Archive for February 2016

Zen Meditation: The Quiet Mind

A quiet, reflective start to the day.

A quiet, reflective start to the day.

Several years ago my office building was burglarized. Two young men used a tire iron to break a window and enter the building. Tax offices do not have a lot of stuff worth stealing so they settled on two monitors and an old safe with an empty coffee can in it. People pay their bill by credit card or ACH in the majority of cases; a few still pay by check and cash comes in during tax season and is removed each day.

The young men caused thousands of dollars in damage for the massive haul of two monitors worth maybe $20 each. (New monitors are under $100.) So what were they geniuses looking for? Well, it seems they remembered I had a soda machine outside my building a decade ago and they assumed I moved the machine inside the building. Yes, they burglarized my building for some of that lucrative soda machine money.

They did not find the soda machine. I retired the machine years ago. The police were so excited to gather evidence. A few days later the young men were in custody. The police and district attorney informed me I was a victim. I replied ‘I am not the victim. My building is the victim; they kicked the shit out of it.’ For some reason I did not feel violated; I can’t speak for my building since I was not the one sodomized. Read More

Why I Work Too Hard (and So Do You)

The Wealthy Accountant is pushing for a hernia.

The Wealthy Accountant is pushing for a hernia.

Back when I was in high school I started down the road to OCD, I mean toward being a wealthy accountant, by recording everything I did. Every penny that came in and every penny that went out went into the columnar pad. Tracking my progress was so important to me I refused to go to bed at night unless the “books balanced”.

Once I reached adulthood I continued recording my financial progress and expanded it to other areas of life. For decades I have recorded my daily electrical usage. No fancy devices are used because that would cost money and you know how we feel about spending money around here. Except for vacations, I can tell you how much electricity I used on any particular day for the last twenty years or more. (In the near future I will share how my electricity usage obsession helped me reduce my utility bill 80% for the farm and 65% for the office.)

Such anal obsessions may sound like a sickness. When running a business the obsession frequently is the difference between survival, failure or massive success. I keep two sets of books in my accounting firm. Before you scream to the IRS that I am cheating on my taxes I ask you sit down and listen first.

There are some things QuickBooks does not do. I track my income and expenses in QuickBooks and on an Excel spreadsheet. The Excel allows me to also track non-financial items, too. Like my electricity usage, I can tell you how many tax returns I e-filed back to 1990. (Yes, they had federal e-filing way back then. I was an early adopter.) The Excel worksheet also allows me to review my business over long periods (decades) in a different way from QuickBooks or any other accounting software. Read More

How to Retire Younger than Mr. Money Mustache

Golfing buddies taking a break at the Vic Ferrari Charity Golf Event for Children's Hospital

Golfing buddies taking a break at the Vic Ferrari Charity Golf Event for Children’s Hospital

Several years ago while surfing the web I ran across a guy called Mr. Money Mustache, written by some crazy guy out in Colorado*. His claim to fame was that he retired at age 30, to which the Internet Retirement Police took him to task, claiming he did not ‘really’ retire at age 30. Not me. I sat back in my chair and wondered: What took him so long?

Fast forward to last weekend where my 21 year old daughter, Heather, complained about issues with her supervisor at work. It was the perfect opportunity for me, dear ‘ol dad, the Wealthy Accountant, to share some golden nuggets of truth.

The people living with me, sometimes known as family, are quite accustomed to my rants on how to live life, sometimes known as ‘dad’s little psychotic episodes’. The good father that I am, I share my lifetime of experiences liberally and sometimes even add a modest amount of BS. Let me be 100% clear here; I never lie. Ever!

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Retire Early With Rental Properties

IMAG0302People serious about early retirement turn to rental real estate to turbo-charge the process. Saving and investing can get you to retirement fast. With real estate you can go from zero to retired in a few years. It does require careful planning to make it work.

There are three steps in successful income property ownership: buying right, management and taxes. Over the years I have seen many people lose money, even go broke, due to rental properties. I have also seen ordinary people make more money than doctors or lawyers with real estate.

From the late 1980s to the late 1990s I owned well over 100 pieces of property in a partnership with dad and brother. Real estate is a passive activity according to the IRS. In reality it is planning and work. The number of rental properties required for a comfortable retirement is not all that large. I currently own two properties (other than my homestead) generating over $36,000 of passive income a year. This is profit, not gross rents. Read More

Cold House Journal

A bit cool outside this morning, but balmy inside.

A bit cool outside this morning, but balmy inside.

I grew up on a small farm in rural northeast Wisconsin. We lived in a shotgun shack which is more familiar to the U.S. South. If you don’t know what a shotgun shack is, it is a home with so many holes you could shoot at it with a shotgun and the pellets would pass right through without hitting the building.

A shotgun home in NE Wisconsin has problems in the winter months. The small furnace kept the pipes from freezing and not much more when the temperatures dipped below 0 F. My upstairs bedroom had no heat. As luck would have it, I had an electric blanket. There was one more advantage: I kept ice cream under my bed for two or three months a year and it would not melt. Those are wonderful memories.

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IMG_0598The first week of tax season is in the books as I write this. Most tax seasons bring the same problems with a few notable new ways to mess up a tax return. New employees frequently bring bad habits from previous jobs we work hard to break. A new CPA in my office has reminded me how important it is to address problems quickly.

Communication between accountants in the office and with clients can either make or break the client relationship. Clients will ask for things that will really harm them in the end. Today I want to address two areas of concern: injured spouse and deductions (business and personal).

All too often a client wants an immediate benefit without regard for the future. The most difficult task in training new employees is to get them to think about the effects on all tax returns affected. Clients generally get it when I explain it to them. For some reason the tax pros want to tenaciously hang onto the old destructive habits.

Injured Spouse

A quick definition: An injured spouse is where one spouse owes back taxes or child support and the other does not. As a result the refund will be seized by the IRS to satisfy the child support arrears or the state or federal back taxes owed. To protect the spouse not responsible for the payments, the injured spouse can file for relief (receive their portion of the refund on a joint tax return). You can even marry into such a situation. Read More

Buying Stuff Just to Throw it Away

Out in the boondocks where I live the garbage is picked up every two weeks; recycling once per month. Until a few months ago this arrangement worked well. Garbage was placed in a large barrel the garbage truck could automatically empty into the truck hopper. Recycling was placed in blue plastic bags with paper and cardboard placed in either a box or tied in a bundle. A few months ago the system was changed for recycling. Bags were replaced with a blue barrel the same size as the garbage barrel. I understand why the change took place. Under the new system the recycling company could run the route with only one employee. The truck has a lift (like the garbage truck) to grab the barrel and empty the contents.

The problem comes from the amount of recycling I have. All the recycling from my office, farm and home went into the barrel and it was not big enough. It was hard to believe I had so much crap every month. The garbage barrel was almost empty; we have one small kitchen garbage bag for disposal every two weeks. But the recycling did not fit. At first I wanted to blame all the stuff (a technical term used by hard-core wealthy accountants) on the office and farm. Certainly, they played a roll, but personal recyclables still would fill the barrel monthly. Read More