Friday, August 29, 2008

10 Things Millionaires Won't Tell You

1. "You may think I'm rich, but I don't."

A million dollars may sound like a fortune to most people, and folks with that much cash can't complain — they're richer than 90 percent of U.S. households and earn $366,000 a year, on average, putting them in the top 1 percent of taxpayers. But the club isn't so exclusive anymore. Some 10 million households have a net worth above $1 million, excluding home equity, almost double the number in 2002. Moreover, a recent survey by Fidelity found just 8 percent of millionaires think they're "very" or "extremely" wealthy, while 19 percent don't feel rich at all. "They're worried about health care, retirement and how they'll sustain their lifestyle," says Gail Graham, a wealth-management executive at Fidelity.

Indeed, many millionaires still don't have enough for exclusive luxuries, like membership at an elite golf club, which can top $300,000 a year. While $1 million was a tidy sum three decades ago, you'd need $3.6 million for the same purchasing power today. And half of all millionaires have a net worth of $2.5 million or less, according to research firm TNS. So what does it take to feel truly rich? The magic number is $23 million, according to Fidelity.

2. "I shop at Wal-Mart..."

They may not buy the 99-cent paper towels, but millionaires know what it is to be frugal. About 80 percent say they spend with a middle-class mind-set, according to a 2007 survey of high-net-worth individuals, published by American Express and the Harrison Group. That means buying luxury items on sale, hunting for bargains — even clipping coupons.

Don Crane, a small-business owner in Santa Rosa, Calif., certainly sees the value of everyday saving. "We can afford just about anything," he says, adding that his net worth is over $1 million. But he and his wife both grew up on farms in the Midwest — where nothing was wasted — and his wife clips coupons to this day. In fact, most millionaires come from middle-class households, and roughly 70 percent have been wealthy for less than 15 years, according to the AmEx/Harrison survey. That said, there are plenty of millionaires who never check a price tag. "I've always wanted to live above my means because it inspired me to work harder," says Robert Kiyosaki, author of the 1997 best seller Rich Dad, Poor Dad. An entrepreneur worth millions, Kiyosaki says he doesn't even know what his house would go for today.

3. "...but I didn't get rich by skimping on lattes."

So how do you join the millionaires' club? You could buy stocks or real estate, play the slots in Vegas — or take the most common path: running your own business. That's how half of all millionaires made their money, according to the AmEx/Harrison survey. About a third had a professional practice or worked in the corporate world; only 3 percent inherited their wealth.

Regardless of how they built their nest egg, virtually all millionaires "make judicious use of debt," says Russ Alan Prince, coauthor of "The Middle-Class Millionaire." They'll take out loans to build their business, avoid high-interest credit card debt and leverage their home equity to finance purchases if their cash flow doesn't cut it. Nor is their wealth tied up in their homes. Home equity represents just 11 percent of millionaires' total assets, according to TNS. "People who are serious about building wealth always want to have a mortgage," says Jim Bell, president of Bell Investment Advisors. His home is probably worth $1.5 million, he adds, but he owes $900,000 on it. "I'm in no hurry to pay it off," he says. "It's one of the few tax deductions I get."

4. "I have a concierge for everything."

That hot restaurant may be booked for months — at least when Joe Nobody calls to make reservations. But many top eateries set aside tables for celebrities and A-list clientele, and that's where the personal concierge comes in. Working for retainers that range anywhere from $25 an hour to six figures a year, these modern-day butlers have the inside track on chic restaurants, spa reservations, even an early tee time at the golf club. And good concierges will scour the planet for whatever their clients want — whether it's holy water blessed personally by the Pope, rare Mexican tequila or artisanal sausages found only in northern Spain. "For some people, the cost doesn't matter," says Yamileth Delgado, who runs Marquise Concierge and who once found those sausages for a client — 40 pounds of chorizo that went for $1,000.

Concierge services now extend to medical attention as well. At the high end: For roughly $2,000 to $4,000 a month, clients can get 24-hour access to a primary-care physician who makes house calls and can facilitate admission to a hospital "without long waits in the emergency room," as one New York City service puts it.

5. "You don't get rich by being nice."

John D. Rockefeller threatened rivals with bankruptcy if they didn't sell out to his company, Standard Oil. Bill Gates was ruthless in building Microsoft into the world's largest software firm (remember Netscape?). Indeed, many millionaires privately admit they're "bastards in business," says Prince. "They aren't nice guys." Of course, the wealthy don't exactly look in the mirror and see Gordon Gekko either. Most millionaires share the values of their moderate-income parents, says Lewis Schiff, a private wealth consultant and Prince's coauthor: "Spending time with family really matters to them." Just 12 percent say that what they want most to be remembered for is their legacy in business, according to the AmEx/Harrison study.
Millionaires are also seemingly undaunted by failure. Crane, for example, now runs a successful company that screens tenants for landlords. But his first business venture, a real estate partnership, went bankrupt, costing him $20,000 — more than his house was worth at the time. "It was the most depressing time in my life, but it was the best lesson I ever learned," he says.

6. "Taxes are for little people."

Most millionaires do pay taxes. In fact, the top 1 percent of earners paid nearly 40 percent of federal income taxes in 2005 — a whopping $368 billion — according to the Internal Revenue Service. That said, the wealthy tend to derive a higher portion of their income from dividends and capital gains, which are taxed at lower rates than wages (15 percent for long-term capital gains versus 25 percent for middle-class wages). Also, high-income earners pay Social Security tax only on their first $97,500 of income.

But the big savings come from owning a business and deducting everything related to it. Landlords can also depreciate their commercial properties and expenses like mortgage interest. And that's without doing any creative accounting. Then there are the tax shelters, trusts and other mechanisms the superrich use to shield their wealth. An estimated 2 million Americans have unreported accounts offshore, and income from foreign tax shelters costs the U.S. $20 billion to$40 billion a year, according to the IRS. Indeed, "an increasing number of people want to establish an offshore fund," says Vernon Jacobs, a certified public accountant in Kansas who specializes in legal foreign accounts.

7. "I was a B student."

Mom was right when she said good grades were the key to success — just not necessarily a big bank account. According to the book "The Millionaire Mind," the median college grade point average for millionaires is 2.9, and the average SAT score is 1190 — hardly Harvard material. In fact, 59 percent of millionaires attended a state college or university, according to AmEx/Harrison.

When asked to list the keys to their success, millionaires rank hard work first, followed by education, determination and "treating others with respect." They also say that what they absorbed in class was less important than learning how to study and stay disciplined, says Jim Taylor, vice chairman of the Harrison Group. Granted, 48 percent of millionaires hold an advanced degree, and elite colleges do open doors to careers on Wall Street and in Silicon Valley (not to mention social connections that grease the wheels). But for every Ph.D. millionaire, there are many more who squeaked through school. Kiyosaki, for one, says the only way he survived college calculus was by "sitting near" the smart kids in class — "we cheated like crazy," he says.

8. "Like my Ferrari? It's a rental."

Why spend $3,000 on a Versace bag that'll be out of style as soon as next season when you can rent it for $175 a month? For that matter, why blow $250,000 on a Ferrari when for $25,000 it can be yours for a few weekends a year? Clubs that offer "fractional ownership" of jets have been popular for some time, and now the concept has extended to other high-end luxuries like exotic cars and fine art. How hot is the trend? More than 50 percent of millionaires say they plan to rent luxury goods within the next 12 months, according to a survey by Prince & Associates. Handbags topped the list, followed by cars, jewelry, watches and art. Online companies like Bag Borrow or Steal, for example, cater to customers who always want new designer accessories and jewelry, for prices starting at $15 a week.

For Suzanne Garner, a millionaire software engineer in Santa Clara, Calif., owning a $100,000 car didn't make financial sense (she drives a Mazda Miata). Instead, Garner pays up to $30,000 in annual membership fees to Club Sportiva, a fractional-ownership car club in San Francisco that lets her take out Ferraris, Lamborghinis and other exotic vehicles on weekends. "I'm all about the car," she says. And so are other people, it seems. While stopped at a light in a Ferrari recently, Garner received a marriage proposal from a guy in a pickup truck. (She declined the offer.)

9. "Turns out money can buy happiness."

It may not be comforting to folks who aren't minting cash, but the rich really are different. "There's no group in America that's happier than the wealthy," says Taylor, of the Harrison Group. Roughly 70 percent of millionaires say that money"created" more happiness for them,he notes. Higher income also correlates with higher ratings in life satisfaction, according to a new study by economists at the Wharton School of Business. But it's not necessarily the Bentley or Manolo Blahniks that lead to bliss. "It's the freedom that money buys," says Betsey Stevenson, coauthor of the Wharton study.

Concomitantly, rates of depression are lower among the wealthy, according to the Wharton study, and the rich tend to have better health than the rest of the population, says James Smith, senior labor economist at the Rand Corporation. (In fact, health and happiness are as closely correlated as wealth and happiness, Smith says.) The wealthy even seem to smile and laugh more often, according to the Wharton study, to say nothing of getting treated with more respect and eating better food. "People experience their day very differently when they have a lot of money," Stevenson says.

10. "You worry about the Joneses — I worry about keeping up with the Trumps."

Wealth may go a long way toward creating happiness, but the middle-class rich still can't afford the life of the billionaire next door — the guy who writes charity checks for $100,000 and retreats to his own private island. "What makes people happy isn't how much they're making," says Glenn Firebaugh, a sociologist at Pennsylvania State University. "It's how much they're making relative to their peers."

Indeed, for all their riches, some 40 percent of millionaires fear that their standard of living will decline in retirement and that their money will run out before they die, according to Fidelity. Of course, it may not help if their lifestyle is so lavish that they're barely squeaking by on $400,000 a year. "You can always be happier with more money," says Stevenson. "There's no satiation point." But that's the trouble with keeping up with the Trumps. "Millionaires are always looking up," says Schiff, "and think it's better up there."

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How Newegg Stopped Collecting New York State Tax

Reader Chris Schiffner pinged Newegg to see why and how they stopped collecting New York State tax. They sent him an answer, posted after the jump, but here's the short story: A new New York law would have required internet retailers using affiliate marketing to collect sales tax, so Newegg "restructured its affiliate marketing program." The new structure somehow avoids having to collect New York sales tax. Shrug. Whatever, New York geeks, rejoice!

Newegg's official statement:

Earlier this year, New York State passed a law which potentially forces non-New York State internet retailers to collect and remit New York State sales tax if the retailer’s marketing affiliates engage in certain marketing activities targeted at New York residents.

In response to this law, on June 1, 2008 (“Newegg”) began collecting sales tax on its sales to New York State residents.

Since then, New York State tax authorities have issued additional guidance as to the circumstances in which internet retailers would be required to collect sales tax. Based on this guidance, Newegg has restructured its affiliate marketing program in an effort to ensure that Newegg is not presumed under New York State law to have to collect sales tax.

What this means to our New York State customers is that, effective 12:00 a.m. Eastern Time on August 21, 2008, Newegg will no longer charge sales tax on its sales to you. However, please be aware that you may still have an obligation to pay New York use tax on your purchases. (Use taxes are not charged or collected by Newegg but are paid directly by purchasers to the appropriate taxing authority.) Newegg cannot offer you any tax advice, so if you have any questions about whether you have to pay use tax, please consult an appropriate tax professional.

Disclaimer: Nothing in this email shall be deemed an admission that Newegg has ever been legally required to collect and remit New York State sales tax on its sales to residents of that state. Newegg continues to challenge the validity of section 1101(b) (8) (vi) of the New York State Tax Law.

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Japan military may run out of gas money this year

By Jay Alabaster, Associated Press Writer

Japan's military may run out of gas money this year despite cutbacks on use of jets, ships TOKYO (AP) -- Japan's military may use up its annual fuel budget months early this year, despite running some ships and planes at low power and cutting back on major exercises.

Faced with fuel costs that exceed spending plans by 60 percent, the Self Defense Force has scaled back training missions involving jets and ships, vehicles are being run at slower speeds, and more passengers are being squeezed in per trip in order to conserve fuel, a Defense Ministry spokeswoman said on condition of anonymity, citing protocol.

"If fuel prices keep increasing we won't be able to cover it, and we will have to make a request to ensure we have sufficient funds," the spokeswoman said.

She refused to say the fuel shortage would affect Japan's foreign operations, such as dispatches in support of U.S.-led forces in Iraq, but she denied that the country's defense would be compromised.

It was unclear when the country's military would run out of gas under current conditions, though broadcaster NHK said the fuel budget would run out in November, over four months before the end of the fiscal year in March.

A request for more funds would likely be included in the supplementary budget, to be debated in the Diet -- Japan's parliament -- later this year, she said.

Japan is dependent on imports for 99.7 percent of its oil supply. Over the last two months, the average price for fuel used in military vehicles -- land, air and sea -- has risen to $4.18 a gallon (120,000 yen per kiloliter), 60 percent higher than the $2.62 a gallon (75,000 yen per kiloliter) budgeted by the military.

The ministry is considering canceling its largest annual naval exercise in November for the first time. The exercise involving 90 warships and 170 jets has not been called off since it began in 1954.

As in other countries, soaring oil prices have also hit consumers and prompted some industries to ask the government for help.

Japanese fisherman staged their largest-ever national strike last month, and Tokyo responded with 74.5 billion yen ($690 million) in emergency aid.

Earlier this week thousands of truck drivers across Japan held demonstrations to protest rising fuel prices, demanding lower gas taxes and highway tolls and warning they would add surcharges to cover spiraling costs.

Even royalty has not been exempt: when Emperor Akihito attends an annual ocean convention in northern Japan in September, there will be no sea parade for him this year.

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Prosecutor: Baby put in microwave on purpose

DAYTON, Ohio (AP) -- A mother intentionally put her month-old daughter in a microwave oven and cooked the child to death after a fight with her boyfriend, a prosecutor told jurors Thursday.

China Arnold is accused of killing her baby by burning her in the microwave.

China Arnold is accused of killing her baby by burning her in the microwave.

Defendant China Arnold and her boyfriend had argued over whether he was the biological father, Assistant Montgomery County prosecutor Daniel Brandt said during closing arguments in the woman's retrial.

The argument got so heated that Arnold bit her boyfriend's lip and he slapped her, Brandt said.

Arnold, 28, of Dayton, is accused of killing her infant daughter Paris Talley in 2005. She could face the death penalty if convicted of aggravated murder.

Brandt said Arnold told a cellmate she put the baby in the microwave and turned it on because she was worried her boyfriend would leave her if he found out the child wasn't his, Brandt said.

"She could have stopped it with one finger, but she didn't," Brandt said. "We know she used that microwave as the instrument of death."

Defense attorney Jon Paul Rion told the jury there was evidence that someone else was responsible.

He cited testimony from a boy who said he saw another boy walk into the kitchen of a nearby apartment with the baby, heard the microwave go on, and then later saw the burned baby in the microwave.

"He told a very believable story," Rion said.

Judge John Kessler declared a mistrial in February after he privately heard the youngster's account. The boy, now 8, testified at the retrial Tuesday.

In rebuttal, however, the 8-year-old's mother testified Wednesday that they lived some distance away and they were not at Arnold's apartment complex when the baby died. Her former live-in boyfriend also testified that he was certain the boy was not at the location.

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Text message snoop? Study says beware

SYDNEY (Reuters Life!) - Can't help checking your partner's text messages on the sly? You're not alone, with an Australian survey showing one in three mobile phone users are text message snoops, and the consequences can often be heart-breaking.

The online survey, conducted for telecoms service provider Virgin Mobile Australia, shows that women are more likely than men to check their partner's phone in secret.

It also revealed that 73 percent of these sneaky text checkers have found out things they later wished they hadn't, and 10 percent ended their relationship because of SMS snooping.

"In a society when we very rarely let our mobile phones out of our sight, it's quite amazing to think that for a lot of us the minute we jump in the shower, someone might be checking up on us," Virgin Mobile's Amber Morris said in a statement.

Slightly more than 500 mobile phone users in Australia aged between 18 and 29 were polled by a market research firm in July.

The survey found that 60 percent spy on text messages when their partner is in the shower, while just over 41 percent do it when they are in the same room.

Nearly 45 percent said they had discovered flirtatious or sexual texts, ranging from the harmless to the graphic.

"With so many modes of communication available these days, it's difficult to keep track of your partner's whereabouts or who they're chatting to and when," Virgin Mobile quoted author and relationship expert Samantha Brett as saying.

"Flirting is age old, but the fact that it can now be tracked on your phone makes a nervous partner a paranoid text-checker."

Brett advised SMS snoops to stop. "If you suspect that your partner is up to something, talk about it. Text checking can turn into a vicious cycle, and it can easily be avoided," she added.

(Writing by Miral Fahmy; Editing by Paul Tait)

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Halliburton sued for human trafficking

John Byrne

Twelve men recruited in Nepal died after forced transfer to Iraq, lawfirm says

Thirteen Nepali men were recruited and held against their will for thirteen months in a human trafficking scheme engineered and perpetrated by Halliburton and its Jordanian contractor, according to a lawsuit filed yesterday in California federal court.

The Nepali men, each between the ages of 18 and 27, were allegedly hired as kitchen staff by the then-Halliburton subsidiary KBR and its Jordanian subcontractor, Daoud & Partners. Once they arrived in Jordan, however, their passports were seized and they were dispatched to Iraq.

"Tragically, as the men were being transported to Iraq, a car containing twelve of the men was stopped by members of the Ansar al-Sunna Army, an insurgent group," the Washington lawfirm Cohen, Milstein, Hausfeld & Toll writes. "The 12 men in the car were taken hostage and executed by the insurgents. The executions were filmed and posted on the Internet. The Inspector General for the United States Department of Defense investigated and confirmed the facts related to the fate of the 12 men, which led to increased enforcement of anti-trafficking measures by the United States."

Only one man survived. After he was released by Iraqi rebels, he said he was assigned to work as a loader/unloader in a US military warehouse facility supervised by KBR. He asserts that he was held for 15 months against his well, before the firm finally allowed him to return home to Nepal.

Cohen, Milstein is suing on behalf of their families and the remaining survivor, Buddi Prasad Gurung. According to the law firm, their families went deep into debt to pay recruiting fees to Halliburton's contractor in order to get promised jobs.

This spring, a judge at the Department of Labor ordered KBR's contractor, Daoud, to pay $1 million to the families of 11 of the victims. "The Inspector General for the United States Department of Defense investigated and confirmed the facts related to the fate of the 12 men, which led to increased enforcement of anti-trafficking measures by the United States," the lawfirm said in a release.

KBR declined to comment directly on the charges when contacted by the Washington Post Wednesday.

"KBR has not seen the lawsuit so it is premature for us to comment at this time," KBR spokeswoman Heather Browne wrote the Post in an e-mailed statement. "The safety and security of all employees and those the company serves remains KBR's top priority. The company in no way condones or tolerates unethical or illegal behavior."

KBR was spun off from Halliburton in a 2006 IPO, and formally disengaged from the company in 2007. The spinoff appears party as a result of negative press relating to allegations the company engaged in overbilling and got sweetheart deals. KBR had been Halliburton's engineering arm for 44 years, and was also accused of overbilling and sweetheart deals during the Vietnam War.

The family members and the survivor are suing under the Trafficking Victims Protection Reauthorization Act, the Racketeering Influenced and Corrupt Organizations Act, and the Alien Tort Claims Act. The DC lawfirm representing them often focuses on victims of forced and slave labor and other violations of international law.

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Putin accuses U.S. of orchestrating Georgian war

SOCHI, Russia (CNN) -- Russian Prime Minister Vladimir Putin has accused the United States of orchestrating the conflict in Georgia to benefit one of its presidential election candidates.

Russian PM Vladimir Putin has accused the U.S. of orchestrating the conflict in Georgia.

Russian PM Vladimir Putin has accused the U.S. of orchestrating the conflict in Georgia.

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In an exclusive interview with CNN's Matthew Chance in the Black Sea city of Sochi on Thursday, Putin said the U.S. had encouraged Georgia to attack the autonomous region of South Ossetia.

Putin said his defense officials had told him it was done to benefit a presidential candidate -- Republican John McCain and Democrat Barack Obama are competing to succeed George W. Bush -- although he presented no evidence to back it up.

"U.S. citizens were indeed in the area in conflict," Putin said. "They were acting in implementing those orders doing as they were ordered, and the only one who can give such orders is their leader." Video Watch Putin accuse the United States »

White House spokeswoman Dana Perino blasted Putin's statements, saying they were "patently false."

"To suggest that the United States orchestrated this on behalf of a political candidate just sounds not rational," she said.

U.S. State Department deputy spokesman Robert Wood concurred and labeled Putin's statements "ludicrous."

"Russia is responsible for the crisis," Wood said in an off-camera meeting with reporters in Washington on Thursday. "For the Russians to say they are not responsible for what happened in Georgia is ludicrous. ... Russia is to blame for this crisis, and the world is responding to what Russia has done."

When told that many diplomats in the United States and Europe blame Russia for provoking the conflict and for invading Georgia, Putin said Russia had no choice but to invade Georgia after dozens of its peacekeepers in South Ossetia were killed. He told Chance it was to avert a human calamity. First-person accounts from the center of the conflict

The former Russian president, still considered the most powerful man in the country, said he was disappointed that the U.S. had not done more to stop Georgia's attack.

Putin recalled that he was watching the situation in Georgia and South Ossetia unfold when he was at the opening ceremony of the Beijing Olympic Games on August 8.

He said he spoke to U.S. President Bush, also attending, who told the Russian prime minister he didn't want war, but Putin spoke of his disappointment that the U.S. administration didn't do more to stop Georgia early in the conflict.

Also Thursday, Putin announced economic measures that he said were unrelated to the fighting with Georgia. Nineteen U.S. poultry meat companies would be banned from exporting their products to Russia because they had failed health and safety tests, and 29 other companies had been warned to improve their standards or face the same ban, Putin said.

Putin said Russia's health and agricultural ministries had randomly tested the poultry products and found them to be full of antibiotics and arsenic.

Putin repeated that the bans were not related to the Georgian conflict, but they indicate the measures that some Western countries -- particularly in Europe -- fear if Russia goes on a diplomatic offensive.

Russia is trying to counterbalance mounting pressure from the West over its military action in Georgia and its recognition of the breakaway regions of Abkhazia and South Ossetia.

But Russia's hopes of winning international support for its actions in Georgia were dashed Thursday, when China and other Asian nations expressed concern about tension in the region.

The joint declaration from the Shanghai Cooperation Organization, which includes China, Russia, Tajikistan, Kyrgystan, Kazakhstan and Uzbekistan, said the countries hoped that any further conflict could be resolved peacefully. Video Watch more on rising tensions between Russia and the West. »

"The presidents reaffirmed their commitment to the principles of respect for historic and cultural traditions of every country and efforts aimed at preserving the unity of a state and its territorial integrity," the declaration said, The Associated Press reported.

"Placing the emphasis exclusively on the use of force has no prospects and hinders a comprehensive settlement of local conflicts," AP quoted the group as saying.

Russian President Dmitry Medvedev had appealed to the group at a summit in Tajikistan on Thursday to support its actions, saying it would serve as a "serious signal for those who are trying to justify the aggression."

On Wednesday, a U.S. ship carrying aid docked in Georgia, while Britain's Foreign Secretary David Miliband traveled to the Ukraine, which is worried about Russia's intentions in the region, to offer the UK's support.

Miliband equated Moscow's offensive in Georgia with the Soviet tanks that invaded Czechoslovakia to crush the Prague Spring democratic reforms in 1968, and demanded Russia "change course," AP reported. Do remember the Cold War?

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