Tag

FIRE

Frugal Living, Lifestyle

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.

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
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
Taxes and Investing

Prepare Your Own Taxes the Right Way

It’s that time of year again where we need to reconcile the previous year’s income for the government. The task can be daunting, but with armies of tax professionals and online software, many people can tackle their tax return with few issues.

The trick is finding the right tax software when you plan on preparing your own tax return. The most popular online packages are dummied down versions of better tax software programs. The Q&A required by most online programs can become daunting (and time consuming) if you have any tax knowledge at all. The biggest problem is finding tax software that is professional grade that offers just enough help to not be invasive.

I want to introduce you to an online tax program I think is superior to other online software: Drake Software. The banner below is a direct link to the software for individual users. It was featured last year on Mr. Money Mustache. It also happens to be the same tax software I use in my office.

Over 50,000 tax professionals use Drake software to file over 26 million tax returns.  My office was one of the earliest adopters of the Drake interface (one of the first 200 if my ID number is any indication).

Back in the late 1980s I sought out a professional software package that was not only robust, but offered economical e-filing. Back in those days it was common for software to charge $35 or more just to e-file. Drake was an industry leader, charging only $1 per e-filed return. My office could offer free e-filing before anyone else due to Drake and their powerful software platform.

Time has only made this software better. Of course, my office still e-files for free, but it is so much more. Drake branched out into other areas of the accounting office. They also offered accounting firms like mine an opportunity to provide an alternative in the DIY tax preparation segment.

What I liked from the start was that Drake incorporated the entire professional grade platform in their online version for people preparing their own return. No other online software offers such a robust program to the general public, in my opinion. They market the program under the 1040.com name.Continue reading

Related posts
Applying Cost Segregation on a Tax Return
March 27, 2017
Tax Deductible, Low Cost, High Speed Internet You Can Take Anywhere
March 24, 2017
Stop Paying Your Quarterly Estimated Taxes!
March 22, 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, Frugal Living, Lifestyle

Dealing with Jealous People

4482714827_491d395f7e_bReaders of this blog are committed to financial discipline. They save a large portion of their money and invest it wisely in index funds and real estate. Whatever is left after investing they consider spending . . . maybe.

Before long the value of the index funds grow significantly and the investment properties gain more equity while throwing off a steady stream of passive income. People begin to notice. You, one of the mentioned readers, drive a less than fancy car and have a modest home or apartment. People also notice you brown bag lunch at work and rarely party with the crowd. Instead of the bar scene you invite friends over for a cookout and a few cold ones.

Everyone around you notices how much less stress you seem to have compared to them. You make it look easy. And you have money. Of course, you do. Because you don’t spend every penny you earn. It starts with one person feeling resentment and spreads like a bad rash. For the first time you feel the sting of jealousy. People you care about and admire now have turned against you because you are clearly no longer like them. You lack the fancy house, expensive car and endless nights of fine dining. And how dare you live without cable TV. Is there something wrong with you?


Continue reading

Related posts
Everybody is Talking about the New Forum on The Wealthy Accountant
March 23, 2017
Stop Paying Your Quarterly Estimated Taxes!
March 22, 2017
It’s a Small World
March 20, 2017