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financial independence

Early Retirement, Frugal Living, Lifestyle, Taxes and Investing

$10 Million Isn’t What it Used to Be

I remember the day I realized I crossed the seven figure mark. The actual moment of crossing was lost because I didn’t know I was doing so well. There was no party or celebration.

The year was 1996, I was 32 years old and the bank needed a personal financial statement for an investment property purchase. The real estate partnership I had with my dad and brother was in full swing, but I wanted to add a few additional properties to my personal portfolio.

The bank asked for a personal financial statement. It had been a while since I filled one out so I was interested in where I would end up.

Don’t get me wrong. I track my finances closely. Each individual investment gets reviewed annually or semi-annually. I don’t always add up all the numbers to see where my net worth is, however.

As I gathered each asset and wrote its value down I could see this was going to be higher than I originally anticipated. My liquid investments had advanced a lot over the years and the real estate in my portfolio was adding a serious number to my net worth.

Once I had the assets added I knew I had crosses the million dollar mark before tallying the liabilities. Debt was low, even with all those rental properties.




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Embrace Failure

Show me a successful person and I’ll show you someone with deep seated pain. Pain is a powerful motivator. Few can reach lofty heights and keep pushing without underlying pain driving them forward.

Steve Jobs said you have to be “. . . insane to do this. . . ” when he discussed why he worked so hard to achieve so much because “. . . it hurts so much.” He expanded the insanity to include all successful people. It doesn’t matter what it is you are the best in. Being the best and marching forward after attaining the top is an exercise in pain regardless the field.

Some are satisfied with “good enough”. They are the lucky ones. Normal people attain a certain level of success and sit back and enjoy it. You see these people everywhere. They are the upper middle class people lucky enough to have reached the level of “having it” or “made it” without the grinding pain from earlier in life driving them on.

Then there are the people we see in the news on a regular basis. These are the business leaders and entertainers who never are satisfied with their performance even when they have reached so high they have cut new ground. They climbed to the top of the mountain and started building the mountain higher. What drives these people? And are you one of them?




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You’re Using the Wrong Definition for Retirement

Students are ready.

Old dogs can learn new tricks. Preconceived notions are not reality or facts.

Several years ago life was going fine for me. Business was good, the sky was sunny and I thought I had a firm grasp on how the world worked. An avid reader, I chanced across a blog that pulled me in deeper than any before. Normally I read several blogs with no blog standing out from the crowd. I digest what I can and move on. Then along came Mr. Money Mustache.

Some blogs are better than others. Quality is frequently an issue, but personal taste is too. To make matters worse, this Mustache guy had a serious following. High quality suited to my tastes with a massive audience started me questioning some of those preconceived notions.

Most issues I was in complete agreement with. There was one stand-out: retirement and what the word meant. At first I had an identity crisis. Was I really retired all along and didn’t know it? Is it wrong to have gainful employment?

The only way to figure this thing out was to attend personal finance conferences with like-minded people. That was two years ago. In the beginning it made the confusion worse and the crisis more acute. Then I developed my own definition of retirement to suit my needs. Finally, last weekend, I made what I feel is the final leap in my evolution toward a retirement definition I can use in my personal life.




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How to Become Wealthy in 2017

Here is an important interview with Warren Buffett everyone needs to listen to as we face significant tax code changes from the new administration. Warren's views are not always mine, but his fundamental understanding of taxes and how they work requires all intelligent people to listen and learn as we grade our representatives on how well they are leading.




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Frugal Living, Lifestyle

A Year of Frugality — How It Changed Me and My Views about Money

Today we have a first on The Wealthy Accountant: our first guest post. Offers to guest post are common once you reach modest traffic levels. Most offers are junk as they are nothing more than thinly disguised advertisements for things I do not approve of. (Anyone want me to promote forex trading? Thought so.)

Then a young lady, Patricia Sanders, emailed asking kindly if she could write a post for me. I did a Google search of her work and found she has a modest online presence. She sounds young, but genuine. Her writing is basic, but I took a chance and invited her to send me an article.

When I write I always try to find something few people are writing about. It is all about value. If I can share an idea with my readers I can make a difference, especially if it hasn’t been written to death before. I talk basic, but usually within the framework of a more complex financial or tax issue. Two things I shy away from—brevity and simplicity—works against me at times. My preference is for storytelling when attempting to convey a message. And no one had ever accused me of being brief.

Then I read the submitted article from Patricia. Her message was brief and basic. This started me thinking. My readers need to hear the basics, too. Michael Jordan was not a superstar because he made three-point shots. He was a superstar because he made the free throws without thinking. He was a superstar because he made the layup without thinking. He was good because the basics became automatic. Patricia reminded me of this.

It is important to encourage young people starting their life journey. We learn far more teaching than being taught. Patricia has a story to tell. Not some long-winded diatribe I like to spew. No, she has a simple message only a young adult can tell. Sometimes our old eyes forget where we came from and how we got where we are. I am not such a fool as to ignore the legacy granted me. It is a pleasure to present you Patricia Sanders today. She has a bright future. Maybe we will cross paths at a financial conference in the near future. It would be an honor meeting her in the real world.Continue reading

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What the Wealthy Accountant Owns and Why

In my last post I discussed how difficult it is for personal finance bloggers to find fresh material. There are a few areas where fresh material is always available: spending reports, net worth reports, and investment reports. My spending is boringly low so I rarely share those numbers. Net worth reports are fun to watch as people go from zero to millionaire; afterwards it becomes bragging and tends to discourage those starting out.

Even though we all have a timeline where we reduced/eliminated debt and built our net worth, each personal story is a marker along the road to financial independence. Readers love these stories because it provides a framework as they reach for their financial goals.

Killing debt is hardest once the habit is established. It seems impossible for those buried in debt to see any light at the end of the tunnel. Hell, they think the tunnel is a bottomless pit. And it can be if they don’t crucify their old habits! Dear Debt is an awesome example of a young woman breaking up with debt and getting her life back. She said it better than I ever could because I didn’t dig the hole as deep in my younger days. And not because I am smarter. I just had fewer opportunities to be stupid. (Note: You are not stupid, Melanie!)

Net worth reports are great for illustrating how fast a nest egg can grow. When you start it looks so small at first. Debt is gone and you amassed a whopping $10,000. Big deal. Well, it is a big deal! Financial independence is gained one dollar at a time. Watching others further along in the process is motivating for some. Here is another young woman well on her way to financial independence at the ripe old age of 26. She will reach FI sooner than she plans. It’s how it works. And here is a blogger who planned on reaching FI in 1500 days and showed up early. How rude! They should have made an appointment first.




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They Said It First . . . and Better

The hardest part of writing a personal finance blog is finding fresh material. Most things have been said before and better. All the important points have been regurgitated onto the screen thousands of times before. If a PF blogger wants to make a difference she needs to find something to add to the already large heap of material available.

The trick to wealth is a very short story: save half your income, invest in index funds, avoid debt like the plague. Everything else is opinion. Everything else is nothing more than ways to spend less and learning to live on half your income without feeling cheated so you stay the course. The real trick is to get readers to apply the simple message.

Then the truth hits home. Even brilliant new ideas come crashing to earth as the blogger reads the PF universe. The new idea was said before and without a doubt, better. It is a sinking feeling when it happens. You pour your soul out onto the page only to discover weeks or months after publication another PF blogger already wrote the story. You feel like a hack.

You keep writing, keep hunting for the elusive fresh story. It’s new to you so it does not matter. Your story, your writing, is a journey of discovery; a story you can’t keep inside; a story you must tell. So, several times a week you sit in your chair and push your index finger (in honor of index funds) down your throat until you ralph up another classic. And you hope and pray it all makes a difference for at least one person. Otherwise you are only wasting your time.

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Lifestyle

The Easy Way to Wealth: Deferred Gratification

 

Sometimes it is hard to wait.

Instant gratification is the hallmark of a good economy according to the government wonks and marketers. It is also the hallmark of the impoverished souls forced to work forever in a soulless job to cover the debt payments.

Watching clients for decades has made it clear there are only a few golden rules to wealthy. Automatic investing is one; deferred gratification is the other. Deferred gratification is what funds the investment account so I think deferred gratification is by far the more powerful of the two traits.

Instant gratification is sometimes hard to see. Today I will point out all the signs you are satiating your lusts a bit too quickly for your own good. By recognizing your overzealous spending habits you can delay gratification to your benefit. You give up nothing, but gain plenty of freedom, less (or no) debt and financial independence. It is a stress-free way to conduct life.

Support this blog. Thank you.

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