I’m such a loser. My whole life has been one failure after another and I’m sick of it.
How many times have you felt this way? More than once, I bet. Life, no matter how fortunate, throws periodic curves. This is not a character flaw; it’s life.
Hard times define you more than success. Success lulls you into a false sense of superiority. When things start to fall into place too well for too long you fall into the trap you are somehow better than you really are. Learning turns off and it’s unhealthy.
The good news is you can still learn from your wins and good fortune. You must be aware success is a poor teacher and be willing to challenge your inclination to think a win means you are right. Plenty of winners have been wrong throughout history. In driving they have a term called “dead right.” You might be right, but you’re still dead. It’s an important distinction!
Edison didn’t invent a working light bulb the first try. Failure precedes success every time. EVERY TIME! There are no shortcuts.
Your reason for visiting this blog, kind reader, could be one of a legion of reasons. Maybe entertainment is all you seek. For the remainder of the crowd they are searching for answers. And answers mean you have tried and failed and are on a journey of discovery. Welcome.
Failure is the best thing that can happen to you early on. Lessons learned early provide a foundation to build on. Child actors provide ample proof early success breeds the illusion of being right. All too often it ends in tears. Sports stars by default enjoy early success followed by financial hardship a few years after their career ends.
Before we point and laugh at sports figures and child actors, we might want to look long and hard in the mirror.
Life has been beyond good for me lately. Business is good, investments are smoking hot (have you checked your index funds lately?), I’m adjusting to my newfound business growth and my writing has been honored with a nomination for two Plutus Awards. Life is great and I’m worried. Now is not the time to become complacent; now is not the time to become arrogant. There is no doubt I’m on a roll, but it is a matter of when, not if, newfound challenges will poke their head above the waterline.
You’ve experienced the same thing. Maybe a relationship is awesome. Maybe you found the job of your dreams or have reached your financial independence (FI) goal. Then life intervenes, or worse, you do something stupid. Don’t worry. We all do it. Bellying up to the bar of stupid is not an exclusive club. You are born with a membership and membership has its privileges.
And good thing!
If everything always turned up roses life would be boring and (sorry guys), but you’d be stupider than a box of dull thumbtacks.
Tragedy and Crisis
I’m writing this the night before this is published while sitting in a hotel dining area at FinCon. What an awesome opportunity! FinCon, that is. The people I get to reacquaint myself with is a great pleasure. New people grow my circle of relationships and influence.
Yet, things can go south fast. What if I don’t win the award I covet? I can feel proud of the winner and her success or I can act like an ass. Or I could hedge my bet and smile while secretly loathing. Only genuine pride for the winner is allowed. The other is the first salvo of the war against myself.
Other tragedy can also rain on my parade. Illness, disease, or death of a loved one can mess up a sunny afternoon.
Not all problems are self-inflicted either. You can do everything right and still get crushed.
The real question is: What will you do if the big one hits? Most issues in life are minor inconveniences. However, what if the unthinkable happens and you lose it all?
Careful planning doesn’t prevent fraud or theft from destroying your best laid plans. Your business or side gig not only can fail, but a lawsuit could rob you of all you have worked so hard for decades to build. It can happen.
CNBC recently published an article where Richard Branson was asked what he’d do if he lost everything. His answer was revealing. Branson said he would review his notebooks for ideas he never had a chance to try and now try them.
What an attitude! He lost everything and his first impulse is to learn from the loss and go right back to building something important.
More important, most people probably missed the hidden message: you can’t try every idea!
Smart people know several streams of income are better than one. Successful people like Branson and Elon Must hedge their bet with the pursuit of several ideas. They also are smart enough to know some ideas, even good ones, are not realistic to attempt under the current workload.
The Winner’s Circle
Disaster is not the end unless you die. Death isn’t a bad end either. We all get it right the first time.
Failure is a grand opportunity to undertake ideas you couldn’t previously consider. There is no doubt in my mind every successful person will be right back where they are now, if you take all their stuff away, within a few years or a decade, at most. Winners know how to win! It’s like riding a bike.
The only difference between a phoenix rising from the ashes and the current superstar is the area they will excel in. Elon Musk started with PayPal and morphed into Tesla, Solar City and (who would have thought) The Boring Company. The path is different, but the path still leads to the top. Once again, winners win.
The same applies to you! Your prior losses are only learning experiences. You know what doesn’t work! People who never try don’t even know that.
Business failure is common. Some of my business ideas turned into painful lessons. I’m NOT exempt!
When Branson says he would review his old notes for new ideas he means it. He knows some of those ideas could splatter upon contact. He also knows many ideas, executed properly, are winners.
The winner’s circle is littered with people who understand the value of multiple streams of income. They also know Warren Buffet wasn’t tax on all of his billions of net worth. Most of it is unrealized gains.
What you will not find in the winner’s circle are people who never tried or people who try every idea which poked from the inside of their temples (jack of all trade, master of none). Winners understand balance.
The top of the food chain loves to share their story. They know there is no real competition. Your blog doesn’t compete with mine. Your tax office (even if across the street) doesn’t compete with mine. You are your own competition. Don’t screw it up!
You must work on multiple streams of income, but you don’t have to bust tail on every revenue source! Dividends, interest and rents are income streams you don’t need to handhold daily.
A business or side gig can contain several revenue streams within the corpus of the main business. Think of your friendly accountant. My tax practice earns revenue from tax preparation, plus bookkeeping, consulting, payroll (most of that was sold for a different revenue stream) and this blog and all its sources of revenue.
Failure WILL happen! And thank the gods that be it does. Life would suck without value lessons. Imagine how boring this blog would be if I told you story after story of all the glorious things happening in my life with nary a hic cup. First, you wouldn’t believe me and second, you wouldn’t have read this far into this post. Crap happens and it makes life worth living.
The good news is most crises are minor bumps in the rearview mirror. You can come back and relive the thrill of starting all over again, this time with a boatload of experience. It may never happen, but if it does, what a grand opportunity to try all those ideas you couldn’t shoehorn into your busy schedule.
And that is why you should, like Branson, keep a notebook of your ideas. You never know when you might need it.
Here are my working notes on this post. The idea was born weeks ago and finally breaths life. Writers might find value in where I started my writing process on this post and where it all ended up. Enjoy.
For a life of success to happen you must first expect a life of failure. Many ideas will fail even with the greatest of care taken when planning.
Richard Branson recently said in an interview, if he lost all his money he would review his notebooks for ideas he never had a chance at trying. Successful people try a lot of things and frequently fail. They also work multiple ideas at once so when one falters there are more in process to work on. It’s a lifelong commitment trying many things.
You need multiple streams of income. You WILL fail. A lot. You only need a few a few hits to do well; one home run is a life changer!
Therefore, the most optimistic thing you can do is embrace a life of failure.
There are times thinking like an accountant determines how much of your hard-earned money you get to keep and how well your investments perform. Money isn’t the only thing accountants think about either. Time is more important than money by a long shot and plays into the equation every time.
This past week my oldest daughter asked if I would be helping with her tuition for next semester. I lollygagged as I didn’t want to think about it at the time. My daughter persisted, finally mentioning she wanted me to know about her tuition if I wanted to use a credit card to accumulate bonus miles or cash back.
Every year I generate cash and miles equivalents of around $10,000 per year. The whole family knows my love of these bonuses since they are tax-free and nothing motivates a tax guy like a five figure tax-free benefit.
I shrugged at the suggestion of getting another credit card for a bonus. Yes, tuition is nice spend to generate lots of cash back or miles. I did just that earlier this year. But I didn’t feel like it anymore.
Another credit card with a required spend would be a nice added bonus. However, I only undertake the process when I feel like it. Some days I am in full hack mode and other times I could care less. Since I don’t need more miles and the kitty is full, my desire is based solely on thrill.
It comes down to time. Tracking spending on a certain card takes a small amount of time. The rate of return is high, but I don’t want to do it! Call me a spoiled child (in the comments, please), but there are times my time is worth more than another $400 tax-free.
Earlier this year I went crazy on the system. I used several new cards to generate thousands in cash, free hotels rooms and miles. I hate traveling and business travel will take years to consume all the benefits I amassed this year. Like I said, I went ape.
I also discovered selling tradelines a year or so ago and decided that looked like fun (if not tax-free). After mild research (and a few hiccups) the ride started producing a revenue stream. The numbers were nice, even if taxable income.
Selling tradelines requires more time tracking each card involved and assuring you have at least something on each card involved. It started becoming a pain in the tail real fast. The money wasn’t worth it after a while. (My attitude changes over time. When I stop enjoying the process I go do something else; when my deviant nature bubbles to the surface I am all in. Until it grows old again.)
There is a danger in the FIRE (financial independence, retire early) community. We tend to research to the nth degree as we seek to maximize results with minimal risk.
But minimal risk may not be acceptable risk! As I went crazy on selling tradelines I ended up with one credit card cancelled. (Don’t cry for me. Plenty more where that came from.)
The danger part of tradelines was wasted time. Owning a business means I have plenty to spend on. Putting a few transactions on a dozen cards started being a real time consumer, however. If I didn’t have a tax practice and blog to manage I might find the time expenditure acceptable.
With tradelines you need to track when an authorized user is added to the card and when to remove them. More time is needed to track your payment so you get paid for the hassle investment of time.
The money is good, no doubt. Selling tradelines on a few cards can add a few hundred to the mad money account. A dozen cards can reap up to a thousand every month; sometimes more.
A good accountant would milk this thing for all it’s worth. I’m not every accountant.
A bird in the hand is worth two in the bush they say. And they are wrong! Free money from credit cards is a lot of fun, but your time is more precious! I will still harvest tradelines and credit card bonuses when I feel like it, but this is the boy in me playing. It isn’t maximizing results.
Or maybe it is! Picking every bone clean that happens in your path is insanity! Not only is time precious, but what you could do with that time can easily make more. Life is too short to waste on every hack. You must be careful which hacks you pick and choose.
Harvesting credit card rewards and selling tradelines at least makes you money as long as you don’t increase spending. The real danger comes when you only consider maximizing rewards in other areas of life.
Drugs might provide lots of utility as long as you realize it costs money and a piece of your soul with every purchase/use. An alcoholic drink now and again is fine for most people. But if you get confused with mild stimulants you can get in deep quickly. The jails are full of people who maximized pleasure without concern for long-term consequences.
Not to mess with your head, kind readers, but sex is good a few times a week, too. Seven times a day might sound funny, but you can do real damage. You don’t want to milk every last ounce of utility before you end the activity. (Bad choice of words.)
And now we get to the real risk of maximizing results applicable to everyone in the FIRE community. Every accountant knows (or should know) leverage is the best way to spike results. Public corporations do it all the time. XYZ, Inc. adds a pile of debt, buys back stock and watches earnings per share skyrocket.
Until it doesn’t.
Leverage is a double edged sword with the edge cutting you enjoying the advantage. You see, leverage has a built in cost. Interest is owed on each leveraged dollar, win or lose. Break even is a loss with leverage.
Investors figure this out early on. A thousand dollars can buy $2,000 of most listed stocks. If the stock increases 10%, your return is 20%, minus interest owed on the borrowed money.
Here is where it gets bad. If the investment declines the loss is also magnified! A 10% decline is a 20% loss on your original money, plus interest owed on the borrowed funds.
The worst part is staying power. Everyone knows broad market declines happen. Everyone should know the market always comes back given enough time. When you use leverage you don’t have unlimited time. Interest is accruing every day you have an outstanding balance on the loan. The market can outlast you when you use leverage.
Without leverage, all you need to do is wait. An individual stock might go down for the count. It happens. But the overall market is a reflection of the long-term growth trends of the whole economy. In time the market will reflect the continuing growth in technology, productivity and economic growth.
And only the unleveraged can outlast Mr. Market.
Most people use leverage at a far greater level than what is allowed to buy stocks, bonds and mutual funds.
I can hear your screams of innocents. You don’t buy stocks or mutual funds on margin* (good to hear), sell your tradelines (maybe you should) or use credit cards with or without rewards and bonuses (why not?).
However, I bet you borrowed money at least once in life on an investment virtually guaranteed to lose money: a vehicle loan. Ah, but that’s different, you say. No it’s not, says your favorite accountant.
Leverage is leverage. And leverage accentuates gains and losses. An auto loan creates the same leverage a stock investment does. The only difference is the size of the loan and the guarantee the asset will decline in value.
There is another leverage I bet most readers have used: the mortgage. But how can you afford a home without a mortgage, you protest? You might not. I’m not even asking you to buy your first (or any) home without a mortgage. What I want you to think about is the amount of leverage you are taking on and the potential consequences.
Real estate tends to be a good investment, except for 2008. As bad as the housing market was in 2008 and thereabouts, the only people who lost their home to the bank had a mortgage. Usually leveraged to 100% or more.
Some leverage can be a smart move, but leveraging any asset or investment to 100% or more is begging to have your head handed to you.
Think of it this way. You buy a $100,000 home with $3,000 down. (We will ignore closing costs and other items that muddy the water.) If the value of your new home goes up 3% the first year you doubled your equity in the home. A mere 3% decline and your home has no equity. None. Zero.
In most cases you are okay as long as you are current on your payments. That is a whole different issue. What does happen when you have no equity in your home is it requires you to come to closing with cash to sell the darn place. It removes the selling option for many people.
Massive leverage is common historically in real estate. In my office landlords are the number one group to declare bankruptcy. They are also the same group who has the highest net worth. What’s up with the dichotomy?
It all comes back to leverage. Those who abuse or overuse leverage find themselves in too deep to wiggle. When you lose the ability to move financially you are in death spiral. Even if you survive there will be significant damage done.
The Efficient Frontier
I hear business owners and those willing to cheat on their way to FI brag about a method they discovered to generate massive income and net worth growth. Before the words are out of their mouth I know they read a news article on using leverage to spike returns. The article probably highlighted a major corporation using leverage to maintain and grow returns.
With rare exception it ends badly and our victims need to start over or at least re-walk part of the path toward FI.
Accountants love to talk about efficiency and maximizing returns. And it is true I want you to think like an accountant. But just because thinking like an accountant is a good thing doesn’t mean accountants never have stupid ideas. Abusing leverage is one of these ideas.
I would never, repeat, never recommend a client to borrow funds to invest in the stock market. This includes option strategies to spike investment returns.
(Side bar on options: Options are not bad in and of themselves, but most people use them wrong. I have no problem using an option to buy a stock a lower price and collecting premiums or replacing a sell order with a covered call. However, if you use an option to buy stock you must have all the cash on hand. Otherwise you are only disguising massive leverage. The bad kind.
If you don’t understand options you have no idea what I just said. That’s okay. Someday I’ll write a post on options and the incredible risks to the foolish as well as using options as a hedging tool for your own investments. Stay tuned.)
Back to our show. A car loan is leverage and not the good kind either. I understand a loan is sometimes necessary. When this is the case you must make your leverage a DEBT EMERGENCY! When you have debt on a wasting asset all nonessential spending stops until the debt is gone.
The home mortgage is a bit different. I make exceptions to the rules for mortgaging a property, but only after careful consideration. Once again, remember 2008. It never happens until it does.
If your accountant tells you to leverage your business or investments, take caution. When he (a woman would never recommend such a stupid strategy) explains how leverage maximizes your gains, grab your wallet and run like the wind. Your accountant didn’t lie, but the risk assumed to take such a strategy is insane.
If your accountant, or anyone else, encourages excessive leverage on real estate or business, or any leverage on an equity (stocks, mutual funds, et cetera) position, remember the words of the dearly departed George Carlin:
“Do you know how you can tell if you have a stupid kid? Take him to the curb in front of your house and stand him there. If you come back in two weeks and he is still there you have a stupid kid.”
And a stupid accountant.
* borrowed money
Hey, everyone! My dad took off for a conference I think he said is called FinCon. That would make me a junior accountant, or, as “dad says”, a junette, since I’m a girl.
As luck would have it my dad left his computer on (as if a password would stop me). I’m pretty good at IT so I figured I could write a post while he was out. Besides, how will he find time to write when he is sooooo busy doing important stuff like talking to people about money? And he left his computer at home! Sucker!
Anyway, I kinda had this whole thing planned out. I more like helped dad forget his computer so I could spread my gospel, too. Dad has the platform and I have the brains. The plane couldn’t leave the ground fast enough for me.
You see, last week dad started giving me crap about driving the car to school. We live out in the boondocks and I am the first one on the bus and the last one off. That means three hours of my life evaporates into smoke every day I ride the bus. There is only so much time a kid needs to think and play video games.
Anyway, dad asked if I showered at school after gym class. I told him we don’t have time to shower since the bus comes about five minutes after class ends. He whined about me not showering when I take the car and DO have time to shower. Truth is, I don’t like the school showers.
My dad says I should take a shower at school so we save money at home from heating water. What a tightwad! Did he ever tell you guys he saved a few nickels over the years and did pretty well for himself? Well, you wouldn’t know it if you saw this place. (Or the car he has me drive. I’ll include a picture so you can see for yourself how much I suffer.) Poverty, folks. Sheer, unadulterated poverty, is what I live in. How do I do it?
It ended up in a fight when I refused to budge. I’m not taking a shower at school! When the fight was over I cussed dad out, kicked him in the shins and stormed out. No! Wait! That’s what I was thinking.
What really happened is I rolled my eyes and said I’m going write a book titled: My Dad Says . . . .
I’m seventeen and I figure if that Money Mustache guy dad always blabbers on about can retire by 30, I can beat him by twelve years. I’ll plagiarize all dad’s advice and put it into neat little packets, each beginning with: My Dad Says . . . . It ought to be worth a few bucks, right?
I’ll package the whole thing in a book, sell a few million copies and live the easy life before I graduate high school.
To make this whole situation worse, dad took mom with him and my sister is off to college so I looked forward to the house all to myself with our cat, Pinky. Except, at the last minute, dad seemed to lose faith in me as grandma walked in the door to spend the week with Pinky and me. And where grandma goes, grandpa goes. Did I mention they both have their concealed carry? If I try to sneak out of the house with that awesome car dad provided me I’ll be winged by grandma before I get twenty feet!
This unsavory turn of events left me with plenty of time to pound out a post for dad he’s sure to be proud of.
Hey, would you guys like to hear some of dad’s golden nuggets? Thought so.
Before you get too excited, I intend on using these examples as marketing material. Let me know what you think.
1.) My dad says I’m as smart as I’ll ever be. It’s all downhill from here as I discover all the stuff I don’t know.
You know, my dad can be a real boob sometimes.
My dad really thinks I’m stupid sometimes. I know there is no school on the weekends.
3.) My dad says reading is one of the most important things I can do. He says there is a direct correlation between what I earn, my net worth and the amount of TV I watch. The more TV, the poorer I will be.
Thanks for the advice dad, but I don’t watch much TV. Video games!
4.) My dad says I should save a minimum of half what I earn.
Yeah, yeah, dad. Heard it before.
5.) My dad says I should invest in either a total market index fund or an S&P 500 index fund at Vanguard and leave my fingers off it.
Yeah, dad. I know Vanguard has low fees. Yeah, I know you can’t beat the market consistently if you trade. Yeah, I know if I leave it alone it will turn into a really big amount over time. Well, dad! You forgot your youngest daughter has a book deal and I’m borderline diva.
6.) My dad says I should never stop learning.
This is related to the reading thing. I’m not the biggest fan of school like my older sister, but now that I’m a senior I’m starting to think the tech school might give me an advantage. I enjoy working outside and work for grandma doing landscaping and such. It’s fun work I enjoy. If the book deal falls through I think I’m going to work with my hands outside. Come to think of it, I might work regardless what happens with the book deal. You have to do something with your time. It may as well be something you enjoy. Right?
7.) My dad says to find friends who challenge me.
He also says I should hang around people who are doers. If I hang with buds who don’t accomplish anything I’ll never be forced to push my bounds. People who get things done are the kind of people you want to socialize with. They end up business partners, friends, clients and leaders. Good friends make all the difference. It can make or break a girl. Got it, dad.
8.) My dad says to socialize with good people.
Kinda like number 7, I think. What I think dad means to say is ‘all work and no play makes Jack a dull boy.’ Well, last I checked I wasn’t a boy, but the rule still applies. Enjoy free time with good friends.
9.) My dad says to be deliberate in everything I do.
Dad can speak in Coptic at times, but let me spell out what he’s getting at. What he means to say (and needs an intelligent child to translate) is that I should eat right and get enough sleep. To not worry about the little things, or anything I don’t have control over for that matter. He means I should vote, but not get pissed off when my candidate loses or when government officials let us down. If I can do something to change the situation, I should; if not, then there is no need to waste precious time worrying about it.
This deliberate thing always concerns me. I see dad think things through a lot with business decisions. He intentionally talks about money, family, relationships, politics, his love for mom, sex (Eww! Old people sex.) and anything else that comes to mind in front of my sister and me. Dad’s a pretty open guy with the whole family.
Dad thinks a lot. He researches. When he decides what steps he wants to take he finds the right people to surround himself with to get the best results. It takes a lot of time when the issues are big.
Most of all, dad is deliberate about money. He saves and invests, of course. But it’s more than that. He thinks long and hard before spending money. He knows the smallest part of the cost is the purchase price. Keeping, storing, insuring and using a thing consume more money and TIME. Time is the most precious commodity we have, dad says. Use it wisely.
Dad says we must always be good stewards of our gifts. Our money, our family, friends and time are precious resources never to be squandered.
My dad says the richest man on Earth has the exact same amount of time each day I have. They are successful because of what they did with that day.
10.) My dad says to make time for family every day.
Dad is also very deliberate in expressing his love for us. He can really be a dork at times, but mom, my sister and I never doubt dad loves us. He makes us feel wanted all the time. No matter how bad I screw up I always know dad will be with me.
You know, it’s kinda strange having a dad who cares so much. Not all the kids at school are so lucky. He may walk around the house singing crazy songs and telling stupid stories, but he really is okay.
Anyways, I got to go. This is getting long and my dad says I should turn things off when not in use to save energy and money.
If you see him down at FinCon, let him know I took care of his blog for him while he was gone.
Also tell dad grandma winged Roger when he came over to buy a dozen eggs. (Grandma is itching for someone to “Go ahead, make my day.”) He should be out of the hospital by the time they get back. Roger is sure jumpy when he drives past the house now.
Once again, here are my notes as I prepared this post. Writers may find value in my writing process so I include my unedited notes periodically. My daughter’s name is redacted for security reasons. And yes, my parent’s are lurking about when I am out of town and yes, they do have their concealed carry. Please, for your own safety, do not startle them.
I asked [redacted] about showering at school after gym so she wouldn’t have to do it at home, saving dad money. She said she isn’t given enough time to shower, but it’s her last class. She would miss the bus if she showered, drives to school a bit extra because the bus ride is a solid 1 1/2 hours to get home.
I started teasing her she could shower at school after gym is she took the car. The utility savings would pay for the gas to drive to school.
I then said [redacted] will start every story she tells her friends with, “My dad says . . . ” It morphed into, the first book [redacted] writes will be titled: My Dad Says.
This could be a fun post playing on all the things “Dad Says” from [redacted]’s perspective. It would be funniest written as if [redacted] were the author. A fun piece with loads of meaning on living right.
I’m proud of what I’ve done to the FIRE (financial independence, retire early) community. Once upon a time Mr. Money Mustache and Early Retirement Extreme dominated the demographic; MMM still does. The shtick of the community focused on the ER part of the equation. FI was a tool to live ER.
Guys like Pete at Money Mustache retired early and enjoyed their life of freedom. Time with the wife and kid/s was paramount. Then the community was infiltrated by the travel guys. ER was no longer enough! Now you had to travel the world before your fourth birthday to be average. (Okay, folks around here were older than four, but you get the drift.)
The FIRE community continued growing new arms. Some focused on ER; some focused on FI; some traveled; some became home bodies. With all day on their hands it is no surprise many took up hobbies and side gigs.
The side gig is the most awesome part. Once you are debt free and have a couple hundred grand invested, a side gig makes it possible to bow out of a traditional working life during the core years of adulthood. Conferences sprang up all over the country, nay, the planet. The phenomenon was in full bloom!
I was fortunate to catch the early part of the MMM movement. Pete became a client on our first encounter without any effort by yours truly. I’m not complaining.
The FIRE community was still fragmented until MMM drew the pieces together with his mega blog. The FIRE community was mainstream and mass media was taking notice.
I was now considered an insider and accepted for the most part. It made me as uncomfortable as hell.
At first I felt guilty I was so old (at 50!) and not retired. What a screw up! I toyed with retirement many times in the past, even before I drank deep from the world of FIRE. Each time I planned my orderly exit I changed my mind. Three times I set up a countdown clock. The last time the clock granted me three years to work out the secession of my firm.
As the clock ticked inexorably closer to doomsday I chickened out. When truly faced with retirement I flinched every time. I liked my office. I loved the work. I loved the clients, even the annoying ones. And the employees were a pleasure to work with.
Once I was officially inside the FIRE community a crisis set in. I’m too old to brag about early retirement and didn’t want to quit in the first place. My solution was to become an apologist. It was an unconvincing performance. I’d write about my imminent exit from the profession only to reassure my clients who read such posts I will be around for a long time.
I was BSing somebody and I had to figure out who before the house of cards collapsed. It didn’t take long for me to come to my senses and say what I meant: Retirement is BS. At least for me.
Some people thrive in a traditional retirement. Some folks love traveling. I travel for business because it serves a purpose I find useful so I tolerate the headaches surrounding travel. (In the last five years I traveled once for a non-business purpose: the eclipse. I’m a science nerd. What can I say?)
People like me, filled with ideas and energy, have no business cashing a check and riding into the sunset at any age (at any age!). Can you imagine Steve Jobs quitting? Heck, no! He worked what he loved until he couldn’t stand. He lived life by his terms. He lived right.
The same can be said of Warren Buffett or Bill Gates or Elon Musk or Richard Branson or Mark Cuban. These guys are juiced with the challenges of life. It’s not the money! After a point money is only a scorecard and a limit on what ventures you can pursue. I’m not anywhere near as talented as these men, but I share one characteristic with them; I want to keep pushing forward until my body can’t cash the check my mind writes.
When you do what you love it takes on the characteristics of an addiction. If left unchecked it can ruin relationships and health.
Working long hours with few days off eventually takes a toll. Recently I wrote about forensic accounting. In that post I mentioned the most likely person to commit fraud against a company. The malefactor frequently is a good friend, the best employee or the person who never takes time off. My advice to all business owners was to give all employees paid vacation and require them to take the time off. It solves the problem of temptation with your best people. Vacation time is when the misappropriation of funds is discovered. Hard to cover your activities when you’re not there.
Outside the demographic I am relatively unknown. Most of my readers are other bloggers and deep insiders of the community. (Someday I’ll grow up and be a real blog.)
I opened this post with the statement “I am proud of what I’ve done to the FIRE community.” I’ve been around the halls of this beast to recognize a few patterns taking shape.
What was a dedicated group of people hell-bent on retiring as soon as possible (and before they turn 40 at the latest) is pushing back out to sea. The focus has turned more to the FI part of the formula.
The number of people who contact me to thank me for making it okay not to travel when they retire is pleasing. Better still, I see many people going back to work or starting their own FULL-TIME business. The side gigs are growing up!
Some are bloggers, but the whole world can’t be successful bloggers! Variety gives life the spice it needs to make it worth living.
The FIRE community is partially responsible for the abnormally low labor participation rate. Economists and government officials debate what has changed. They should have asked me. I’d have told them, “Give me some time while I smack these guys up besides the head.”
Early retirement is NOT for MOST people! Without calling people out by name, I can share a few stories of people who rejoined the “rat-race” and finally realized there are no rats! It was all between the ears!
There is an IT guy who retired at a very young age and bought a farm in Washington State. He loved his farm and had a similar background to me. In the past few months he notified people he knew he wanted back into his profession. He was hired quickly and he is happier than ever. He missed the office. I hear ya. A life of helping people has its rewards.
A couple retired as teachers in their late 20s and traveled the world. This last year when we met at Camp Mustache in Seattle the husband said he was no longer retired as he was working a business idea. The wife was publishing books! (Last I checked that is a job, a career.) I tested the husband by repeating several times he was still retired. He insisted he is not.
How cool is that? Retirement is no longer the preferred method of living! I don’t care what anyone says, but I’m taking a bow for that. Yes, I know it was all them, but they read this blog and I know, I just know I planted a seed where it was okay to run a business and dump the whole retirement thingy.
There are plenty more stories to share, but they have to wait for another day. We need to move on to the real reason for this post.
Physician, Heal Thyself
I’ve been thinking about this for a long time. I am very tired and in desperate need of a nap. Ah, heck, let me just come out and say it. When FinCon is over next week I am quitting. Done. Cashing it in. No longer will I be the demographics apologist.
For a month.
I am tired. The workload has been grueling and it is taking a toll on my health. I don’t sleep decent anymore. My mind races with ideas and obligations. In short, I’m wore out.
The finally straw came in the last month when my office staff rose up in a coup and forced me into a corner. They used my own words against me. (How dare they?) They pointed out employees, by my own advice, must take a vacation every year. It says so in the forensic accounting post.
I protested. Unfortunately, my team has been reading my words too closely and used it against me as a weapon. How can I embezzle funds from my own firm? (Don’t answer that.) The tax pro in the office reminded me when I am as exhausted as I am I am no longer efficient, a form of stealing from the company.
They are right. I finally finished a coal mine valuation a month and half late. It took me triple the time required because I worked from a position of exhaustion. Stupid. I want to help people, but I help no one until I take care of myself.
Let me just cut to the chase. I will be out for the month of November. I have a few consulting appointments I will honor and maybe 10 hours of other work in the office for the month. That’s it. Finite.
You, kind readers, are the lucky ones. My fun time includes writing and reading. I’m still working on a 250 page book I started three weeks ago. I’m that tired.
Without the constant demands of the office I can enjoy quiet reading time. There are multiple posts I want to write that require more time. Remember the post I promised offering over $600,000 of deductible contributions to retirement accounts? Yeah, me too. I have all the material, but I haven’t written the darn thing. It requires more than my mind has left to offer. And I better hurry up because there are deadlines to consider! I’ll get it done, but it will require some readers to hurry. You have every right to blame me for dropping the ball.
Most of all I will sleep during November. Elon Musk runs several large companies at once. I am no Elon Musk. I don’t even make a good Keith Schroeder at times!
I need a break. A gap year doesn’t work well in my profession, nor with my personality. A month will be the break which refreshes. I can focus on the blog which is a significant break from managing an accounting office.
I can’t lie around all day. Maybe the first two or three. After that I need to fill my day with meaningful activity.
I’m salivating over the posts I can write in advance for tax season and the guest posts I’m sure to be asked to provide at FinCon. I am excited for the change of pace.
And Now You, My Dear Friend
Normally this type of activity would happen behind the scene. I’m facing burnout and finally fessed up to needing a timeout.
But what about you?
The reason you lust for retirement so badly is because you are exactly like me. You are tired. Tired of the rat race; tired of running to keep up; tired from the long hours.
According to the dictionary, retirement means used up, useless. Neither I, nor you, are retired or should be. Like me, there are times you need a nap. Dr. Accountant prescribes an ample dose of rest.
A gap year is fine. Some people handle a year or two off without a problem. If you tend toward my anxiety levels a month can do the trick as well.
My absence at the office isn’t the end of the world. Playing with my blog is a few hours per day. I’ll have plenty of time to read, walk around the farm and chase Mrs. Accountant around the house. (Ewww!)
When November is over I should be refreshed and ready to go for another tax season. A gap month doesn’t mean complete absence. Collecting money and recording the business’s progress never grows old. I’ll show up at least once a week for that.
Payroll is a different story. Paying employees is money going out and I never feel warm and fuzzy about that. (I just said that because employees read this blog and I wanted to mess with them. I’ll know first thing when they read this post.)
As much as I rail against retirement and travel, I still firmly believe in time off and yes, even travel. You can love your work, but never forget your family. When they feel it, it is time for a break to spend time with the people that matter most. The kids grow up fast and significant others need snuggles. (So do you.)
Don’t be mad if you can’t book an appointment with me in November. It’s not happening. Most days I’ll be at home. Several books are lined up ready for consumption.
If a crazy accountant from Wisconsin can take a break from his lovechild, so can you.
And you should.
Note: In case you missed it, I will continue my regular publishing schedule in November.
Here are my notes for this post from a month ago. I encourage readers to take a week, a month, a year, or whatever time is needed to recharge. Everyone has something to give, but only if they are healthy. Retirement is overrated. A vacation or stay-cation is just what the doctor ordered in most cases. The truth for you and me is we will perform better, get more done, when we have ample “me” time.
Taking off November so I don’t burn out.
Will still write (will write more, in fact) because it is what I enjoy.
This is a healthy thing. Too much work, even work you enjoy, can damage performance.
I will handle normal office work in November, but will add no new non-emergency appointments or consulting. I am taking the break which refreshes and encourage you to do the same when you notice you are losing your edge from pounding too hard.
This is all a lie; none of it is real. Everything I told you is an untruth, an illusion to get you to do what I want. And even that is an illusion.
For nearly two years now people have followed and watched and read this blog. Nobody, until I pointed it out this moment, knew it was one big, fat fiction. The worst part is you are as much an illusion as I am.
Nothing you or I say matters. Deny if you must, but I will expose you in the next thousand words as I reveal my greatest fault.
The evidence is all around you. Clues are everywhere! You probably missed them. But as I explain each piece of the puzzle you will know I am correct.
Oh, who am I fooling? You aren’t even real! A character in a video game is more real than you. I write this for me. Only for me. There is no one else to listen; no one else to care. Nothing matters and never has.
I lie naked in a room typing these words desperate to find meaning in a universe where I am the only thing that exists. The ghosts that walk these halls evaporate in the morning sun, leaving me alone with my dreams.
The Guinea Pig
How can I live in such a gilded age? History books speak of a hard life and myriad lessons learned by mankind over the eons. Still, I do not die.
Everything seems to work for the best. A heart condition in my youth was cured my modern medicine; a cure only a few years available. Lucky me, I guess.
The doctor died of AIDS, but never infected me. Lucky again.
Hard lessons in finance growing up on a farm where the family is bankrupted just as I entered adulthood still didn’t stop my progress. Go figure.
I mentally wander for years and find the woman of my dreams and she loves me back. What are the odds?
I start a business involving something I love and am addicted to. It seems the miracles never end.
Now I write a blog, another dream I needed fulfilled. I scratch frantically at the slate chalkboard of life looking for recognition my work has purpose, meaning. And then, after a few years of work, it is all coming together. The recognition I crave is happening. There are thousands and thousands of blogs and somehow, like cream in a bowl of fresh milk, I rise to the top.
One of these things I might have bought, but not all of them? No way can there be that many coincidences. Luck? If I were truly lucky I would win the lottery or inherit a massive sum. Nope! No such luck. Yet everywhere else it is all golden.
There is only one explanation. I am a game of some vastly more intelligent creature examining my every move. This is a cage! A CAGE!
The brutal truth is some child has created a game, a game with a sentient creature, me, to test and examine. If only she would not have programmed me for pain.
The alien child tests me. She gives me great fortune to see if I handle it with poise or if I turn tyrant and cruel. Questionable politics is a test of my endurance to do good. If only there were clearer clues.
It took a while. When I realized this was all an illusion, even my beautiful wife and children, I began to cry. Solomon was right: Vanity, oh, vanity! What does it profiteth a man to gain the whole would and lose his life. Oh vanity!
The whole world is mine. The universe in its entirety is mine for the taking; to enjoy as I see fit. But I am just a child’s plaything. Still, the nagging clues.
The child tests me as she giggled at my Neanderthal responses. She is too subtle.
The child sent Stephen Hawking to reveal a truth of the universe. Hawking discovered the information contained in a black hole is in direct proportion of the inverse square of the event horizon! The ghosts I walk through life with might not understand, but the child examiner gave me the capacity to realize the implication of this discovery.
The event horizon of a black hole has no signposts or markers. It is an invisible line in space you don’t even know you crossed, but once you do there is no return! To the outside universe you just disappear.
But how can an invisible point in space contain all the information within a black hole? There was only one explanation. The universe is a holographic projection!
Space is expanding. Scientists have said it for years. Space isn’t expanding into anything either; it’s just expanding. At the current rate the universe will double in size in 12.2 billion years. And the bigger the universe gets the colder it gets.
If the universe is a holographic projection from this so-called edge of space, then the information contained within this universe is expanding as more space is created! Maybe I’m not alone. Maybe the experiment continues elsewhere.
Still, the truth eludes me.
Elon Musk was sent to hit me beside the head to get my attention. Musk said there is only a 1 in 1,000 chance any of this is real. I get it. The child’s school experiment needed to see my response to such obvious facts. How would the sentient being react to knowing he was only an illusion? The guinea pig must be prodded further.
The victim, me, does not know what to do. If only any of you were real I could ask for help. But we are all only projections from the edge of space; a non-real entity. I am the reason all this is here. Soon it will end. The child wants only to spend a bored afternoon watching the wild accountant struggle with existence. To me it is an eternity, a lifetime. To her, a way to pass a rainy late summer day.
How can she make me dance? Add more clues!
My insatiable reading has educated me to a great many things outside the normal realm of someone in finance. For example, I know the emptiest of space really isn’t exactly empty!
Like a computer game there are pixels comprising the smallest areas of space. In my world it’s called Planck space or Planck length. This is the smallest piece of reality, shortest distance possible. The distance can no longer be divided. Just like a computer game.
Things to the side are fuzzy until I turn to look. Things beyond my horizon don’t exist until I either go there or look in that direction. The child’s computer seems to have an upper limit of computing power.
But what about this empty space that still has energy? There is no zero energy space! None. This non-zero energy is called dark energy in my world and is pushing my universe apart, expanding space.
The detail piques my curiosity until I realize it is all a projection, unreal.
I am provided great leaders and thinkers to read and listen to. Some mesmerize me. Business leaders especially.
Steve Jobs is an interesting projection I can’t seem to shake. In his commencement address to the 2005 graduates at Stanford he said, “Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose.”
I close my eyes hard until tears form at the outside edge. What if it is real?
Steve also said to, “Stay hungry. Stay foolish.”
How can I reconcile all the facts? The evidence is irrefutable! I am alone in a universe of vast size. Probably part of a multiverse. In each of these bubble universes I can imagine another experiment happening. Another victim just like me.
For the longest time I felt the alien child a cruel tormentor. But why such an elaborate game?
There is no doubt I am writing to myself to ease my mind; a form of therapy. I am no more alive than the pictures on a movie screen. Nothing is real.
The clues don’t make sense. A grand universe with so many wonders just for me? It seems such a waste.
What can I make of Jobs and Musk and Hawking and pixilated space made up of Planck units with non-zero energy? What about all these wonders! Just for one illusion! One. Me!
Then I finally figured it out! This is a ruse. Yes, my world is a projection and you don’t exist. To you, I DON’T EXIST! We all have our own world.
In the end I will die, as Jobs declared. I have nothing to lose. There is no excuse to not try. There is no excuse to quit. In the end it doesn’t matter. The projection will end, the experiment over.
There is nothing to be afraid of. I can live my life by my terms. I can do what gives me meaning. I am naked. On the verge of death as the projector runs low on film.
I will do great things because that is who I am! When I do it for you, I do it for me because you don’t exist. You are an illusion.
The child’s toy is running low on power. The program needs to recharge so I sleep. The world disappears when I sleep.
As I lay my head on the pillow I dream of things I can do. Important thing. As I drift into slumber I mutter:
STAY HUNGRY. STAY FOOLISH.
I have nothing to lose.
Notes: When I write something as surreal as you just read it requires a minimum of an explanation. There are hidden messages laced throughout this post. No hidden codes, but many, many messages underneath the text. The links are required to unravel all the meaning. Below are my original working notes. If you can figure out how I got from my notes below to the post above, let me know. I can’t figure it out.
Elon Musk says there is only a 1 in a 1000 chance this is real and not a computer simulation.
Stephen Hawking discovered the information contained in a black hols is the inverse square of the event horizon, a non point in space.
Steve Jobs told the Stanford graduates the most humbling thing he knows of is that someday he will be dead.
If this is all an illusion, you have nothing to lose by trying: business, family, life.
No zero energy even in empty space.
Planck space is smallest size possible for space; a pixelated space, like a computer game, is granular.
Universe is like a video game. Only stuff in view is clear. All else is fuzzy or is created when needed.
Don’t be alarmed, but The Wealthy Accountant is involved in a class action lawsuit. Mrs. Accountant and I were also dragged into the mess and we couldn’t be happier.
Class action lawsuits are everywhere as major corporations find increasingly clever ways to strip hard-earned money from your hide. Enterprising shysters, ah, I mean attorneys are equally as enterprising in exposing this malfeasance to line their own pockets while throwing a few crumbs to the proletariat to give the whole process an air of credibility.
Except the crumbs can be mighty large at times. This last week Google deposited $485 into my business checking account as settlement from a class action lawsuit. Mrs. Accountant received unwanted telemarketing calls that ended up in a class action lawsuit and she is eligible for up to $300 per unwanted call with a max of 3 calls. Yes, my lovely bride will bring a whopping 900 bucks into the family budget for being a victim. Keep a stiff upper lip, honey. It’s for the kids.
For several years I’ve worked the class action lawsuit network with reasonable success. Even in a low spending household, the amount of money owed us ends up over $1,000 every year. Some years we break $5,000. When that happens I break down and splurge by buying a pack of gum. Ah, the lifestyles of the rich and famous.
Whenever I broach this topic, people want to know if they qualify. (Why is it always about them? I’m the victim! Honest.)
Almost everyone is the victim of some scam. Even in the low spending Accountant household we find we are victims a lot. We just don’t play the role well. We need to practice our sad faces more.
Many class action lawsuits revolve around the purchase of a product or service. Other times you qualify for a reward, ah, compensation for damages caused you and your family for things like unwanted telemarketing calls.
You may be familiar with class action lawsuits as law firms send letters letting you know you are a part of a class action suit. If you take the time to respond, acknowledging you qualify for compensation, you get a check in the mail about a year later. But you have to respond and it can be a pain in the tail.
Then there are the myriad class action suits you have to discover yourself or forever hold your peace (or is that piece—I always forget which).
Finding Class Action Lawsuits
Now we need to find all the class action lawsuits we are entitled to compensation from. Thank God, it’s a simple process.
There are multiple websites listing all the many current class actions taking place. Top Class Actions is the best in my opinion and is the site Mrs. Accountant and I use.
Virtually all class action claims can be handled with a simple online form. A few require you to print out a claim form, fill it out and mail it in. The process takes less than a minute in most cases.
Many class action lawsuits are small in size, only a few million dollars. For a few seconds of time (if you qualify) you can get a check for a few dollars six months to a year from now. As long as you are scanning the list of suits you may as well submit a claim for all you qualify for.
Problems with Claims
The worst problem with filing a claim is proof. You probably don’t have a record of every nuisance call to determine if you should be compensated for an illegal telemarketing call. You probably don’t have a receipt, or any kind of proof, you bought xxxx between June 1, 2002 and September 24, 2012.
Some class actions require proof. Many provide a lower level of compensation with only a sworn statement you bought said product in question. When it comes to the list of telemarketing calls you can be compensated for, you enter your phone number and they’ll let you know if you’re a victim. (Ah, the new world order! Where the internet helps us determine if we should feel like a victim. Yes, we should, it seems.)
Review of Current Actions
The process is pretty simple, but this post is too short to stop here so I’ll use some current examples to spur you into action. You can send my commission check to . . .
Note: This is not an affiliate program and neither I, nor The Wealthy Accountant, receive any compensation if you use Top Class Actions and/or submit a claim to an action. However, if you see me at a conference you owe me a beer.
I will not link to any of the current class actions I found interesting as the links will break after the suit is finalized and I’m too lazy (or stupid) to remember to come back and update this post multiple times as class actions expire.
The first one we will review is of interest to travel hackers lurking about. The Citibank American Airlines Miles Promotion Class Action Settlement is worth up to $245. It seems Citibank reported erroneous information to the IRS causing people in their program undue stress. (The IRS wanted more money than they deserved and Citibank helped the IRS get it.) So Citibank owes you the losses due the faulty IRS document they filed and refused to correct. Since it is out of statuette, tax returns can’t be amended so Citibank is paying your taxes. Gawd! I love this country!
Did you get an unwanted text from Hooters? Then you might get 50 bucks! Doesn’t really make up for the tongue lashing the missus gave you three years ago, does it. But it is enough to enjoy a night at Hooters! (What’s a hooter? The boy from the backwoods wants to know.)
Do you shop at Costco? Yup, you might want to check out the claim form.
Did Citgo send you an unwanted text? Don’t remember? Fill out the claim form. They ask for your phone number and tell you within seconds if you qualify. (Dang! I wasn’t a victim. I hate it when I’m not a victim.) The settlement amount is still undetermined.
Did you buy a computer in the last ten years? Then you’re a victim! Congratulations! But you better hurry. Claims must be submitted by October 31st. I’m a victim here both personally and my tax practice. Verification of purchase is not required, but may be asked for later. I have most of my records (I hope).
This last one brings up a good point. Should I submit a claim when I don’t have proof? It depends. The instructions tell you which documents are required. I wouldn’t lie; it’s a good way to get into trouble. But, if you purchased a product—or at least think you did—then I would submit a claim. In most cases it’s not a big deal. I yell across the room, “Mrs. Accountant, do we buy xxxx?” If she says yes, I submit a claim.
Terminix had some trouble with the law due to their robocalls. I had no idea if we received any such calls. Good thing they had a record on file. All I did was enter our cell phone numbers (it only applies to cell phones) to see if we were victims. Sadly, I was not victimized. Thank Jesus and all the powers that be Mrs. Accountant was! We can expect 60 smackeroos in about a year.
I could go on, but you get the point.
I check the list of class actions every couple months and apply for those that I qualify for. It seems we qualify for a lot of them. Insane!
One final class action settlement you might qualify for if you were a part of the Ashley Madison data breach. It’s worth a humongous $3,500! I thought it was safe when I used my brother’s name. Now I can’t collect. Dang it!
Reminder: The forum is a great place to get tax questions answered and find a tax professional in your area. The more people the forum the more vibrant it will become.
1978: It was hot and dry the summer of 1978 in northeast Wisconsin and I hated it. My fourteenth birthday was around the corner and I was recently out of the hospital from heart surgery. The doctor said I needed to sit still as I healed over the next six months and my grandmother did her best to enforce the rule. I was having none of it. I wanted to run, bike and play.
It was the best of times as long as you ignored the building storm clouds on the horizon. Inflation was a problem, but interest rates hadn’t risen enough yet to reflect the new reality. The government encouraged borrowing by farmers through Land Banks.
We were dumb farmers and dumb farmers were soon to learn they had no place in the new world order. Yes, farm prices were high due to inflation while interest rates were lower. Unfortunately, these situations don’t last for long.
Ground was broke on the new milking parlor within an hour of the moment I went under the knife. I was young and innocent and full of faith. As I recovered in the hospital those two weeks I decided to fill my time reading the Bible to other patients less fortunate than me. God had plans for the Bible-thumper.
1980: The hot wind from the storm clouds began to blow. Interest rates climbed as the first recession of the 1980s was about to begin. It was only a warning shot.
Healed from heart surgery, it was learned my surgeon was deathly ill from AIDS, except it wasn’t called AIDS back then and blood wasn’t screened either. The surgeon may have nicked his finger from an infected patient or he may have been gay. I never found out. All I know is I survived without infection. A few years later the man who saved my life was dead.
The World’s Luckiest Man went about life as if nothing were wrong. But plenty was wrong. The family farm tilled by our blood for five generations was in deep trouble and we were all in denial. The debt burden had continued growing and rising interest rates coupled with the first crack in agricultural prices brought us to the edge.
Deep down I knew the farm was in trouble. Some family members started gambling in futures looking for the big score to solve the farm’s money problems. Too young to really understand and enjoying my first real girlfriend distracted me from the truth. These were the last good days of my childhood. A nightmare was about to begin that would scar me so deep I would never again forget the fear.
High school wasn’t a high priority for me. I assumed my life would be filled as a farmer, as my father, grandfather and great-grandfather before me. Excluding my senior year, the only thing that stuck with me is a lesson from Social Studies: the 1929 stock market crash. We spent one day only on the event, but I was completely hooked. I had to understand why things happened the way they did back then. The lust to understand the crash follows me to this day. This is the very moment I decided my career if farming didn’t turn out: stock broker.
1982: The winter of 1981/82 was the cruelest. The farm’s coffers were depleted and heavy snow caused the free stall barn roof holding the milk cows to collapse. The insurance was delayed and there was no money to fix the problem. The barn cleaner froze tight and manure piled up. Those animals suffered like nothing I’ve seen before or since. I shiver from the memory now 35 years old. Another scar was created.
The family farm was gone. The collapsed barn roof hastened the inevitable. Maybe God was merciful to me after all. But those beautiful animals paid a dear price.
Spring came and the clean-up began. Lawsuits flew as a last desperate hope was cast to cling to a past no longer possible for our future.
It was only four years ago I left the hospital excited to see our new milking parlor. Gone were the grand emotions of seeing our farm grow with cutting edge modern technology. The cows were now gone. My uncle and I were the last to clean up the mess. My dad started an agricultural repair business he runs to this day and is very successful. You can’t keep a good man down. My mother sold Tupperware to pay the bills as my dad’s business struggled for traction during those early days. My mother sold a lot of burping bowls; so many in fact she earned a company car.
The second recession of the early 1980s was biting deep as I graduated from high school with the barest of margins between passing and failing. I still held hope I would be a farmer as illogical as that looks in hindsight.
Some young stock remained and the fields still required planting and later harvesting. Still, most days that summer I spent playing a card game called Rummy with my uncle and throwing darts at a dartboard with a picture of the Ayatollah Khomeini. (Remember the American hostages in Iran?) The summer went on forever.
I discovered a love for reading my senior year in high school. The summer of 1982 was my first opportunity to dig deep into the knowledge books had to offer.
Back then they had something called Value Line in the library. They’re still around, but nothing like it was back then. Value Line was a treasure trove of information on publicly listed companies. I reached the age of majority in June with no real future before me while I invested heavily into myself without even knowing it.
The family was broke, the farm damaged beyond repair. I was broke, too, in a manner of speaking. The first 18 years of life I spent as close to nothing as you can without saying nothing. Money from my birth went into a passbook savings account. Money from birthdays, confirmation (church) and high school graduation added to the stack.
Passbooks actually had a reasonable return back then and I loved watching that puppy grow. The passbook wasn’t computerized. They stamped the numbers in a real, honest-to-God, passbook! I was thrilled each quarter when I could hitch a ride to town to the State Bank and have them stamp the accumulated interest since the recording of last quarter’s interest.
Added to my passbook was income from working on the farm. My wage for seven day work weeks of fourteen hour days was $40. Yup, ten bucks a week. I didn’t complain much; I now realized how bad things were. I was more concerned what I would do when the bankruptcy of the farm was finalized.
In November the farm was gone. The homesteads were preserved, but most of the land and all the cattle and machinery were part of history. It was cold that winter. We had no money to heat the rickety farmhouse. At least we had a place to stay.
1983: I went to work for my dad’s agricultural repair business once the farm was wrapped up. The pay wasn’t any better, though I was earning $400 a month by the time I quit. We struggled to survive.
My passbook was a beacon of hope for me. Nearly $10,000 had accumulated over my years of youth.
I hated every moment working for my dad. The work was hard and did not thrill me. I wanted a different life. There were no other options in the deep recession of 1982. There were no jobs available in my community. None. It was work for dad or starve. I worked.
My investing research brought me to my stock first purchases. Philip Morris was one of my first buys and has clung to me like smoke in a bar. I played with other ideas to learn more about investing. Most of my passbook money was cashed in shortly after my 18th birthday and placed in growth and income mutual funds. The timing couldn’t have been better. August of 1982 was the launch of one of the biggest bull markets in history.
By the time the farm was gone and I was turning a wrench in my dad’s company I knew I needed another source of income. In high school I was in the Future Farmers of America (FFA). To raise money for our group we sold light bulbs. This is when I learned I could sell an Eskimo an ice cube.
Every year I was in FFA I sold more light bulbs than anyone else by a large margin. When the group decided to sell seeds, I topped that list as well. I could sell anything!
By the time 1983 arrived I found a company called Specialty Merchandising Corporation (SMC). I think they’re still around, but they have a lot of complaints online.
SMC was different in 1982-85. I was able to buy junk, ah, I mean stuff through them mostly made in China (yes, it’s my fault China ever got a foothold in our economy (sorry)) at wholesale. My selling skills from high school did not work as well as an adult. People will waste money on stuff sold by the school without question. (Did I say that?) When an adult goober like me showed up they questioned.
My advantage was persistence. Okay, stubbornness. I didn’t give up not because I was smart or energetic; I was desperate. The profits were thin, but added up as time went by.
One more side gig appeared at this time in my life. In 1982 I prepared my first tax return. (Later, a client with several unfiled tax returns, would give me the chance to prepare tax returns back to tax year 1978.) Let me be clear; I prepared a tax return. I consider it my start date. (Laugh all you want; it’s my story.)
1984: The economy was improving in the Rust Belt, but it did a certain neophyte accountant no good.
The good news was my mutual funds and individual stocks were tucked in for the ride to the moon with the stock market. Profits from tax returns and SMC added to my meager wages working for the family business. In 1984 I was a poor farmer with no debt, no bills (living at home with my folks) and over $50,000 invested.
The spring of 1984 I made more money preparing tax returns than I did working all year, 90 hours a week, swinging a hammer. Thank God, business in the ag repair industry was slow during tax season. Thank God the repair business was slow over the holidays so I could sell like a Wildman for the Christmas holiday. It made a difference.
1986: My investments reached $200,000; it was time for vacation. I quit working for dad (it was a minor family crisis), bought a mobile home in Forest Junction and read books all day and drank coffee. The amount of information I consumed during this gap year was immense.
I was starting to grow up, but there was a bit more to go.
1987: The most fantastic thing to ever happen to me happened in 1987; I met Mrs. Accountant! (You thought I was going to say I made a pile of money in the stock market crash of ’87, didn’t you?)
A respectable man I am, but finding an awesome woman like Mrs. Accountant only made me consider getting a “real” job.
That would all change one year and six days from the day I met her.. Mrs. Accountant forced me to marry her and she wasn’t even knocked up!
1988: One year and six days from the day we met we were married. While going through orientation with the minister it was brought up I do not work. Good husbands work and the church had an open position for a janitor.
I took the job. It paid $7.65 an hour. Not much even in 1988, but honest labor.
1989: I hated swilling toilets for a living about as much as I enjoyed turning a wrench and swinging a hammer for dad. A year and bit later I quit. Good for nothing husband!
SMC was history by now, too. Tax work paid the real bills. And I found another profit engine: real estate. We bought our first home (mobile homes don’t count) and investment property.
My net worth was climbing slowly now. I estimate my net worth hovered around $300,000. The ’87 crash had recovered and I was still adding to the stack. However, a woman entered my life and for the first time did some spending as part of my mating ritual. Thank the powers that be it worked or I’d still be single!
1996: The first years as a full-time tax practice were difficult. I made money when my costs were zero and I did returns by hand. As a “real” business I automated and computers and printers were ungodly expensive. It took three years before I turned a profit. My buffer of investments was my only comfort (and a friendly snuggle from a certain young lady nursing our first child).
To keep the finances in the black, Mrs. Accountant and I took in foster kids until our daughter was born. They paid $1,000 per month to take foster children back then because we took high schoolers. It was a challenge to say the least.
Real estate’s best days were in the 1970s. High inflation meant leverage amplified gains by several magnitudes of order. Tax law changes in 1981 and 1987 reduced some of the benefits of investment property ownership and real estate inflation was back to normal levels while interest rates remained historically high.
Real estate was still profitable for collecting rents in our locality. My dad, brother and I formed a partnership so we could by more properties. Without going into details, all I can say is we owed a lot. I mean a real lot!
Around this time the bank demanded a personal financial statement because we had a modest loan on our investment properties. When I added all the numbers and subtracted the small loan on our primary residence and my portion of the loan for the rentals, it tallied to $1.2 million. I was stunned.
The mutual funds and stocks were worth close to $850,000. Our personal residence had maybe $30,000 of equity (it was a small home worth maybe $70,000). LuK Enterprises, the family partnership for the rentals, was worth approximately $350,000 for my pro rata share of ownership; the original investment was $105,000. The business was still in the home so I valued it at zero. In reality, the tax practice was worth $200,000 to $250,000, I estimate.
The next year I bought the office building my tax practice currently runs out of and the farm I currently live at. We sold our home in town for a $40,000 profit.
And that is how a broke farmer became a millionaire He never quit trying; he never gave up.
As Dickens said: It was the best of times; it was the worst of times.
And I wouldn’t trade them for all the money in the world.
Credit cards are one of the most powerful wealthy building tools in existence today when used properly. They get a bad rap because irresponsible people rack up massive quantities of high interest debt and spend decades digging out if they ever get out. Still, credit cards can put a lot of ka-ching in your pocket if you understand the rules and never run a balance on the card.
If you are in the accumulation phase of your wealth building cycle, looking for a high income compared to the time invested or love gaming the system (your favorite accountant is guilty as charged), then you need to learn about tradelines.
To play this game you need a credit card at least two years old. The longer you’ve held the card and the higher the credit limit the better. This game requires you use said credit card and pay it off in full each month. The more credit cards you have the better.
Setting the Table
So what is this tradelines thing anyway? A tradeline is what a bank calls a line of credit. Your credit card is a tradeline.
A “seasoned” tradeline is at least two years old meaning it has a history. If you have no late payments on a seasoned card there is an active market for selling your tradeline.
Still confused? Me, too. It works like this. A credit card is called a tradeline. You can add authorized users (AU) to most credit cards at any time. People with poor credit pay to be an authorized user of your credit card so the bank reports the high unused credit limit on their credit report. This increases their credit score fairly quickly.
You know who they are, but they haven’t a clue who you are! A big concern surrounds risk of having your card cancelled. What if someone buys your tradeline and runs off spending all your money? No worries mate. It’s impossible. When you use a company acting as clearinghouse the buyer never knows who you are and a credit card never gets sent to the AU.
There is no need for you to spend effort looking for people willing to buy one of your tradelines either. There are a multitude of companies out there doing all the heavy lifting for you. They find the buyers, background check them (to prevent fraud), collect the money and send you the information. You add the AU to the card they purchased a tradeline from and sit back enjoying a cold one. Several months later you remove them as an AU and a check is mailed to you (direct deposit actually).
People buy tradelines to increase their credit score to get better loan rates and to reduce their insurance costs. This isn’t repair credit! If you went through a bad patch, buying tradelines can give your credit score a lift as long as you are not adding more negative marks to your credit report. A medical disaster is no longer a lifelong financial death sentence.
Car and homeowner’s insurance can be higher when your credit score is poor. It’s like kicking someone in the face when they are down. A medical emergency can destroy a life without hope of financial recovery. Buying tradelines can lower the interest on a mortgage or car loan, but also lower insurance premiums. Some people enjoy major benefits investing in tradelines.
Time for a Walk
The best way to understand selling tradelines is to walk through the process. By the end of the walkthrough you will know how your credit cards can add $1,000 or more per month to your pocket for an hour or so of your time.
Step 1: You need a clean credit history. No delinquencies in the last year or so. Your credit score doesn’t matter. If you’re like me you collected more than a few credit cards over the years and only use certain ones.
Open an account for free at Credit Karma. Credit Karma should list all your open and closed accounts. Each credit card should list the account open date and credit limit.
Step 2: Research companies brokering tradelines. You will need to vet each company for quality; most will not make the cut. More time will focus on finding the right tradeline company for you than the actual process of earning money with tradelines. The most important questions involve account verification. The banks generally don’t like tradelines being sold. Their biggest concern is fraudsters increasing their FICO score, getting a credit card or other loan and defaulting. Without adequate fraud control criminals can cause losses for the banks and that ends the party. Ask before selling your tradelines with any company. Better yet, ask for proof they are collecting all required documents and running a LexisNexis background on each client.
Step 3: Once you sign up with a tradeline company, you choose which credit cards you wish to sell tradelines on. Your tradeline company will tell you what their firm pays for each tradeline per card. You should try to get your credit limit raised on all your cards to increase the potential income from each tradeline sold.
Step 4: Your tradelines are listed by the tradeline company. In short order you will get an email explaining you sold a tradeline! It’s not money time yet. Follow the instructions for adding the AU to the card listed.
The credit card company will send YOU a card for the new AU. You don’t have to activate the card.
Step 5: The tradeline company will send you another email in two to three months informing you to remove the authorized user. Follow the instructions on how to remove an AU from your credit card.
Step 6: Keep an Excel spreadsheet listing all AUs, when you added them, which card added to, when the AU is removed and when you get paid. Recordkeeping is important! You need to know what you have and where.
Step 7: Collect a check.
Step 8: Repeat.
It is possible to have more than one AU per card. In fact, it is likely. This is good for you. The more AUs, the more income. There is a limit, of course. Each credit card has a limit on the number of AUs you can have at a time on their card. My opinion is no more than two AUs per card ever. If you already have numerous AUs on a card for your business you probably should keep that card separate and not use it for selling tradelines.
Is this legal? Another question people have is the legality of doing this. My research indicates it is legal, including remarks from a spokesman from the FTC. The illegal issues lay with tradeline companies not doing adequate background checks. This is why it is important to vet any tradeline company before signing up with them. My understanding is this cannot be listed as credit repair and money can’t be collected up front from the client. You get paid after the fact so reading FTC reports indicate there are no legal issues with selling tradelines. If you vet a tradeline company and later the company takes a shortcut there is liability risk to the tradeline company. Having your due diligence in order protects you.
A Few Rules
Tradeline companies will have some rules to follow. I want you to follow those rules and add my more restrictive rules to their list if necessary. The more restrictive rule applies to protect you from account closure.
When your tradeline company tells you to remove an AU from a card, DON’T DO IT, unless at least two months have passed, preferably three. If you slap additional AUs on and off a card too fast the bank will cancel your card. Selling tradelines may not be illegal, but like counting cards in a casino, the bank will not like it if they know what you are doing, cancel your card and tell you to not come back.
All AUs stay on my cards for 90 days minimum!
You will be told to spend a token amount on the card. BS!!! Every card with an AU should have meaningful charges. You do the spending. The AU is not around to spend on your card. But meaningful spending on a card with AUs is a must. Don’t game the system with the card issuer getting a few pennies.
I’m lucky. With a business I can find plenty of things to put on the credit card. A typical paper order (in our paperless office) runs 250 reams. You may wish to consider previously published alternatives to spending, too.
If you are frugal (like me) without a business (unlike me) with few expenses to charge, there is a low limit to selling tradelines. Still, a couple hundred a month for less than an hour of time is a nice addition to the mad money account. One account handled properly can be worth $300 or so every couple months.
One Last Caution: There are plenty of companies brokering tradelines. I spent serious time reviewing multiple companies to verify I am with a “seasoned” firm and still discovered it wasn’t as seasoned as I would have prefered. There are other good tradeline companies out there. The real work is in finding them.
Vet several tradeline companies before committing. I use a tradeline company and am aware of two more who run a tight ship. The additional two companies I know of are doing it right so they don’t have much supply. Still, slow and steady wins the race. The company I am using was originally listed in this post and I edited them out until I can verify further. I want happy readers. The last thing I want is a mob of angry people who had their credit card cancelled. A background check on all clients is an absolute MUST!
This is a process. Consider adding to your credit card portfolio to increase future income. Go to the TWA Recommends page and scroll down to the recommended credit cards. Pick a card that matches your needs. Travel miles or cash rewards, et cetera. A good plan might be to add one card every three to six months or so for you and a significant other. Max out the bonus rewards and keep the card until it is ready for use selling tradelines. Don’t cancel the card. Keep it for future personal use too. Of course you will have a favorite card, but I use different cards for different situations as I suspect you will.
While I don’t recommend any tradeline company, I use the below company for my personal tradeline sales.
2534 State Street, Suite #433
San Diego, CA 92101