Tag

financial independence

Early Retirement, Lifestyle, Small Business

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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Early Retirement, Estate Planning, Lifestyle

Leaving a Legacy Without Destroying Your Children

Reaching financial independence requires a consistent set of skills and persistence. The habits that allowed you to amass a sizable nest egg don’t die just because you pass some arbitrary border. Education, job, and family life consume all your time in the beginning.

After college it is time to earn a living. After finding a job it is time to climb the ladder, all the while saving a massive percent of your income to reach your financial goals.

Family is a priority. A significant other and children take time and money. You increase your saving and investing skills. Raising a family is expensive only if you don’t know how to shop. You hit the rummage sales and thrift shops for kid’s clothing, toys, height chair, car seat and other stuff the youngsters will grow out of quickly. Later you sell the kid’s stuff for about what you paid for it at a rummage sale of your own, passing the same opportunity you had to another young couple.

And then it happens. Your hard work, intelligent spending and diligent saving pay off. You reached financial independence earlier than planned. Now you have another problem you never gave much thought to before: your legacy. If you reach financial independence early, how large will your net worth grow before you leave this world?

Thinking about your legacy when you are still in the building stages is hard. It requires looking into the eyes of the possible: early death. What happens if you die while the kiddos are still minors? A plan is needed. Even if the kids are grown, a plan of succession is necessary. And what if kids are not part of the picture? Then what happens to your legacy? Let’s explore the possibilities.

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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.




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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.


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2016 Review; 2017 Plans for The Wealthy Accountant

statistics-706384_960_720Well, the first year is in the books. The Wealthy Accountant came to life on January 15th, 2016 in anticipation of a shout-out by Mr. Money Mustache. The project was on the drawing board for years, however, the workload caused me to drag my feet. But when I start I am all in.

This isn’t the first blog I’ve run, nor is it the only one I write at this time. Running a blog is work and something I held back on because I knew once I started writing this blog it would take over my life. But here I am and I am feeling good.

Other people writing a blog and curious readers are usually interested in statistics. The growth pattern of The Wealthy Accountant is taking a different path from other online venues I used. For example, the website of my tax practice has low traffic and no ad revenue. Just about every visitor of http://taxprepusa.net/ wants to be a client of my firm so we don’t want hundreds of thousands of visitors.

Then there is a content farm I wrote a hundred or so articles for years ago. After Google slapped the funny off the faces of content farm writers I moved my writing elsewhere. Still, HubPages sent me $439.93 in 2016 on 87,719 pageviews. Not bad for not doing a thing on HubPages in five years.


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Lifestyle

Sex, Porn and Addiction: The Killers of Financial Independence

586746403_1280x719Goodwill Industries of North Central Wisconsin provides a multitude of services to the poor in my community. Everything from help with medical, job search services, to the iconic Goodwill thrift store are there to benefit the poor. Another program is the Financial Information and Service Center, otherwise known as FISC. FISC provides personalized counseling in financial matters: bankruptcy, student loans, budgeting, credit card debt, and delinquent taxes.

Every year FISC calls me in to speak to their group. Counselors from around Wisconsin come to hear my message. Sometimes it is an informal presentation more along the lines of an inquisition (Q&A session). Other times we fill a large room and food is catered. A few of the counselors are clients as a result.

The FISC counselors are not tax professionals or even trained in tax matters. For their worst cases they refer their client to my firm. And so it was this past week. A man in his mid 30s had serious tax problems. When no one else can help there is always me. I take a limited number of impossible cases each year. These people have limited funds for my services so I charge a very low fee or just do it pro bono.


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