Tag

FIRE

Early Retirement, Lifestyle

You, Inc.

Whether you like it or not You are a brand. Everything you say and do either adds or subtracts from your brand. Ignore You and your brand starts to turn stale.

You, Inc. is your brand. It will take you wherever you want to go. But do you know what You, Inc. is all about?

It is simple to see You, Inc. in action when compared to a business. Take this blog for example. I can speak at conferences or just attend to build contacts. Guest blogging brings more visibility to my work. Or I can spend money to promote my brand. How I act and interact with people around me reflect on my brand. Treat the brand well and it will take good care of me; ignore it or treat it badly and the brand will kamikaze faster than you can snap your fingers.

Building You, Inc. takes time and effort; destroying You, Inc. can happen fast. Your income and net worth are directly related to the brand of You, Inc.  Arming yourself with knowledge is the surest way to supercharge your brand. But knowledge is not enough. Knowledge without action is worthless. Creating a large net worth in a relatively short time is possible. Increasing income to retire debt and grow investments is the only road to financial independence.




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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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Early Retirement, Frugal Living, Lifestyle

Get There Before You Arrive

How long does it take to crawl out a hole you dug? How long to formulate a plan? Execute it? Reach your goal? Financial independence (FI) is a goal most people have. Some want it bad at a young age and work toward that goal. Others wait until Father Time ticks closer to the traditional retirement age. Still others get a wakeup call when their body fails in some way.

Before this blog I was a tax Endorsed Local Provider (ELP) for the Dave Ramsey organization. His story resonated with me. I agreed with Ramsey that debt is the acid which destroys the vessel that holds it. Ramsey is fanatical against any kind of debt; I am a bit more moderate in the faith. Still, debt is a problem for many people.

Before FI can be achieved debt first needs to either be eliminated or seriously curtailed for most people. The Ramsey plan is to eliminate all debt and invest in actively managed mutual funds offered by a financial advisor. If you read that last sentence carefully you will begin to understand why I could no longer in good conscious be a Dave Ramsey ELP. Ramsey’s philosophy is right on so many levels and wrong on so many more.

Debt in and of itself is not bad. It’s just a thing. Too much debt is the real issue. Credit card and similar high interest debt is caustic, no doubt. A home mortgage can make all the sense in the world. Even a small, short-term business loan is a positive in many instances. A blanket faith in no debt is something I don’t subscribe to. When very wealthy people borrow for a home or investment it is frequently the right choice. Borrowing $10,000 for working capital in your business instead of selling a profitable income producing investment I will argue is a good call, especially when you consider the tax consequences.




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Early Retirement

Maximizing Retirement Investments with Multiple Plans

Every so often I say something that starts a firestorm or causes my inbox to overflow. Since the laws of nature state I am one human being and have a limited amount of time to read and answer emails, most emails go unanswered unless from a current client.

It may have been something I said in a podcast or new readers enjoying a deep drink of my lovely prose triggering the question in question. (Yes, I wrote that intentionally.) The latest question storm revolves around retirement plans. The questions are all the same with slight nuances. As a human being with limited time to dedicate to cold call questions, I left most unanswered and the few I did respond to were given quick and to the point answers. And as I fired off these quick answers it occurred to me I misinterpreted the question asked in some cases. A fresh blog post on the subject should clear that up. If not, some ointment might also do the job.

The question stuffing my email is this: Can I have more than one retirement account? My accountant told me I can’t contribute to an IRA if I have a retirement plan at work. Is she right? We will address this line of questioning in a bit. There is a small twist to the question from some readers. Can I have two retirement plans in my business or side gig? I sent many a quick answer as follows: In most cases there is nothing in the Code disallowing such action, but it would be impractical to do so. My answer is wrong! I should have left questions unanswered if I didn’t have time for an adequate response.




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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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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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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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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

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