Buying a car is like marriage to me; it is until death do us part. So far she has been the one dying and I remain to keep the memories alive. In 2009 I bought a 2007 Toyota Camry from the local credit union to help them clean up a bad loan. I have never had serious problems, but periodically I have to invest a bit into the vehicle so the ‘ol girl makes it to 20. The Camry had one of those days.
The exhaust pipe broke near the head next to the catalytic. The metal was too thin to weld so replacement was the only option. My neighbor across the road (how convenient living out in the country), Roger, has a lift in his garage and handles most minor repairs for me. I still change the oil so I can brag this accountant gets his hands dirty now and again.
The replacement part had the cat in it so it wasn’t going to be cheap. I went over the O’Reilly Auto Parts for the replacement. It set me back $184. Roger charged me $25 to change it. I knew it was going to be a bit more than a simple muffler repair. When I picked up the section of exhaust pipe the kindly clerk asked me if I was a member of their rewards club. I said I was now. It works like this: for every $150 you spend they send you a $5 coupon for a future purchase.
I’m a sucker for that crap. But when I really think about it for a minute I realize how much a waste it really is. I don’t buy stuff at O’Reilly’s that often. The only way to use the coupon is to run over there for oil and a filter before the coupon expires. All for $5. I charge $120 per hour minimum for my time at the office. I average just under $340 for every hour I actually work at the office. (I don’t work that much.) Even if it is a slow day and I only turn $200 per hour, my time is worth over $3 per minute. How much is that $5 coupon worth now?
And so it goes, as Kurt Vonnegut said. Mrs. Accountant sits at the kitchen table clipping coupons and testing products for surveys for some side change. She wants to feel she is contributing to the household finances. She doesn’t understand how valuable she is to me regardless the coupon clipping or product testing.
Mrs. Accountant is not alone in such foolish endeavors. I like to handle certain projects around the farm and at the office myself. How much money do I really save changing my own oil? Roger charges me ten bucks (I have to buy the oil and filter). He does it faster and cheaper than I ever can. I convince myself it is a good expenditure of time because I am not working at the office so I may as well do something that saves money. And it is the prime reason I am not richer; it is the prime reason I don’t help more clients. I spend too much time fucking around on projects I have no business doing in the first place. My free time is worth as much as my work hour rate! Free time is important time to recharge and refresh; time to grow the relationship with Mrs. Accountant and my girls. But at least I saved $10. Right?
People spend too much time crying about money when they need to focus on their strengths. I’m pretty good at earning money; I’m also tight with money so there is a stickiness between money and me. I’m not so good as an auto mechanic. I have ramps so I can crawl under the car and pull the plug. What if those ramps ever failed? I would be killed or worse over $10. Do they have a medicine for that level of stupidity? Doubtfully.
The $10 spending spree to pay someone to change the oil does not affect my financial situation one bit. In fact it makes it worse because I am focusing my time on a weakness. A short consult with a client during the same time the oil is changed would yield 20 times more wealth.
The line becomes blurred as the activities change. Some people steal (yes, steal) soap from hotels. Vacation time is an opportunity to fill the soap drawer back home. Jesus fucking Christ people! The last several years I have earned 8% interest guaranteed from banks around town on up to $50,000 at a time. Every bank with a bonus offer had your favorite accountant enjoying a FREE cup of coffee and opening an account. One day after the bonus period ended I went back and got my money. Yes, I know that is $4,000 per year, but the full $50,000 wasn’t always invested as there were a varying number of banks with offers at any one time. The amount of time I spent dicking around opening accounts and closing them for what ended up as no more than $2,500 per year was a fool’s errand.
My sanity has returned. Sort of. I have given up on the idea of sticking it to the banks and their bonus programs. I’m still a sucker for a credit card bonus, but the time involved is small and I rarely cancel a card. I don’t sign up for as many cards as I once did. I carry two with me and another dozen reside in the sock drawer with other assorted personal possessions. The card I always use pays 2% back on everything. Story over. Time to live life.
It’s not just about money either. All this stupid stuff takes time. Because we have employers (or are a motivated business owners) we keep the coupon clipping and other crazy stuff to our personal time. While Roger is fixing the Camry I will not be on the phone with a client. I stuck around and helped (if Roger reads this don’t believe a word he said about me standing around the entire time with my hands in my pockets). Between busted knuckles we talked. You know neighbors used to do that kind of thing.
Filling our down time with tasks destroys happiness. Everyone needs downtime to recharge. Not every second of every day needs to be filled with productive labor. It is okay to read a book, watch a movie, and make small talk with the wife. AAHHHHHHH! Yes, you must talk with your wife. She is a nice lady if you ever got to know her.
When was the last time you had a beer with a neighbor? When was the last time you snuggled your wife. . . for hours? When was the last time you sat quietly alone in a room doing nothing, only you and your thoughts? Yeah, I thought so.
Friday night is cards for your favorite accountant. I play sheepshead with family and neighbors. As a bunch of old codgers, we don’t play late. My youngest daughter likes to sit behind one of the neighbors and watch him play. The memories created on Friday night will make us smile a lifetime and one of the experiences every one of us will hold fondly on our death bed.
Turning Failure into Success
You are a failure because you focus on the unimportant. Financial independence is not built on 30 cent coupons. Yes, Mrs. Accountant still uses coupons, but a hell of a lot fewer than in the past. Most grocery coupons are for processed food we should not eat anyway. Mrs. Accountant loves testing products and reporting her results. It makes her happy so I support her efforts. The $250 or so a month she earns testing said products is not a productive use of time unless it brings happiness. It is not a real moneymaker. If she did anything else it would earn more.
Elon Musk is so hyper focused on his businesses and ideas there is no time for a personal life. People like Musk create the world we live in with their products and services. I am okay with that. Most of us don’t possess the ability to be so driven. Most business owners live their business, but still need down time to maintain good health.
Yet, we all try to act like Elon Musk, filling our days with stuff to do. We fail because what we focus on is unimportant time wasters. A free second waiting in line causes fidgeting. Soon the Mister Spoke tricorder, aka, the smartphone, comes out. Gotta check the time, email, and news. God forbid we have more than nine seconds without mental stimulation.
You can turn failure into success. Money is not the indicator; happiness and satisfaction are. When you sacrifice time with your significant other and kids to save $10 changing the oil in the car you need your head examined.
Instead of wasting time saving a few dollars, educate yourself to earn more. Improve your investing skills by learning how great investors like Warren Buffett control their emotions during market turmoil. Time is your most precious commodity. You get the same exact (notice the redundancy in my writing here) amount of time as the greatest men and women in our society. Bill Gates revolutionized the world with his software and had no more time available to him than you do. So why the difference in results? I can tell you one thing. Mark Zuckerberg didn’t make his money Facebooking all day. He did it by building Facebook. When you learn the difference you will start living a significant life with plenty of money.
Money doesn’t make you happy so success is not measured by the size of your Vanguard account. I know plenty of people with eight figure net worth’s so unhappy they contemplate suicide. I know happy, well-adjusted people with very little money. It is all between the ears, my friend.
Failure and success are measured by how you live your life. For some reason, people who live life right always seem to accumulate enough money to satisfy their needs and more. When you get greedy things tend to head south fast. Stop checking your email all day; same applies to social media and news. If you are a business owner stop selling to every person you meet. It’s annoying. As an accountant people want to ask me tax questions at inappropriate times. For example, while standing at the urinal is not the time to ask me about your required distributions from your IRA. I’m just saying. If I lose my concentration I might piss on your shoe. What I am trying to say is: turn it off. I am as guilty as hell on this, too, so go ahead and rub it in. An hour is not enough. The world will not end if you take a few days off here and there. Trust me. (Nothing ever goes wrong when someone says, “Trust me.”)
The most productive, successful, and happy people know how to separate work from play. They know how to come home and unwind. Happiness is not another $10 in your pocket. Happiness is handing Roger $10 to change the oil in your car and catching up with him on family news.
If you are failing in life, if you are not living the life you want, then maybe this post explains why. Focus on the important. Anything is possible when you believe. Start thinking big. You can do this. It is too important not to. Your family—your children, for Christ’s sake—depend on you. They need you; quality time with you. Kids could give two shits if you worked more overtime for more stuff. The time spent together playing cards or throwing ball are gifts they will never forget. If you enjoy changing the oil in your car at least bring junior along and have some bonding time while you work on the car.
There is so much more I have to say on this. Maybe later. I have a $5 coupon in my email with an expiration date and the Camry is due for an oil change.
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. Call 888-844-8910, email Darren@TradelineSupply.com 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.
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!
Life in the accounting business can be difficult at times. Clients are as close to friends as you can get without actually being friends. You know all the details of their private lives. I know a divorce is imminent many times before the spouse does. I get details on illnesses in the family. I have to. Part of the tax preparation process is to know your client. When you ask about medical expenses you get the details too. In Wisconsin we have a deduction for certain private school tuition. When I ask about the kids I get the low-down on little Billy. And I don’t mind one bit. I care about my clients so I listen and interact. The line between client and friend is thin indeed.
That is why it bothers me when I can’t communicate a message to a client. Try as I may, some clients could care less about their taxes. They are willing to overpay their taxes to get out of all the reporting. They don’t understand the amount of money left on the table.
A few weeks ago I emailed a client reminding them to verify their retirement contributions and to provide a log for business miles and business overnight stays. To be honest, I didn’t expect a response. They are awesome clients and I love’em to death, but they just don’t engage at the level I would like and it bothers me because it is costing them dearly.
The day after Thanksgiving in the States is called Black Friday, as if anyone doesn’t already know that. What you might not know is that it is also Buy Nothing Day. Buy Nothing Day started in Canada (how un-American) in 1992 and has grown into an international movement against overconsumption. The idea is one day of no spending should lead to a lifetime of responsible personal finance which should ease pressure on natural resource demand and pollution. It has been a slow start.
If you print it they will spend. The non-stop growth of fiat money, created by central banks at the click of a button (I know it involves more than that, but a longer description would interrupt the flow of my story) gets spent. The money supply growth of the last decade has not generated a massive wave to new consumption and inflation because most of the newly created money is sitting bank vaults and central banks around the world to prop up balance sheets. Siphoning off the excess cash once it is unleashed has a high likelihood of being very painful. Before this happens you must hone your financial muscles to protect yourself.
Self control is the only tool you have in self protection. Just because you have money doesn’t mean you have to spend it. If you hold a hammer in your hand do you automatically hit something? Okay, bad example.
Buy Nothing Day is a great idea to get us thinking, but it is a stupid idea in practice. Staying home and not spending on one day of the year is meaningless. It’s like those “Don’t Buy Gas on Friday” slogans, as if not buying gas on Friday will stick it to OPEC and Exxon. It doesn’t. You just fill up on Thursday and drive all the more. You want to stick it to OPEC and Exxon? Ride a fucking bike. Want to send a message on overconsumption? Then spend less all year round.
We live in strange times. One day—and for most of us only one day—we take time to give thanks as we gather with family, enjoy an awesome meal, and watch football (in America; I don’t know what the rest of the world does on their Thanksgiving festival). Then the next day we kick the shit out of our neighbor so we can save a hundred dollars on a flat screen. I‘m beginning to wonder how thankful we really are.
Feelings of gratitude and expressions of thanksgiving should not be relegated to one day per year. We live in the best of times where we should feel thankful non-stop. People in times past found the expression of gratitude an admirable trait. People actually worked hard to remember to feel thankful for the gifts life has bestowed upon them. And we have it so much better today!
In my short 52 years of life the world has changed so much and for the better. One gift I still can’t get over is the one you are using right now: the internet. I have the largest library ever collected at my fingertips; I have the ultimate communication tool. Has it ever been easier to communicate with people with shared interests from around the world? Never! I think of all the people I would never have met or known all because of this awesome gift called the internet. And the World Wide Web didn’t exist 25 years ago.
The end of the year is fast approaching. Time is running out to modify your finances to optimize tax savings. I will run down the more common ideas to reduce taxes. Keep in mind this is not a comprehensive review. Your facts and circumstances will determine what is best for you. Use this review as a guide to reduce your tax liability.
Most readers here have significant investments so we will start there. All adjustments to investments should have an economic reason beyond taxes. Reducing taxes is the goal, but the increased costs of selling can offset a portion or all of the benefit.
If you are not using an automatic tax loss harvesting program such as Betterment, now is the time to review your non-qualified (non retirement) portfolio. Mutual funds and stocks with losses can reduce the capital gains distributions of other mutual funds or ETFs. You can also report up to a $3,000 loss against other income on your federal return. Your state taxes will differ. In Wisconsin, for example, the loss against other income is limited to $500.
The holiday season is fast approaching and the best laid plans of financial independence and early retirement are left for discussion another day. Normally frugal people can lose their senses when the holidays roll around. One day they are giving thanks and the next they are trampling their neighbor to get a deal on a flat screen over at Wally World. And this is supposed to make us happy?
Wants are a harsh mistress. Once you satiate your wants, new wants fill the void. It is a forever hungry beast. Wants satisfied are not the end; they are the beginning of a long slog through financial hell. Once you buy something you need to take care of it. You need a place to store you newly owned junk, ah, I mean, stuff. You now must spend more to protect your pile of garbage. A home or car needs insurance lest something happen which could cause you to lose your slavery, sorry, belongings. Room is made in the home or stuff is put into storage to make way for the new round of crap purchased on the credit card so you can keep wasting your hard earned money on interest. Once you own stuff, stuff owns you. It becomes an obligation and obligations cost money.
There are two dangerous times in a retirement plan: when things are going really bad and when things are going really good. We have been lucky the last seven and a half years. The market has marched higher at a steady pace with nary a pullback to be seen. There are people in their 20s who have only seen the mildest of market corrections (a decline of 10% or more) and have never seen a bear market (a decline of greater than 20%).
The steady beat higher for so long is unusual. Regular investments have only known one direction: up. Money invested last year is worth more this year, same for the year before that, and so on. It is easy to invest in such an accommodating environment. The goal of early retirement looks so easy when every year is an up year.
Now the election is over and we have seen a serious move higher in the stock market. Bonds have been down more than stocks are up. The rally is narrow. High dividend yielding stocks and growth companies are down significantly. Banks and other financials are drinking the Kool-Aid. For the first time in years I have clients calling and readers emailing me for my opinion on borrowing money to invest in the market. Ahhhhhhh!
Starting a business is an act of love and courage. Enjoying a task soon becomes a business. You might start working out of the home or buy a small store front. The previous hobby now commands more of your precious time. A business is about more than making money. Small business owners love the work they do and get paid to do it. Awesome! Then reality sets in.
When I was a sophomore in high school I fell in love with the stock market crash of 1929. The teacher said economists don’t know what really caused the crash. The Smoot-Hawley Tariff was probably the trigger but many other events also played a role. I could not let it go. Every book in the school and public library in my small town was in my paw, devoured for any tidbit of information on why things went so wrong in 1929. I never found a definitive answer, but I did learn a lot about economics.
And the stock market. From that point on I wanted to be a stockbroker. When I was in college I took a business class, accounting, and macro and micro economics. Though I never earned a degree I learned a lot that has helped me in my career. It gave me a start on where and what to study to get good at finance.