to have a better interest rate.  Real estate agents have an abundance of information about the homebuying process from their years of experience, so feel free to call our top notch agents at VB Realty Group for your credit questions and real estate endeavors. 

If you want to read Vance Kellogg’s full article, click the link below.


What is an ADU?

An ADU is a secondary dwelling unit with complete, independent living facilities for one or more persons and generally takes three forms:

  •   Detached: The unit is separated from the primary structure

  •   Attached: The unit is attached to the primary structure

  •   Repurposed Existing Space: Space (e.g., master bedroom) within the primary residence is converted into an independent living unit

  •   Junior Accessory Dwelling Units: Similar to repurposed space with various streamlining measures

ADUs offer benefits that address common development barriers such as affordability and environmental quality. ADUs are an affordable type of home to construct in California because they do not require paying for land, major new infrastructure, structured parking, or elevators. ADUs are built with cost-effective one or two story wood frame construction, which is significantly less costly than homes in new multifamily infill buildings. ADUs can provide as much living space as contemporary condos being built in new infill buildings, and serve very well for all types of households.

ADUs are a different form of housing that can help California meet its diverse housing needs. Young professionals and students desire to live in areas close to jobs, amenities, and schools. The problem with high-opportunity areas is that space is limited. There is a shortage of affordable units, and the ones that are available are out of reach for many people. To address the needs of individuals or small families seeking living quarters in high opportunity areas, homeowners can construct an ADU on their lot or convert an underutilized part of their home (like a garage) into a junior ADU. This flexibility benefits not only people renting the space, but the homeowner as well, who can receive an extra monthly rent income. ADUs give homeowners the flexibility to share independent living areas with loved ones; they allow seniors to age peacefully with room for extra care and help bring extended family members together while maintaining privacy.

Relaxed regulations and the cost to build an ADU make it an easy, affordable housing option. A UC Berkeley study noted that one unit of affordable housing in the Bay Area costs about $500,000 to develop, whereas the highest price for an ADU goes up to approximately $200,000.

ADUs are a critical form of infill-development that are affordable and offer important housing choices within existing neighborhoods. ADUs are a powerful type of housing unit because they allow for different uses and serve different populations: ranging from students and young professionals to young families, people with disabilities, and senior citizens. By design, ADUs are more affordable and can provide additional income to homeowners. By encouraging the development of ADUs, local governments can improve access to jobs, education and services for many Californians. 


3 Tips for Renovating Your Home

With the economic uncertainty that arose due to the coronavirus pandemic, it was expected that remodeling projects and housing changes would decline drastically.  However, people who have been working from home and have accessible income may be pondering the idea of renovations to increase home functionality.  To effectively conduct a renovation, one must contact contractors and designers for advice.  Below we’ll discuss 3 tips for executing a home renovation.

Tip #1: Make Sure Everyone Involved Is On The Same Page 

Have a plan for the work you want to get done.  Make sure every contractor/designer knows their duties, and clearly outline the details of the project along with who is leading it.  Miscommunication can have drastic consequences. 

Tip #2: Construct an Agenda 

Prepare for mistakes and construction issues by giving yourself enough time on the schedule to recover from any possible missed deliveries, declined permits, or natural disasters.  Throughout the renovation, schedule multiple meetings with everyone involved in the project (contractors, designers, and service providers) to ask questions and discuss new information.  Joint meetings allow everyone in the party to come together to create an effective, efficient plan. 

Tip #3: Carefully Choose the Contractors, Designers, and Other Workers Involved in Your Renovation

Ensure you know their skills and experience, and discuss the building blocks of your renovation plan to gage their perspectives.  Even though lower prices are appealing, accepting them may entail a sacrifice of product quality and craftsmen experience.  Do not be afraid to question the choices your contractors make; open communication is necessary for a successful home renovation.  Guarantee an outstanding home transformation by choosing the best fit for you, whether it’s contractors or paint colors.  

To read Michael Lerner’s full article, click the link below.


How Does a Home Foreclosure Work in Real Estate?

A foreclosure occurs when a borrower does not maintain their mortgage payments, and the lender who gave the loan reclaims the property and sells in an attempt to regain the money that was lost. 

Steps Leading Up to Foreclosure 

  1. About 2-3 weeks after you’ve missed your first mortgage payment, a letter from your lender will appear in the mail detailing the past due payment and describing the possible measures that will be taken if the mortgage payments are not made.  Usually, lenders will provide a grace period of about 10-15 days where late payment can be made free of penalties.

  2. You will receive multiple methods of notifications (calls, messages, letters, etc.) if you continue to miss payments.  Late-payment penalties may be instituted by the bank.  

  3. After 90 days of missed payments (3 mortgage payments), a notice of foreclosure in 30 days may be issued to you by your lender. 

  4. The lender is allowed to begin foreclosure after 120 days of missed payments.  Depending on the state, the process may take from one week to one year.

A foreclosure forces the eviction of all the tenants living on the property.  To prepare the property for a resale, the locks will be changed and the premises will be secured.  Timelines and foreclosure policies depend on the town and the lender; the local economic standings may also affect how the foreclosure functions. 

Impacting your credit 

A foreclosure entry will appear on your credit report, and it will stay there for seven years from the date of the first payment you missed.  Foreclosures are seen as damaging entities in your credit history, and influences the judgement of creditors.  It will also affect your credit score, but the weight of that effect depends on the state of your score beforehand.  The action that most negatively impacts credit scores are missed payments, so the odds are your credit score will be significantly lower if you undergo a foreclosure.  

Foreclosure Alternatives 

More often than not, lenders prefer to avoid the time consuming, expensive process of foreclosures whenever they can.  Within their missed payment notices, lenders will list a lender representative for you to speak to for help.  Utilizing that opportunity could lead you to a financial recovery.  It is possible to negotiate a new payment plan with your lender (provided you agree to fees and a higher interest).  Worst case scenario, this gives you time to find a buyer for your home that way you profit off of the sale.  You may also get your lender to agree to a short sale, but that is an unfavorable option for both parties.  A short sale entails you selling the house for the highest price you can get, and the lender will accept the proceeds of the sale as a form of settlement for your mortgage loan.  Though this option is viable, it provides no benefits to the client.

Explaining Foreclosure Sales 

Foreclosures provide some great opportunities for homebuyers with determination and willingness to accept a potentially challenging estate.  Homes that have been foreclosed have the potential to be sold at a cheap price, but it is best to know the risks before you enter the world of auctions or lenders.  

My House Has Been Foreclosed, Now What? 

Foreclosures can have substantial effects on your credit score that will take at least a couple years to recover from.  The best approach you can take in this situation is to start rebuilding your credit.  Stay consistent and patient; your credit score will eventually return to a good standing. 

To read Jim Akin’s full article, click the link below.


What’s the Difference Between Revocable and Irrevocable Trusts?

Many people are oblivious to the different kinds of trusts and the purposes trusts serve to maintain estates.  Below, the two basic trusts are compared: revocable and irrevocable. However, when firmly deciding which trust to invest in, a discussion with an attorney will provide you with in-depth information and professional guidance. 

The terms of a revocable trust can be changed at any time, whereas an irrevocable trust cannot be modified without the approval of the beneficiaries. If you choose to put property in a revocable trust, you maintain the ownership of the trust and have complete control over it.  The property can always be taken out of the trust, and you control everything that happens to it.  In terms of the IRS, revocable and irrevocable trusts are treated the same.  However, if you choose an irrevocable trust, you essentially lose personal control over it.  The trust claims ownership over the property and controls its future.  The former owner of the trust (you) would not be able to remove the property from the trust or sell the trust itself.  The future of the trust can only be controlled by the beneficiaries. 

Choosing which trust is right for you depends entirely on your individual circumstances.  However, the purposes of each trust can be separated based on their standard uses: usually, irrevocable trusts are used for estate and federal estate tax purposes, and revocable trusts (a.k.a. living trusts) are initiated to evade probate issues but do not affect your federal income or estate income taxes. 

This decision should be made with the consultation of an attorney.  An attorney will be able to guide you and explain each type of trust in more detail.  With the information and purpose of each trust, you will be able to make an informed decision on what will most benefit you and your family. 

To read IIyce Glink and Samuel J. Tamkin’s full article, click the link below.


Clear Negative Items from Your Credit Report

When applying for credit or loans, your clean report will mean lower interest rates.  So if you have one or more negatives on your credit report, use the following strategies to fix it:

  1. Dispute: If the business/company that reported the an item (the “Reporting Business”—this can be a bank or credit card, too) made a mistake, then contact them and dispute it !  Businesses are required by the Fair Credit Reporting Act (FCRA) to investigate and correct errors.  Insist that they correct their error with all three credit-reporting bureaus.  

  2. Dispute Again: If the reporting business doesn’t fix it, contact the three Credit Reporting Bureaus yourself (again, this is if there’s an error involved).  The bureau is required by the FCRA to investigate and correct items that are wrong.

  3. Pay to Delete It.  If it wasn’t an error, you can offer to pay the debt (with a pay-for-delete letter) if they will delete it from your credit report.  You could try offering a settlement instead of the full amount—no harm in trying!

  4. Write a Goodwill Letter.  Ask the creditor for a “Goodwill Deletion.”  This works best if it was a one-time mistake on your part, such as a late or skipped payment.  The company doesn’t have to do it, or even respond…so just persuade them that you realize the error you made and explain that you’ve become more responsible now.  It’s worth a shot.

  5. Wait It Out: This can take a long time, and the length of time varies.  However the impact of a negative item on your credit score will diminish with the years, even while it’s still there on your reports.  Meanwhile, try hard to keep new negatives from hopping onto the bus.

  6. Hire a Professional Credit Repair Service.  For about $100 per month, a reputable service can help you correct errors, dispute negative items, and negotiate with creditors.  You can do these things on your own, but if your situation is complicated, this might be for you.  

Strategies That Won’t Work:

  1. Filing for bankruptcy.  Sure, it can eliminate your debt—but it will ruin your credit score and will be visible on your credit report for seven long years.  Only do it if you are desperate!

  2. Closing the account with the negative item.  Just don’t.  Doing so will not remove the debt.  It will lower your amount of available credit, thus damaging your credit-to-debt ratio on your credit score formula.

Regularly reviewing your credit reports is the best way to stay on top of your score.  Be patient and pursue all avenues when addressing problems.  Your credit score affects your ability to obtain credit cards, loans, insurance—and the interest rate for each of these.  For the full article, click here: