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Archive for October 2016

Supercharge Your Net Worth

img_20161009_152000Business ownership is the fastest way to significant net worth and financial independence (FI). It is possible to grow your net worth $2 or more for every dollar you increase your revenue. This is before investment gains! By understanding the accounting behind business valuation, anyone can accumulate a seven figure net worth in as few as five years which can be turned liquid and invested in income producing assets allowing for early retirement.

Building a massive net worth is more difficult, if not impossible, with earned income only. Mega-wealthy people like Warren Buffett and Bill Gates know wealth is created from multiplier effects. Buffett grew Berkshire Hathaway by investing in other successful companies and insurance. Bill Gates grew Microsoft into a world leading software company. In each case the majority of the wealth created, around twenty times the profit level, came from multipliers. Only about 5% of their wealth came from actual profits!

Average people can use the same methods as the uber-wealthy to supercharge their net worth. Business owners have the advantage. Wage earners have no multipliers to help them accelerate their net worth growth, whereas a business owner can increase her net worth by $2 or more for every dollar of increased revenue the business has even if she saves and invests none of the profits.

Hard Numbers

Accounting practices sell for 1 to 1.5 times revenue. There are a few that sell outside this range, but most fall within the range. Most industries are similar. If you review the financials of public companies you will find many trade around 2 times revenue.

This creates an interesting situation for the business owner. Let’s say your favorite accountant wants to increase his net worth really fast. The easiest and fastest way to do so would be to increase the size of the business. An additional $100,000 of revenue should yield an additional $50,000 of profit (accounting practice margins are 30% – 50%) in a well managed firm, which I have. Since I have no need to spend more, I can invest the entire $50,000 profit, assuming no taxes.

At first glance you would say my net worth has increased $50,000. And you would be wrong.  The company is now larger and more profitable. A buyer of the firm is willing to pay for that stream of growing profits. Since we know accounting practices sell for 1 to 1.5 times revenue, the value of the practice has increased $150,000. (I run an efficient firm so my practice is valued at the high end of the range. In reality I might get a bit more, depending on the current market and the buyer.)

Think of this for a minute. An increase in revenue is worth more than the revenue! A $100,000 revenue increase raises the value of the firm $150,000, plus there is that $50,000 of profit to add the net worth column. That brings us to a $200,000 increase in net worth on only $100,000 in additional revenue ($50,000 in additional profits) for the business owner.

Who would pay so much for a company? Anyone with good math skills. Paying $150,000 for $50,000 of profit is like buying a stock with a 3 price/earnings (P/E) ratio! The difference between a public company and a small business is that when a sale takes place it is usually the entire company being sold when a small business transfers ownership. There is customer retention risk to the buyer. Sellers can counteract this risk (and get a higher selling price) by taking a small position at the buying firm to help clients adjust to the new corporate environment.

The buying firm that retains all the clients of the acquired firm will reap a 33% return on their investments. They paid $150,000 for a $50,000 stream of profits. There will be willing buyers. A small business owner wants to increase her revenue quickly to supercharge her net worth. Working 10 -15 years to reach retirement can be a real drag. A business owner can get there in five.

Imagine you start your own accounting practice and use some of the advice on this blog to grow revenues to $500,000 per year by year five. This is a reasonable goal for a small tax/accounting office. Your profits the last year should be $200,000 or more. I assume you saved half your income each year as recommended on this blog. In year five you can sell for $750,000. You should also have another $250,000 or more of your earned income saved and invested. There you have it. A $1 million net worth in five years and you only built a very small accounting practice.

It works the same way in other industries, too. A small business with a steady to growing stream of profits is very valuable. A lot of smart money is hungry for such investments. A million dollar net worth should throw off $40,000 or more per year (the 4% rule). Since you were living on $50,000 or less when you ran your company, selling is a step up because you have enough money for all your needs without working.

Retirement is a short five years away when you engage the accountant in you.

img_20161025_095421What about Non-Business Owners

The same multiplier effects exist in public companies too. The P/E ratio is a common barometer used by investors to gauge value. Because reported earnings are easy to manipulate there are better measures of wealth creation within a company. As the economy grows, so do profits.

The value of your index funds do not increase the same amount as earnings are increasing; your index fund grows about 20 times faster! If the stock market has a 20 P/E ratio it means stock prices are 20 times earnings. If earnings increase $1, the price of the stocks in the index will increase $20 or the P/E ratio falls.

The P/E ratio moves around a lot over time. At the end of the day stocks will reflect the earnings growth of the underlying companies. Dividends and stock buy-backs are funded by earnings. Borrowed money can sustain dividends and buy-backs only temporarily. In the end it is about earnings, or more accurately, free cash flow.

The reason an investment in a broad index fund is so powerful is because of the multiplier effect of increasing earnings. A small business owner only realizes the actual profits of the company. Only if the business is sold in whole or in part can she diversify her net worth. A broad basket of stocks can throw off a steady and increasing income stream and is already diversified.

Another way to look at this is by reversing the P/E ratio to get the earnings yield. A 20 P/E ratio is a 5% earnings yield (E/P). The higher the P/E ratio the lower the earnings yield. It becomes clear quickly why interest rates have such a powerful effect on business valuations.

Serial Entrepreneurs

Working hard and saving half your income is a sure way to reach retirement in 15 years or less. Starting and running a business is a real pain in the ass at times. Building a million dollar accounting practice is work. Even a practice half that size is work. The great news is it doesn’t have to be an all-or-none proposition.

While you are in the wealth building phase a micro business with $100,000 in revenue still supercharges your net worth. Selling a micro business can put you over the top years sooner. There is nothing preventing you from starting several micro businesses either. Keeping a business small has its advantages.

Take The Wealthy Accountant blog as an example. Blogs have virtually no overhead or expenses unless the sucker gets huge, requiring employees and office space, a rare occurrence. A small blog with a steady $50,000 of revenue can be sold for several times revenue. If you sold for only 1.5 times earnings, the annual rate of return on the investment would approach 70%! It would be silly to sell at such a low price. Even a sale of such a blog at 5 times revenue ($250,000) would generate nearly a 20% rate of return on the investment. Remember, almost all revenue on a blog flows to the bottom line. In accountant speak, the margins are extremely high.

For the record, I have no plans on selling The Wealthy Accountant.

It Always Comes Back to Taxes

As if the wealth creation of business ownership wasn’t enough to encourage you, now the government wants to chip in. If your small business adds $100,000 to revenues and $50,000 to profits, the government will tax the $50,000 of profits only. The $150,000 increased value of the company is not taxed.

You are only taxed on the increased value of the company when you sell. (I am only talking income taxes here. Property and similar taxes are disregarded for this discussion.) The $50,000 profit is taxed as ordinary income where rates top out at 39.6%. (I also disregard the additional taxes assessed high earners due to the Affordable Care Act.) But when you sell the business the gain is taxed as a long-term capital gain where the top tax rate is 20%.

If you have a really smart accountant you probably organized your business as Section 1202 Qualified Small Business Stock where the gain on the sale could be completely tax-free in certain circumstances! (Before you call me asking for one of these awesome deals, I remind you they only apply in a narrow set of circumstances. Most business owners are better off with a different structure.)

The End is Near

The hardest part of FI is the waiting. People saving half or more of their income get excited when they see their account balance grow, but along the way feel the drudgery of a long slog. Sure, non-savers spend a lifetime working to have nothing at the end. But fifteen years for a dedicated person responsible with their money is still a long time if you want out of the rat race now.

A sideline gig can supercharge your net worth so you reach FI sooner, in as little as five years. The light at the end of the tunnel has just gotten brighter. If you are standing on railroad tracks looking into that tunnel, might I suggest standing to the side. You don’t want to get run over the moment you finally make it.

Workflow in a Tax Office

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Workflow system.

The more traffic grows on The Wealthy Account the more questions I get from accountants wanting to know how to run their office more efficiently. The tips below can be tweaked to work in many business settings and can be applied to personal management of time with family and friends while allowing ample “me” time for reading, thinking, and relaxing.

The workflow process in my office evolved over time as the tax industry changed and my practice transformed from a tax office to an accounting/payroll/bookkeeping office to its current incarnation as a quasi-communications company focusing on tax issues. So you understand my thought process I will walk through how I handled workflow in the past and why I changed procedures when I did. By seeing each stage of my workflow history you can pull the pieces that fit your situation best and modify them for your needs.

In the Beginning. . .

Organization in a tax office is not optional. From day one workflow had to be recorded and tracked. In business and even in our personal lives it is important to write things down. We start each client with a line item on a legal sized piece of paper. Since there are so many steps we take with our clients we break down each task into its components. Accountants track their own work and the computer monitors progress. My front desk is used as a redundant system, preventing mistakes. An empty checkbox on the legal paper requires investigation.

Before workflow even enters the office, client flow must be managed. In your personal life you can’t visit 38 different friends in different locations at the same time. The same applies in business; you see one client at a time. The early years of my business grew fast. People would frequently drop in without an appointment. Then one year in early February there was a line out of my building and half way down the parking lot. Something had to be done.

We instituted a pre-appointment program. With well over 2,000 tax returns during tax season we needed to control how many people were at the office at one time. At the end of each year we sent an organizer to help clients gather their information. We included a pre-scheduled appointment for each client and reminded the client they could always call and change the appointment.

There was another feature we instituted and encouraged: the drop-off. I have no problem talking with clients. (I have no problem talking at all. Ask anyone who has met me.) The problem arises when people want to see one of the accountants before the return is prepared. We discovered if people dropped off their documents and we called them with questions while we worked on the return we did a better job. Then, when the client picks up the return we sit with them. By talking with a client after-the-fact we can review the completed return for accuracy and plan for the current year with maximum tax savings in mind.

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Managing workflow in a tax office is not optional.

Today

We got rid of the pre-appointment program completely. We encourage clients to call if they need an appointment or to drop off/email/mail their documents. We see some clients before the return is prepared, but the money shot is the meeting when the return is picked up. This is where we save the client real money.

The type of client we serve has also changed. More businesses versus simpler individual returns allowed us to ease up on client flow procedures. My practice now prepares around 1,000 returns annually with most clients owning a business or investment properties. The size of the tax returns takes more work than the 2,000+ returns of a decade ago.

The demographic change to our client list means clients naturally want to drop off their paperwork and meet afterwards. Business owners prefer working normal business hours versus individuals always wanting evening and weekend appointments. I enjoyed that change.

The issues changed; we did too. I included some photos of our current system around this post. The open doors photo is where tax returns are categorized by where they are in the process. The open drawer is empty because it is after tax season, but normally is filled with tax returns categorized as an A, B, or C. More on this in a bit.

When tax work comes in it is put into a drawer until it is scanned. Every document in our office is scanned and backed up daily to a third party, off-site administrator. Some data is backed up every 15 minutes and some is backed up at night. Everything is backed up in 24 hours or less regardless.

We still use legal paper as a check-mark system to assure each step was handled properly on each tax return. If the tax return does not need a certain task a note is made. When a client picks up their tax return the line after their name should be filed almost to the end. When the tax return is e-filed and accepted the line for that client should be completed. We also include a checkbox for invoicing and payment. If we are not going to get paid we might wish to consider a different line of work.

Back to the open cupboard doors. If any slot (there are 6 if it is hard to see in the photo) overflows we have a filing cabinet to handle the short-term overflow issues. Starting at the top right the slots are labeled: pending, review, e-file, ACK rec’d, drop off, and print. The details for each slot are as follows:

  • Pending: Files in this slot are for tax returns started, but we are waiting for more documentation from the client. As you can see we still have a few files there in late October. Some clients are slow.
  • Review: Most tax returns are reviewed and I look at all but the simplest of tax returns before e-filing. Even my work is reviewed. I might be good, but I want a second set of eyes holding me accountable.
  • E-file: This slot has the signed e-file forms. All signed e-file forms are filed before I leave at night, no exceptions.
  • ACK rec’d: ACK is the indicator the IRS provides when a tax return is filed and acknowledged. Once a return get an “A” indicator for accepted, it is scanned into the electronic filing cabinet and the hard copy destroyed.
  • Drop off: These are dropped off returns awaiting scanning.
  • Print: This slot is for completed tax returns ready for printing. The client gets a hard copy; we keep a PDF copy.

The A, B, C drawer is where all tax returns go waiting for an accountant to take them in. Any accountant can prepare an “A” return and a review is unnecessary. Most tax returns are classified as “B”. Any preparer can enter the data, but the return must be reviewed. “C” returns must run through my desk. Only very experienced preparers can touch these returns and are always given a full review by me. If I handle the original preparation of a “C” return, I review the work again after a second preparer reviews my work. “C” returns always have special issues.

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The A, B, C drawer.

To Infinity and Beyond!

Of course, the world changed everything on me then. This blog and several Mr. Money Mustache mentions increased the volume of work and the number of “C” returns. I am only one guy and like my free time for creative thought, reading, and, oh yeah, family.

Half my clients no longer reside in Wisconsin. More work arrives via email and the web portal than ever before. Demand for my time has also exploded.

All these changes are forcing me to once again rethink workflow in the office. The ultimate goal is accuracy at the fastest pace, but it also now includes determining how it will affect my personal life (as if I had one before). Time is at a premium. It is hard finding tax professionals who burn as hot as I do. No bragging, experience gives me an edge. Most tax pros either retire by now, burnout (a real risk for me), or devolve into data processors.

Thirty years ago my practice was a tax office. Ten to fifteen years ago it evolved into an accounting office with CPAs offering tax, accounting, payroll, bookkeeping, and consulting. Today my practice is turning into a quasi-communications company with tax and consulting the focus.

It has been a hell of a ride. Many of the changes I never imagined until they dropped in my lap. Life (and business) are like that. You have to go with the flow and be ready for anything. Demand for my time is the highest it has ever been. In the past I would speak publicly maybe five times a year; I get that many requests a month now and the pace is quickening. I enjoy public speaking so no problems there. The real issue is determining what I give up to do the speaking.

And I am slowly learning to use the word “no” a lot more now. I hate it with a passion. But it time for me to grow up.

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.

The Boring Math Stuff Made Fun, or How Value is Created

How do you create value? Better yet, define value for me. Haven’t thought about that before, have you? Let me expand the thought. If you own your own business, own investment properties, or invest in stocks, how do you go about determining if your investments are creating value if you can’t define value?

Ohhhh, you don’t know the answer to that. Then let me ask this. If you can’t define value or determine if value is being created in your investments, how will you ever get value in your life? We are going to fix this right now.

In finance school they teach value is created when the return on invested capital (ROIC) exceeds the cost of capital. I know, I know. A big, bad formula hard to understand. It isn’t that bad. An illustration might make it easier to understand. It looks like this:

  • You invest $1,000 in your business which creates 12% profits per year, or $120.
  • The cost of capital (the interest paid to borrow the money or the income/gain/profits/ lost by deferring the capital to the investment) is 10%, or $100.
  • Your $1,000 investment throws off $120 of profit by investing capital costing 10%. Therefore, $20 of value has been created. If a public company (a listed stock) has a 20 P/E ratio, the additional $20 of value is worth $400.

That last step might have surprised you. You created an instant $400 of value by increasing profits $20 after the cost of capital. Warren Buffet loves watching free cash flow and ROIC. High returns on invested capital are a strong indication of value creation and probably makes the investment sound.

Application

ROIC isn’t everything and we will address that issue in a minute. When dealing with wealth in our life, when working toward financial independence, when using the 4% rule to determine when you can retire, an understanding of ROIC is an important tool to have.

In my home and at my office I reduced normal costs by up to 80% without sacrificing anything. Take my utility bill. At home I use a geothermal heat pump for hot water, space heating, and air conditioning. This is a very energy efficient way to supply heat to a home. However, when the geothermal is working it gulps electricity. I also have a farm where a fair amount of lighting is on 24/7 or at least during the evening hours. I used the formula above to decide when to swap out lighting. Barn lighting and heating costs dropped ~ 80%. Lighting was updated in the house and proper insulation installed where value was created by making the investment.

Before I started the home investment program winter electric bills could approach $600 for January if it was well below normal. Summers electric bills were always low at around $50. Keep in mind this includes a barn with heaters and heating tapes wrapped around water pipes required to keep the water works working in sub-zero Fahrenheit temperatures.

In the barn I reduced the size of the enclosure around the water intake valve and built the wall out of foam insulation. I use an electric heater in the barn to reduce fire risk. By shrinking the area heated by over 95%, the cost of keeping the barn functional in the coldest of weather was small.

Similar improvements were made around the home. Now, even with a record cold January, the electric bill tops out in the $200s. This reduction in the electric bill is even greater considering electric rates are up nearly 40% in the time frame involved.

The same process applied to the office dropped the electric bill a smaller amount since the bill was not that large to begin with. Updated heating and air conditioning units reduced costs and lighting costs are down 95% due to usage of LED lights.

I will not go through the math in each example step-by-step to save time. You can easily use the formula above for your personal projects. The ROIC on the farm was higher due to greater inefficiencies in the barn. The value created in my business was the easiest money I ever made. The lighting updates cost under $300 and the furnace/AC updates were requires anyway due to the age of the equipment. Currently heat and electric rarely cross $200 a month combined, including in the middle of winter. We have six computers with dual screens on every day with a server and plenty of other electronic components used in a business setting.

the-thinkerUtility (and I am not Talking about the Light Bill Either)

Deciding when to update equipment or add insulation is easy compared to non-quantifiable personal expenditures. Spending $3,000 on a vacation will have no real ROIC unless you consider it recharges your batteries so you can work harder when you get back home. Working harder is not our goal; working smarter is. Cars do not create value, either; quite the opposite.

There is another measure of value called utility. Economists know value creation comes from ROIC over the cost of capital. There is another factor called utility which measures how much pleasure we derive from consuming an item or performing an act. Whereas value is created in business and investments, utility creates value in our personal lives.

Measuring utility is much harder. What gives me utility may actually be negative utility to you. Eating one chocolate bar may have immense utility. By the seventh chocolate bar the utility of consuming more in one sitting is turning down.

But you can think of utility the same way you think about ROIC. Consider the invested time and what you give up to undertake the activity giving you pleasure. There is even a better way to gauge utility: Does it make you happy? If it makes you happy it probably creates personal value. The one notable exception is addictions (think drugs).

Utility should also be viewed from the perspective of time. Remember our example above? The one problem you should see quickly involves time. If you invest $1,000 for a $120 increase in gross revenue, it assumes the increase is forever. What if the increased value declines fast after the first year? You might not recover your entire investment, in which case value was destroyed.

Utility needs a similar review. If you buy stuff the utility is many times high at first, but quickly turn negative. A fancy new car that has you all excited can be a burden once the reality of maintenance, upkeep, fuel costs, and insurance start adding up. Then your new car gets its first scratch. Personal utility when applied to things has a tendency to head south in a hurry.

Spending time with family and friends is low cost with high utility. Even an expensive vacation has utility with long-term potential. Remember how your grandparents talked about a major trip they took back in 1978? After all these years the utility is still high and probably higher now than it was at the time they took the vacation.

Investing in experiences has more utility than accumulation of stuff in all but the rarest of circumstances. Investing in the right experiences assures a lifetime of happiness.

The Critical in Thinking

Media blasts messages scientifically tested to provide the results the advertiser wants by tricking you into wanting things that provide limited utility for a short period of time. This requires you keep coming back for your next fix. Our education system does little to help us defend from these mental assaults. They need obedient people accepting shitty jobs they have to work at their entire life for the illusion of happiness from buying all kinds of stuff they never wanted in the first place.

Critical thinking in all aspects of life would improve our world. Most problems vexing the human race can be traced back to stupid thinking. Thinking critically takes effort and we sometimes don’t like what we find. Stupid thinking allows us to blissfully wander the wastelands, unhappy and uninformed.

From now on you will think. Critically. You will not blindly follow the crowd or believe something just because some crazy accountant from Wisconsin wrote it. Critical thinking will increase the happiness in your life. No fancy words like “ROIC” or “utility” are necessary. Wise spending is easy when you involve critical thinking. Experiences providing happiness is where you want to focus your attention. Spending money should create value. It usually takes only a small amount of money or even no money to live an awesome experience.

Now that you understand critical thinking, go do something you can be happy about.

Lessons Learned: Raising Children with Disabilities

In the winter of 1995 Mrs. Accountant and I were a young married couple anxiously awaiting our first child due in late February. Winter in NE Wisconsin has a tendency to get bitter. The winter in question was no different. The holidays were still fresh in our mind on January 7th. My business was a remodeled basement; the following year would be my first with a store front.

The air felt colder than normal and Mrs. Accountant was feeling the effects. The stress of pregnancy coupled with the weather had her bed-ridden. Early on the 7th she got up and wandered to the couch. Then the world turned upside down. Her water broke seven weeks early. Dumb as I was I still knew this was really bad.

I rushed Mrs. Accountant to the hospital. The doctor decided the longer the baby stayed in mom the better. For two days my wife suffered. The doctor finally relented and had Mrs. Accountant transferred to a hospital with facilities for such a premature baby.

It was an intense delivery. I was not allowed in the delivery room. Our first baby entered the world seven weeks early and spent 19 days in intensive care. If I had not worked out of my home at the time I would have never stayed in business. Working from home allowed me all day with my wife and newborn daughter.

The medical problems were only beginning.

Chapter 2

Five years later Mrs. Accountant and I decided we wanted one more child. Two seemed like a good number and we had it in our heads if we only had one child she would be spoiled. (We spoiled her anyway, with love.)

The doctors were taking no chances this round. The ultra sounds were all normal; all tests were normal. It did not matter to Mrs. Accountant and me the gender of our child so we waited for our baby to enter the world to know.

Shortly before the due date the doctor decided a C-section was the safest course. This time I was allowed in the delivery room. The operation went smooth. As the baby slid from mom’s belly one doctor said, “Congratulations, sir. You have a son.” Another doctor said, “Look again doctor. You have a girl, sir.” All I remember was muttering, “It’s both.” The room was silent the remainder of the procedure.

I died that day. Everything you read about me or from me is from a man who did not exist before that day in the delivery room.

Numb, I went to the office and told Bev what happened. Bev, now retired, is a friend of my family since I was born; she is also friend and was a longtime employee as well. I told her I was not coming back. It was over. Nothing in life mattered anymore. It was the closest I ever came to quitting what I love doing so much.

Chapter 3

The medical problems of an intersex child are legend. The mental problems were also hard to handle. My youngest daughter’s birth certificate reads: gender: “unknown”. The birth certificate was later reissued. Normally a Social Security number is issued at birth. We had to wait until we knew the gender for my child.

The hardest part is talking with people. You know the first question asked of new parents: boy or girl? I could not stand it. I was crushed. How do you say “both?

Under stress and distracted, Mrs. Accountant and I had serious decisions to make. Our baby was going to die within a few months if we did not act quickly. The gonads didn’t drop and were pre-cancerous purplish masses that had to be removed: surgery one. My child’s genital were malformed and neither truly male nor female. The urinary tract exited a penile structure and internally. Infection was imminent if the issue were not remedied: surgery two.

The doctors did a DNA test. It was discovered my baby was conceived male, but the Y chromosome became isolated after a few cell divisions. My child’s body was 15% XY (male) and 85% X (androgynous). The second X was missing. In the absence of a sex chromosome the human body tends toward the androgynous, or more feminine. In our minds our baby was a girl. It was also easier for the doctors to construct a female than a male.  We had two daughters.

A Social Security number was issued and the birth certificate updated.

Chapter 4

I was racked with guilt. It was my fault. Something about me caused this failure. Of course this is not true, but back then I felt that way. Deep down, I still do.

Two children; two children with serious medical problems. As I wrote Chapter 2 and 3 above I broke down. After all these years the emotions run deep and cause immense pain.

Support groups are hard to find. The closest thing to intersex is transgender and they are not the same. A transgender has a choice in surgery, my daughter had none; it was either create genitals or die. How would you like that choice as a parent? And if you guess wrong . . .

The therapy for mom and dad did not last long. I discovered quickly most people with children like ours were messed up in the head. They kept it a deep, dark, dirty family secret, as if the child was somehow an abomination. Mrs. Accountant and I took the opposite approach. It isn’t a secret; it is what our daughter is and if you can’t handle it , that is your problem.

Our attitude allowed our daughter to grow up normal. There was a sigh of relief when she took to girlish things. I started joking I had 1 ½ daughters. Some people were offended. They can re-read the last sentence of the last paragraph. We laugh and joke about it. It isn’t a secret and she is not abnormal; she IS normal. A normal girl. (I also joke I have 34 kids of which two have survived . . . so far. The rest had an accident in the pond. I am waiting for the police to show up and dredge the pond for bones. I have sick sense of humor. I have to; it is a survival technique.)

Medical Bills, Money, and Work

More than ever I had to be a parent. Work was secondary. As a business owner with employees I was allowed ample time from the office until my head was set straight. Money, which was not an issue since early adulthood, returned. We lived in the hospital. Surgeries were handled at Children’s Hospital a two hour drive away. Mrs. Accountant always stayed; I sometimes went home and to the office. The truth is I had to get away. It hurt too much.

Insurance covered many of the medical bills, but not all. It was a burden. Ample savings and investments allowed us to survive unscathed. Thank God for frugality at a young age! I shudder at the thought of having to leave my wife and daughters to go to work each day during such an extended crisis.

Once the first few years passed the medical bills declined. Then puberty showed up, or, well, was induced. You see, without gonads or naturally occurring estrogen, my little angel would stop growing around age 10 and would go straight to old age, brittle bones, and death. The medical problems have re-escalated.

This kid of mine has gone through several more surgeries. She had three this year, but we look good for a while now. Gall bladder removal, kidney stones, and migraines are all part of the course. She has an allergic reaction to estrogen so it is difficult finding a balance. She stand 4 foot 8 and will never grow another inch. She is all girl, for sure. A very petite girl.

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Scleroderma

What about the Oldest Daughter?

My oldest daughter felt left out and jealous at times. She had a point. As she got older she adjusted and understood. The medical issues she had were less life threatening at the time, but have grown as issues as she has grown older. She suffers from Scleroderma and Raynaud’s. I hyperlinked the terms allowing the professionals to explain the details of each disease. In short, Scleroderma calcifies the skin until there is no feeling and Raynaud’s causes limited blood to fingers and toes. Cold turns her fingers and toes black. She lives in Wisconsin, but 80 degrees F can be considered cold at times for her. She could lose digits and her love is art. Life is all too often cruel.

Mrs. Accountant and I care deeply for our children. We have been hit with a one-two punch and remained standing, as resolute as ever.  The prescription medications and doctor bills are one of the largest of our household expenses.

Managing the Minefield of Major Medical Bills

Medical has unloaded well over $1 million from my net worth. There was never any real choice. I will never walk away from my kids! I can live with poverty. I chose my children and Mrs. Accountant over financial wealth if that is the only choice I have. Fortune has granted me both. I am luckier than words can say.

And still, my medical problems are small compared to many. I fight back tears when I see a client with medical issues well beyond anything I have had to deal with. My children are alive! Not everybody is allowed such a gift.

Medical issues affect how we plan financially. Making too much money can leave you with less. Medical bills topped $1 million the first year of my youngest daughter’s life. Picking the right insurance becomes the most important financial decision each year. Social Services help cover many medical bills when the children are very young and when they strike out on their own because they earn so little.

There are other related costs most families don’t face. Doctor visits frequently are a full day drive away. A 15 minute doctor visit can easily top $500 and is not always covered by insurance. The prescriptions are unreal for my girls. The youngest takes pill like a 90 year old. She has no choice. When certain medications are stopped she goes straight to menopause, old age, brittle bones, and death. There is good news! I am in awesome health and take no medications and rarely require doctor visits.

Raynaud's Syndrome

Raynaud’s Syndrome

The answers are not simple, nor do they fit in a neat package. My goal here is to show you how lucky you are if you don’t have medical problems. My goal is show you are not alone if you do. My children are a gift I would never give up. I can live with a challenge. Keeps life interesting.

More than ever, if you have medical risks you need to adopt frugal and responsible financial habits. If your income is low, consider Social Services for help. Many costs can be covered. Also consider your income. Sometimes earning another $10,000 will cost you more in insurance and medical costs than the additional income. By living a reasonable lifestyle you can protect yourself and your family.

I know I dumped a lot on you, kind readers. I can only teach what I know. This post was in the queue for months and it had to be written.  We talk money around here and nothing affects financial wealth more than health. Even in countries with socialized medicine (just about everybody, except the U.S.), health problems still affect finances and quality of life. Medical issues take you away from your job or business, the engine of earned income. Investing early creates a buffer protecting you and your loved ones from such serious body blows. It also allows you the chance to step away from work so you can be with your family.

And to my friends suffering the same issues or worse: Never give up. Money is nothing, only a tool. Life is everything. Live every moment of every day. They will not last forever. Love. Love with every fiber of your being.

I am not a religious man (I found my way back to faith since the original publication date) so I will close with a verse from the Bible:

Now these three things remain: faith, hope, and love; and the greatest of these is love.

 

My Daughter Retired at 22 — Here is How She Did It

img_20161018_075051For five years I played treasurer at the Wisconsin Writers Association (WWA). The annual conference is their big event. Every year great minds gathered to share ideas writers could use to write better and promote their work. I always tried to snag a spot for a presentation on promotion for writers.

WWA is a small writers association. Only a small portion of the members are actually published, not including self-published books. I had tons of ideas for those few who did have a book in print and in bookstores. When it comes to promoting a small business — and writing is a small business (which can get really big for some) — I have a massive arsenal.

Three years ago I presented at the WWA annual conference in Wisconsin Rapids. My idea for writers was simple. Stop doing book signings at bookstores and focus on libraries. A gasp rose from the crowd. Sacrilege! I had to explain when you are at a bookstore you have thousands of competitors an arm’s length away. It is common for an author at a bookstore signing to have fewer than five people buy their book; many times they sell none!

Libraries are different. Your competitors are available for checkout, but a signed copy is available only with purchase. Libraries are hungry for authors willing to speak to their patrons. Not only will you sell books, you will also get paid for the speaking engagement in most cases. Libraries are the unsung heroes for people looking to supercharge their writing career.

I went into more detail at the conference than I will here. I will chase to the end. During the 50 minute presentation I outlined how an author can earn six figures annually working ten or fewer hours per week. I was soundly admonished. Authors disagreed vehemently that this would work. I stood my ground. As the presentation came to an end a man in the back of the room raised his hand and said, “I am with the Door County Library system and what Keith has said is 100% true. We can’t get authors to show up even when we pay them. And when authors work with us they sell books and get paid for that too. We also sell the author’s book at wholesale price to patrons so the author sells even more books and gets more royalties.” I rest my case.

My oldest daughter, Heather, was in the audience that day. She is also the only one who took notes and followed through.

Play all Day

Heather is not a normal kid; she is a lot like her dad. She does not want to run a business like I do, but she isn’t excited about working for the man. She struggled with her true dream: art. The kid is talented, for sure, but so are another couple million people, too. Heather wanted to attend art schools around the planet and I refused to pay her way. I told her she doesn’t want to produce the same art everyone else is producing. Be different if you want to survive with art.

My junior accountant spends every day buried in her art. She loves working with children and works as a substitute at a few of the local schools. The rest of her time is dedicated to art.

So how does she make money? I can tell you it isn’t from selling her art. Her best income comes from libraries. She remembered how I taught the group at the WWA conference and applied it to her art. She visits libraries and almost every library schedules her! She gets paid to run these programs. Sometimes she has a one-day only workshop; some libraries want several workshops; some libraries want holiday specials. That darn kid of mine is in high demand.

Heather’s biggest problem is scheduling. As more libraries want her services, the tighter her schedule gets. She works weekends for a few hours and evenings if a library wants an after school workshop.

The library will do most of the work filing the workshop, but she never counts on somebody else getting the job done. What I told my little accountant to do was send a press release to the local newspapers and drop off a flyer at the local churches. The outcome: Now some churches want her to do projects and workshops.

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Everyone on the planet thinks they are a great artist. Many are! To stand out in such a crowd you need to be different, think different. I explained to Heather she will need to get out to the public if she wants to earn a living with her art. Too many artists want to work in a corner of their basement and sell on Etsy. Whatever.

Let me be clear, these workshops are not just for kids. She has workshops for people of all ages and periodically is offered gigs. I am encouraging her to publish a book on several of her art programs to sell at the libraries she has workshops at. My estimate is this one simple improvement would increase her bottom line over 30%.

To her dad’s consternation, she is a smart kid. What I mean by that is she figures as long as she doesn’t have a sweetie she may as well live at home. (Dad can’t pry her ass out with a crowbar.) She drives a beater car owned by dad and pays a small rent which also covers use of the car. (Dad does not believe in a free ride.)

With expenses low and a modest income all but assured, she has managed a nice nest egg by the ripe age of 22. Our rule for retirement is: when you have 25 times spending liquid you are working because you want to; you are technically retired. Well, when you spend almost nothing and invest the rest, time has a way of building the investment account to admirable levels.

What Do You Mean By Retired?

What would you do all day if money were not an issue? For Heather, she would work on her art all day and does. When you practice new ideas painting all afternoon you can hardly call that working for the man. When you do what you love all day long you never really work a job.

The best is taxes. Since Heather had a dad that might know a thing or two about the tax code, she pay almost nothing in taxes either. Remember, spenders pay more tax than savers. As a small business owner — art is small business — she can deduct miles to her gigs and all ordinary and necessary expenses. Her art books are now a deduction!

Heather plays all day doing what she likes doing and has hit retirement at the ripe age of 22. (She is actually 21 until January, but I don’t think anyone would believe what this kid has socked away at age 21.)

Having a retired 22 year old child leads to some interesting activities around the farm. Last summer when I cut some dead trees, I noticed Heather was right behind me with a little saw cutting half inch wafers from several branches. She was looking for the perfect piece of wood for her latest project. It looked funny watching this 90 pound girl with this little, itty, bitty saw cutting up a branch a half inch at a time. And people ask why the neighbors laugh. We have a strange household.

Proud Daddy

img_20161018_075059I love what I do. I dreamed of investing and taxes when I was in high school. (Okay, investing, but taxes came along for the ride.) Heather is now doing what she loves. Due to her frugal nature (and daddy’s awesome life lessons), Heather can live her dream. It is hard to say if she ever worked a day of her life. She did work in my office for a year and hated it so I fired her. During that year she saved around 80% of her income and hitched a free ride to work with dad. What is work to Heather is playtime for me. Another lesson people should learn.

Heather is happy; that is all that counts. She chooses her own schedule and gets paid for what she would do all day long anyway. The amount of time she spends in front of people is fewer than ten hours per week. She plays with her art the rest of the time. As a fun aside, she has decided to be an assistant at a local church’s Sunday School. She just loves working with people, especially kids, when teaching and art are involved.

I worried as Heather turned 18. She hated most jobs and avoided them like the plague. It bothered me as I tried to push her toward a traditional path for most young adults. She took a few college classes here and there that were applicable to what she wanted to do. Funny thing is she will probably teach advanced classes without a college degree because she is the one cutting new territory. I am no longer worried. She has found her bliss.

One Last Thing

Heather is a perfect example of how young people today can retire before they even start. We live in a different world. Ten hours of work a week is more than enough to cover living expenses, especially if you run your own business. Something as simple as visiting the library can generate a very comfortable living and all you do is play!

Then there is my youngest daughter racing to finish high school. I have no idea what she will do with her life. She loves computers and understands them more than I ever did. My guess is she will either write an app or hack the Pentagon. Or, she might write an app that hacks the Pentagon. I will love her even if she gets 30 years in the slammer for hacking the Pentagon. How many parents can say, “My kid did that!”

After I am done adjusting my collar with pride I will know deep down inside my junior accountant will never spend 30 years in the slammer. The Pentagon will hire her so they can figure out how she did it. She will have security clearance (god, help us all). China and Russia have been warned. Some crazy accountant over in Weesconsin trained his children way too well.

A Walk Around the Farm

Each of us have a worldview built on our personal experiences. There is no right or wrong in anyone’s worldview. The differences are what make life worth living. It is why we communicate. Life is interesting because we have endless opportunities to grow as we travel through each day.

Some of my favorite comments are: You write different. You run a tax office different than any other I’ve seen. Working for you is different from previous jobs. Your ideas on growing a business are so different. The key word is different. When people say I am different it means I am doing something outside the mainstream. Perhaps I am blazing new roads. Doubtfully. What I am really doing is practicing a task in a manner that makes sense to me based on my worldview.

Anyone haunting these posts knows my disdain for formal traveling. That makes me different again. I am getting better. By writing out my thoughts and communicating with people I respect I am discovering ways I might enjoy time away from home. And good thing. Mrs. Accountant would enjoy traveling more. What she sacrifices to be with me is beyond comprehension. The plan for a long road trip is still on. Mrs. Accountant wants to see Hawaii so bad it hurts. I think next summer or autumn will be the time we take the leap.

Before I start that part of my life I want to invite you into my home. It is autumn here in NE Wisconsin. It is the prettiest time of year. Instead of showing you the building where I eat and sleep, I will give you a tour of my farm. It should help you understand why I like home so much. There are lots of pictures. Enjoy.

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Autumn on the farm is a special time. Pears, plums, peaches, and, of course, apples are harvested. The animals love fruit. We throw 5 gallon pails of apples to the chickens daily. They can’t get enough. When I had steers the windfall fruit never stood a chance. Steers love their sweets. I miss my boys.

 

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Have you ever seen one of those nature documentaries where they use computer graphic to show how the Hawaiian island chain was formed? I have a version of that on my farm in the form of burning barrels.

 

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Don’t tell Mrs. Accountant, but I have a flock of girlfriends in the barn.

 

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This John Deere tractor first saw service during WWII. The starter is out and I need to fix it if I want to move it. The work never ends on a farm.

 

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This is the back part of my pond. I am on a hill formed from the excess ground. To the left of the photo is a trail up the hill I run sprints on to build endurance.

 

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Took an old box elder down. Still have more chainsaw work.

 

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I had some of the last elm trees in the county until Dutch Elm Disease killed mine too. This is the last standing reminder of the once awesome elms gracing my farm.

 

 

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There are three dwarf peach trees on my farm. I tell Mrs. Accountant and the girls there are no peaches yet. When I clip lawn I have a snack and feign innocence. I think they are on to me.

 

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Not everything pretty is good to eat.

 

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There is beauty everywhere I look on the farm.

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The pond overflow exits here.

 

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The cool evening air invades the Accountant farm. You are looking at a maze of hiking trails at sunset.

 

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I sprint up this hill 20 or so times for a good workout.

 

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More hiking trails.

 

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Anyone up for a walk?

 

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More trails. Now the big decision. Which way to go.

 

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Walk or run, it is all the same. Each trail is an adventure.

 

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Evidence deer have been this way.

 

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The sun is going down, my friends. It is time for a fire pit and supper. Don’t be a stranger. Y’all come back now, ya hear.

 

There are plenty more photos. I am not the kind of man to sit still long. Here, on the farm, I find peace and tranquility. It is here where I can relax. Now you know why all I want to do is go home.

Enjoy your weekend, kind readers. May this photo journey help you relax and enjoy the world around you.

The Book of Gratitude

img_20161018_081240Marcus Aurelius hoped for a period of peace when he returned to Rome in 175 after spending much of his reign fighting wars and natural disasters. He secured the borders along the Rhine-Danube after spending most of three years in Carnuntum. A year later Marcus and his son returned to the Danube as hostilities flared once again. It was here, between the battles, where Marcus started writing reflections on life and how to live he titled To Himself. These writings later became Meditations.

Of all the Stoic writings from antiquity, Marcus speaks to me clearest. Whereas Seneca wrote letters which feel polished for publication and Epictetus gets preachy at times, Meditations has the comforting feel of a man reminding himself how to live an honest and good life. There was no need to impress the reader; the only reader would be Marcus himself. The honesty Marcus shared with the world is his greatest gift to humanity.

Start with Honor

Meditations is divided into 12 short books. The combined text reaches 99 pages in the copy I carry with me religiously. I find myself reading bits and pieces daily while reading the entire text from beginning to end slowly in an endless cycle. Because Marcus was writing to himself it feels like he is speaking to me, right to my face. With each passage I can’t help but think he was the greatest political leader to ever have lived.

In a time where emperors demanded the heads of any who would commit the smallest slight, Marcus was quick to forgive. His gentle soul made him loved by the people. History has called him the last of the Five Good Emperors. Rome was at her greatest when Marcus ruled.

The problems faced by Marcus daily are beyond anything I will ever experience in my life. In under 100 pages I can find guidance, warmth, and compassion for anything I am struggling with. Marcus had the power to crush his enemies and people who annoyed him. No one could hold him accountable if he did. Yet he chose to do the right thing, to live with honor and integrity. He is the kind of man most of us would follow into war.

As Marcus began writing to himself he started with a book of gratitude. The 12 books that comprise Meditations are untitled. In my mind the first book is called On Gratitude. He lists family, friends, and acquaintances that molded him into the person he became and thanked them all. In our time when politicians can’t wait to pat themselves on the back, Marcus began his self-reflection with a list of all the things he learned from others. He gave them credit.

The Unperfect Man

Marcus was the first to admit he still had much to learn. He was the first to admit he did not always live up to the standards he set for himself. That is why he started to write To Himself. Marcus was the epitome of a Stoic. He knew life was a journey filled with pitfalls. He accepted there would be times he would not live to his high moral standards. The measure of a man, to Marcus, was not perfection, but to strive constantly toward that end.

He had ample opportunities to hate or be angry. Marcus had a morning ritual where he would say to himself, “You will meet some really stupid and ignorant people today who will annoy you. Now that you know this, act honorable to all, including them.” Marcus reminded himself people would annoy him. Sometimes the slight was intentional, other times not. Regardless, Marcus, the most powerful man on Earth, reminded himself to use restraint, to let it go, to forgive and pardon.

That is what made Marcus the great leader he was. He was far from perfect and he acknowledged it. By acknowledging his imperfection, he was closer to the ideal man, the ideal Stoic, than any other. And then I ask: What is my excuse?

I am not perfect by any means. Business can drive me crazy at times. I am also my own worst critic. My ego is easily bruised when someone I admire gently rebukes something I say or do, even when it is obvious they said it to help me improve myself. This blog is my latest baby and something as petty as traffic can affect my ego. Ego is the enemy.

It is at moments like these when I pull out my copy of Meditations and remind myself, Marcus was a great man with much more on his plate than I’ll ever know, and he found a way to handle situations with integrity. If I were half the man he was I would be legend. I toil on.

The Running Man

For most of us we are either running from something or to something. After significant time in reflection I discovered I am running from something. Part of my writing on this blog is in the vein of my personal Meditations, knowing full-well there is a growing audience watching and forming opinions of me. It affects what I say. Why should I care what people think if I am honest in my confessions?

img_20161018_081018Your story is different. Your worldview, shaped by your lifetime of experiences, are different from mine. I can’t tell you what to do. I can suggest and no more. Self-discovery is of vital importance if you want to find happiness (as opposed to only pleasure).

During my impressionable years the family farm went through a wrenching bankruptcy. The extended struggle to preserve something so ingrained into the fabric of my family left an indelible scar. No matter how hard I try or how much I accomplish I always feel like a failure. I am running from my deepest fear, the fear I am not good enough. Deep down I know that is why I refuse to hang up my cleats and relax.

There are precious few people who find the answer. These people find a place where they are neither running to or from anything; they live life for what it is. These people are easy to identify. They are rarely driven to anger and quick to forgive. They sometimes offer a gentle nudge in the right direction, but allow you to make your own path. They are the Marcus Aurelius’ of our era.

Our Book of Gratitude

Like Marcus, we should write our own Meditations. Marcus was correct to start his reflections with a book of gratitude. Reminding ourselves of the people who shaped us is the most important step in growth. Family will dominate the early verses of our Meditations for most of us. When enough time is spent in quiet reflection you will discover, as I did, the vast list of people who made you who you are. And the list grows daily.

When I was a child I always looked up to older people. It felt natural. And I thought it would always be that way. In my mind the greatest age was the 40s. At family gatherings the people in their 40s seemed to have it so together. Now I am 52 and I still look up to people, except some are younger. As strange as it sounds, it still feels natural.

Learning is not confined to chosen peers. Ryan Holiday is a young guy with a fascinating life story. He is also a Stoic. I also learned more from him than I can list. Ryan is 29.

Younger people teach lessons we sometimes forget. When I watch young adults discovering life it helps me remember what life was like when I was younger. I think young people are awesome at seeing the wonder of the world. Age coupled with routine sometimes clouds the adventure of discovery.

Like Marcus, I am starting my own book of meditations. I will begin, as Marcus, with a book of gratitude. Unlike Marcus, the Meditations will never see publication. My meditations are personal and a reminder to me of how I should live life.

I invite you to start your Meditations. Your book, like mine and Marcus’, will be short. It will take years to write. Wayne Dyer said, “It is the silence between the notes that make the music…” It is the silence between the words that convey the message also. It takes years of quiet reflection to communicate a message to yourself. Unless alone, I have a hard time closing my yap. A personal Meditations might allow me to stop running. As I stand still I should experience a whole new world of wonder. I can only hope.

Meditations are never really finished. Each day we add a verse to our collected personal knowledge. On the last day, when the book is closed for the last time, there is a record on why we lived, on how we lived a good life to the best of our abilities. May whatever god there is smile on us.

Early Retirement versus Laziness

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Look at all those crazy retired people. They are so lazy as they sit there on top of a mountain they climbed.

Pete over at Mr. Money Mustache does not publish as often as he once did. I still check in now and again to see what Pete is up to. Even when there are no new posts people still comment on previous posts. A few days ago a comment grabbed my attention. In short, the commenter stated she thought Pete was anything but lazy. This got me thinking.

The post in question was actually written by Mrs. Money Mustache. (I’ve been in the mustache house. She really does have a mustache. Damndest thing I ever saw.) She said she felt like a “Lazy Log” compared to Pete who is “extremely self-motivated”. As their accountant I can attest neither are lazy. On a fairly consistent basis Pete contacts me on a tax related topic he is working on.

As most of you are aware, MMM retired at 30 and is living the good life. The argument over the years has revolved around ‘Is Pete really retired?’ The answer, of course, is yes. Mr. and Mrs. MM are retired and living the life they want. The next question then is “Are all these early retire people lazy asses?’ That is the topic of today’s discussion.

Busier Retired than when Working

I have noticed in my office that when many people retire they end up busier than when they were punching a clock. For some reason a job screws up your personal life so there is no time for major projects that sooth the soul. Once you put ‘organized labor’ behind you (don’t confuse with union labor) you are now free to pursue the things you want. Most people are like me, brimming with thoughts and ideas racing through their mind. Once the floodgate is opened it is unstoppable.

As I write this, Pete tweeted (his Twitter feed is on the front page of his blog) a picture of a bike storage area project he just completed. He was proud of the work (he should be) and proud it cost under $100 and was constructed from mostly scrap materials he already had on hand. When you don’t have a 9 to 5 demanding your time and mental energy you have time to think about and construct an awesome bike rack.

When I was over at Camp Mustache III in Seattle, Doug Nordman made a comment that stuck with me. He said, “You think you don’t have enough to retire, but you do. You have more than you think.” Of all the people at CM III, Doug made the greatest impression. His words resonated with me. He makes the rounds of personal finance conferences so if you ever get the chance be sure to chat him up. A remarkable man. I’m hyper, jumping around and speaking 1,200 words a minute. Nords sits back comfortably and says what needs to be said, then stops talking, and smiles. His point sinks a lot deeper.

Pete, Nords, and all the other personal finance bloggers/gurus share this confidence. They are very comfortable in their skin. It is important to listen to a wide variety of these people because they each have something to teach. Their different styles mean different things sink in as you listen to each of them. All their messages are the same: spend less than you earn, invest, enjoy life. After half a million words on this blog my message is still the same short phrase.

Guys like Pete are great to bounce ideas off of. I am lucky because I have Pete’s ear. The deluge of emails and requests from clients and blog readers make it hard for me to handle individual cases. I take some, but most are unanswered due to sheer time constraints. All you can do is keep reading and rereading their work.

Lazy Log

Personality plays a large role in how we handle retirement. Your favorite accountant doesn’t know how to sit still. Pent up energy has me bouncing non-stop. Guys like Pete and his wife are better able to relax. And Nords makes it look so easy. He just enjoys the moment. I’m working on it; I really am.

Reading a book is not lazy! Mrs. MM said she felt like a Lazy Log because she was not as self-motivated as Pete. I know the Mustache household enjoys the comfort of books. Pete spends plenty of time researching. I know because when he comes to me he has this whole laundry list of things he has already checked out.

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Aw, heck! Now Mr. Money Mustache ruined my vision of retirement.

Ryan Holiday says reading is work. Warren Buffett goes to the office and reads most of the day. Neither is lazy because they spend significant amounts of time reading. Holiday is right; reading is work if you are reading the right stuff and taking notes. You can still be retired and working! Please, for the love of god, do not stop reading because you managed early retirement.

Early retirement, any retirement for that matter, is not about sitting around doing nothing all day. Many people travel. Pete loves building things; Nords loves surfing. Both write, and I assume, read a lot too. People who achieve goals should step back and teach. You only early retire once. Now you can share your story.

People were not designed to work only. This whole concept of working like a dirty dog 30 hours a day, eight days a week is an insanity that started with the Industrial Revolution. Bringing workers to one place and pounding them into the ground was a great way to increase the return on invested capital as long as you had no conscious. The concept never really worked. What made it look like it worked was a whole lot of people were abused so a few could reap the rewards. The workers were pitied, but the wealthy industrialists were admired as world class leaders.

Such work is no longer needed as technology has given all of us the opportunity to live a comfortable life without toil. Yes, we still work, but the work is different. Dangerous jobs still exist, but are fewer in number. Only a few hours a week are enough to provide our needs. Now we have plenty of time to live, really live.

Brave New World

The people who resonate the least with me are the travelers. This is in direct opposition to what resonates with normal people. I’m just one of those funny birds who is perfectly happy on his farm and could care less if he never left the acreage. Pete is somewhere in between. He travels, but not excessively (that I am aware of). I know some people are on the road more than at home when the final work bell rings. To each their own.

Traveling is also hard work! Guys, if you think early retirement is all about sitting back and working the palm, forget about it. Retirement is busier than the so-called working years. All those projects and ideas come flooding out until you are up to your armpits in work. Taxes are a seasonal job. My antsy nature coupled with a seasonal job caused me to own way too many income properties in the 90s, start a farm, run a hedge fund (two actually), expand my accounting practice, and write several blogs. Jumping Judas priest people, I stated a tax office because I thought it would give me something to do a few months of the year with plenty of free time to do as I choose the remainder of the year! What I really need to do is channel Pete and Nords so I learn to sit still for more than three seconds. It’s okay to relax, retired or not.

Retirement is hard. I see it every day in my office. People are so excited for that wonderful day when they don’t have to go into work. Some people let go and sit on the couch all day. They age fast and badly. Their life expectancy is low. For many, they have no idea how much work there is to do once the boss is not around. Take it from a lifelong business owner; you are the toughest boss you will ever have. No human on Earth will push you as hard as you will.

That is why all these blogs are so important. Have you noticed how many people who have reached their retirement goals still show up at personal finance conferences and write and read these blogs? Once you learn how to reach early retirement you now need to learn how to live in retirement. To each their own. The formula for wealth and early retirement is simple; the formula for living in retirement is much harder.

The reason retirement is so much harder is because each individual views retirement differently. Wealth is defined as “I have enough.” That is mostly a mindset. Now that you have enough, What will you do? Ahhh. I get ya, buddy. I bought rentals, expanded the tax practice, ran hedge funds, raise animals, write like a Wildman.

All I can offer is this: read. Read a lot from a variety of sources. I am grateful for the readers here. Still, read all the other blogs that trip your trigger. You are not lazy. That is why you made it to retirement or are well on your way. Now you have stuff to do.

Now I am going to sit back and read a book for the rest of the day. After I finish a few things at the office.