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motivation

Early Retirement, Lifestyle

Take a Selective Vacation to Maximize Productivity

vacation-149960_960_720The past year has been the most brutal of my career. What started out as a good idea has cascaded into a challenge I am still working the details out on. Challenges excite me, but this one showed up unannounced.

Back in the day when I was building my practice I didn’t work that many hours because it was a seasonal business and I saw no need to bust my tail for “a few more dollars”. (A good movie, by the way.) My strategy was simple; always do better than the year before. As the years accumulate, beating last year required more work. It wasn’t money; it was pride.

Eventually I was working way more than I wanted to, so I cut back dramatically and seriously considered selling my practice and living a “real” retirement. The reduced hours and the return to a normal lifestyle (for me) put the “selling the business” idea on the back burner.

It all changed a year ago. This blog and other media attention sent requests for my personal services through the roof. The process of digging out is still ongoing. I had no choice but to say “no” a lot more than I ever had before. That is a difficult pill to swallow because I love working with people and helping clients reach their goals.


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Lifestyle

Tricks to Beat Procrastination

img_20161221_091909I’ve been putting off this post for a while. Now is as good a time as any to get it done.

Now that I got the obvious joke out of the way it is time we discuss a serious issue facing us all: procrastination. When we least need it, our desire to finish, or even start, a task is put off. There are a variety of reasons for procrastination. The job might be distasteful, it might be a large project, or you might not fully understand the task.

Fear keeps us from acting. We all have had experiences where we put something off and put it off and put it off, only later to find out, once we started, the project wasn’t that bad after all. Many times procrastination begins when we are mentally overwhelmed by the task. Either your to-do list is longer than Santa’s on Christmas Eve or you started a task and hit a road block. Once that dreaded file is put to the side it is in a kind of purgatory. Starting again is almost impossible.

There are various tricks I use to get massive amounts of work out the door. Rather than focus on different scenarios, I will hone in on issues surrounding my office work. We will deal with email, phone calls, social media, and tax returns. Think of my stack of tax returns as the pile of work in your office or the long to-do list at home.


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Lifestyle, Small Business

20% is Enough Effort

8632234386_56ed10483b_zOver a hundred years ago an Italian economist made a discovery while in his garden. Vilfredo Pareto noticed on a pleasant 1906 afternoon that 20% of the pea pods in his garden produced 80% of his pea production. His interest piqued, Pareto wanted to know if this 80/20 ratio applied to other areas, including business. In every place he looked the ratio held. 80% of results came from 20% of the inputs.

Today we call this the Pareto Principle or the 80/20 Principle. The ratio isn’t perfect, but more of an approximation, somewhere around 4 to 1 or 5 to 1. And it happens everywhere, not just in business or an Italian’s garden! Think about it. You wear 20% of your clothes 80% of the time; use 20% of your home or apartment 80% of the time; eat the same food 80% of the time.

Illinois Tool Works is a large public corporation that has turned the 80/20 Principle into a profitable business plan. ITW buys smaller competitors on a regular basis and then sends in their teams to ramp up profitability by firing clients! Sort of. The 80/20 Principle says 80% of profits come from 20% of clients. Yup. It does. I ran the numbers in my own office. A small list of my clients brings in the bulk of profits. And ITW capitalizes on this fact to improve profitability in companies they purchase.

Think of your personal life. You spend 80% of your waking hours doing the same 20% of activities. If a normal day includes 20 activities, about 80% of the time will be spent on four of those activities.


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Taxes and Investing

Year-End Tax Planning 2016




imagesThe end of the year is fast approaching. Time is running out to modify your finances to optimize tax savings. I will run down the more common ideas to reduce taxes. Keep in mind this is not a comprehensive review. Your facts and circumstances will determine what is best for you. Use this review as a guide to reduce your tax liability.

Investments

Most readers here have significant investments so we will start there. All adjustments to investments should have an economic reason beyond taxes. Reducing taxes is the goal, but the increased costs of selling can offset a portion or all of the benefit.

If you are not using an automatic tax loss harvesting program such as Betterment, now is the time to review your non-qualified (non retirement) portfolio. Mutual funds and stocks with losses can reduce the capital gains distributions of other mutual funds or ETFs. You can also report up to a $3,000 loss against other income on your federal return. Your state taxes will differ. In Wisconsin, for example, the loss against other income is limited to $500.Continue reading

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Early Retirement, Taxes and Investing

Stay the Course with Your Investments




dollarrThere are two dangerous times in a retirement plan: when things are going really bad and when things are going really good. We have been lucky the last seven and a half years. The market has marched higher at a steady pace with nary a pullback to be seen. There are people in their 20s who have only seen the mildest of market corrections (a decline of 10% or more) and have never seen a bear market (a decline of greater than 20%).

The steady beat higher for so long is unusual. Regular investments have only known one direction: up. Money invested last year is worth more this year, same for the year before that, and so on. It is easy to invest in such an accommodating environment. The goal of early retirement looks so easy when every year is an up year.

Now the election is over and we have seen a serious move higher in the stock market. Bonds have been down more than stocks are up. The rally is narrow. High dividend yielding stocks and growth companies are down significantly. Banks and other financials are drinking the Kool-Aid. For the first time in years I have clients calling and readers emailing me for my opinion on borrowing money to invest in the market. Ahhhhhhh!Continue reading

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Early Retirement, Lifestyle

Overreacting Solves Nothing




chicken_little_823927821

Chicken Little and her children.

Chicken Little is in true form this week as the election in the States surprised many. The headlines this morning on CNBC echo and increasing level of alarm: Anti-Trump Portland Protest Turns Into a Riot; Op-Ed: I’m not worried about a US recession, I’m worried about another Great Depression; Trump’s enemies are already paying the price; Donald Trump tweets about unfair protests — then has second thoughts; An ‘ugly period’ for the market is drawing near: Saxo Bank economist.

I haven’t seen such overreacting since, well, I don’t know when. There is certainly a lot not to like about Trump, but overreacting will not make it better. The stock market is rallying on higher interest rates. Financials are doing well while much of the market is down. Overall we saw a nice rally and it might, or might not, be overdone. Over at CNBC again we hear: Cramer warns the rally is ‘getting out of hand’ —better deals found in the trash. Really! Yeah, the market will pull back at some point and there is no reason for stocks to be higher due to a guy winning an election who hasn’t even started his first day on the job.

Interest rates rising rapidly bear watching and could be a problem for housing and the economy as a whole, but as of now the SKY IS NOT FALLING! There are reasons for concern. Unless you are a white man there has been vitriol spewed toward you from the President-elect over the past few years.

Overreacting solves nothing. Rioting certainly doesn’t. Playing into the hand of violence never works. Taking a proactive approach is the only solution. The people most shocked are the ones who worked so hard campaigning for another candidate. I get it. I’ve worked hard for a long period to watch a project utterly fail. But it wasn’t the end. I learned a lot throughout the process. You need to focus your efforts, using what you learned to facilitate change.

People make America great. The guy with the second highest tally of votes won the Electoral College and the election. It isn’t the first time it has happened. And I bet you have experience working with people of less than the highest caliber. We all have. As frustrating as it can be at times, we need to engage our Stoic training. Complaining and whining is not allowed!Continue reading

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Early Retirement, Lifestyle

Why Keep Working?




img_20161103_233136It had to happen sometime and now was that time. As soon as traffic reached a certain level someone would finally say what was on everyone’s mind: Why are you doing it, Mr. Accountant? If you are so damn rich, why do you bust your ass running a tax practice and writing more copy than Stephen King on meth? The answer seems so simple to me, but I have seen this sickness before.

My buddy, Pete, over at Mr. Money Mustache faced similar comments in the past. Now that the guy publishes around two times a month no one is talking, but they all wish he did write more. (Way to go guys!) Recent comments on The Wealthy Accountant have now touched on the subject. The comments are very polite and not derogatory by any means. That is not always the case. The comment in question casts doubt on all personal finance bloggers claiming to have made it. There was doubt the bloggers are really retired. Between the lines you can read “the blogger needs the blog to pay bills”. There were also a few comments protesting the need for a side hustle. I want to set the record straight.

I have no problem as apologist for the “retire early” community of bloggers. I have met many of these fine people and find them to be genuine. There is no fraud, folks. You don’t go into blogging for the money! First you spend a year or more writing your tail off and then only a microscopic number actually turn a profit or any revenue at all. Even fewer make real money. Real world, dear readers. The people writing these blogs are doing it to share their experiences. No more. If it doesn’t hit big it does not mean back to the cubicle; it means, see ya in Tahiti. They are really retired and travel the hell out of the planet.Continue reading

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Lifestyle

Learning to Think: The Art of Critical Thinking

thinking-767040_960_720Critical thinking is in short supply in our society. Before we blame modern technology, the weather, or those darn kids these days, we need to look in a mirror. Critical thinking has always been a dear commodity from the beginning of time. You can’t force critical thinking on another man, but you can take steps to incorporate critical thinking into your approach to any problem and life in general.

School rarely teaches you to think. Schools are built to ingrain conformity. Most people are broke because they were indoctrinated into the poverty mindset. Hell, economists define economics are the allocation of scarce resources. The message: there is not enough to go around so we will have to find a way to distribute the limited [fill in the blank] resource.

There are no shortages! We complain we have limited water resources when 71% of the planet is covered by water. What really happens is we piss in our own cup and complain our water is polluted. The problem is not a shortage of water; our problem is dangling our junk over our drinking cup.

I could go on with a plethora of additional examples, but you understand my point. Huge, world changing issues, require leaders willing and capable of critical thinking! Unless you are one of these world leaders you have limited influence.

Critical thinking is vital in your personal life as well. Decisions made with faulty, or worse, no thinking, are the root cause of most problems in our lives.

Everyone needs a bit of accountant in them. Everything (or so scientists have discovered) can be boiled down into a mathematical formula. We don’t need a master’s degree to make sound decisions based on critical thinking. A few simple ideas can give us all the tools we need to live a happy, prosperous life.


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