Break the 401K Piggy?

I checked out "More Wealth Without Risk", a 90s book on saving and investing by Charles Givens. It is in the same vein as 40 hour work week but dated. The pages are yellowed. His Money Movement Strategy says to move into stocks whenever the prime rate is less than 9%. The prime has been under 9% since January 2001.

However, looking at his section on insurance, it was about as good as you can do in 80 pages as part of a larger book. OK, maybe this guy does know something. His big thing is taxes, but tax laws change and likely the book is worthless in the details. So, I have been surfing this getting ideas.

Yeah, I will get to the point eventually.

In the past month there have been a couple of MSN.com articles on Tax strategies to use your 401K to fund your startup. I am sure Suze Orman would have something to say about this. It is dangerously risky, but if you are willing to bet the farm, it looks something like this:

1) Set up your company.
2) Form a company 401K plan.
3) Establish retirement plan rules that allow you to buy stock in the new company
4) Roll over your legacy 401(k) into the startup 401K plan.
5) Use your 401K funds to buy stock in your company
Presto: Tax-free working capital

The articles below explain the process and the potentially farm sized pitfalls. Read them while the links still work.

I have an ex-coworker who already plans to use his 401K money for his startup and this will save him $$$.

http://articles.moneycentral.msn.com/Taxes/TaxShelters/use-your-401k-to-start-a-business.aspx?page=all

http://articles.moneycentral.msn.com/Investing/Extra/fund-your-business-with-your-401k.aspx

Inbox Zero

I have been looking to be more efficient at work. One thing that got to me was the time I spent on email. I looked at it closely and made some changes.

Stop sending so many emails.
I looked at my incoming email 2500 in three months and my out going email 800 in three months. I realized that I was part of the problem. I replied to everything directed to me even if it was just 'Thanks'. I emailed notes to someone else who was in the same meeting also not paying attention to the speaker. I also noticed that I take longer to type up a message than it would take to call them. Now if I have a quick question for one person, I just call. Shocking. If I have the answer, but it was directed to someone else, I let them reply.

Stop sorting emails.
This has been huge. Probably half the emails I get are what is called reference. I don't need to do anything with them, but it might be important to know later. Previously, I would decide which of 27 folders to stick the email in. When I needed to find it I would go to that folder and look for it often resorting to searching for some topic in the email. When the email was not there, I looked in the next most likely folder. Now, I have one folder which is read mail for the current 3 month period. Anything, reference is filed there quickly with CTRL, Shift, V. I don't spend any time thinking where to put it. Since everything goes in the same bucket, I can highlight 10 read mails and move them at once. Yes, when I go to find something, I have to sort through 100s of emails instead of dozens, but knowing who sent it and when lets me find it quickly. If not, the computer can search on a topic fairly quickly.

Looking at it now, I see this is a known efficiency tactic. If you notice, Gmail embraces this.

Insurance

This is probably the best post I will put up. Unfortunately, I could not put up a file. So, if you want the spreadsheet, I will need to email it to you. Email me or leave a comment.

In 2008 I finally decided to review my insurance. I suspected I could save money.

My reference was the book Insurance for Dummies. I recommend it even though he pushes a lot of insurance. I also referred to several websites such as the Texas state insurance site, moneycentral.com, bankrate.com etc.

There are two reasons to do an exhaustive review of insurance
1) To save money. I was not disappointed. I am saving $1500/year for about my admittedly time consuming effort of maybe 40 hours?
2) To plug your holes. I was shocked at what insurance does not cover.
You really need to read for yourself, but here are a couple of eyeopeners.
a) Business and personal are totally separate. If you have a home business you are not covered by homeowners. Don't let your customer slip and fall!
b) Your personal insurance probably covers a rental car, unless you dropped collison and comprehensive on your insured car.

Highlights:
1) I upped my liability from dangerous to OK. $300,000 liability is a lower limit
2) I raised my deductibles for significant cost savings. You don't want to report small claims anyway.
3) The variation between companies for same coverage is large. Shop around.
4) I went with with Amica for both Home and Auto saving $1500 a year over previous State Farm coverage. Notes: You have to pay new Homeowners insurance before getting money back from old and, with escrow, your mortgage payment does not reset until next year.

My dad wants to do this, so I tidied up the spreadsheet for him and he gets the book. Get with me if you want the spreadsheet.

The 4-Hour Workweek

I have been focusing on how to be more effective. I had read Getting Things Done by David Allen and thought it was a good book. GTD is quite the phenomenon. Listening to a GTD related podcast I came across a comparison to The 4-Hour Workweek by Timothy Ferriss.

The 4-Hour Workweek could not be more different. GTD is corporate and helps you become more efficient at what you do. 4-Hour Workweek is radically out of the box, question everything you have been told stuff. Basically, your parents will get GTD and 4-Hour Workweek will “make their head explode” if you try to explain it.

First, The 4-Hour Workweek is not about organization per se. It is about getting rich quick so that you can follow your dreams and travel the world. He is pretty obnoxious with all that stuff. If I had not been looking for the effectiveness stuff I might not have even read the whole book.

The key contrast and necessary effectiveness tool that is different than GTD is the 80/20 rule. He makes this a core. The 20% of work that gets you the 80% of results should be all you ever do. Everything else should be eliminated, delegated or automated. This is an “Ah-hah” for me. My problem with GTD is the “capture everything and prioritize” mantra. Trouble is after a few months I have a 100 actions which were added and immediately descended in priority to pretty much zero. Now, remember that each of these 100 actions were deemed important and, in David Allen’s words, could “blow up” at any time. It is pretty depressing to look at that list and realize all the things that could go wrong because you are not working 24/7 to nip them all in the bud.

Here are my takeaways from the book.
1) The 80/20 rule has caused me to look at the fires I get sucked into at work and look for ways to eliminate or delegate. After a week, I was spending twice as much time on my priorities that my boss is going to judge me on.
2) I plan to give actions an expiration date. If they don’t get worked in maybe 2 months, they are deleted. It may look like a mission critical task, but if in 2 months it has not bubbled up to the top then it is deleted along with the insignificant