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education

Early Retirement, Lifestyle

Smarticus

Dick Proenneke

There are two kinds of stories people like to read in the personal finance community: personal finance reports and “What am I doing” stories. Pete over at Mr. Money Mustache released his spending report for 2016 this past week and Jim at jlcollinsnh provided us with a report on life in the comfortable Wisconsin south woods.

Spending reports/progress reports toward financial independence interest me, too, even though my financial situation has been solid for a few decades. Spending reports motivate me, giving me ideas to cut consumption without sacrificing quality of life. Progress reports are always interesting. The writers of such reports usually express an emotion with where they are at on the scale of financial independence. From my viewpoint it seems so obvious they are in much better financial shape than they imagine. It is intoxicating watching these good people make their way to the Promised Land.

It’s been a while since I offered my own spending report. Sorry. Spending is so boring to me. God willing, I will get my 2016 report out before the end of 2017.

Kevin has started the redesign of this blog (I’ll pay him a soon as my new bonus credit card arrives).

Collins shared his life these past few weeks on his blog. I enjoyed his story and I was there part of the time! Such are the simple pleasures of life.

Your favorite accountant has a few interesting tidbits in his life you might find of value, too. Whereas, a lot of people in this community talk about their sedentary or retired life or world travels, I am busy acting like a mini Elon Musk. Call it a sickness.




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The Knuckle Dragging Neanderthal Meets Uber and Airbnb

Tax Collector? They opened an office for me when I visited Florida!

Earlier this year Mrs. Accountant and I attended Camp Mustache in Gainesville, Florida. We were offered a ride to the Camp, but we also had several additional days planned around the event. Renting a car in such a situation is expensive since the car would just sit there for days while my wallet was financially abused.

My youngest daughter rolled her eyes when I mentioned I needed the phone number to the Gainesville taxi service. She grabbed my phone and started working on it. This is an unusual event for anyone who knows me. I use my phone as a phone. Period. I don’t care about, nor do I want to know about any of the other things smart phone can do. I make my own breakfast, thank you.

In a few minutes my daughter completed her assault on my virgin phone. She added an app to my phone. (To this day I have no idea what an app is. Whenever the kids talk about apps I joke that we are living on The Planet of the Apps.)

I told her it was nice of her to put an app on my phone, but I’ll never use it. Another eye roll. “Here, dad,” she said pointing to the Uber icon now conveniently located in the middle of my screen. “All you do is touch the icon and tell the phone where you want to go.”

Huh?

Well, my fingers don’t work well with all the small letters and stuff on a phone so I have made a habit of avoiding the issue. Now I find out I can talk to my phone and it responds. Awesome!

I know, I know. You readers are rolling your eyes like my daughter. This stuff has probably been around for a long time. Somehow I missed it. I refuse to blame my stubbornness on “missing it” even though it is probably the reason why.




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Fighting the Profit Train

One of the mantras of the FIRE (financial independence, retire early) community is the owning of income property. With rare exception, investors do it all wrong, taking on extraordinary risk for no reason.

Side gigs are handled the same way. Whether you run a full-fledged business or a side gig, you probably make the same mistake real estate investor’s do.

Americans love to invest at home. There is a tendency for people from all countries to focus their investment dollars in the domestic market. The comfort of understanding the local business climate clouds the investor’s judgment. American’s are the worst. For decades I have recommended 70% S&P 500 index fund/ total market index fund and 30% international index funds for my American clients. This is still weighted heavily toward U.S. companies. The diversification in broad-based index funds with a third of the portfolio in international is a good mix in my opinion. Small business owners and real estate investors rarely make such a sound decision.




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Thinking Like an Accountant

The only serious accountant around here.

Things have been looking up at The Wealthy Accountant. Traffic is increasing and the audience is expanding. Even better, the original demographic attracted to the site has expanded, bringing in more people to benefit from the information provided.

The newfound success also causes problems. People unfamiliar with the FI (financial independence) community are frequently shocked at the way I present information. It’s an easy thing to do. Right up there in the title is the word accountant. The blog ought to be about taxes and similar stuff found in a CPAs office. Then you open the cover and find me standing there. Don’t worry! It would scare me too.

There is a major misunderstanding on what this blog is about. Yes, the word “accountant” is in the title. There are a few reasons for that. First, it’s getting hard to find an unused url in the dot com universe anymore. Second, I don’t want you to be an accountant (unless you want to be), but I want you to THINK like an accountant. There is a difference.

Thinking like an accountant allows you to make better decisions in all areas of your life: working, investments, taxes, even relationships and raising the kiddos. Accountants think in a logical fashion. They plan. They also look before they jump.




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Why Saving Half Your Gross Income is Better and Easier Than Saving Half Your Net Income

People frequently look to their accountant for sound financial advice. Good accountants are up to the task; other, not so much. Finding a good one is easy; they tell you what you don’t want to hear even if you threaten to leave.

Advice sought from accountants runs the gamut. Selling or buying a business requires in-depth analysis and most people trust their accountant’s judgment regarding this matter.

Then the bizarre requests come. Over the years I have been pulled to the side by clients wanting advice on how to raise their children, gambling problems, infidelity, and divorce issues. Some of the requests have a hint of tax built into them. Gambling problems are also tax problems. I’m never comfortable helping anyone decide if they should end their marriage. It’s not my place or at least shouldn’t be. And even if it was I want nothing to do with that kind of conflict.

My favorite requests are about personal finance, intelligent tax reduction and retirement. These are the moments when I can shine. It is also an area of massive risk. My mantra, oft repeated, is simple, yet rarely followed. First the client is in denial (which is a river in Egypt last I checked). Quickly the client moves to tell me my advice is impossible to follow and nobody does it. (Oh, yes they do.) Finally, the client starts to bargain her way into a deeper hole. They think they can change the rules and make it easier. Don’t they know I already thought of every twist and shortcut possible? Clients usually bargain themselves into a deeper hole without even knowing it.




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Lifestyle

Secret Messages

Sometimes accounting can be a downright boring subject. It is the job of your favorite accountant to spice it up a bit with stories and jokes so the message resonates and therefore gets through. No matter how brilliant my idea to increase wealth or lower taxes, it is worth nothing if I can’t keep you reading to the end.

Many people find blogs like this by accident. The people hunting for blogs like this already are open to the concepts. Not so the wayward traveler finding her way here from search engines. I write for the choir, but always consider the wayward, too.

I use stories to convey the message. Money is fun to read about and have. To keep readers engaged I impose secret formulas to keep them coming back. It’s almost like a sickness the reader can’t quite put her finger on. How come I am so draw to this blog about (egads!) accounting, saving money, investing and retirement? the wayward soul asks.

Let me be clear. The message is simple: Save half your gross income and invest in a broad based index fund. All done. Now you have another 23 hours and 58 minutes to fill today. Money stuff is done.

Easy as it is, I still need to make a living writing this blog. I enjoy the writing process and telling stories. Changing people’s lives for the better is a bonus.




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It’s a Small World

There is a ritual the accounting profession goes through every autumn. Eager tax professionals attend continuing education programs to hear all the latest tax law changes with interpretation. Large hotel venues fill with CPAs, enrolled agents, and even attorneys eager to learn. The room is filled with tax professionals all from within a hundred miles.

It amazes me how small the accounting profession is. Tax professionals are an even smaller crowd. A handful of conferences draw nearly the entire industry in each geographic region of the country. Smaller programs abound, but the annual refresher courses with tax law updates bring out the vast majority of the industry.

The same people attend year after year. We know each other. Sometimes personally, sometimes we are only aware of each other’s existence. Many times we talk and share ideas, talking taxes, clients and business management. There is respect in the air. We have something in common and feel comfortable together.  Some of us worked in the same office or worked together on a client’s file. Few members of the crowd feel we are competition.




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Starting a Successful Seasonal Tax Preparation Business

Readers of this blog are always looking for a side hustle. Seasonal tax preparation is a perfect fit for many early retirees. A small tax preparation business allows for an earlier retirement as the side income can easily be enough to live on for even a modestly frugal person. Another large reader demographic involves the accounting industry. There are plenty of blogs talking about tax issues, but few discuss the realities of starting, promoting and maintaining a tax practice.

I touch on the subject of practice building periodically, but my email folder is filled with requests for a more detailed post. A recent email from someone called Speed (I love it!) asked a series of questions that encompasses the bulk of practice management requests.  Much of what I discuss can be applied to most other business ideas with only slight modifications.

Rather than give a play-by-play on starting and managing a tax practice, I will take each of Speed’s questions and answer them. The reason for avoiding the play-by-play is because there are many ways of starting a successful business. I don’t want to give the illusion you are locked into one pattern to win. Life is rarely that neat.
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