Category

Early Retirement

Early Retirement, Frugal Living, Lifestyle

Medical Tourism: Save 90% on Healthcare and Get a Free Vacation

Even if you read the news poorly you know healthcare costs in the U.S. are astronomical. The U.S. healthcare system is more than double the cost of the world’s second costliest health care system in the U.K. And what do we get for all this extra money we pay for healthcare? Subpar performance. The U.S. currently ranks 37 according to the World Health Organization, right behind Costa Rica and ahead of Slovenia. Pathetic.

Medical issues are the one area of life that can destroy early retirement plans or any illusion of financial independence. To make it worse, health insurance is now required in the United States and it isn’t cheap. For American citizens, you are forced to participate in this inadequate health care system by financially supporting it to your maximum potential.

To add salt to the wound, many medical procedures are not covered. Weight-loss programs, cosmetic surgery, teeth whitening and hair transplants are not deductible expenses on U.S. tax returns, nor is it covered by most insurance. If your insurance does not pay for it, it comes out of your pocket. Many deductible medical expenses are not routinely covered by insurance. Eyeglasses and Lasik surgery come to mind.

Continue reading

Related posts
Tax Deductible, Low Cost, High Speed Internet You Can Take Anywhere
March 24, 2017
Everybody is Talking about the New Forum on The Wealthy Accountant
March 23, 2017
It’s a Small World
March 20, 2017
Early Retirement, Lifestyle

Living Between Mr Money Mustache and Tim Ferriss

Modern technology and automation is making our lives easier every day. Virtually every task humans do is also done faster, cheaper, better by some automatic process with a silicon chip inside it. These automation processes started showing up a few centuries ago and started changing human life in fundamental ways in the last 100 years. The pace started slow with a steepening incline of progress. Today, we face a challenge never faced by humans before: what to do.

Free time was always a part of human living. It took the Industrial Revolution to transform human stock into expendable machines. In hunter and gatherer days, man would spend large amounts of time idle, pursuing whatever created interest. We can still see a few remaining fragments of art at historical sites. Hunting parties might extend for days or even weeks. Once game was slaughtered and the meats cured, the pantry was full for an extended period of time. Weeks, even month were free to build monuments, create art, and tell stories around the fire.

Then the Agricultural Revolution arrived. Man had his first taste of what was yet to come. Humans were now slave to the ox and land. Working the land and domesticating animals kept man busier than hunter/gatherer days. Hunched over the plow all day brought the first lower back pain for the species. Humans worked more hours than ever. But once the crops were planted there was free time, followed by a flurry of activity harvesting the crops. Then, man settled in for a long winter season of leisure.




Continue reading

Related posts
What the Wealthy Accountant Owns and Why
March 13, 2017
They Said It First . . . and Better
March 10, 2017
Stop Working for Money
March 8, 2017
Early Retirement, Lifestyle

The Right Way to Own Investment Properties




During the 1980s and 90s I owned a lot of real estate. It started slow and exploded into a 176 building pain in the ass. To be fair, most of the investment properties we owned were either single family homes or duplexes. A few multi-family buildings, a boarding house and a storage facility rounded out the mix.

With so many properties running through my personal accounts and a partnership with dad and brother, I learned a few things along the way. One hundred seventy six buildings is a lot of buildings. Good thing I didn’t own all of them at the same time. Mistakes were sure to happen.

By the early 2000s the real estate empire was gone. I was burnt out and sick of working with tenants. Countless property managers helped us over the years, but it was not enough. Managing over a hundred units much of the time over a footprint covering most of NE Wisconsin took its toll. To complicate matters, I also ran my accounting practice with double the employees I have today (during tax season).

Starting slow was my greatest idea. It felt good to see the passive income filling the checkbook. Our teams of contractors allowed us to buy fixer-uppers and increase the property values significantly. Our best deal was the purchase of an upper-lower duplex in my hometown for $8,000. Hard not to make a profit on those.Continue reading

Related posts
Applying Cost Segregation on a Tax Return
March 27, 2017
Why Trade Wars Never Work
March 17, 2017
Thriving on Minimum Wage
March 15, 2017
Early Retirement, Taxes and Investing

Tax-Advantaged versus Regular Accounts

 

Nick H recently emailed me a question about how much money he should invest in tax-advantaged accounts before adding to non-qualified accounts. Due to the large number of emails I receive I am unable to provide individualized tax advice unless you are a client. Nick’s question had a familiar ring. Several times per week I get a variation of the same question. Rather than ignore the request, I decided to put it into a post so all readers can benefit from my suggestions.

Here is Nick’s complete email:

Dear Wealth Accountant,

I have been a reader of yours for a few months now, and enjoy it very much.  I was introduced to your site via a MMM post.

I have a question for you regarding investing in tax-advantaged accounts vs. normal accounts. Standard advice is that I should max out tax advantaged accounts before saving in normal accounts.  However, with financial independence/early retirement in mind, if I do not make enough to max out tax advantaged accounts and save enough in a normal account for early retirement, I think that it makes more sense to put just enough into a 401k to get my match, then save everything else I can in a normal investment account.

I reach this conclusion because the goal of early retirement is to build up an income stream, unlike standard retirement in which you just achieve the largest possible pile of cash.  Since there are significant limitations on access to the funds in taxed advantaged accounts, this seems like an inefficient method of saving.  Again, assuming that I have to choose between the two.

Thanks
-Nick H

PS. I also posed this question to MMM.  I am very curious to get both of your perspectives on it.  Thanks & hope to hear from you!

Nick makes a narrow assumption of either/or. He indicates he either has to max out his retirement accounts before funding non-qualified accounts or he will not have an income stream to fund his early retirement.

Nick also turns the tables on the standard advice by saying standard advice says to max out retirement accounts. I guess it depends on whose standard advice we are looking at. Most standard advice is geared toward generating larger fees for the investment house. Standard advice says you should save 10% of your income. It makes me nauseous thinking about it.Continue reading

Related posts
Applying Cost Segregation on a Tax Return
March 27, 2017
Stop Paying Your Quarterly Estimated Taxes!
March 22, 2017
Why Trade Wars Never Work
March 17, 2017
Early Retirement, Estate Planning, Lifestyle

Avoiding the Gold Diggers

Community Property States

At a recent Camp Mustache where I gave a presentation I also offered one-hour personalized consultations. Most of the advice I give is identical among all people I consult with. Most themes come up again and again. About 20% of what I advise is unique to the individual.

This particular group was comprised of high net worth people. These people save a massive percentage of their annual income and are in a position to retire early; mid-30s is average. Incomes were all over the map. Some had high income; some had modest income. All invested heavily in index funds and/or real estate.

An attractive young woman was next in line for a consultation. She had amassed a reasonable amount of liquid funds and was planning her retirement strategy. I knew she wasn’t married by looking at her tax return. I asked if she had a special someone in her life. She said no. I then made the offhand comment, “If you ever decide to get married you will have a prenup.”

Prenuptial agreements are common so I felt the comment was just a reminder. She seemed surprised so I reiterated she will need a prenup if she gets married, especially since she has a sizable nest egg. She wasn’t so certain it was a good idea. I reminded her gold diggers don’t always have tits. It took a bit of convincing to get her to come around to my way of thinking. I told her if I ever found out she got married without a prenup I would be very unhappy with her. My final selling point was, “When you have money some people will lie to get you to marry them. Then when they screw around and leave, you will pay them half your net worth to screw another woman. It is a bitter pill you want to avoid.”Continue reading

Related posts
Tax Deductible, Low Cost, High Speed Internet You Can Take Anywhere
March 24, 2017
Everybody is Talking about the New Forum on The Wealthy Accountant
March 23, 2017
It’s a Small World
March 20, 2017
Early Retirement, Frugal Living, Lifestyle

Kill the Economy and You Will Not Even Notice

It does not take long when you wander the blogs of the ‘retire early’ community before you hear the common refrain: If everybody did this stuff it would kill the economy. To which I promptly call bullshit.

Bill Gates and Warren Buffett managed to not spend over $100 billion of their money over the last few decades and the economy has done fine. In the 1950s the savings rate was much higher and the economy more vibrant. When the research is reviewed there is no doubt excessive debt, a low savings rate and excessive spending have more to do with an anemic economy than any responsible spending will do.

People look for any excuse they can to remain married to their poor habits and lack of self-control. It is easier to complain about successful people than it is to take responsibility for your own actions. Somehow these people have been bullshitted for so long they actually think poverty is the only way to keep the economy going. Really? They think the only way to survive is to spend every nickel they have. They think living on the financial edge of ruin from the first light breeze is what makes the economy purr and provides job security. Where does this nonsense come from?Continue reading

Related posts
Tax Deductible, Low Cost, High Speed Internet You Can Take Anywhere
March 24, 2017
Everybody is Talking about the New Forum on The Wealthy Accountant
March 23, 2017
It’s a Small World
March 20, 2017
Early Retirement, Lifestyle

Recap of Camp Mustache SE

Working as a team to climb any wall in our way.

Each edition of Camp Mustache gets better than the one before. Camp Mustache SE in Gainesville, Florida (January 13 –January 16, 2017) is the fourth in a series of camps, this being the first outside the Seattle area. I have had the honor of attending and speaking at all but the first Camp Mustache.

Stephen Baughier organized the event with guidance, advice and a helping hand from Emma Pattee. Emma’s experience organizing Camp Mustache in Seattle allowed Stephen to move up the learning curve faster. The added experience and hard work made Camp Mustache SE awesome on every level. For the record, I have already accepted the offer to attend Camp Mustache IV in Seattle over Memorial Day weekend in the states this May. There is no doubt the gathering will be an incredible place to learn and meet like-minded people in the FIRE community.

Several notable names were in attendance. Pete, the guest of honor, was, of course, there. J.D. Roth (Money Boss), Joshua Sheats (Radical Personal Finance), Brad Barrett (Travel Miles 101), Gwen (Fiery Millennials), Jonathon Mendonsa (Chosefi), Zeona McIntyre (ZeonaMcIntyre.com), Brooks Nelson (Gainesville Cohousing) and more were available for questions. (Hope I did not miss anyone.) Continue reading

Related posts
Tax Deductible, Low Cost, High Speed Internet You Can Take Anywhere
March 24, 2017
Everybody is Talking about the New Forum on The Wealthy Accountant
March 23, 2017
Stop Paying Your Quarterly Estimated Taxes!
March 22, 2017
Early Retirement, Lifestyle, Taxes and Investing

Financial Independence for Normal People

51efot8iakl-_sx324_bo1204203200_Discussions around here have focused on early retirement and financial independence with a few assumptions: either you own income properties, own a business, or have a side hustle. But what about the other 95% of the people working their tail off, day in and day out, looking for a retirement plan? For those fine folks I have a treat today. We will focus on normal people and wealth accumulation. We will avoid tax talk because income level and type of income create too many variables muddying the conversation.

You would think it should be simple if you are a wage earner only, but it’s not. There are several choices you need to make to maximize your wealthy building. Accelerating to the early retirement line is straight forward if you know where to start. Without passive income like rental properties you only have your earned income (wages) to rely on. Your passive income will be limited to dividends, interest and capital gains.

Building an Empire

There are two parts to living the Financial Independence (FI) lifestyle: the building phase and the maintaining phase. During the building phase you save like crazy. My recommendation is to save half of what you earn. It is more important than ever to have a high savings rate if you don’t own rental properties or have a side hustle. It will take 16-17 years to reach FI at a 50% savings rate assuming a 5% growth rate and a 4% withdrawal rate once retired.


Continue reading

Related posts
Stop Paying Your Quarterly Estimated Taxes!
March 22, 2017
Why Trade Wars Never Work
March 17, 2017
Thriving on Minimum Wage
March 15, 2017