Pennies on the Dollar? (Part 1)

We’ve all heard the infomercials touting the great investment opportunity of tax lien investing. So can you really get homes for pennies? Well yes and no.

Counties need the funds from property taxes to pay the Sheriff and so on. Somehow these counties need to collect the taxes due. If the taxpayer cannot meet their obligation, then the counties look to outside sources to pay those taxes. The how to collect unpaid taxes are determined by the state. States either collect the unpaid taxes through tax lien sales, tax deed sales or a combination of the two.

Through tax lien sales you can purchase a lien for unpaid taxes on a property with the right to foreclose at a future time. Note the right to foreclose is not the guarantee to the property. Tax Lien states such as Arizona or Florida annually sell unpaid property taxes as liens to investors at an agreed interest rate. (The top interest rate in Arizona is 16% and 18% in Florida.) During the sale/auction, investors bid to win the right pay the taxes owed and place a lien on the property. After a period of time set by the state, generally several years, the lien holder if still not paid back has the right to initiate foreclosure proceedings on the property owner. Even during the foreclosure process the property owner can pay the tax lien and associated costs and keep their property. It is the aforementioned interest rate that attracts investors like myself to tax lien sales rather than the chance to acquire property.

At a recent sale I purchased an $800 lien on a property valued at over $80,000, hence the term “pennies on the dollar.” If after three years the property owner has not paid their back taxes, then I can begin the foreclosure procedure. I don’t expect to acquire this property; my objective is to earn a 12% rate of return on my investment until the property owner can settle up with the county.

An investor will typically only get the property about 2% of the time as a result of purchasing a tax lien sale certificate. That’s a far cry from the ads on TV. Tax deed sales result in the investor acquiring the property, but is it really “pennies on the dollar”? Check back for Part 2 for the answer.

Linear Income or Residual Income?

We all know about linear income even if we don't recognize the name. It is income one receives for the hours put in on a job. Work for X time frame and earn Y. Most of Americans earn linear income from the day they begin in the workplace to the day they retire, then the money train stops. But what about after retiring? Well, hopefully while earning a linear income the worker saved enough through 401k or pension plans to supplement Social Security enabling them live a comfortable lifestyle in their golden years.

Residual income on the other hand, is a source of income that keeps coming in; from work done once. Several fields provide the opportunity for residual income; acting, insurance and network marketing come to mind. Actors are paid a fee for appearing in movies or TV. They also earn “residuals”. Movie actors receive residual payments when movies appear on TV or DVD. Television actors, residual payments start when the show goes to reruns or to DVD. Insurance agents are generally paid a commission on the new insurance policies they sell. An agent also receives renewal commission each time a client renews their policy. A Network marketer builds a team as well as a customer base. They earn income on purchases made by their customer base as well as sales earned by their team. Along with the opportunity to make a comfortable living while “working” people working in residual earning fields continue to generate income on work product produced once. The retirement puzzle for residual income earners adds an additional source of money for the retirement pot.

I’ve done the linear income model for years. I think it’s time to try the residual income model. Work once, get paid multiple times, this is my new goal.

Epic Snow & Ice Storm NOT, just another NJ snow storm

The trees got the worst of this storm.
Picture by Amanda Donner

This past week, the news was all a buzz about the snow and ice storm crossing the country. Dire forecasts scared the bejesus out of most of us on the east coast. A snow storm is one thing, but an ice storm is quiet another animal. Reports coming from the Midwest on conditions there only heightened our concern. The parking lot at the supermarket earlier this week was packed. Long lines at the checkout counter and empty shelves were the norm.

In northern NJ, the storm started Monday night with snow into Tuesday morning. Undeterred, I ventured out early in the morning to clear my patio of the couple inches of ice had accumulated in advance of the ice portion of the storm. While I was at it, I cleaned the car & topped off the gas tank in case of the pending ice brought down power. Luckily I didn’t lose power as the ice never really accumulated. For all the doom, gloom and dire warnings of the weather people the storm in my area, was pretty lame. Even so, I along with most of my neighbors was housebound for the better part of two days. In order to keep from going stir crazy I scrubbed the bathroom down (is there another room that’s more yucky to clean?), sorted my paperwork for 2010 (my accountant will be thrilled) and sent valentines to friends. Ever since my friend Gen introduced me to Send Out Cards, I’ve been having fun sending cards for all kinds of events that I never would have before. 

While the storm didn’t live up to the hype in my area, it was a productive for me. Even so, I’ve very happy to be able to get out and about again. I’m off to breakfast with a friend, have a great day!

My 1st Movie

I recently went to a presentation that included a nifty little movie using text-to-movie technology. The movie was so amusing I found it on the web shared it with my Facebook buddies.  Another friend, also uploaded a movie, but it was one she created. Intrigued, I went to the company’s website to investigate.  Xtranormal provides the technology to turn a script into a movie. Pick a set. Cast the actors, in this case animated avatars. Type in your script, add the camera shot list, and music and presto change, you’ve got yourself a movie.

It sounded simple, so I decided to make a movie.  The movie centers on a girl telling a friend about NJ Libraries’ Technology Catch-up Centers. NJ Libraries are trying to win a $250k grant from Pepsi Refresh to create Technology Catch-up Centers at libraries throughout the state. The grant provides money for not only the hardware, but training, and downloadable books. Each center’s kit will contain an Ipad, nook, kindle, and flip ultra camcorder. The centers will open up a world of possibilities for all patrons and further NJLA’s goal of libraries being community centers where library patrons become lifelong learners.

Learning how to use xtranormal’s features is pretty easy. The choices are limited, which for a beginner like me is a good thing. While creating a movie, you can make as many changes as you want. Of course this meant, I tried out almost every set, avatar, camera angle & expression that xtranormal offered. On a freezing cold weekend, it was a fun way to stay entertained, inside. I hope you like it. If you’ve got an idea for a movie, now it’s as easy as pie to become a movie producer. Go for it, I look forward to seeing what you create.

Which is better $1 million dollars or 1 penny doubling for 30 days?

Which would you rather have $1 million dollars today OR 1 penny that doubles everyday for 30 days? It’s a classic case of instant gratification vs delayed gratification. Gratification is the pleasurable reaction to fulfilling a goal or desire; or in a word, happiness.

Many people would take the million dollars thrilled with the rush from immediate gratification. The wheels instantly start turning on how to spend the million. With the excitement level rising, many people won’t even stop to think what a penny doubling every day would be worth. Other people would start to do the math in their head. If they got to day 10, the penny option would be worth… a whole $5.12! Even on day 20 the penny option is only worth $5242. Well forget that, it must be better to take the mil. This is the instant gratification world we’ve been living in (just look at Congress) we can’t even take the time to do the math for the whole 30 days.

But boy if you did, the answer of which to take is much different. The magic of compounding gets really impressive at day 27. Suddenly the penny compounding is fast approaching the million dollars, $671,088. On day 28 the penny has compounded it way past $1million dollars. By delaying gratification until the day 30 payday, the penny has grown to $5,368,709.12.  Surprise, by waiting the little penny has grown far beyond the million dollars. Now that’s happiness. Now that’s happiness. 

Double a Penny everyday - Last 7 days

NJ Libraries Vying for Pepsi Refresh Grant

NJ Libraries are trying to win a $250k grant from Pepsi Refresh to create Technology Catch-up Centers at libraries throughout the state. Pepsi accepts 1000 proposals every month from groups that have ideas that can create a positive impact on their society. The public then votes and the top 2 vote getting ideas will receive $250k grants.

The New Jersey Library Association (NJLA) and the NJ State Library have joined together in this proposal to bring the latest technologies to New Jersey Libraries. The “catch-up” centers will contain e-readers and a flip-camcorder which will allow patrons access new technologies. These centers will help parents “catch-up” with their digital native children. They will help the unemployed or under-employed to “catch-up” with their full-time employed counterparts.

The grant provides money for not only the hardware, but training, and downloadable books. Each center’s kit will contain an Ipad, nook, kindle, and flip ultra camcorder. The centers will open up a world of possibilities for all patrons and further NJLA’s goal of libraries being community centers where library patrons become lifelong learners.

I would love to use a Technology Catch-up Center in my library. Please vote EVERY day from now through January 31, 2011.

New Year, New Post

Yes, I've finally gotten around to updating this blog. It's been a tumultuousness few months. I went to Tina Sloan's NY premiere of "Changing Shoes", a wonderful show. If she's in your area, do go and see her one woman show. Tina kind enough to come to the Roxbury Library for a book signing. Thank you Tina!


My dad moved in with me. While preparing for the move, I had an accident which ended with me a little bloody and with both arms in slings. Luckily only the left elbow was broken, but I was fairly useless for most of the move. While dad is moved in, my car is still unhappily waiting to move back into my garage. 

The move necessitated a re-evaluation of my belongings. There have been endless trips to charity drops and the dumpster. God bless the Telenext dumpsters. There is something therapeutic about throwing junk in a dumpster, even more than the endorphin rush of donating to charity.  But let's face it we all have stuff that is worth money. Maybe not a lot, but something. Now I loved the video shop in Mendham that had an E-bay store on the side. I could just drop off my stuff, he'd sell it & I'd get a check or if it didn't sell, he'd give it to charity. Either way once it was at the shop, it was out of my life. Unfortunately not only has Netflix taken out Blockbuster, they forced my video store to close as well. So the search began for a new venue to sell my more valuable belongings. The whole Craigslist/E-bay world is confusing to me. The concept of having to pack & mail items gives me a headache and has me shying away E-bay. Craigslist proved challenging but I did sell the biggest pieces of furniture, so I consider it a success. I've still got a number of items I need to relocate from my home/storage. So, if you know of anyone looking to by dishes, I've got two sets of china and one everyday set I'm looking to sell. 

One of the fine china sets I'm looking to sell