Today I have a very special guest I would like you to meet: George M. Cohan. George has been a regular fixture of my practice from nearly the first day. But he has one serious problem; he hates keeping business records.
There is a very good reason why Cohan doesn’t keep good records of his business expenses. He is a very famous Broadway actor. He also likes to enjoy his fame.
Well, the IRS came knocking and since most of his receipts were missing the expenses were disallowed. Cohan might be lax when it comes to keeping business records, but he can fight like a pit bull in the hot sun after a pair of double espressos. Our good friend was headed to court.
The IRS felt they had it in the bag. Unfortunately, the IRS had an education coming. The 2nd Circuit US Court of Appeals settled the case in our good friend’s favor. The court said when receipts are absent it would be impossible to get a perfectly accurate number. However, the court continued, allowing nothing is inconsistent when it is obvious there were expenses.
This court ruling happened March 3, 1930 and my office has never been the same.
Close Enough for Government Work
Paid tax preparers sign tax returns under threat of perjury that the return they are signing is true and accurate to the best of their knowledge. Too many tax professionals forget this as they quickly scribble their signature for the eighteen thousandth time this tax season.
The shoot from the hip response from most tax professionals is if you don’t have the receipt you don’t get the deduction. Sometimes, as we shall shortly see, this is true. Many times it is not.
Even when a client has records it may be necessary to make adjustments to reflect the facts and circumstances. A handful of returns grace my desk every year I wish never showed up in the office because I need to apply more art than science to the return. There is no other option.
Before we talk about adjusting deductions we need to set a few ground rules. The Cohan Rule doesn’t apply to every area of the tax return. The court ruled an approximation of business expenses, based on credible evidence other than actual documentation, was enough to sustain a deduction.
The Cohan Rule can be applied to most deductions or business expenses with the exception of travel, meals, entertainment and listed property (Section 274). Airfare and hotels need a receipt or the deduction is lost. Mileage records need to be contiguous. This means you need to record the information in your logbook near the time of the event and certainly before the tax return is filed. Meals under $75 don’t need a receipt, but you need to record the expense in your logbooks along with the business purpose of the meal and who you were talking with. Receipts for entertainment are required to qualify for the deduction.
What about that listed property thingy? Listed property consists of computers (and related peripherals) not used exclusively at a regular business establishment or qualified home office; vehicles susceptible to personal use; and property used for entertainment, recreation or amusement (i.e. video recorder). Cell phones are not considered listed property. No deduction/depreciation is allowed on listed property unless you can substantiate the expense (have a receipt). [IRC Sec. 274(d)(4)]
The Tax Court has provided plenty of help over the years in determining which instances we can use the Cohan Rule. There are also areas of inconsistency. A few years back the IRS started requiring charitable deduction receipts must be in your hand prior to filing the return. However, the Court has applied the Cohan Rule in some cases involving small charitable donations while disallowing the deduction if the amount donated involved $250 or more in any one donation.
To make it even more interesting, the Tax Court used the Cohan Rule when determining gambling losses in a 1991 case. Who would have thought?
Time to Get Creative
Now that the basics are out we can apply the Cohan Rule for more obvious cases to more creative uses of the rule.
A fire or theft could cost you your substantiation of deductions and the Cohan Rule would apply. A computer systems failure is a modern version of “the house burnt down” excuse.
Recreating deductions might not always be as hard as first thought. Bank statements are not technically receipts or allowable substantiation, but the IRS uses them all the time. Check stubs and statements from a vendor after the fact can get you reasonably accurate numbers the IRS should accept.
Certain tax forms like a 1099 can also do the trick as the IRS will already have that information. You can request a transcript from the IRS to see what they have on file as a good starting point to reconstruct a substantial or complete loss of documentation.
Now things get harder. You think you have all your receipts but they don’t make sense. I’ll use an example from a real client. Names and certain facts are changed to protect the guilt.
The client in question has a retail store. He expanded to a second store this last year. His paperwork was a mess. Some records were there, a lot was missing. When I added what appeared to be income it amounted to a massive increase over the prior year even adjusting for the new location.
After a dozen or so rounds with the client we were able to get a reasonably clean revenue number for the business. Reminder, the number I used was reasonably accurate. There was no way to guarantee it was absolutely accurate. As I sign the return, it was “true and accurate to the best of my knowledge”.
Now came the hard part. Major expenses were missing. Anything unsubstantiated under Section 274 was automatically lost per the Code. What we had, we used. No more, no less.
The other expenses were also obviously off and to make matters worse the client paid for many items, including inventory, with cash. (Please god, be kind to an accountant. Don’t use cash for business expenses with the exception of a few minor items from petty cash.)
Some receipts were illegible and the bookkeeping was incomplete and a mess. We had to reconstruct. I’ll save you the boring details and give you the important information. I used a model based on prior year data and expected ratios for the business at hand to determine reasonable numbers. It sounds easy, but it took a lot of time as I kept working the numbers until it all looked acceptable. In this case we had at least a few numbers to establish a baseline.
Whenever I rely on the Cohan Rule on a tax return I attach a statement clearly outlining what we did and how we arrived at the numbers we did. Whenever I have attached such a statement to a return the IRS has never, I said never, audited any of those returns. Maybe I am lucky or maybe the IRS figures if I went to that much trouble to get it right they would come to a similar conclusion.
The same applies in an audit. I take a lot of IRS audits from off the street. These people usually have a mess on their hands and missing receipts. When I bring up the Cohan Rule auditors have always been receptive once I outline how I will determine a reasonable number. I think they like my methodology because I am intense instead of guessing. I really devise a method to arrive at relatively clean numbers in pretty much any case. Auditors are usually impressed and if they aren’t their supervisor is. A few cases went to appeals over the years, but none to Tax Court and we always had end results within a nickel’s throw of where I said we would land.
Having your books and substantiation of deductions in order is the best policy. If disaster strikes you can rest assured there are alternatives for fixing most of the problem. Any additional tax liability should be small unless major Section 274 issues are involved.
Even bad bookkeeping has a solution. If a client brings in books that defy logic I must, as a tax professional, dig deeper. Sometimes the client has more material to clear up the issues. Sometimes I have to make adjustments. I disclose any adjustments to the IRS as an attachment to the return.
I sign my name attesting to the accuracy of a return to the IRS. I take that attestation seriously. When you sign your tax return you are making the same attestation I am. You can’t just file a return because that is what your books read or what a tax document or statement says. Statements can be wrong; books can be wrong.
Adjust obvious errors where allowed to reflect a more accurate return. Keep a record of the changes and the method used to reach the final numbers. I recommend attaching a statement to the return as well.
From now on you can sleep better knowing a lost receipt isn’t the end of the world. Make a note of it and take the deduction. The IRS (and the Tax Court) have your back on this one.
Reaching the lofty goal of financial independence comes with some secret advantages. Early retirement and success coupled with wealth allows you a freedom few can even imagine until it is reality.
What is this secret advantage no one is talking about, not even personal finance bloggers? Freedom to spend what you want and when you want, PLUS, you never have to get paid ever again for any work you do or from investments you have!
Just think of it. You work hard and save until you have 25 times your spending in liquid investments. Under the 4% rule you are ready to cash in your ticket. Since you have money you can turn on the spigot and splurge because you deserve it.
Even better, you can undertake all the things you enjoy while hearing people tell you you shouldn’t be paid for your services now because you not only enjoy the work but already have enough money.
The same rules apply to investing. Stocks you own can keep the dividend. Your renters should get a pass this month because they needed to buy a new boat more than you need the rent payment.
Ah, yes! Financial independence is awesome. No worries and a carefree life. Nothing stupid to mess up your day like getting paid for your side gig.
Or maybe not.
Pay The Writer
Harlan Ellison has a great rant about paying the writer. And he is right! If Harlan thinks writers get shafted for the work they do he should step into my world and see how fast people think successful people shouldn’t get paid.
Recently I made a mistake. I knew what I was doing and what would happen, but did it anyway. I was originally under the delusion Rockstar Finance added you to their list once they discovered you had a blog in the genre. Stupid me.
Once the fog lifted and the mental illness evaporated I submitted your favorite blog for inclusion on the list. One question asked was about net worth. Curious, I decided it was time to look up all the stuff I own and add it up. I plugged the number and hit send.
Rockstar Finance listed me within a few hours but didn’t add the net worth figure. Not one to waste any movement I decided to write a post on my net worth.
My net worth is the highest listed on RF. I knew this going in. Later J Money added the net worth figure when he realized I wasn’t some schmuck gaming the system. Now people noticed and what I knew would hit full force did.
I’m not the wealthiest guy in the demographic by a long shot. Some bloggers on the list that don’t list their net worth have one higher than mine. My guess is they don’t list their net worth for the same reason I’m going to now outline.
How much would you pay to have lunch with the poorest guy in town? Would you even sit at the same table with the guy for any amount of money?
What about your favorite accountant? How much would you pay to break bread over an hour-long dinner? Would you pick up the tab? Pay $300? $100?
Now how much would you pay to sit for lunch with Warren Buffett? Earlier this year someone paid $2,679,001 to dine with Warren Buffett. All proceeds going to charity.
This brings up a good point. The wealthier you are the more you deserve to get paid for your work!
I can hear the screams. Please sit down and let me explain.
Now with word out my net worth jumped into the eight figure category (it has since edged into the lucky $13 million arena thanks to the stock market and my Tesla holdings) some people have a different attitude about me.
A week or so ago I published a list of programs I planned for this blog. The final sentence asked if people would be willing to pay for the advanced material.
All the comments were insightful and polite. One comment stood out. The comment asked why I would charge anything since I already have enough money.
After all these years I still stop writing in stunned silence as I wrap my brain around the comment.
Once again, the higher you rise, the more you get paid! My fees have gone up, not down since this blog started. And it’s not because I am a dick either.
Imagine paying a doctor with the worst track record more than the doctor who practically performs miracles. Boggles the mind, doesn’t it?
Warren Buffett uses his wealth and fame to raise a lot of money for charity and all he trades is one lunch. (Not even a nice sit down dinner!) Warren is a nice guy so let’s say he opened the doors and allowed anyone who wanted to sign up for lunch with him for $1,000. Madness would ensure. Warren is one guy and can only afford to sit for so many lunches!
Some of my clients over the years figured out my net worth is getting up there. The way I talk and act sometimes gives away my financial success (luck). Most clients want to pick my mind when they come to this realization. Makes sense to me.
Periodically a client will insinuate I shouldn’t be paid because they are broke and I have too much. My response: Then why should I even bother to work.
As long as we are willing to this far, how about another step? If I (you, too) shouldn’t be paid for work I enjoy doing because I like the work and have plenty of money, should investments receive the same treatment? When Coca-Cola discovers Buffett is rich they can easily withhold paying the quarterly dividend to him.
For you folks in the landlord business reading, once you grow your nest egg to a certain predefined value determined by the people who need to pay you, you should no longer collect rent on your properties. You have enough! Stop being so friggin greedy! It’s revolting.
Okay. How about this? As an incentive to work hard, save and invest you receive the grand prize of not getting paid once you get, say, a million dollars. Talk about an incentive to keep producing!
As long as we are at it, I really have had my eye on those new all-electric cars from Tesla. They look like a sweet ride! Elon Musk (Tesla’s CEO) is a billionaire so I expect a shiny new Tesla S to show up in my driveway free and clear right soon. I’m going to pour myself a cup of coffee and sit on the front porch waiting.
The Rewards of Success
Having money doesn’t automatically turn you into a prick. I give plenty of my net worth and income to charity. I have had weak moments and handled accounts pro bono. Hardship cases of people screwed over by the system have a chance of being added to my client list.
Success is not an opportunity for everyone else to punish you. If you are so good you must keep working, harder than ever, to serve anyone who might need your services or products and for no pay, what’s the incentive! No wonder so many people decide to remain broke. Sure beats the alternative.
Time to put the obnoxious joking aside.
There is a real reason why successful people charge more. First, they are worth it and they have proven their value.
Second, and this is the real reason wealthy people charge more, there isn’t enough time to do everything and even if there was I (and other wealthy people) have earned the right to respite. Money is only the scorecard.
Fees and my income increase because I continue creating greater and greater value. Higher fees create a sort of firewall or filter. People who produce are inundated with people who want to kick the tires. If you allow, they will consume every second of your day. This is unreasonable and untenable.
I love helping people. Mr. Money Mustache sent this blog rocketing higher. My continued efforts here have kept the ball rolling. It took a while, but I finally have reached a good balance with my fees. What I charged when I only served a local market is different now that I earned the right to a national market. By increasing fees to a level where I can get work done in a reasonable time without hiring staff to tell people “no” all day is fair to me and to you, especially those paying me to do the work.
It gets better. Kevin Clack, has been working on this blog for a while redesigning it. The new design will have a tab called “Working with the Wealthy Accountant” where I will share the kind of work I will take on and my fees. Demand will have some bearing on the fee. I am accepting new clients again, but say this reluctantly so I don’t get swamped. My goal is quality service and advice at a reasonable cost. (Yes, you may request a consult. I may open more hours to new clients and consulting as new automation frees my time for important work helping you.)
Winning is not a crime! You should not be sanctioned or punished for success. So you reached financial independence and retired early. So what if you travelled the planet for a few years and now yearn for a side gig, business or even returning to the traditional workforce full or part-time.
No matter which path you choose you still get paid.
Growing up on a dairy farm in northeast Wisconsin in the 1970s had its advantages. Computers were the stuff of Star Trek reruns and staying in the house was a form of punishment.
The kids in my family loved summer. We would run and bike down the road and through fresh mown fields of alfalfa. The only neighbor within striking distance was a rental property. To our great fortune the couple who moved in also had kids reasonably close to our age. They were soon sworn in members of our cult.
In the summer we would play cops and robbers on our bikes. Len was a big dude and always wanted to play the cop. The advantage we had is we were wiry kids born of solid German stock. Our lean bodies could bike faster than Len could ever hope to keep up with. The robbers won every time.
During winter we would build massive snow forts. A few winters in the mid to late 1970s included record snowfall for our little corner of the world. The snow plow would pile snow to the highline wires.
Grandma would scold us kids as we built forts in the massive banks. Finally a truce was called where we were allowed to dig our snow mansions into the side of the snow banks on the side away from the road. Those were the best of times.
Then the 1970s came to an end. Len and his brother Joel and their sister Dawn were gone. (If you guys read this please contact me. I really would like to know whatever happened to you guys. I pray you had a good life.) The first signs of financial strain were showing on the farm. I was halfway through high school.
Then the dream was over.
Fitness was never an issue in my younger days. High levels of activity kept me fit and trim. The food we ate was clean and pure, most of it raised on our own farm.
Adulthood brought with it a more sedentary life. The family farm was gone and within four years I was living the good life of retirement wondering what the heck to do with myself.
Mrs. Accountant, a new business and kiddos soon filled the wonder. I decided sitting in a chair and reading all day was fun, but hard on the body. I was still is super-great shape consuming my youthful legacy.
By the time the candles on the birthday cake reached into the 40s the legacy was gone. I was out of shape and had extra pounds.
Something had to be done. Guzzling soda no longer was fun. It upset my stomach and seemed to grow there too. No more free rides.
I took action when the scale tipped 220 pounds (100 kilograms). The weight didn’t sit nice either.
Fed up with my physical condition I started running. To my surprise I couldn’t make it a quarter mile (.4 kilometers) before stopping with my hands on knees out of breath.
The closest crossroad to my home was a quarter mile away. I insisted I make the distance. Much of it was walked, but I did make it back home. My lungs burned.
What happened to me? It was never like this?
I was shocked into action. Every day I ran. First to the corner, then a bit further. Soon my strength increased and endurance improved.
Before long I was pushing a mile (1.6 kilometers), then two, then five and even more. The weight peeled off. I even ran a half marathon and finished in a respectable time.
Weight was no longer an issue as long as I was addicted to running. Over 50 pounds (23 kilograms) was gone and I have no idea where I placed it. The wiry kid was back.
There is a difference between farm boys and runners. I lost the weight, but my muscle mass was nil outside my legs.
Once I dropped below 170 pounds (77 kilograms) I no longer looked health. I was too thin. I was hungry all the time and the unrelenting running schedule was felt in my joints and lower back. Time to go back to the drawing board.
Heavy running will peel off excess weight. It was a schedule I couldn’t keep up forever. As pleasant as a runner’s high was I needed to tweak my gameplan.
Running made me hungry all the time. I ate whatever and whenever I wanted. And I ate a lot. As much as I ate as a growing boy running all day on the farm. A half dozen eggs was a good start for a meal.
The eating had to happen with all the calories I was burning. However, no amount of strength training would add muscle since I burned every bit of food I stuffed down my throat.
I thought I could have it all! I started to workout at the gym to build muscle mass. I would cap a workout with a 10 mile run. For some reason I couldn’t build muscle. Go figure.
A trainer at the gym finally convinced me I had to ease up on the running if I wanted to build muscle. Two years later I was bench pressing 265 (120 kilograms) and squatting 370 (168 kilograms). On good days I could push even more.
I ate lean and had muscle and could run like the wind. It also took a lot of time. Then this blog came along.
You can do anything, but you can’t do everything. I think I heard that somewhere. Writing is something I love as much as the running. More time was required to write and service all the new clients. You know the story. Most of you here have lived or are living a similar timeline. Spoooooky.
The something that gave was the running. Hernia surgery didn’t end the running—I ran five miles four days out of surgery much to the doctor’s chagrin. But my muscle mass was about at a peak for my age and body type unless I wanted to go professional or extreme. My policy is exercise in moderation. (Notice I slipped the pun in?)
I kept running for a while until I joined a gym between my office and home. Three days a week I lifted, reaching the numbers listed above. I also ran three days a week with one day off.
Eventually I focused on the weight training to further enhance my appearance. Running ebbed until I wasn’t running much at all.
The weight started creeping up. Hunger was still ravenous like it was when running so the diet didn’t change when the exertion did.
If you are still with me it is because you struggled at least once in your life with body weight and/or muscle build. Western lifestyles are not conducive to a healthy body. Life is good so we MUST make an effort to retain or rebuild our health.
Weight lifting made me feel as good as running and I was starting to look pretty darn good. Mrs. Accountant couldn’t keep her hands off me. Not that I was complaining.
I kept reducing the running part of my exercise schedule because I noticed the less I ran the more muscle I built. But the pounds started adding on before long.
A year later I was at 214 pounds (97 kilograms) again, slightly less than I was as flab-boy several years back.
The good news is that a lot of the weight was muscle. But let’s be honest, there was plenty of fat on the scene too.
Some of the weight I took off eventually was added back as muscle; the rest was lard. My legs and arm were chiseled; my midsection was another story.
Men tend to put excess weight on in the stomach area first and women on the tail. Exercise can reduce this excess, but it takes a lot of work and diet MUST be a part of the process or you will never succeed unless you are lucky enough to have a body that will allow you to run 20 miles (32 kilometers) a day. And even then . . .
I needed new goals I could use the remainder of my life. Here is how I broke down my physical goals:
- Running: I want to have endurance without training to marathon levels. If I can run 5 miles (8 kilometers) comfortably on a long day and 2 miles (3.2 kilometers) on a normal day I would consider that appropriate. My goal is to run 2-3 times per week.
- Strength: Bench press: 215 pounds (98 kilograms); squats: 265 pounds (120 kilograms); bicep curls: 35 pounds (16 kilograms) per arm, et cetera.
- Weight: Ideal weight goal would be somewhere in the 180s (84 kilograms). Not too heavy and not too light. Plenty of heft for muscle and endurance, but not too much to look flabby.
Some of these physical goals would still be a stretch while I adjusted to my new diet and exercise schedule. It was okay. I didn’t have to bench the peak amount every day. If things felt good I can always lift more or run further as long as it is a periodic, rather than normal, part of my training.
The real goal was to get rid of the gut. Soda, junk food and alcohol were partly to blame. The rest of the blame lies with eating too much all the time.
The physical goals required few adjustments. I started running again at least two times a week. It didn’t take long to feel comfortable pushing two miles or so on a typical run. I also interspersed hiking and biking into the mix without reducing the run frequency.
You Are What You Eat
Activity wasn’t my problem, eating was. My craving for junk food was my great undoing. Soda is the worst. At home we don’t keep soda, but at the office we provide free beverages to clients and employees, including soda. Sometimes I can’t resist. (I’d make a joke here, but this is too serious an issue. Our lives depend on it.)
I worked hard to clean up my diet. I stopped drinking alcohol. In my younger days I drank a lot. Then I spent decades drinking almost no alcohol. It was purely a choice. Then I started drinking a bit more. Beer is not something I ever crave, but a shot or three of whisky is good. (Whisky has up to 300 calories per shot!) For the record I will still drink in social settings so don’t worry about offending me if you offer a beer. If I don’t want it I’ll say so; if I haven’t overindulged lately I’ll probably say yes.
Soda is a boogeyman in the room. I cut soda out for several weeks and now drink maybe a can or two per week. (I’m human and far from perfect.)
Snacks are the interesting part. My craving for chips, crackers and other assorted snacks is all but gone. I still eat the stuff in social setting, but at home I rarely touch the stuff and when I do it is a small portion as it doesn’t sit with me.
My goals and diet were defined. I started eating cleaner. For some reason the scale kept reading 214 pounds (97 kilograms)! What gives?
First, as I started this new phase of my life I kept eating pretty much as I always have. Even without soda, alcohol and junk food I wasn’t shedding tonnage. It was disappointing. If I lost a pound or two, hunger returned and so did the weight. I was stuck in neutral. If I were most people I could have been satisfied. I had great muscle mass with a gut. One out of two isn’t bad. Right? Wrong!
The real problem I knew existed in the back of my mind had to be addressed. I am 53 years old. Not 16, not 45; 53. Okay. Age makes a difference!
My metabolism was slowing down with age and I needed to adjust for it and/or do something to speed it back up. That is when my research discovered fasting.
I practiced fasting in the past. Never seriously, but more as a thought experiment. This is where my story has to end and the real facts get exposed so you can improve your life.
I’ll share my experiences so you have an example to guide you, but we have to talk facts. This gets serious now.
Lies, Lies and More Lies: The Intermittent Fasting Story
Is there anyone left in the room who hasn’t heard the most important meal of the day is breakfast? And it’s the biggest lie ever used to assault the health of the American people and is spreading to the rest of the world.
Two hundred years ago and prior eating breakfast was considered a form of gluttony. According to Heather Arndt Anderson is her book Breakfast: A History, nothing was consumed with the exception of coffee or tea prior to lunch.
So where did this crazy idea you had to eat first thing after jumping out of bed start? My research reveals the quote came from a 1917 article written by Lenna Cooper and published in Good Health magazine.
The breakfast cereal companies saw a grand marketing opportunity and the rest is history. You were brainwashed by a lie disguised as common knowledge. People even argue kids suffer greatly in their ability to learn if they skip breakfast. We’ll expose that lie in a bit.
First we want to go back and review what Cooper really said. She said breakfast is the most important meal of the day because it is the first. This meal should be simple, easy to digest, enjoyed with the family and not over 500 calories. Processed cereal and sugar filled products were not what Cooper recommended. I can only imagine what the marketers will do to twist my words to their advantage. Just the thought makes me nauseous.
Breakfast is important, even the most important meal of the day. You enjoy this meal around noon and it must be healthy! What makes for an ideal breakfast? Steel-cut oatmeal, fruit and nuts. Your body will thank you if you break your fast with these foods.
I fell for the ‘ol eat right away in the morning gag too. And it was near impossible to lose weight! My breakfast was healthy. Oatmeal was common, but eggs were more common. And the calorie count was low.
It also fired up the system. My pancreas released insulin to help process any sugars in the food. It doesn’t take much to get the system turned back on.
Processing food takes energy normally segregated for the brain’s use. Some people report greater mental acuity when fasting and this might be the reason why. A belly full of food diverts resources from the brain to the gut.
Once the system is turned on it wants to keep going and requires periodic refilling of the tank. The three square meals a day is another big lie.
One source I found claims Europeans started the three meals a day mantra when they arrived in the New World. It seems the Native Americans ate whenever they felt like it. The morning, noon and early evening regular meal schedule was seen by the Europeans as a sign of their sophistication whereas the Native American eating style was seen as uncivilized.
This is all well and good, but what does it have to do with better health, weight loss or intermittent fasting?
The Beginner’s Fast
I was trying everything to lose weight and it wasn’t working. Running was sure to make a difference, but if I slowed my pace in the future weight was sure to start sticking to my abs. And I am well aware of the calendar. Eventually time will slow my metabolism more and my body will be unable to deliver consistent massive runs.
My research took me to intermittent fasting. YouTube videos were a massive help, but I had to be careful. Some videos are better than others. After over 100 videos and articles I felt my level of competence was high enough to put the plan into action.
There are several types of intermittent fasting. The method I chose is sometimes called 18:6. Under this type of fasting I eat during a six hour window each day and fast the remaining 18 hours.
Other types of intermittent fasting include eating normal one day and no more than 600 calories the next. You continue alternating on and off days. Another style included fasting for an entire day one or two days a week.
I picked the 6 hours feeding window type because it didn’t require a special diet nor long-term fasts which could affect my workout performance.
The nice thing about the 18:6 fast is that you can start small. Begin by missing breakfast. Over time the feeding window should shrink until you are eating during a small timeframe each day.
I chose a feeding window in the evening. My normal eating pattern favors more evening consumption of food. Breakfast was easy to miss as I am rarely hungry early in the morning. Unless I am totally disengaged I can avoid food easier during the daytime than early evening.
My feeding window shrunk to 4-5 hours quickly without much bother. Some days I got hungry and if it was too much I ate something light. If a client wanted to have lunch, I had lunch. This wasn’t a hard and fast rule. It was a guideline I could bend when circumstances dictated as long as I didn’t find an excuse on a regular basis. I didn’t. I stayed true to the program.
The results? Well, I dropped twelve pounds (5.4 kilograms) so far. Another twelve and I will have reached the top end of my acceptable weight band.
Muscle mass is good. I don’t think I lost any muscle, but below I will share how I lost some strength when heavy lifting.
I felt better as I dropped the pounds. Running started to feel better. The lower weight made it easier to run and put less stress on the joints.
There are additional benefits to eating during a small evening window. I agree with people reporting their mental concentration improved. I no longer need to brown bag a lunch for the office either.
The best part is my body started to adjust so I rarely felt hungry during the day. Workouts and running were better before I ate. That’s right! I am heavy lifting and running after twenty hours without food! And my workouts are better now than ever.
Since I put no diet restrictions on my fasting I was worried I might binge. I found the opposite to be true. I drink less soda without cravings. Most junk food turns my stomach. My calorie intake is probably a bit lower, but I make no effort to restrict calories. Calorie restriction generally leads to muscle loss and I made muscle a priority.
The six hour feeding window (that term sounds funny to this farm boy) ended up shrinking to 4-5 hours most days. Some days I ate during a seven our window; sometimes in only a 2-3 hour window. Things were going well.
Then I did something stupid.
In the past I tried a few full-day fasts. They worked, but I found them hard to do. Twenty four hours is a long time to go without food. Now that I trained my body to go longer periods of time between eating I felt I was ready to give long-term fasting another chance.
The advantage of fasting is to train the body to burn fat. By eating all the time our body never gets a rest. It is always digesting and burning sugar (glycol). As soon as glycol runs low in the liver our body sends hungry signals to get another sugar fix.
Your body wants sugar all the time because sugar is addicting and people living in the Western world are sugar addicts. You can’t avoid the stuff.
Fasting solves the problem. After about twelve hours the liver runs out of glycol. The body then turns to glycol in the muscles (not to be confused with muscle loss) and fat. Intermittent fasting trains the body to burn fat for part of the day. That was the main reason I couldn’t lose weight when I was eating all day. Fat was never burned. I ate clean, but if I wanted to preserve muscle mass I couldn’t restrict many calories. A restricted calorie diet will cause your body to burn muscle.
My body had adjusted to 18-20 hours without food daily. It was time to try a long-term fast. I wanted to go all-in. The goal was to fast for 4-5 days. My reasoning was that after about two days the body starts killing off white blood cells and grows fresh new ones better able to fight disease. There is evidence long-term fasting can lead to longer life and even prevent cancer.
I am uncertain of the claims, but I still wanted to experience a long-term fast. Not just a day, mind you. Something I could be proud of.
Boy, did the proverbial manure hit the fan fast (notice yet another pun).
Fasting is all between the ears. You can easily live without food for a day. The average adult can live somewhere around 60 days without food. Unless you have medical issues, long-term fasting can be beneficial!
So the day was set. I was going to start on a Thursday and go until at least Sunday night without eating.
Wednesday night I ate my last food as I normally do and Thursday morning I woke up so darn hungry I could have eaten the back side out of a skunk.
What was up with that? It wasn’t even twelve hours since I had food last and I was already psyched out. If I wasn’t starting a multi-day fast I would not have eaten for another 10-12 hours anyway.
Just the thought worked on me. I wasn’t going to eat for days.
Thursday night I went to bed hungry and dreamt food. Oh, for crying out loud, Accountant! Man up!
Friday I thought of food all day. It drove me crazy. Friday is a normal gym day so I did a light workout. Long-term fasting requires rigorous exercise be reduced. Light exercise only.
By Friday night I was so mentally twisted I broke down after 48 hours and a few minutes without food. I enjoyed three eggs, if you must know.
I felt terrible for failing.
The worst part is my strength collapsed. At the gym the amount I could press was down seriously. Even running was down. Long-term fasting sapped my endurance and strength.
And I know it was all between the temples. I allowed the whole process to twist my thinking. It has been a while since mental weakness was so pronounced in me. It was a wakeup call.
All the grandstanding I read about where the first day is the hardest, then it gets easier was bull. Day two was a major slog. Mentally I was unprepared for the 4-day fast.
Back to Intermittent Fasting
I don’t give up easy. The next day I went back into my regular intermittent fasting schedule. Everything seemed fine because my brain knew I would eat that evening.
Tim Ferris said he doesn’t lose muscle when he fasts for several days. My research indicates most fasting doesn’t lead to muscle loss, whereas, calorie restriction does. Intermittent fasting can actually help increase muscle growth because you don’t necessarily eat fewer calories, but your body learns to burn fat on demand!
Intermittent fasting has helped me lose some weight while increasing my endurance. My strength is returning to normal from the long-term fast. My workouts now are actually shorter (about 20 minutes) as I started high intensity interval training (HIIT). I spend a lot of time outdoors during the summer so I get plenty of exercise outside the gym. Winter in NE Wisconsin is more of a challenge and the workouts might expand back toward an hour three times per week. Running may decline as weather restricts outdoor activities and I hate treadmills. Regardless, I think I will stick to 2-3 days of running even if it means running indoors. My runs are now only 20-30 minutes anyway so they are easy to fit in.
I don’t give up easy! That long-term fast has me mesmerized. More research is in order. With a 48 hour fast now part of my experience I plan on trying again and making it at least 72 hours with a goal of 96 hours.
Long-term, multi-day fasts should only be tried a few times per year. Intermittent fasting is something you can do daily.
When friends come over or you are at a social gathering there is no reason to enjoy a cold beer, snacks or a small meal even if it doesn’t fit your normal intermittent fasting schedule.
Remember to drink plenty of water while fasting so your body can flush out all the garbage. Tea and coffee are okay. Some people allow creamer or a small amount of sweetener in their tea or coffee. I disagree. Sugar, cream or any substitutes causes an insulin response in the body. At that point the fast is over. The goal is to avoid an insulin response for as long as possible so your body starts burning fat. Remember, insulin builds fat!
Share your experiences with fasting in the comments section. I’ll update periodically. The next long-term fast certainly deserves a mention.
Disclaimer: Whenever talking about health, diet and exercise I must remind you to use common sense. Consult with your doctor or medical professional before engaging any of the activities in this post. Also, don’t try to perform at my level. I’m in pretty good shape. You need to build to lift and run at the levels I do. Some readers are younger or in better shape than I am and will lift more and run longer than I currently do. Please keep safety in mind. I want to see you happy and healthy.
[Writing is a funny business. The process of creating a story takes time and evolves over time. In looking over my notes, here is a paragraph I wrote as part of my original outline. I must have thought it was a good idea at the time.
The best part is not having to eat all the time. Like Kim Jong-un I don’t have to eat or the thing you do after digesting the eaten food. My first game of golf I managed a hole in one on all 18 holes, just like Kim. I never sweat when I workout either. Is it any wonder I don’t own a small third world nation of my own?
Aren’t you glad I took a different approach in what I did publish? Me, too.]
As I surf around the internet I sometimes run across people commenting on me and this blog. A common refrain goes something like this: “The Wealthy Accountant blog isn’t really about accounting or taxes.”
This blog is written by a wealthy accountant. My goal is to get you to think like an accountant (a wealthy one) so you can improve your life. Sometimes that means I talk about things that don’t seem tax related on the surface.
My next blog post is on fasting: intermittent versus long-term. (Get ready for it.) I’ll get a few complaints, a few pats on the back and plenty of eye rolls. What does fasting have to do with wealth, accounting, taxes, or personal finance? Simple. Financial independence has little value if you don’t have health to enjoy it.
Sometimes the connection is hard to see. When I started this blog I wanted to show the world what it is like from my side of the desk. It’s the first post of this blog. I was still searching for the voice I wanted to use for this blog, but the tenor was there.
As time went on I wanted to step out from behind my desk and was hoping you would join me. I make no claim to being better than anyone else or have higher quality life experiences. In addition to standing behind me while I run my practice and visit with clients I want to share many of my personal life experiences. Call it a form of legal stalking.
Each story has a goal. First, I have to entertain to keep you reading. The second goal is to show how I solve problems. Everybody runs into a buzz saw now and again. The real issue is how you deal with the slice and dice.
Some messages hit you square in the face. Others are more subtle. The facts and circumstances determine the method of delivery.
Over the last several years I have had the great honor of meeting some of the most awesome personal finance bloggers walking the green Earth. In some cases I am so humbled because said bloggers then ask me to handle their tax issues. It is no exaggeration when I say I am numb from the responsibility. At no point in my professional career did I ever feel I would be held in such high esteem on a national level.
I could rattle off household names in the industry I have personally broke bread with or served professionally. The list has been published here often.
There is another group of PF bloggers I admire and even pressed palms with, but never took the relationship further. Paula Pant is one of these bloggers.
I met Paula a few times and managed to say “hi” in passing. It is my fault I didn’t build the relationship. She is an open, intelligent woman. And I love her blog. I just never took the time to get personal.
Paula writes Afford Anything; she also has a podcast.
I’m not a big podcast person due to time. I can read faster than I can listen. Writing also tends to be tighter than conversation. For the record, I didn’t even listen to my own podcast on ChooseFI. Jonathan and Brad did great work on the podcast. The issue was me. I started listening and couldn’t stand hearing my own voice spewing advice I normally give. Very disturbing. I’m not sure I trust this Keith guy.
Afford Anything’s moniker is: You can afford anything . . . but not everything. I feel in love with the concept instantly for the opposite reason most people do. Most people spend too much and need to focus on the most important thing you want to spend on and save the rest. Me, I need a pry bar to crack my wallet open. In fact, I don’t even have a wallet. Why spend the money on something to just carry my money? Instead, I fold my money with the smallest bills showing on the outside, usually $1 bills, with credit cards and driver’s license tucked in the middle. I do this because I don’t want people to think I have too much money. It sounds stupid, but it is a mindset hard to break.
At this point I would like to give Paula a high-five for getting me to live a more balanced life with my wealth, but I can’t. You see, when I am brutally honest, my spending hasn’t changed much. Sure I travel for business a bit more now, but after incentives and tax advantages it frequently reduces, rather than increases, my spending.
Paula Pant has an awesome message yet an adoring fan was left in the ditch. You can’t win them all.
Sometimes you smack the ball out of the park and you didn’t even know the pitch was coming. I always take a bow in such circumstances so I get full credit. (What? WHAT!)
Paula had just such a moment.
The spending thing is still percolating into my skull with not much to show for the effort. But Ms. Pant did something she probably never intended. She allowed a crazy accountant from Wisconsin to balance his life in another area.
As much as I admire Paula’s moniker, I always felt there was a hidden message in the phrase specific for me.
Then it hit me. It wasn’t about “have”; it was about “do”! Where most people need guidance to spend less and save more, focusing spending on that one important thing for you, I needed the message where it applies to my time.
I want to do EVERYTHING! And it has served me well too.
All the stories published here are true and I intentionally leave out many more to protect the guilty. Some literary license is taken to fit the story into a tight space and to keep it interesting. In other words (sorry Mister Strunk (writers will know what I’m talking about)), I cut out the boring details or unrelated pieces so the story moves. The truth of the story is never modified!
It doesn’t take long to realize I am always up to something. Still, curiosity has been known to kill cats. . . and wayward accountants.
You will never find a more powerful blog or podcast than Afford Anything. Paula’s style is inviting and informative. And the lessons learned are not always floating on the surface. I encourage you to read and listen to her work.
I Want It All
You can afford anything, but not everything. You will never have enough money to buy every shiny bauble that catches your eye.
You can also do anything, but not everything. We are all granted the same amount of time each day regardless of wealth or status. It is the great equalizer. What you do with that day is up to you and will in large part determine your level of happiness in life.
In my quest to experience and know everything possible I have paid a dear price. Sometimes the price was very high, even higher than I wanted to pay. Even when the price wasn’t dear, it caused sacrifices.
This isn’t the first blog I’ve written. Two of the many blogs I’ve written over the years are flash fiction. I always wanted to publish fiction. After several years of writing these blogs I think I made a mistake.
Even in business I can bite off more than my teeth can chew. Before Elon Musk I wanted to be Elon Musk. Musk has Tesla, SpaceX, Solar City and the Boring Company. He is spread thin.
Like Musk, I wanted to be all things within my industry. My small office did everything the accounting/tax industry offered. I worked (and still do) massive hours to get good at as many facets of the industry as I could. At one time I was this close to getting my license to practice in Tax Court. Finally I realized I would never have time to actually take a case from start to finish in Tax Court. I settled for providing research in Tax Court cases.
Recently I delegated payroll accounts in my office to a team at a national firm I trained. People calling the office need payroll. But my tiny office can’t handle payroll from around the country, even locally. So I trained a team and set them lose.
Bookkeeping is next on the chopping block.
I’ll still supervise and review accounts when needed. Clients are not left to the wind. It’s just that one person can’t do everything. (Did I say that? What is wrong with me?)
These are two massive areas I want my clients to have access to with quality service. I couldn’t do quality when I was spread so thin. So I delegated intelligently, protecting my clients (and readers) while preserving the last vestiges of my sanity. (Keep comments on my sanity to yourself.)
This still leaves tax preparation/planning/consulting and this blog. If you think about it my plate is still plenty full.
I can’t give up these last things I love to do!
Yes, Paula, I know. I can do anything, but not everything.
Don’t tell Paula, but in my fantasies I am a god. (Enough of my delusions of grandeur.)
I want to do a lot of things. I still do. I miss the things I give up, but the 24 hours you get to use today are the same 24 I get. No more, no less. Net worth has nothing to do with it.
Slowly I improve. I hope my story helps you find balance in your life. Perfect is not the goal. Slowly, like a stubborn clam, my wallet is opening and some minor spending is juicing the economy. (You have noticed the low unemployment rate? Right? That was me.)
Slowly I increase life balance in the things I really enjoy doing.
Just because I like doing something doesn’t mean I have to do everything I enjoy all the time. There is no foul in focusing.
I pray Paula is okay with my butchering of her moniker. No harm was intended.
I know I don’t always talk about taxes, accounting and money like a broken record. But do you understand the connection now?
Eight years ago Barack Obama was hitting full stride in his first term as President. The economy was in tatters. The banking industry was only beginning to come to terms with the level of bad loans they had on their books. The largest insurance company (AIG) required a bailout to survive; the largest domestic automakers needed a bailout to preserve jobs; nearly every bank required assistance and every money center bank actually took assistance to weather the storm. This easily could have been another Great Depression.
So what did President Obama do in this desperate environment? Why, tackle health care reform, of course.
Every President has a short window of opportunity to build a coalition at the beginning of their Presidency to pass a key piece—or if lucky, several pieces—of legislation. These are the tough issues, things like major infrastructure investments and tax reform.
President Obama chose health care reform. The country needed, and still needs, major health care reform. The country also needed economic stimulus. Badly! Unemployment was high, income inequality was expanding at a rapid pace, while the nation’s bridges, roads, sewer lines and water works crumbled.
It was an honorable effort, but a tactical error that prevented any additional large, and necessary, legislation. (Yes, I am aware banking reform was passed along with other legislation. This will all become clear in a minute as I illustrate why the most pressing legislation never happened.)
And President Trump is making the exact same mistake.
A New Man
Presidents get two terms max in the United States. After eight years it is time to bring in some new blood. If you loved the old guy, wave goodbye nostalgically; if you hated him, bid him good riddance. President Obama served his two terms and it was time for the new guy. The American people choose (well, the electoral college chose) Donald Trump.
Break out the confetti. A new guy on the job means another opportunity to pass significant legislation early in his first term. And what did President Trump choose as his key legislation? Why, health care, of course.
You would think Trump would have learned from Obama how easily healthcare can bog down your agenda. A litany of problems to solve devolved into a serious fight extending longer than anticipated when Congress went to work on a health care replacement plan.
Obama was lucky. He was able to pass major health care legislation, the Affordable Care Act. It was an improvement, but far from perfect. Many more people now have insurance and pre-existing conditions no longer leave you uninsured regardless of ability to pay.
The ACA also has serious flaws which need addressing. Insurance premiums are exploding and many markets have few, and in some cases no, insurance choices.
Eight years ago I explained to anyone who would listen that President Obama was making a mistake when he addressed healthcare first while the economy is what really needed attention. Fix the economy and the money would be there for healthcare reform, even a single payer option so coveted by the Democrats.
Donald Trump ran on a platform promising four key things: immigration reform, repeal/replace the ACA, tax reform and infrastructure investment. All four areas need attention, no doubt.
President Trump addressed immigration with executive orders which ended up bogged down in the courts. And there was no wall erected. The wall was a stupid idea anyway. We don’t need a wall. Remember President Reagan? “Mister Gorbachev, tear down that wall.” The Republicans should have been listening to their leader.
Then came the real first attempt at legislation. Tax reform and infrastructure would have to wait (and wait and wait) regardless how necessary legislation was needed. Health care, and more to the point, repeal of President Obama’s key piece of legislation, was first on the list. Once again it was a stupid idea with expected results.
Obama was lucky. With the economy in dire straits he was able to muster the votes to pass the ACA. With a large part of his political capital spent and the midterm elections costing the Democrats the majority in the House, any additional major legislation was impossible. To hell with the American people, not to mention the world economy.
Time to Play Trump
Time to let President Obama enter the history books and play the Trump card. Obama is no longer President and has no hand in passing future legislation.
The issue here isn’t politics. Your opinion of Trump doesn’t matter. He is the President and if things are going to get done he has to take the lead.
By picking repeal and replace (or just repeal) of the Affordable care Act it was inevitable the President’s agenda would struggle in the deep quagmire of mud the runs down the halls of Congress. It was also the worst choice Trump could make.
Trump watched Obama spend every drop of political capital on health care while the Federal Reserve was the only game left in town to deal with the economic issues punishing the country. It was a bad choice then; it’s a bad choice now.
Since it is always easier to play armchair President, I will share what Trump should have done to save his Presidency. (Obama should have taken the exact same path and he would have kept the House and passed serious additional legislation of his liking.)
Trump has it all backwards. He is right about the issues needing attention. Health care and immigration are important. Tax reform is beyond desperate need. And infrastructure is embarrassing the nation as our roads and bridges crumble like those of a Third World nation. We can do better.
If Trump would have hired me I would have advised a different approach, one that would have given his entire agenda a fighting chance of being passed.
My advice to the new President would be this: Turn the whole process around. Attack infrastructure first. A trillion dollars of infrastructure spending would have caused an economic boom with plenty of good paying jobs here at home. The increased economic growth would not stop at the jobs dealing with the infrastructure. High-speed transportation (once again so we can join the 20th Century—you read that right), better roads and updated airports would increase productivity.
Business would boom for decades. Trump would be an easy two-term President with this single change of policy. The advantages to the economy would continue into the foreseeable future.
The tax revenue would pour into the government coffers! Now you have the money to fund health care initiatives and tax reform. Who would argue with a President who produces such success? He would have been a demagogue! (Opps! That part he covered himself already.)
Think about it. The only way to move forward in this country is to start doing things differently. President Clinton wanted to tackle health care out of the gate and went nowhere. Obama managed massive legislation on health care at the expense of the remainder of his agenda. Trump is nearly out (if he isn’t already) of political capital.
Trump’s only chance to save his Presidency is to do a 180 degree about face, dropping all issues save infrastructure.
The Republicans might actually go along with it; the Democrats would salivate over the prospect. The Republicans are so desperate for a win (or any legislation to pass Congress) this crazy idea might just work.
An Open Letter to President Trump
Mister President, it is time to stop screwing around. Stop hiring idiots with no training or idea on how to run the U.S. government, the largest organization on the planet. Stop draining the swamp! The swamp is there for a reason. Get rid of all the wetlands and the wildlife dies! Time to let the swamp do what it does best. Use that to your advantage.
Focus on infrastructure. Provide massive financial support to each state to fund projects of their choosing. Also demand certain projects get attention. The trillion dollars of spending is spread out over many years. The increased tax revenue will lessen the impact on the deficit, but make no mistake, the deficit will go up to pay for this.
We need high-speed rail and other advanced forms of transportation to compete with the world. It is time to pull out heads out of our arses in this matter. Time to act like a world leader instead of playing catch-up all the time. Use your unique way with words to get Congress to do the right thing this time.
Part of infrastructure is rolling out an overhaul of the electric grid and converting our society to renewable sources of energy. We can always sell our oil to countries less enlightened. We will lead the world once the transformation is complete with the lowest costs of production. Jobs will be outsourced around the world to the United States as we will be the best choice for business.
Solar and wind energy must be part of the mix. Considering the entire infrastructure program, solar and wind installations will be a small part of the expense. Battery storage and transmission lines must also be including in the process. This will bring down energy costs for the American people and businesses.
Tax incentives for businesses and homeowners to invest in battery storage technology and energy production will power the economy forward without the government footing the entire bill. Citizens and businesses will be partners with the government in transforming this great nation of ours.
The rapidly growing economy will be the envy of the world. The expanding tax base and increased government revenues will allow for tax reform, and (gulp!) dare I say it, tax cuts.
Health care will be easier to tackle once the real problem has been addressed. Hard to get emergency medical care when the road is so bad you can’t drive on it or the bridge is out.
Immigration is the least issue, but does require attention. We don’t need a wall; we need an effective partnership with our neighbors so they have opportunities at home. There is nothing wrong with allowing people from around the world (even Mexico!) to dream of coming to America. Isn’t that what it is all about?
Gives you that warm and fuzzy feeling, doesn’t it, Mister President? And it is all yours if you can find a way to put the swamp to work productively. You do know how to make deals, don’t you?
Or, if you prefer, we, the American people, can sit around all day and complain about your performance.