In the ’70s, it was,
”
Where’s the gasoline?
”
In the ’80s, it was,
”
Where’s the beef?
”
In the ’90s, it was,
”
Where’s my credit card?
”
In the ’00s, it is,
”
Where’s the cash?
”
Yes, after the interest rate and tax spike of 2000, the
terrorist attack and oil price surge of 2001, and the busted
corporate liars of 2002, in 2003, many Americans, and especially
Californians, have become cash poor.
In the ’70s, it was, “Where’s the gasoline?” In the ’80s, it was, “Where’s the beef?” In the ’90s, it was, “Where’s my credit card?” In the ’00s, it is, “Where’s the cash?”
Yes, after the interest rate and tax spike of 2000, the terrorist attack and oil price surge of 2001, and the busted corporate liars of 2002, in 2003, many Americans, and especially Californians, have become cash poor.
Where’s the cash? Ask the auto dealers. Ask the appliance stores. Ask the airlines and cruise ship companies. If these folks are cash poor, then most likely, so are we. Translation? People may lack the cash to spend on some of these big-ticket items. This may explain some of the incentives offered by auto dealers and appliance stores these days. For example, my wife and I recently bought Sears’ top-of-the-line washer and dryer for 20 percent less than last year’s sale price, not to mention a same-as-cash credit extension all the way through 2004! Moreover, go to a local auto dealer, and offers of zero-percent financing may entice you. At local travel companies, recent cruises to Mexico were dirt-cheap!
Because California offers so much wealth in so many different facets of life, it is easy for Californians to be ignorant of the goings on across the nation. Sadly, many of our brothers and sisters across this great land scoff at our local economic misfortunes. Of the many business and personal contacts I have eastward, I have noticed this trend pick up steam in direct proportion to our downward spiraling economy. We Californians are somewhat sheltered from this information.
What we may not know is that many of our interstate friends have continued their careers, have kept their cash stash and have tarried in their local territory. It is not that they have achieved pinnacles of prosperity, but at the same time, they have not suffered the doldrums of economic depression either. For the most part, their respective areas of commerce do not experience the economic volatility that we face year to year. And as we have noticed, there is a plus side as well as a minus side to this volatility. However, while our scornful counterparts somewhere in Missouri may be content with slow to moderate growth, we are always content with slow eating and moderate temperatures.
So how do we fatten up our wallets again? Work hard? Work smart? Work more? Your guess is as good as mine is. But let me warn you about one way that if you are not careful, you may experience more wallet weight loss. Many mutual funds declare capital gains and dividends in December. If this happens to you, you will probably receive a 1099 sometime in early 2004. Thus, more taxes to pay and more holes in your pocket. During the past three years, you may not have received much in the way of 1099s from your mutual fund companies since stocks performed so poorly. But 2003 has been a stellar year for stocks; therefore, mutual fund companies may declare capital gains and dividends that could surprise you. I believe much of the investment public is not ready for this.
What can you do about it? A few weeks before the declaration date (the date that mutual fund companies count you as an owner for capital gains/dividend tax purposes), upon request, most financial professionals and mutual fund companies will tell you the dollar damage with which to expect on your upcoming 1099. This is valuable information to know because you may be able to plan your way around these taxes. Please note that each investor is different, therefore, it is a good idea to consult your tax advisor before enacting a strategy.
In my office, every December is power-packed with various strategies and methodologies for my clients to avoid this potential minor catastrophe. For this reason, December is by far my busiest month of each year. Clients must be made aware of every expected as well as every unexpected future event.
To many financial market investors, there is nothing more irritating than receiving an unexpected 1099. It is a bit like arriving at your long-awaited expensive resort suite in Hawaii only to discover that your only choice of rooms is the smoker’s quarters. Therefore, it is time to plan now. By the time you read this, you may not have much time to adjust your holdings if necessary. But if you long to have more loot in your coffer next year, with astute planning now, you may be able to successfully maneuver your way to tax freedom.
