Archive for June 2016

Cut Your Electric Bill 80%


My insane obsession.

Utility bills left unattended can put a serious dent in your budget. There is good news. You can reduce your electric bill 80% or more in a few short steps. Heating, water, internet and other utility bills can also be reduced by massive amounts with a few tricks.

The old adage ‘A watched pot never boils” is an apt place to begin. Before you can reduce your utility bill you need to know how much energy you are consuming. I get invited to seminars periodically that promise massive energy savings. They offer a free meal and Mrs. Accountant and I are always up to learning something new when a free meal is involved. The seminars are all the same. They try to sell over-priced products, many of which will never work if you understand even a small amount of science.*

Back by the ‘watched pot’ we are beginning our journey to energy reduction. The first step is to record your energy usage. For some reason, when I ask clients to record their energy usage the amount they use seems to decline. Like the ‘watched pot’, energy is still consumed. The water will boil, it just seems to take forever when you are watching the darn thing. Scientists know when something is observed the results can be affected by the observer. In medicine it is called the placebo effect (if you think it will work, it sometimes does, even if it is a gelatin pill). By watching your energy consumption you become aware of how much you are using and start to take steps to stop waste. Read More

Occam’s Razor

Keiths Razor

Keith’s razor. Ah, hahahaha! Oh, grow up! This is serious stuff.

Life is more complicated than it has to be. More moving parts do not mean better. Electric cars have one moving the part, the motor; whereas gasoline powered vehicles have several hundred moving parts. More moving parts mean more things can go wrong. When all things are equal, the machine with fewest moving parts that still gets the job done is usually the best choice. Electric cars will outperform old-fashioned gasoline engine vehicles on every front as electric vehicles are improved. Lots of explanations will be given as to why electric cars blow gasoline engines off the road, but the simplicity of an electric vehicle will be a significant reason for the lower costs and higher performance.

Enter William of Ockham, a friar from the fourteenth century. Way back then he told us why electric vehicles, with fewer moving parts, would be a better choice once the technology was worked out. William of Ockham gave scientists a tool we now call Occam ’s razor. What William taught us is that the simplest answer tends to be the correct one. Scientists use Occam’s razor as a tool to break down theories into their simplest components. Therefore, by breaking down the theory into small (simple) testable parts, fewer excuses can be made when the results are falsified. When there are too many moving parts it is too easy to make excuses as to why the experiment failed. With fewer moving parts the test results are more reliable because there are fewer opportunities to give explanations for the test failure due to other circumstances. The same applies to the world of FI (financial independence).

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Giving Up What You Love

HeifersFinancial independence means you can indulge your dreams. By 1995 I had reached a level of net worth where I could realize many of my dreams. Coming from an agricultural background I wanted to move back to the country and have a small farm. Ten acres with a house and barn came up for sale a mile from where I grew up. My dream was now owned.

In 1982 the family farm went through a wrenching bankruptcy. I was eighteen and had no future. Everything I knew related to farming. The pain etched a deep wound in my psyche that never went away. My desire to live in the country was not the whole dream. I had to own a small farm. In my mind I had to understand why the family farm died when I was at such an impressionable age. Read More

How Lucky We Are


Wha’da’ya know. The guy who hates travelling is on vacation and having a good time.

Regular readers around here know Friday night is card night in the Wealthy Accountant neighborhood. Scheduling issues forced us to move card night to Saturday this weekend. As always, we catch up on news and solve all the world’s problems as we enjoy the game. This week was no different.

Roger lives across the road from me. He plays sheepshead, but we never invited him to our game, an oversight we need to rectify. Roger is a low-key man. He is quiet, but quick to help a neighbor in need. I don’t remember how Roger came up as a topic around the card table. We started to sing Roger’s praises when Pete said, “Roger would be unstoppable if he didn’t have so many medical problems.”

We all nodded. Roger is hard working and it is understood his medical condition is not good. I said, “Bob told me a few years ago Roger nearly died it was so bad.”

“It wasn’t good,” Pete said. “He was having a kidney replaced when he had a heart attack on the table. They had to do two surgeries in one.” Read More

Passive Income Hoarder

Create massive streams of passive income by aggressively pursuing each passive income opportunity. #money #retirement #earlyretirement 3hoarderWhen it comes to passive income I have an edgy side as the title indicates. Multiple streams of income showing up in your account regardless what you are doing is a powerful force to have on your side. Losing your job is only an issue if your job is the bulk of your income. Business owners know the loss of one client out of hundreds is no more than an annoyance. You can harness the same force in your finances.

Before I list the sources of passive income I have, let me share a short story that happened to me recently. Certain sources of passive income are offered to small groups only. I was fortunate enough in my business to have one of these sources. Mr. Money Mustache, a personal finance blogger named Pete, gave me a plug, including a plug for this new source of passive income. I did not expect a lot. When the numbers were finally tallied I was surprised. The revenue was much higher than I calculated. I shared the info with Pete along with traffic data. He responded with an email saying, “Welcome to the world of passive income.” It started me thinking about all the sources of passive income I have and how passive income cements my finances regardless of the economy or my business.

You can harness the same passive income empire. Below I will outline many of my sources of passive income with a few ideas I don’t use. With a small amount of effort you can build $4,000 of passive income per month; more than enough for a luxurious lifestyle. Keep in mind what I call passive income is different from what the IRS calls passive income. Some of my sources of passive income are classified as earned income for tax purposes. My definition of passive income is something you do today that generates a steady stream of income with almost no effort for those future payments.

A Passive Income List

  • Interest
    • Bank interest: In today’s interest rate environment I do not consider the small amount earned from bank interest consequential.
    • Prosper and Lending Club: P2P lending offers high rates of returns, as much as 12% consistently. Once you open an account you can set up automatic reinvestment of income. A true “set it and forget it” investment. The whole process self sustains. (I’ve stopped recommending Prosper and Lending Club and stopped investing there myself over multiple concerns. As of this update note I use PeerSreet, link listed below.)
  • Dividends: Dividends are easy to get addicted to. You can reinvest your dividends in more shares (easy to do with a dividend reinvestment plan and mutual funds). Reinvested dividends mean you have more shares every quarter. It is like a pay increase four times a year. Index funds are great for reinvesting dividends or living off the income stream. I also receive dividends from my S corporation.
  • Rent income: I no longer own residential rental real estate, but receive $30,000 per year in commercial rental income. Residential rental properties are more forgiving, yet the right commercial property will generate a significant amount more than residential compared to the value of the underlying property. It is common for good commercial real estate to throw off enough rent income every seven years to pay for the property in cash. My property receives enough rent every six year to buy the building, cash.
  • Speaking: Speaking engagements are earning income for tax purposes and is not completely passive in nature. My attitude is anytime I get paid to talk, something I do whether I am paid or not, is free money. I am always amazed when I speak for an hour or two and they hand me a check for several thousand dollars. If you are interested in speaking for profit check local speakers bureaus. Focus on one area you are well versed in. As you can guess, I talk taxes and financial planning a lot.
  • Land contract: Once upon a time I owned well over 100 residential rental properties. Like so many things I do, I burnt out from overdoing it. I still have a land contract. Here is how it works. I bought a repossessed home from Veteran’s Affairs twenty years ago, fixed it up, and sold it for a tidy profit: 10% down, 10% interest, 30 year term, no balloon. They never refinanced and I pray to whatever god will listen that they don’t either. Ten percent is a nice income stream secured by a piece of real estate with only 20% loan to equity at this time.
  • Personal lending: I have been known to lend money to businesses and people I know and trust. The loans are always secured and short-term in nature. Funding the transaction can come from cash flow or I can create a wrap-around loan. Wrap-around loans are where I borrow the money at a cheaper rate than the interest rate I am receiving. The nice thing about the wrap-around is no capital investment is needed; it is all free money.
  • Blogs: I write two flash fiction blogs which bring in about $22,000 per year (don’t tell me you can’t make money writing fiction online), a variety of tax and personal finance writings around the web which brings in small amounts, a content farm I no longer write much for (HubPages; Google: KeithTax) with several thousand in revenue trickling in, and this blog. The Google and Amazon affiliate programs are a monthly source of passive income. Other third party affiliates pay more, but can be seasonal in nature. Blogs are a fast growing segment of my passive income portfolio.

Passive Income I Don’t Use, but Could

  • Airbnb: I could always rent my home when I am away, take in roommates, or remodel a guest house for additional income. I don’t, but I could.
  • Turo: I could always rent my car when not in use on Turo for extra income.

There are many more passive income opportunities if you keep your eyes open. In business and in the blogs there are literally thousands of affiliate programs that offer massive payouts. A small number of sales from these affiliate programs are more than enough to fund a luxuriant lifestyle. If you are like me and can’t help yourself, you can work a part-time or seasonal job, run a bed and breakfast, or start a business. There are so many ways to earn enough to cover your daily living needs for a few hours time per week. You then have plenty of time to follow your bliss or dreams and live the life you want to live.

Why Passive Income is so Important

51VPhON++mLEven if you listen to the news poorly you cannot miss the raging debate on income inequality. Blah! Yes, there is income inequality and it is worse now than 50 years ago. The truth is where the income inequality is coming from. Fifty years ago people saved more and invested their money. A large part of people’s income in the past came from passive income: interest, dividends, capital gains, and rental income mostly. Today people spend every dime they have and invest nothing. Income inequality is explained in large part by the lack of passive income compared to the past. It does not take much to start a passive income machine, but it does take something. The 1% is doing so much better because they kept investing in passive income: primarily dividends and capital gains (also taxed at a lower rate than wages and other earned income). If you want to stick it to the 1%, save and invest. Keep the stock in your portfolio where you get the dividends. Then the rich can’t have those shares and the accompanying dividends; they belong to you.

Passive income is also important to get comfortable with. Your retirement years will be funded in large part by passive income; get used to it. Whether you retire early or work until you can’t, passive income will play a larger role in your life the older you get. Your body will not cash the check your mind demands as the years add up. Since passive income will play such a major role in your later life, why not start early?

Getting Started

511cR5hpdhL._SX322_BO1,204,203,200_For some passive income you will need seed money. Seed money comes from savings: either spend less or earn more to build your war chest. Passive income from blogs requires almost no seed money. Blogs do take time to build a following, however. The nice thing about many blogs is the income keeps coming in after you generate enough content. As I write this blog post, an article I wrote in January 2010 on HubPages, is flying high. I wrote about Tony Robbins back then and Tony is back in the news today so my traffic is out of this world, along with the income; looks like a bonus passive income month for your favorite accountant. It seems there is always something doing well these days with all the content I’ve written over the years.

Passive income opportunities are everywhere in today’s society. The government’s distress at the low labor participation rate could be a renewed lifestyle by the middle class breaking away from low paying jobs to a passive income lifestyle. The world will not end if we all get our share of passive income. Machines and technology will produce more and more goods and services cheaper and cheaper. We really have it made. The labor participation rate was significantly lower in the 1950s and the 50s were considered an economically great time. Let’s go back to the days where we lived within our means, survived fine on one income, enjoyed plenty of passive income, and enjoyed life with family and friends. What an awesome opportunity and way to live our lives.

Be sure to share your favorite passive income source in the comments below and subscribe.



More Wealth Building Resources

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Side Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant for a bonus. Call 888-844-8910, email or read my review.

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

PeerSteet is an alternative way to invest in the real estate market without the hassle of management. Investing in mortgages has never been easier. 7-12% historical APRs. Here is my review of PeerStreet.

Life is good when you have plenty of passive income streams. Enjoying an ice cream and no worries is all part of the passive income lifestyle.

Enjoying the good life while the money keeps rolling in.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

A cost segregation study can save $100,000 for income property owners. Here is my review of how cost segregations studies work and how to get one yourself.

Amazon is a good way to control costs by comparison shopping. The cost of a product includes travel to the store. When you start a shopping trip to Amazon here it also supports this blog. Thank you very much!

Words: The Power to Create or Destroy


They seem so small and harmless: words. Yet words can create great beauty and wonderful works while at the same time destroy relationships, ruin happiness, disrupt wealth, even bring down empires. Words are a means to communicate. The accuracy of our words makes the difference between building great things and fantastic disasters.  NASA’s Mars Climate Orbiter failed in 1999 because engineers did not convert English measurements to metric. A word left unsaid wasted $125 million and countless hours of work.

Words are just as important in your personal and business life. A miscommunicated word with an investment advisor or when setting up an investment account can have catastrophic consequences. Imagine forgetting to add a beneficiary. A miscommunication could have dire consequences for your heirs. An awesome passive income opportunity is lost when the wrong words are used. Read More

Freaky Friday: Laughing All the Way to the FIRE Lifestyle

Skrattande kvinna

Persons attempting to find a motive in this narrative will be prosecuted; persons attempting to find a moral in it will be banished; persons attempting to find a plot in it will be shot. — Mark Twain


Have you ever wondered what people were like when they were younger? What were people who attained financial independence early life like when they were growing up? Is there anything special about early retirees?

A week ago I proposed life is one big joke and then it is over. My original intentions were to add more humorous material. What concerned me were two things. One, writing humor is no easy feat. All too often when writing a joke, crickets fill the room after the punch line. The only fallback for the comedian is, “Well, I guess ya had ta be there.” Two, not everyone thinks the same thing is funny. Read More

Financial Planning and the Death of a Spouse

Graveyard1There are critical times in the course of life when financial independence is at risk of destruction. A lifetime of planning, saving, and investing can go up in smoke in a few short years without an adequate plan to protect the most vulnerable member of a marriage (or any relationship, for that matter) after the death of a spouse or loved one. The trauma and grief after a loved one dies is acute. Deep pain and emptiness creates risks for the surviving spouse. Well intentioned, and lonely, people will try to connect with the bereaved. A couple committed to a lifetime of financial discipline will acquire a massive nest egg of retirement wealth. The surviving spouse is a prime target, a highly desired, person for this reason. Even people with honorable intentions can wreck havoc on the surviving spouse’s finances. Read More