Many accountants will not work with doctors. Doctors as a group can be difficult in the best of times, demanding an instant response to their every whim. I disagree completely.
My firm has serviced accounts for doctors nearly from day one. The value doctors provide society is vital and I have always felt they deserve extra latitude. The stress level doctors face daily supersedes anything I deal with. If I make a mistake, money is at risk; when a doctor makes a decision, lives are at risk.
My personality meshed well with the mindset doctors have. As a result, I have been a value added service to my doctor clients. Many hair-raising situations were resolved successfully because I understood the doctor’s situation and was able to integrate their issue into the problem solving formulas of my firm. It also allowed my doctor clients to get very rich.
Whether you like it or not You are a brand. Everything you say and do either adds or subtracts from your brand. Ignore You and your brand starts to turn stale.
You, Inc. is your brand. It will take you wherever you want to go. But do you know what You, Inc. is all about?
It is simple to see You, Inc. in action when compared to a business. Take this blog for example. I can speak at conferences or just attend to build contacts. Guest blogging brings more visibility to my work. Or I can spend money to promote my brand. How I act and interact with people around me reflect on my brand. Treat the brand well and it will take good care of me; ignore it or treat it badly and the brand will kamikaze faster than you can snap your fingers.
Building You, Inc. takes time and effort; destroying You, Inc. can happen fast. Your income and net worth are directly related to the brand of You, Inc. Arming yourself with knowledge is the surest way to supercharge your brand. But knowledge is not enough. Knowledge without action is worthless. Creating a large net worth in a relatively short time is possible. Increasing income to retire debt and grow investments is the only road to financial independence.
You can’t sit down with Bill Gates for more than 10 minutes before he starts telling you about a recent book he read. If you’re not lucky enough to chew the fat with Bill you can get an update on his reading recommendations anytime you want on his blog: Gates Notes.
Ryan Holiday actually has a free subscription service to inform his followers monthly of great books he has read and recommends. Over the years I have found many inspiring and mentally stimulating books from Holiday’s list.
Books are the foundation of knowledge. I read a lot because you will be hard pressed to find a successful individual who doesn’t read on a regular basis and because it is fun. Books have a special feel. Some people enjoy Kindle versions; I still prefer holding a book in my hands. I might get my news digitally, but when I dive deep into a subject I want paper in my hands even if I have to lug it through an airport. It’s just me.
Outside family, books have provided my greatest pleasures in life. I have traveled the world and through time; I have seen great societies and dined with the greatest minds of history. I did it all through the eyes of those who were there. Books have given me all that and more. You are free as long as you can crack a book and disappear into another realm.
There are advantages to writing a personal finance blog that go beyond the love of writing and meeting new people. Few things in life bring as much pleasure as sharing knowledge gleaned over decades of experience. Stories are the best. Sharing stories with friends is a time honored pleasure handed down to us through countless generations.
The old adage about the teacher learning more than the student applies in blog writing as well as in formalized education settings. Additional research and looking at a situation considering perspectives wider than just your own is an eye opening experience.
The constant search for a story idea and angle is hard, yet rewarding, work. Topics I would never think of digging deeper into eventually reach the front burner. Unexpected paths are taken. I always have a plan. It never ends up the way I anticipate. Stories have a habit of taking on a life of their own. (At least I started with good intentions.)
Residential investment property is forgiving for the most part. Professional managers exist in most markets and except for the very worst of conditions it is possible to fill most apartments even if it is not at a profitable rate.
The number of residential properties available is large and unloading a single family home or duplex is fairly quick and simple. Many economists consider a six month supply of homes on the market a healthy balanced market.
Things get slightly less forgiving when you graduate to multi-unit apartment complexes. There are fewer to select from, they cost significantly more, there are more tenants to manage and it usually takes longer to sell the more expensive buildings. Not as many investors can swing a multi-million dollar deal or even finance one.
It might not be intuitive, but the more expensive the property the more likely it will be purchased as a cash deal. Big buildings carry big responsibilities and risks, but also are coupled with larger rewards.
Generally the rules are straightforward with residential rental properties. Lease contracts are generally standardized in most states and the landlord/tenant rules are clearly defined. The laws tend to protect the tenant more than the landlord. Still, the landlord, if she bought right, should turn a tidy profit.
Real estate investors usually start small, a single family rental or duplex, moving up to multi-unit buildings later. Most landlords stop at the duplex level with maybe a 4-plex or so tossed in for good measure.
The next leap takes courage. Financing a large deal is more difficult. Only a select number of banks are willing to fund a seven figure project. You need good credit, experience and a documented plan. At the end of the day the multi-unit complex is still a forgiving animal in the real estate world.
Then there is the commercial property.
The year was 1996, I was 32 years old and the bank needed a personal financial statement for an investment property purchase. The real estate partnership I had with my dad and brother was in full swing, but I wanted to add a few additional properties to my personal portfolio.
The bank asked for a personal financial statement. It had been a while since I filled one out so I was interested in where I would end up.
Don’t get me wrong. I track my finances closely. Each individual investment gets reviewed annually or semi-annually. I don’t always add up all the numbers to see where my net worth is, however.
As I gathered each asset and wrote its value down I could see this was going to be higher than I originally anticipated. My liquid investments had advanced a lot over the years and the real estate in my portfolio was adding a serious number to my net worth.
Once I had the assets added I knew I had crosses the million dollar mark before tallying the liabilities. Debt was low, even with all those rental properties.
When the final number was entered, my net worth stood at slightly over $1.2 million.
Most people would be excited if they discovered they were a millionaire. I was numb. I didn’t know what to think.
I was also depressed. Deep down I expected there would be some kind of positive feeling when I crossed the magical barrier. But, nothing. I was still me. I did not feel rich and certainly didn’t want to sell my tax practice. I enjoyed what I was doing.
And this depressed me the most. When I was a child I always wanted to be a millionaire and now that the goal was reached it didn’t make me feel different. What was I going to do now?
Growing up poor gave me a distorted illusion of what “rich” was. A million dollars was rich in my mind without understanding you can be rich with or without money. And now that I had a million dollars it didn’t change me. Something was wrong.
I shared the good news with Mrs. Accountant. She smiled and said, “That’s nice” as she went back to tending our first daughter, one year old at the time. Even my wife didn’t think it was all that big of a deal.
It became clear quickly why I wasn’t feeling the glory. In my mind the million had to be liquid, as in stocks, bonds, mutual funds and bank deposits. Much of my net worth was in income producing assets: a business and investment properties.
I never quite got my arms around the concept that I had arrived. After a while I found a way to let it go and not worry about it. Money, lots of it, would never give me the tingly feeling I expected it to. And crossing a net worth boundary wasn’t going to be something you feel as you cross it.
Such are the illusions of a young man.
Twenty Years Later
It was time for the mid-year review of my portfolio. Normally I wait until later in the summer, but I had a feeling I crossed another big threshold in my net worth. In fact, I was certain of it.
In the late 1990s my business exploded to the upside. Profits were very high and I was young enough and hungry enough to want to push hard. We started selling real estate holdings in the family partnership. By 2000 my real estate portfolio consisted of my farmstead, office building, and some real estate paper paying some very nice rates of return. No more dealing with tenants for me.
I kept adding excess cash to my index funds. Spending was always low because there wasn’t much I really wanted. I had my family and was completely satisfied with this awesome gift. There was nothing else I needed.
Late last year I was a whisker away from $10 million. With the continuing bull market I knew I crossed the threshold without as much as a twinge. I’ve been down this road before and expected nothing in the way of emotions this time.
Adding the assets always takes some time now. My liabilities are easy; I have a small mortgage of just over $100,000. The end.
Assets are scattered all over the place. I own the obligatory index funds in traditional IRAs, Roth IRAs, the HSA and business retirement accounts. The non-qualified account also uses index funds.
Real estate was next. I still hold a minor amount of paper on property, plus the farmstead and the office building. I estimated the values conservatively. No room for ego when calculating my net worth.
The hard part is the trusts. As an accountant I understand the value of using trusts to carry out my wishes when I leave this green earth. This leads to a number of entities. Gathering all the trust values required the most time.
Once the assets were tallied I sat back in my chair and wondered how my life ever turned out so good.
Remember the old adage: the first million is the hardest? Well, I crossed plenty of those in the last six months. The final number came in at $12,600,200.
Yes, I rounded! Real estate and the business are estimated, as I have said.
My net worth increased over 25% in six months! This is an astounding number to me. I’m sure it is to you too. Part of my luck stems from a solid increase in the index funds. Where I smoked it is from investments I made in the 1980s. Phillip Morris is one of my first individual stock purchases. I never sold. It kept growing and keeps growing. In the early days it was in a dividend reinvestment account so the dividends kept buying more shares. Morris later changed its name to Altria when it spun off Phillip Morris International a few years back. The dividend grows times two now.
A while back I bought some Tesla, Netflix, Facebook and a few other stocks. The “other” stocks did okay, going up with the market. I don’t have to tell you what Tesla, Netflix and Facebook did, do I?
Twenty years ago I was depressed I missed the magical moment when I crossed from poor to millionaire. I expected something, I’m not sure what. But I expected it!
After the non-moment wore off I went back to doing what I always did. Nothing special. I ran my tax practice, read piles of books and satiated my curiosity whenever I could with a new project.
Since I invested nearly every dime I had in my paw, there were times money was tight. I subscribed to grandpa’s philosophy: Never take off the pile. I invested first and figured out how to pay the light bill later. What can I say? I always lived that way.
I always felt poor; still do. My goal was to return to the farm and twenty years ago we had just moved into the farmstead I still live in. My dreams were fulfilled. The office was out of the home. My business goals were simple: beat last year’s numbers. More clients, more electronically filed returns, more revenue. Always more. It was the only scorecard that mattered.
I drive bank repossessed cars and grow a significant portion of my own food. Mrs. Accountant loves canning and freezing our excess produce for winter consumption.
You want to hear the really sick part? Mrs. Accountant still refuses to buy any clothes unless it is marked waaaay down. And I mean way down! Like $3 pants and $3 shirts. It gets better. Underwear and socks are frequently purchased at Goodwill. You know, Goodwill sells undergarments with defects really cheap. My attitude is if they don’t have defects when purchased, they will about twelve minutes after I put them on. So I wear the cheap stuff.
Longtime readers of this blog know I muse periodically on why people like Warren Buffett and other very rich people still live frugal lifestyles. Buffett spends under $3 for breakfast he purchases at McDonalds on the way to work. Yes! On the way to work. At 86! He even uses coupons!!!
The exclamations points are for you, dear readers. I totally get why Elon Musk keeps starting new businesses and pushing forward even after snagging upwards of $300 million from his portion of the sale of PayPal. I get why Steve Jobs worked until his body failed. I know why Buffett says he skips to work every day at 86. I get why Jeff Bezos keeps building Amazon bigger when he is one of the richest people alive. I get it.
Those guys all have more money than me by a massive amount. But once you reach a level where money is no longer a deciding factor or important, it becomes something else. A scorecard.
Working my business is not about more money. It is about providing value; doing something important; making a difference; finding fulfilling activities to occupy my time.
I invest and expect the investment to go up. I work really hard to make good investment decisions. If they go down my lifestyle will not change one bit. In reality, it doesn’t matter what happens.
But it does to me. I want to win. It is all a big game. And I like winning when I play. If I can’t win, or am not allowed to win, then I don’t want to play anymore.
In the office I still track my performance. I track my performance a lot more than I track my net worth that is for sure. I want to always keep growing.
There are things I wanted to do even after I crossed the million dollar mark. I wanted to farm, so I did. For a while. (A twenty year while, actually.) I backed away from the steers, but still have the acreage. Maybe I’ll go back into raising more animals, maybe not. Right now I have another goal I need to satisfy.
Everyone has dreams as a child. My dream was to grow up and be a writer. (I wanted to be a stock broker, too. That dream has also been fulfilled and I moved on.) I wrote my first full length novel in high school.
Earning a living writing is no easy task. Some of my work sold, but it wasn’t steady work and by then I had different plans. Still, the dream never died. I wanted to be a writer. A real writer.
Over the years I published a lot. The internet offered more publishing opportunities than ever before in history. But I didn’t feel like a “real” writer.
Now I have this blog and it is my dream. I write. I love writing and will keep doing so. The goal is to build traffic and profits. I call it ego, but it isn’t. It is a little boy inside me screaming out his dream. The sound is deafening.
My goals are detailed. Without wasting your time on the details, let me just say I want this blog to be a standalone business with employees and not a sidebar of my accounting practice.
Like Buffett, Musk and Bezos, I don’t need more money to make me happy or to put food on the table. My lifestyle will not change a bit if this blog grows to gargantuan size or fails. I just want it. That sounds so selfish and self-centered. It’s not.
Money is the scorecard to keep track of progress. Nothing more. Traffic statistics help me see how many people I am reaching; money allows me to see the difference I am making. I want lots of both.
I’ll spare you the gruesome details on how I plan to accomplish my goal. Sharing valuable ideas is more important. What I want to share is an insight you must have.
If you have already reached financial independence you already understand what I am about to say. For the rest of you, I want to share this one nugget of advice I wish I understood at a younger age: Stop worrying about what your net worth is. Relax. Don’t worry about becoming a millionaire. Live right and it will happen all by itself without any necessary worrying.
I missed the magic second when I went from under a million to over a million. It was only a second and if for some reason it did cause some sort of feeling or euphoria, it would have been short lived anyway and a drug only offered once in life. When I wasn’t looking, there it was. I went from less than a million to $1.2 million. The same happened when I went to eight figures. It still blows my mind. Eight figures? And it makes not a bit of difference in the world.
My frugality is not forced. I am frugal with my money because it is who I am. Impressing the neighbors is something I never did. Let the neighbors laugh. It doesn’t bother me.
Saving half your income is easy once you allow yourself the gift. Investing is easy when you are not trying to shoot the moon. Debts and a low net worth encourages people to gamble with their investments. It’s not necessary. You do NOT have to shoot the moon! It will happen faster than you imagine when you let go. Buying a hot stock tip or a flyer is sure to end badly. Timing the market or your index funds investments usually ends in tears.
The rules are simple. Spend less than you earn and invest in a broad variety of established businesses (index funds). The rest will take care of itself.
One day you, too, will realize you crossed a magic threshold of net worth and missed the moment it happened.
It works that way. Hope you weren’t expecting more.
Wealth Building Resources
Personal Finance 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 Finance is free?
Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to skyrocket, 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 good way to control costs and comparison shop. 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.
One moment please. I need to wipe a tear from my left eye. <sniff>
There, I am better now.
Regular readers probably were wondering what happened to me yesterday. I normally publish on Friday and there wasn’t a whisper of evidence a certain accountant was anywhere to be found. I have a good excuse for my behavior: my oldest daughter bought her first car.
The process of buying her first car took time. She was working at it for 6 – 8 months. Dad didn’t do it for her either. I only gave advice; so like dad. She did all the work searching for a car and my job was to shoot down the idea. In the past I bought all my cars from the bank or credit union. Unfortunately, most financial institutions no longer mess around with selling their repossessed vehicles anymore, electing to move the assets at auction.
Unless you have a dealer’s license you can’t buy cars at auction. The effort to get and keep such a license is not worth it if you only buy a vehicle every 10-15 years.
The biggest problem most people have with credit card bonus programs is meeting the spending requirements for the bonus. Business owners have an advantage. Landlords do too. Meeting a $3,000 spending requirement in 90 days is a snap of the finger for even a relatively small business or side gig.
But not every side gig has enough spending that can go on a credit card and if you only own a few rental properties and maintenance is not currently required you will need another source of spending to earn a bonus.
Readers of this blog tend toward the frugal side. Spending for the sake of spending for a bonus is crazy and you guys know it. Your personal spending is probably too low to earn many bonus cash awards or miles. Travel hacking gets harder when you save most of your income.
Manufactured spending is the solution bandied around the blogosphere. It sounds so simple at first. Find a source where you can recycle fake spending into cash and miles rewards. Well, how do you do that?