Sustainable Civilization

From the Grass Roots Up

Introduction - 2 - 3

I. Your Homestead And Essential Life Support - 2 - 3 - 4 - 5 - 6

II. Physical Sustainability Factors and Limitations - 2

III. Neighborhoods and the Web of Life - 2

IV. Sustainability Principles or Guidelines - 2

V. Ecovillage, Sustainable Civilization Minimum planning for continued organized society.

VI. Sustainability Programs, Politics, and Technology - 2 - 3

VII. The City As Ecology - 2

VIII. Sustainability Laws.

IX. Global Civilization.

X. Future.


A. Appropriate Technology - 2 - 3

B. Mess Micro Environment Subsistence System

C. Factoids - 2

D. Medicine Bag - 2 - 3 - 4 - 5

E. Estate Planning - Providing for Future Generations - 2 - 3 - 4 - 5 - 6 - 7 - 8

F. Bibliography

G. Biography

H. Sustainable Tucson - Tucson, Arizona Ecocity analysis

I. South Tucson – Ecovillage analysis

J. Oak Flower – Neighborhood analysis

K. Our Family Urban Homestead Plan

L. Our Plant Selections

Sustainable Civilization: From the Grass Roots Up

Estate and Financial Planning - Providing Assets for the Future - 2 - 3 - 4 - 5 - 6 - 7 - 8


The U.S. Internal Revenue Code provides two versions of what may be a significant means available to help you prepare for retirement. I am referring to "Individual Retirement Accounts" (IRA's). The IRS refers to the two versions as Traditional, and ROTH. Each has annual limits on deposits, withdrawal requirements, etc. If you want to read the complete details regarding either version, I'll refer you to IRS Publication 590. In this update, I just want to briefly touch on the taxable difference of the accounts, and then set out a concept for investing your IRA that provides the greatest possible opportunities.

Traditional IRA - Depending on your income, you may be able to deduct some or all of your annual deposit from your regular income, lowering you tax bill for the year. This has the effect of reducing the amount of money you need to take "out of pocket" to make your IRA deposit. Within a Traditional IRA, the earnings can accrue tax-deferred, until you start withdrawal. At that time, all withdrawals based on a deductible deposit, or profits inside the IRA, will be taxed at the tax rate applicable to you at the time you make the withdrawals.

ROTH IRA - Deposits to a ROTH are not tax deductible when made. Their advantage however is that under present law you may be able to withdraw all of the money, including earned profits, without incurring ANY tax. While there are further details on such tax-free withdrawal, in general if you are 59 1/2 or older, and 5 years have passed since your last deposit, there should be no tax on withdrawals. If you have taken risks with your ROTH account, and made particularly profitable investments, it can make a BIG difference at withdrawal time. Traditional to ROTH Conversion - If "you" (single or married) earn less then $100k per year, you can shift your traditional IRA to a ROTH, and while you will be required to pay income tax on the amount coming out of the "traditional" account, you can avoid penalties. On 17 APR 2006 President Bush signed a change in the tax law which allows even high-income taxpayers (for the conversion rules, "high income" is a couple with $100,000 or more of earnings), to convert their "Traditional" IRA into a Roth IRA. The bad news: The law as written does not make this program available for "high income" taxpayers until 2010. Starting in 2010, this law will suspend the current $100,000 income limit for Roth conversions for two years. In addition, included in the new tax-cut bill is a provision that if taxpayers convert their Traditional IRA to a Roth in 2010, they won't have to pay any taxes on the conversion that year. Taxpayers will be allowed to pay half their tax bill in 2011, the other half in 2012.

In both types of IRA, profits earned inside the IRA are not taxed. The advantage of a ROTH is that it also allows tax-free withdrawals. The concept behind the conversion program is that it allows you the option to convert, and pay tax at the conversion, for the long term benefit of not paying a greater tax later. This aspect is significant if you anticipate "hot" returns on your account.

General Rules - Either of the IRA account types can hold any of the investments allowed for an IRA. The limits you encounter at any particular IRA custodian, for your TSP, 401(k), etc. of a fixed list of "funds" is typically imposed by your custodian, not the IRS. For example, at the time of this writing, TSP accounts are held with Barclays Global Investors, and are limited to 5 mutual funds. Short of the limits imposed by the firm holding your account, for an IRA there is a short list of investments, types of transactions, and prohibited parties. Everything that is not prohibited is allowed.

Your IRA cannot purchase: Collectibles - Works of art, rugs or antiques, stamps or coins, alcoholic beverages, metals or gems.

Your IRA cannot purchase or sell goods or services:

To/from you, your spouse, your ancestor or descendant.

To/from anyone who makes decisions for the plan.

To/from an officer director or shareholder (10% or greater) of the plan.

To/from a partner of any of the above.

To/from a business owned 50% or more by any of the above.

The above list is not as long as you might have expected. All of the other restrictions you typically see restricting your IRA investments are the policies of your IRA custodian, not the IRS.

IRA Outer Limit - If your custodian limits your investment to a money market, stock, and bond funds, it's usually because their business is to sell those funds. Consider the following, which in a very simplistic manner sets out a scenario where you have probably the greatest possible discretion in management of your IRA:

1. You shift your IRA funds to a custodian who is willing to make and hold IRA investments in not only publicly traded securities, but also private securities, such as shares of a privately held Limited Liability Company (LLC).

2. After appropriate legal consultation, you create a new LLC, ensuring you are not an owner. (Anyone can create an LLC, not necessarily the "owner".)

3. You direct your IRA custodian to obtain ownership of the LLC.

4. You direct the IRA custodian to appoint you as the "General Manager" of the LLC. As the general manager of the LLC, you open an appropriate business checking account for the LLC.

5. You direct the IRA custodian to transfer funds to the LLC account for use by the LLC in its business operations.

6. You now have in your possession a checkbook for an account where you are the only authorized signer, which potentially contains all of the money in your IRA.

Extreme Example - Taking examples to the extreme, consider: You use the checkbook for your ROTH IRA to purchase a $300 million "Powerball" lottery ticket, and win. Under present apparent tax law, your ROTH does not owe income tax on the payments as received, and your withdrawals after age 59 1/2 are tax exempt. Transaction Waivers / Letter Rulings - If you want to seek an advance letter ruling to approve a transaction that "might" violate the rules, you may be, as I, surprised to note that it is NOT the IRS that you contact. It is the Department of Labor that holds the responsibility for these.

IRA Out of the Box - I admit the above is an extreme example, which is intended simply to spark interest in what an IRA can do for you. This article provides only a very simplistic introduction to the steps necessary to create such an IRA investment tool, and you should personally consult with legal counsel and your IRA custodian if you are considering any of the actions indicated above. There are numerous websites which describe this process, and for the appropriate fee will do the legal work for you. Please note, the fees vary widely.

Without the complication of the above investment in a private LLC, there is still much that can be done with an IRA account, provided you have a cooperative custodian. As touched on in other articles, an IRA can purchase and hold as an investment in the IRA real property, whether vacant land, or rental property.

As indicated above in the restrictions, you and certain other individuals/entities cannot enter into transactions between you and your IRA. This would of course include lending money to your IRA, or the LLC, or you borrowing from such. It also means you cannot personally sign as guarantor for a loan to your IRA from another entity. It does NOT however mean that your IRA cannot make loans. The IRA rules DO permit your IRA to loan money. When your purchase a bond, you are making a loan. Your IRA can legally loan money to your friend, niece, cousin, brother, sister, etc. You IRA can also borrow money.

There are financial institutions which will make non-recourse loans to an IRA, depending of course on the intended investment of the loan, with the understanding that if it turns out the IRA cannot repay the loan, that the lender has no legal recourse against you, or anyone else, or any other asset, other than the particular IRA account which you authorized to enter into the loan.

Your IRA could "partner" with other IRA's. For example, say you wanted to purchase a small rental apartment building, but you do not have enough cash and/or loan resources to make the purchase. If you know of others who have also set up such IRA accounts with cooperative custodians, your accounts can be combined to make the purchase. You could even enter into a partnership between "you", and your IRA to make a purchase.

Summary - Limited IRA investment options merely example presentations that tell only a selected part of the story. Research the history and full scope of investment information, or any other news, and think outside the box.


Your Car. Unless you have an antique, or some type of "collector car", the purchase of a motor vehicle is far from being an investment.

What does driving a car cost you? For demonstration purposes, assume we start with an 18 year old, who drives for 50 years.

Fuel. A low average annual driving is considered to be 12,000 miles. If your vehicle gets 20 mpg, that's 600 gallons per year. If we ignore inflation projections, and assume a flat price for a lifetime of $2.25 per gallon, each year you spend $1350. Had this money been invested for the long term at 8%, it would be an account of around $800,000.

Purchase Costs. Say you purchase a $20,000 car every five years, and get $5,000 trade in value on the "old" car. You "lose" $15,000 every transaction. Had this lost money been invested for the long term at 8%, it would be an account of around $1,900,000.

Tax and Insurance. Estimate the tax at $300 per year, and insurance at $600. Had this money been invested for the long term at 8%, it would be an account of around $590,000.

A lifetime of driving a "new" car can easily cost you over $3,290,000 that you would otherwise have available at retirement.


For more than a decade, the "unearned" income of children under the age of 14 has been taxed by allowing a small amount to be tax free, and then placing a similar small amount on a tax return filed by the child ($850 for 2006), and the rest on the parents tax return, at the parents rate.

Congress has "retroactively" changed this back to 31 DEC 2005.

Starting with the filing for calendar / tax year 2006, ALL "unearned" income of a child under the age of 18 will be required to be reported and taxed as part of the parents return.

Unearned income of a child is investment income such as interest, dividends, and capital gains. If the child is actually employed such employment income is to be reported on the child's own tax return, and taxed at the child's rate.




If your child is newborn or still young, it's NOT too early to start planning for your child's college education. The sooner you start investing for your child's education, the longer "compound interest" works for you. Start early, and time can be your ally.

The good news is, as your child grows, you'll gain greater insight into their abilities, interests, and capabilities. The bad news is that if you wait until your child is in high school to contemplate their college education, you may find their abilities outreach your financial resources.

Approaches to college costs:

       Long Term Investing
       Student Loans and Grants
       Scholarships (sports and academic)
       Military Academy
       Military Service
       Distance Education

Long Term Investing. The first step in making a plan is to estimate what the total cost of your child's education is likely to be.

In January, 2003, at the community college in Yuma, the first 60 credits of a degree (essentially an Associates Degree) cost $30.00 per credit. The 60 upper level credits needed for a Bachelors Degree cost $133.00 per credit. Therefore, in tuition alone (remember fees, books, pizza...) a Bachelors Degree from our local institute will cost at least $9780. (Round up to $10,000) This cost is well below the national average, which is about $40,000.

Premier colleges can cost much more. (i.e. the tuition at Harvard in 2002 was $23,457 per year) I would suggest you consider the "purpose" behind obtaining an undergraduate degree, before selecting the institution.

At five percent inflation per year, the estimated cost of a four year degree in Yuma 18 years from now would be around $24,000 (10 years from now the cost would be approximately $16,000).

Once you have estimated how much your future cost is going to be, the amount of money you need to invest each year depends in significant part on what you estimate the annual increase of your investment will be.

For the mathematically inclined, the formula is:

F = A ((1+r)n -1)/r)

F = future amount A = amount you put away per time period (i.e. each year) r = interest rate during the time period n = number of years, used as an exponent in the formula

For the computer inclined, you'll want to use the "Future Value" function in your spreadsheet.

Assuming you consistently earn 5%, a quick estimate of what you would need to save annually:

College in Yuma Harvard

Goal $24,000 $226,000

For your newborn.

        $900.00/year	$8,100.00/year

For your 4 yr old.

       $1,300.00/year	$11,500.00/year

For your 6 yr old.

      $1,550.00/year 	$14,500.00/year

To reach these goals, you probably want your money growing tax deferred. The readily available approaches include:

       Educational IRA
       529 Plans
       Regular IRA

Educational IRA. These accounts have been improperly referred to as an "IRA", but the name now appears stuck. They are accounts, which are available at almost any financial institution (banks, brokerage firms, insurance companies, etc.) into which you make annual deposits, up to the present limit of $2,000 per year, provide a wide choice of investment options. Prospectuses on individual plan investment details are available directly from the issuing companies. The investments grow tax-deferred, and if the money is withdrawn to pay the types of educational expenses authorized, there will be no tax even on withdrawal. The accounts are limited to clearly defined family relationships. Note though, DEPOSITS to the account are not tax deductible, and withdrawals that are not used for proper education purposes may not only be taxed but have an additional 10% penalty imposed.

529 Plans. These college savings programs are created by state law, and will vary in their details. The plan created in Arizona is called the Arizona Family College Savings Program at the College Savings Bank (CSB), and is limited to the investment options set out in the state law. Deposits are not tax deductible. Deposits grow tax deferred, and when withdrawn for authorized education purposes, are tax free for federal and Arizona State income taxes. Arizona has no annual limit on deposits, but does have a total deposit limit of $187,000. Please note, that deposits in any year which reach or exceed $10,000 for any one person may require you to file a federal "Gift Tax" form. (Yes, there are laws which impose a tax on money you give to someone else.) You CAN make contributions to BOTH an Education IRA and a 529 Plan. With the 529 plan, "anyone" can open the account, on behalf of anyone else.... Therefore, if you could convince grandparents, or that rich aunt or uncle to help...

Regular IRA. If you have set up a "Traditional", or "ROTH" IRA for yourself (or retired and rolled your TSP into an IRA), you can withdraw your money for qualified education expenses, and avoid the 10% penalty. (You'll still have to pay income tax on what you withdraw though.) If you don't have the "extra" money to set up a dedicated education account for your children, this may be a practical option.

Student Loans and Grants. If you've been dedicated and conscientious in saving for your child's education, yet fall short of being able to pay in full, you may be dismayed if you or your child seek a guaranteed student loan or grant for the remainder. In this regard, your savings will "work against you".

Grants, are great. If you qualify, it's "free" money.

Loans, are, well, loans, that MUST eventually be repaid. If you get a federally backed student loan, payments can be put "on hold" for a variety of reasons. If for example after finishing school, your student enters into active duty in the U.S. military, payments on a guaranteed student loan can be put on hold, and "Uncle Sam" will make the interest payments. This provides an opportunity to either make payments directly on the principle of the loan, or invest money with the aim of paying the loan in full at the end of the loan deferment period. Note for these loans, since bankruptcy law comes from the government, the government protects itself. If you find yourself bankrupt, you should expect that you will NOT be able to get rid of these loans in bankruptcy proceedings.

Scholarships (sports and academic). These are programs specific to the institutions.

Military Academy. Perhaps the most challenging means of obtaining an undergraduate education is one of the military service academies. It is four years of intensive effort, followed by some minimum required period of active duty service.

Military Service. Even if you have saved, consider the benefits of a term of enlistment.

Credits for service. In certain college programs (i.e. distance education) you may receive college credit for "boot camp", other military schools, or even for your MOS/Rank.

Tuition Assistance. All of the services have some program where the government pays some portion of your tuition to attend classroom, correspondence, or other distance learning programs.

Credit by Exam. There are a wide variety of examinations available thru the Defense Activity for Non-Traditional Educational Support (DANTES) for which you may earn college credit. While on active duty, these exams are FREE.

Examples of what is available in the civilian are include:


GRE - These tests may be "worth" as much as 39 credits. The website has available free introduction study guides.

Distance Education. Not that long ago, this would have referred only to "correspondence schools". Today, there are many options, and you can earn Associate, Bachelor, Masters, even some Ph.D.'s thru distance programs. BE SURE though that the "school" is legitimate. A self-motivated student, capable of independent research and study, can complete a degree thru one of these programs in far less time, and at far less cost, than in any other program.

At the undergraduate level (B.S.) I am aware of three programs thru which it is possible to earn a Bachelors Degree, issued by a state agency COMPLETELY by taking exams. (Remember, the tests are FREE for active duty members.) The cost of the exams for civilians are moderate, compared to classroom tuition costs.

Excelsior College (New York)

Thomas A. Edison University (New Jersey)

Charter Oak Collge (Connecticut)

There are numerous other legitimate institutions, which will grant varying levels of credit for exams, correspondence courses, "online" courses, etc., almost all of which have lower costs that traditional classroom credits.

Estate and Financial Planning - Providing Assets for the Future - 2 - 3 - 4 - 5 - 6 - 7 - 8

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