Archive for February 2018

Church of FI

Sunday service at the Church of FI.

Back in the old days the FI (financial independence) community was a different place. Advice was simple and straight forward. King Solomon reminded us to avoid lending or borrowing. Nearly half the parables of Jesus have to do with money and wealth.

The simple message sold well. So well in fact it became ingrained in religious dogma. The goal was honest. Work hard, save and you will enjoy your old age.

The old school in the Church of FI made the most of a basic message. The advice and values were handed down generation to generation. It lasted for one simple reason; it worked!

The early FI community didn’t have a cool name to draw a crowd. Solomon had proverbs and Jesus had parables. Short stories with a powerful message were the perfect device to hand down important information through the ages.

The early days of the Church of FI are similar to the early days of Christianity when there was a Catholic church. The learned may recall the word catholic (little c) means universal. The Catholic Church was therefore the universal church of God. There was one message, one literal scripture, one true triune God. The FI community for millennia was also an all encompassing philosophy.

Some philosophical movements contained the truths of FI, but had other motives. Sophists, Epicureans, Christians, and let’s not forget the Stoics. But that isn’t what our story is about today. Today we will explore what happened to that FI community of old and how is survived (so far) to become the cult classic so loved by business media outlets everywhere.




The Eve of Reformation

If something is working fine, break it to see what makes the darn thing tick. You know, like killing the goose that lays the golden egg so we can mass produce the goose.

For thousands of years the perfect FI message did the job it was intended to do. But as the Industrial Revolution convinced man he could do better a more scientific approach was needed. By the early 20th Century intelligent men were popping the hood to figure out how the goose laid that darn golden egg.

The path to the FI temple is filled with obstacles.

In 1926 George Clason gave us The Richest Man in Babylon. The story resonated because it basically outlined the same message from the ages. The message delivered in parable was also comfortingly familiar to the more religious time. The story of how a rich man saves money boils down to “Pay yourself first”. It worked back then and works now! Our ears find familiarity in stories advising to save first and spend what is left rather than the foolish other way around.

Now that the ice was broken it was time to dig deeper into the details. Dale Carnegie showed us How to Win Friends and Influence People in 1936 followed by Napoleon Hill’s Think and Grow Rich in 1937. Hill also did something unheard of up to his time. He researched his topic by interviewing the wealthiest people of his time: John D. Rockefeller, Charles M. Schwab, Henry Ford, Thomas Edison and more. The scientific genie was out of the bottle. The goose lived and we now knew a bit more about how those golden eggs were produced.

The scientific revolution in wealth creation brought a new wave of FI leaders willing to spill the beans. Ben Graham published The Intelligent Investor in 1949 and the world has never been the same. Graham’s great disciple is none other than Warren Buffett who proved you can do very well stuffing your money in equities.

More and more books and seminars were to follow. No one had a clue a schism was on the horizon in the FI world. The Reformation was here. The Catholic Church would survive, if smaller, and would never be the only game in town to protect souls, ah, financial fortunes ever again.




Ninety-five Theses

Ever since the reformation of the FI community took place scholars have debated what caused the schism. Some say it was boredom, others our advancing way of life and technology. Me, I say it was the internet.

Before the internet you had a limited avenue to spread your message. Printed material and word of mouth dominated. Television and radio allows for a broader audience, but these forms of media needed a message with mass appeal. Save money! The majority of people didn’t want to hear it. Besides, you can’t take it with you.

(Yes, kind readers, the tone of this post has changed. I set the scene and now my warped sense of humor is bubbling to the surface where I wanted to end from the very beginning.)

Ointment for the anointed.

The internet changed everything. Never before could a young man see a naked, ah, sorry wrong story.

The internet allowed every niche an audience. If you had an interest in conspiracy theories you could now spend all day on YouTube and websites conspiring until you bleed from every orifice. And people didn’t mind since you were comfortably locked in your mother’s basement.

A lot of false starts dominated the early internet days. Several blogs found a following in the FI community, kind of.

You see, the blogs weren’t true canon. The Church of FI had a specific set of rules handed down by God to Moses and passed along to us. The internet gurus were NOT following the rules. They added something to the text! HERETICS!

What is it they added, you ask? RE! Yes, RE, as in retire early. This was the greatest sacrilege in the history of FI! FI was now FIRE to many, as in hell FIRE if you get my drift.

Wealth was always important to the Church. (How else you gonna toss some coins into the plate on Sunday if ya ain’t got nothing to toss in?) Work ethic ranked nearly as high as wealth. This crazy notion of retiring was heresy. Work was good for the soul. Retirement was for old worn out people. To retire before you were practically dead was more than the Church could handle. It was time for a few excommunications, as if that ever worked.




Protestant Explosion

The ninety-five theses were spiked to the church door for the world to see. A few fearless crusaders broke from the catholic church of FI to create the FIRE community. We’ll call them Lutherans in honor of Martin Luther and his behavior back in 1517.

The Lutherans embolden a whole new crew of people predisposed to FI thinking, but preferred a less rigid orthodoxy from the catholic faith. These crazy religious fanatics took the RE thing the nth degree. Most loved the RE idea, but needed something to fill the empty spaces. A large number wanted to fill their days with a side gig or start a business. In essence they traded one job for one they could be boss in. They became the person they loathed at their day job.  These guys are the Baptists and Episcopalians of the FI world.

The Church of FI mascot.

Then we got the true whack jobs who thought they would gallivant around the world. These FIRE people couldn’t wait to break out of their cubicle and get on a plane/boat/car to go someplace else. This group splintered fast into even more sub-sects of the shattered FI religion. One group traveled the world; another enjoyed travel closer to home in an RV or even ditched a terra firma home for the RV. Most FIRE community travelers found ways to hack the system with credit card rewards. Travel was virtually free and certainly cheaper than living in a normal house. These folks are the FI communities Mormons and Jehovah’s Witnesses.

I saved the best for last because it is the smallest (and newest) sub-set of the fragmented FI world. Yes, these are the people who reach FI, refuse to quit, keep working their day job or business and enjoy home life with nary a thought given to travel.

Your favorite accountant falls into this last category, I’m sad to say. Travel is punishment to me and my kind (grammar police can send their comments to. . .). I wake up early, excited to get to the office. I love my work life and am fulfilled by it. I create value in my daily duties and as a creature of habit prefer to keep doing what I’ve always done. I guess that would make me the Westboro Baptist Church of the FI world.

My kind is wont to carry signs outside FIRE conferences where they make their travel plans and other such acts of sacrilege. We picket airline counters and RV centers wearing burlap on a regular basis. We’re a fun bunch of guys when you get to know us.

We also think we’re purists! Our Westboro Baptist Church is closer to god and the real FI community of antiquity. We work hard at our job or business and come home to our farms and workshops to build stuff with our hands. We think we’re better than you and we are! Dammit!

Our Diverse Community

(The meds kicked in so we are back to our serious voice now.)

I hope my attempt at humor made you smile. The humor part of this post IS a parable of sorts (in a sick religion). The FI community is more than just a bunch of frugal people working to improve their minimalist skills. Members of the Church of FI have different levels of comfort along the frugal scale. Some bike everywhere while some stay attached to their car habits. Some are minimalists living with virtually no belongings. Others try to live on a set amount of money each year; say $25,000 or less (U.S dollars, living in the U.S. or traveling).

Conferences and meet-ups are now everywhere! You can meet fellow FIers around the world. Very few weeks exists anymore where you can’t attend a FI/RE gathering.

Unfortunately there is one part of the community who will not be there. Yes, the Westboro people love the community and its values, but would rather stay at home with family and local (versus loco) friends. If you plant a FI gathering close to their home they might attend. Maybe.

The FI message didn’t always reach the masses in the past. The message may not have resonated. With the FI schism we are a more diverse group than ever. All races, creeds and genders are represented and welcomed.

As we open our doctrine the old canon is expanded. FI/RE had a slash between them in the past. The catholic church didn’t care much for the protestants and the same applied in the return direction. Soon we realized we all worship the same god: FI. The catholics (FI) and the Protestants (RE and all their cousins) are back together as one (FIRE).

It’s a wonderful place, our faith. All are welcome.

The next time you hear a knock at the door, answer it. When you open the door it might be two young people who say, “Can we talk to you about our faith in financial independence and early retirement?” Do yourself a favor, let’em in.

 

(I know how easy it is to offend writing a post like this one. No offense was meant to anyone’s religious faith. Please enjoy the humor and consider the message. It’s important enough for me to stop picketing airports.)



Problem Discovered in Tax Bill Will Leave Many Owing the IRS Big Next Year

It’s going to be a cold winter next tax season if people don’t prepare for the antics of Congress and the IRS.

A major tax bill late in the year followed by a bill of extenders February 9th and we have the perfect recipe for problems.

My initial reaction to the tax bill in December was that most of my clients would see some benefit since my clients tend towards the upper end of the income scale. I also have lower income and older clients who are not benefiting as I expected. Certain taxpayers are even seeing a tax increase, most notably, those with large unreimbursed employee business expenses like on-the-road sales people and rock band members.

The tax software used in my office estimates what the new tax rules will mean for clients if the rules applied to their 2017 return. This has been a powerful planning tool early in the tax season. But as an accountant I always look under the hood and when I did found a disturbing problem.




From Joy to Tears

Taxes cause pain in two ways. First, the actual tax dings the household budget. Second, if not properly prepared for the changes, the timing of when the remaining taxes are paid can cause exquisite pain.

Adding to the mess, the IRS didn’t have time to update withholding tables until the end of January. Most clients didn’t see a change in their paycheck reflecting the new tax law until their first paycheck in February.

Also problematic is the issue of exemptions. For this calendar year personal exemptions are eliminated while the standard deduction is increased. As expected, this change was a big yawn for most clients. A few were able to capitalize on this particular change.

Without exemptions it is harder for the IRS to estimate the tax liability of household size. Yes, the child tax credit has been increased and the phase-out level pushed higher, but the age of the child and if they attend college now plays a bigger role than in the past.

Late January and early February tax returns delivered in my office presented our estimate of how the tax change will affect the client. A few people saw a tax increase, but most had either a small change or a larger refund.

One thing bothered me as we shared the news. I worried how the updated withholding tables would affect my results. I warned clients my estimate assumed everything was exactly the same as their 2017 return when we know the updated withholding tables would mess with my estimate.

Now that we are on the backside of February and most clients picking up in the last week have seen a paycheck with the new withholding, I can ask an additional question: How much did your paycheck change with the new withholding?

I expected a modest adjustment to my software’s estimate. What I got made me light-headed.

Every single client I met in the last week or so with a new withholding amount is under withholding by a large margin! People expecting a $3,000 reduction in their tax bill are seeing a $4,000 or more reduction in withholding. Clients who already owe money or like to keep it close to breakeven are in for a rude surprise if I don’t intervene.




An Imperfect Solution

I have a solution to fix the problem, but it entails a lot of screwing around. You can either reduce your exemptions on your W-4 or fill in an extra amount to be withheld each pay period above the withholding table amounts.

Unfortunately, most people don’t have a clue what is about to hit them. If their accountant doesn’t figure this out fast they will be steamrolled next tax season when the miscalculation bites. DIYers are at greatest risk as they tend to believe what the computer tells them. Computers are great for grunt level computing in preparing a tax return, but ill equipped to fix this new problem.

Here is what I consider the only appropriate option. When tax season is over you need to speak with a tax professional that is willing to crunch the numbers by hand to adjust for the tax and withholding changes. There is no other way.

My guess is online programs will become available as the year goes on. It still requires taxpayers to understand they even have a problem.

A Busy Off Tax Season

Tax professionals will be busy this year. I can’t imagine 140 million people are going to show up at the tax office this summer. First, many tax offices close or have reduced staff over the summer, and second, tax offices will focus on their regular clients if they address the issue at all. About half of taxpayers prepare their own return. Next spring, after the mid-term elections, taxpayer will have a hangover from the antics of Congress and the IRS. The reduced refunds and increased balance dues could chill the economy. (At least the guys who created the mess got re-elected. Man, if they lost their cushy government jobs they’d be unemployable, except as lobbyists.)

Prepare your own taxes and support your favorite blog at the same time. What could be better?

Your favorite accountant already has a plan. Originally I planned on reviewing all returns in my office with a business or income property. If we find an issue we’d give the client call to set up a meeting. This has been expanded to all clients! I estimate I’ll communicate with 600-700 clients over the summer out of a book approaching 1,000.

Readers of this blog will also feel uneasy as my discovery is copied by other news outlets. (Note to news outlets: Let your readers know where you learned this nugget of information as a gift to a wayward accountant from Backwoods, Wisconsin.) My regular clients have preference. Openings in my schedule are available to non-clients. That means most of you, kind readers.

It’s nothing personal. I have to focus my time as it will be at a premium this year. The amount of tax planning necessary this year will trump (pun intended) anything I’ve experienced in my 36 year career. The business income deduction alone would be enough for a comfortably busy summer. All these extra issues will overwhelm any tax office brave enough to remain open after April 17th.

I’m not bailing on you guys! Normally I block one day per week for consulting. This year I will open two days per week with the option some weeks for a third day. Keep in mind consulting takes prep work before we speak. I need to see your 2017 return and any expected changes.

To make this work will require specialized training in my office so I’m not a lone soldier. As a lone wolf I’d never make it through my client list, not even considering even one non-client from my list of awesome readers.

Late April will be a recovery period as I train and take some time with family. Clients reading this can set a summer appointment already. Some have. Clients picking up from now to the end of tax season will be reviewed for a summer appointment.

From May 1st on it will be full speed forward with consulting and tax planning. Clients with a business and landlords really need to make it a priority to see me this summer or fall.




How Much of My Tax Savings are Going to You, Mister Accountant?

And then we get to fees. In my office I will charge a flat $50 for clients to have their withholding reviewed. Before you pay me a cent (or I do a stitch of work) I’ll pull up your file to determine if a review is warranted. If it makes sense for me to review your records I will. If it is obvious you don’t have a tax issue I’ll inform you so you can save fifty bucks. Retired persons and those with low income generally fall into this group.

Businesses and landlords all require a review this year no matter what! There are too many additional moving parts to abscond a detailed review. My hourly fee will apply. I doubt anyone will lose on the deal as the advantages this year will far exceed anything you pay me (or most other accountants).

All non-client reviews are based on my hourly rate of $275 per hour. Regular clients have an advantage since I already know their tax situation and have their return on file. I need more review time with non-clients to acquaint myself with their tax situation.

I encourage you to begin a dialog with a tax professional early this year due to higher demand on their services. Your withholding is almost certainly wrong and to the government’s benefit. If you never consulted with a tax pro this is the one year you might want to consider it anyway.

I can see all your hands up. Yes, I will handle as many as humanly possible. However, I have a strong feeling my larger public presence will crimp the percentage of non-clients I can accept compared to demand.

The forum on this blog and Mr. Money Mustache are a great resource if you don’t have a tax professional on speed dial. I also expect many local accounting firms to add hours to handle the extra consulting this year.

Finally, you are welcome to contact me for consulting, a review and/or to prepare your return. I recommend you read the Working with the Wealthy Accountant page before hitting the Contact button.



Stalking the Accountant: Groundhog Day

It was an exciting week in the Wealthy Accountant’s world. Facebook decided they didn’t want me to use the name Keith Taxguy. Now if I were a Russian meddling in the election I would’ve had no problems at all. It all ended well (so far).

New policies instituted in the office this year are paying off. For the first time since I showed up in the blogosphere people are surprised how fast I’m getting work done. After tax season I’ll spill the beans on my experience so other tax firms can experiment with the same tools. It should help other business owners and those with a side gig formulate ideas to increase their efficiency. This means less work and more profit. Isn’t the modern world awesome!

I found a gapping problem in the new tax law this week that will cause serious issues next tax season. I stumbled upon it by accident (asking clients questions). Monday I’ll have a full write-up. This issue is for more than accountants. Anyone who files a tax return is affected. I estimate 70% of taxpayers will need to adjust for the error or will have a nasty surprise when they file their return next year.

A few reminders before we head into the entertainment part of the weekend. Do-it-yourselfers should consider 1040.com through this blog. I like the program and use the commercial grade program in my office. Since this blog’s profits go to charity (increasingly supporting agencies helping abuse survivors) it’s for a good cause.

 

We have another nifty drawing to give money away again in the upcoming week. Don’t miss your chance.

 

Looking to manage your growing stash better? Personal Capital is a resource many are using to visualize all their investments in one spot. Best of all it’s free!

 

In the near future I will share my experience using PeerStreet. I think it is an excellent addition to many portfolios. Over the last year or so I’ve wound down my Prosper and Lending Club investments for a variety reasons I’ll outline in the future post. I’ve added PeerStreet to my investment mix and so far have been very happy. I also like the added protection of real estate backing the loans I’m investing in.


Real Estate Investing Platform

 

And now for some weekend entertainment.

 

What I’m Reading

Tax season limits my reading time. (Notice my sad face.) I’m working on a really good book I hope to report on next week. I also have been catching up on some neglected issues of National Geographic. The short articles fit the schedule easier this time of year for me.

 

What I’m Watching

Tax season quickly turns into a real life edition of Groundhog Day. Each day melts into the next, only to repeat again and again until we get it right. With this in mind, I’ve never seen the movie Groundhog Day. I know, I know. Everybody has seen the darn movie except me, until now.

This weekend I went to the library to checkout Groundhog Day. (I actually sent Mrs. Accountant.) Now we can officially declare every living human has seen Groundhog Day. So much for my reputation as an early adaptor.

For the record, I actually watched the movie; something I rarely do. Normally TV is background noise or a sleep inducer. Bill Murray earned his keep. I watched, yes watched, the entire movie. Of course they had me when the groundhog was driving.

 

Here is a YouTube video everyone MUST see. Elon Musk hits the nail square.

 

What I’m Listening To

I worked in silence most of the week as I was on a mission from God. The work was peeling off at a rapid clip. Here is one soundtrack I noticed in my YouTube queue from earlier in the week.

 

Be good, kind readers. One month of tax season is nearly in the books. See y’all Monday.

(Now I’m off to read a book. I am taking the whole weekend off! All of it.)

I Received a $1,980 Check on My First Secret Shopper Assignment

Hey der kind readers. Dis is da welty accountant from way up nort der hey where it gets darn cold in da winnertime. Payin all dos heatin bills is a might painful here in Phuket, Weeesconsin, sometimes known as Nowhere, Weeesconsin so extra side income is always welcome.

Mrs. Accountant does her best to contribute to the family budget by cookin and cleanin whenever the work shows up. She is the kindest thing to ever walk God’s green earth and proves it by sending your favorite accountant with a brown bag lunch to work every day to save money.

She also likes to do surveys online for some extra cash. Well, da udder day she discovered a way to make some real money. I’m not talking small potatoes like selling weed or anything. I’m talkin big time!

She got herself a heck of a side hustle as a secret shopper! Yup. Da missus done got herself some serious job now. And as you can see from da picture of the check above, da missus sure cleaned house (haha, pun intended) with her first job.




Sharing da Experience

I wanna share da experience we had wit dis secret shopping job. Above you can see da first part of da letter dey sent da missus Priority Mail. Des guys don mess around! Dey spent some serious money to get dis to us fast.

I broke da letter into two pictures so you can see what it says easier. I’ll go through the process so you can join in on this awesome side hustle.

First of all, we got da check in da same envelope. Des guys don’t sit on der hands. When dey give instructions dey back it up wit cash!

First thing we had to do was deposit the Cashier’s Check in our bank. Well, right away I knew somethin was wrong. I’ve seen des checks come through the office now and again and know from experience des guys bite off more than they can chew. Sometimes der checks don’t clear right away. Too many secret shoppers, I guess.

Click to enlarge.

I did some leg work (not the leg work I do at the gym, by the way) to verify des guys were ready to rock. A quick internet search revealed the first problem. Their check had the wrong routing number. Personally, I’d fire da guys who printed the checks wrong!

The next thing I knew was dat Kenneth Ginola guy no longer worked at Whitney Bank. Hard ta chew somebody’s tail if he ain’t der no more! They musta taught I was some stupid country bumpkin.

This wasn’t going to work. Des guys might not mess around, but dey are sloppy as hell. Don’t dey know I can’t send’em money I don’t have?

Well, the bottom half of the letter told us where to send our experience report. Once again it was sloppy work. I sent an email to both addresses provided. They came back undeliverable. No worries, mate. They used an online account to print the postage. I tracked it back to the sender, Jose Ceda.

I called Jose and told him I was excited about da offer he sent da missus, but he might wanna be careful and all with our current President’s dislike for most people named Jose. Just sayin.

I also told Jose about da sloppy work and that I still wanted to work wit da guy if he cleaned up his act.

Before long I knew des guys were bush league. They wanted da missus to send some of da money back with a Moneygram and something called a Walmart2Walmart thingie. I never heard of dis stuff so he explained it to me.

Click to enlarge.

Of course da missus messed it all up. We biked over to Wally World and tried to get the Moneygram to dat Anthony Reyna guy in Houston and the udder guy, Gerald Chaffman, also of Huston.

Ah, it was frustratin as getout. Finally I threw up my hands and walked out and called Jose back. (BTW, he had a very pleasant voice and spoke mighty darn good English for a guy from Eastern Europe.) Anywho, I finally convinced Jose to just give me his banking info so I could wire him his money back. I never saw a guy so happy to get out of a deal in my life.

He gave me da bank info. After hanging up da phone I decided it would be da Christian thing to do to still try to get dis to work. After all, we did give our word and we still had the cashier’s check.

Wat I did was use Jose’s bank info and ACHed da money outta his account and into mine. Strange how smooth money transfers when you get all da numbers right. You can always trust your friendly accountant to get da job done.

As you can see from da letter, we are supposed to keep $270 for ourself, $370 if we get da job done in a day. Well, all da dickin around took more than a day, but I said f@*ck’em, figuring da missus deserved da bonus for all the extra work we did.

Before we could send Jose some of his money back we got an email from Jose. (It still amazes me how much stuff they know about a guy these days.) Jose was upset we withdrew $1,980 from his account instead of depositing it. All I can say is he wasn’t as excited as he was before.

The madder he got the more Russian he sounded. I promised Jose I’d personally see to it da missus would complete the secret shopper assignment.

We didn’t actually return to Wally World, but figured we could just make some of it up since Wally World is the only place to buy supplies for a hundert miles in any direction. (Welcome to Phuket!)

I sat down with da missus and worked through the twelve questions we were supposed ta answer. Most of da questions were stupid. Darn near got in trouble when I knew the name of the cute cashier over at Wally World. Dang Jose.

Question 8 was also a problem. Ya see, in backwoods Weesconsin we rarely use the restroom facilities. Normally we just walk out behind Wally World when we need to water the horse.

When I got done sendin Jose the answers to his questions I decided it was such a hassle I wasn’t going to send Moneygrams or other such crazy stuff. I kept the money! I know it’s not da Christian thing to do and all, but for the record I haven’t been to church in God knows how long. (Actually, God might have a hard time remembering the last time I visited for dinner.)

One last thing. I highlighted in yellow the last message on the secret shopper instructions. I am EXPRESSLY FORBIDDEN to disclose this information to anyone.

I won’t tell anyone if you don’t.




Time to Get Serious

Kind readers, I made a joke out of a serious issue harming numerous people every day. Mrs. Accountant does surveys and recently did a few secret shopper projects.

The letter, check and mailing label above all showed up a few weeks ago. We think it came from a Swagbucks offer.

Normally I throw stuff like this out, but decided to write about it. I could have explained the situation and ended with saying, “DON’T!” Instead, I wanted to take a different approach. We are constantly warned of these types of scams. The fact that they are still active means they probably work and many people are getting hurt!

The story above is made up. I took the situation and turned it into a joke. However, it’s no joke to those victimized by these criminals.

There is no doubt in my mind the cashier’s check is bogus. Because I’m writing a blog post I did some research. There really is a Whitney Bank on Johnston Street! But the check is bogus. The check is printed on check stock you can buy online or at Office Depot. A quick call to the bank and it becomes clear this is a scam.

The poor and elderly are most vulnerable. The people least able to suffer the loss are the best target for these scumbags.

Here is how the scam works in a nutshell. They send you a cashier’s check with instructions to deposit the check at your bank, withdraw the money and forward some of the money to the scammer via some type of wire transfer. They tell you to keep a portion as your reward. Later you discover the cashier’s check was bogus and you are out the money.

Today in the office (I’m writing this the day before publication) a client came in with a stack of papers, victim to a similar type of scam. In his case it was a new client of his business who needed extra cash so they used their credit card to withdraw money. They then sent it to another bank account. Later the credit card was discovered stolen and they are now out the money.

If you ever see anyone in a situation where they are asked to deposit a check or credit card payment and send the money to another account, please stop them and call the police.

Have a serious talk with elderly parents and grandparents. Talk to your children. Warn friends and family of the signs something isn’t right. There is no reason to take a check, credit card or any other means of payment and forward it to another account. Ever!

If anyone you know thinks this kind of thing is legitimate, yell at them at the top of your voice,

“DON’T!”



How and When to File a Superseding Tax Return

There is no question the tax code is massive. No matter how knowledgeable or experienced you are, mistakes will happen. The consequences of such mistakes can be minor or they can cost serious amounts of additional tax, interest and penalties.

Filing an amended return is your only option after the due date, including extensions. An amended return solves most problems. Interest and penalties may apply. In some cases even an amended return can’t fix an error; you could lose entire deductions forever.

The number of elections available is large. Some are irrevocable. Making, or failing to make, an election is set in stone in some cases with the original return. Failure to check one little box can cost you a large deduction permanently.

A superseding return may be the only option if you file it on time.




Amended or Superseding Return

A superseding tax return incorporates the new information into the original tax return if filed by the due date, including extensions. 

A superseding return is filed after a subsequent return and before the due date, plus extensions. (That was worth repeating.) The second return is a superseding return. A superseding return it generally treated as the original return, incorporating the new information and modifying (superseding) the earlier return.

Here is a small example where a superseding return is valuable tool.

A common error involves the Section 1.263(a)-1(f) de minimis safe harbor election. Most tax professionals (and readers of this blog) know they can deduct assets up to $2,500 rather than depreciate these expenses over a number of years if they make the appropriate election. The election is required every year. (The IRS says the election must be made “timely”. I take this to mean the election must be made on an original return filed by the due date, plus extensions. A late filed return may not allow the election.) The election is irrevocable.

In my office we automatically make this election for all returns with rental properties or a small business. (All corporate and partnerships returns also automatically get the election.)

Making the safe harbor election covers items a client may have neglected to inform the tax preparer of. If the election is made and not necessary, no harm done. If the election is necessary and forgotten, serious potential harm exists.

 

The IRS is less than clear when it comes to superseding returns. Corporations (S-corps, too) have a nifty box to check when e-filing a superseding return. Only corporations can electronically file a superseding return. Be sure to check the appropriate box or the IRS will probably reject the return as duplicate.

There are IRS instructions on when a superseding return must be filed on an individual income tax return. Unfortunately there are no instructions how to do it!

Superseding personal returns MUST be paper filed. Some tax professionals prefer filing a superseding personal return in the format of an original return and writing “SUPERSEDING RETURN” across the top of the first page. Because this will probably be flagged as a duplicate return another method is advised.

A superseding personal return should be prepared as an amended return on Form 1040X. (There is no superseding box to check.) All amended personal returns filed before the due date, including extensions, are automatically treated as superseding, incorporating the new data and modifying the original return. This means a forgotten irrevocable election CAN be made and is treated as if made on the originally filed return.

If a superseding return is filed before the due date (without consideration for extensions) interest and penalties are also avoided.

Amended returns filed after the due date, including extensions, are not incorporated into the original return. A required “timely” election is not allowed at this point.




In English, What Does This Mean?

The concept is short and simple, but often forgotten. A business owner may discover forgotten deductions for her business return when filing her personal return. The superseding return is a simple and fast solution for a previously filed corporate return. Add the new data, check the box marking the return as superseding and electronically file.

Individuals file an amended return for the same result, which must be mailed.

It sounds like a minor issue. When I review returns from outside my firm I need a powerful tool to make changes, especially when elections are involved. The tax code doesn’t automatically grant you preferred treatment. Special treatment must be requested in writing. Many elections are irrevocable. Many elections are required on an originally return filed by the due date, including extensions.

In English, filing an amended return before the due date (including extensions) on a personal return supersedes the originally filed return and solves most election issues. You can add a forgotten election if you catch it in time. Waiting for the IRS letter is too late. Consider the superseding return an amended return with a really tight due date, allowing you full sway in how the original return looks. It also eliminates or reduces interest and penalties.



Saving the World (and Yourself) One Frugal Act at a Time

Frugal living is challenging at times. What seems like a meaningless small change can energize your budget and fire your investments on a steeper trajectory.

Countless blogs and websites provide lists on how to save money. Turn out lights, turn down the heat in winter and the library are good ideas. Mr. Money Mustache has a strong drive to bike. On several occasions he has published on the benefits of biking. Biking is good for your health and cuts energy use. Reducing or eliminating what he calls a “clown-like car habit”, you cut spending by serious coin.

Like many readers I undertake a number of these ideas. I keep my house 60 degrees F in the winter. To keep warm I wrestle Mrs. Accountant and the kids to keep them away from the thermostat. I use natural lighting whenever available.

The farmstead is a whisker more than 15 miles from my office. I bike about 100 days a year. The savings are modest, but noticeable. A 30 mile round trip costs me about $15 according to the IRS mileage rate. My vehicles are purchased used and run for a couple decades before they are replaced so my vehicle cost is less. I estimate my real cost per mile is closer to 30 cents. This means every bike ride to the office allows me to keep an extra $9 in my pocket, tax-free. (You don’t pay an extra tax for not spending money.)




A Lesson from Walmart. Yes, Walmart

Back around 2008 Walmart started to examine its energy costs. The idea was to offer affordable compact fluorescent light bulbs (CFLs) to customers; the thought being CFLs lasted longer so Walmart would soon have more shelf space for other products. The energy savings customers experienced would likely be spent at Walmart on other items.

The discussion eventually turned internal. What if Walmart used CFLs in their stores? One idea was to replace incandescent bulbs with CFLs in the ceiling fans on display. Of the 3,230 stores Walmart had at the time, the average store had ten ceiling fans. Each ceiling fan had four bulbs.

Each bulb produced a minor savings, but when the Law of Large Numbers took hold Walmart stood to reduce their utility bill $6 million per year! Management had an easy decision.

Since then Walmart has expanded their energy philosophy to include utilizing as much natural lighting as possible and electric semis to deliver products to stores around the U.S.

CFLs cost more than incandescent bulbs upfront, but the longer life of the CFL (8-10 times as long) and energy savings more than cover the initial capital outlay. Total savings from reduced energy use is several times the entire upfront cost.




Lesson from a Humble Accountant

My memory is slipping with age. I can’t remember the exact year I transitioned to CFLs and later LEDs. What I can share is how I determined when it was a good idea to make the switch. Regardless the exact date, I was an early adaptor.

We will focus on my office to keep the discussion simple. I used the same thought process to transform my lighting at home.

Lighting is an important consideration in a tax practice. Eyes get tired easy enough looking at a computer screen all days and trying to decipher smudged and faded documents. Security lighting and signage are also important.

The outside of my office building is covered by floodlights and security cameras. The entrance light is always on. Security lights and the sign are on a photovoltaic trigger. This means the two lights at the entrance are on 24/7 and the sign and security lighting average 12 hours of operation per day — more in the winter, less in summer.

I forget the exact wattage used so I’ll stick with 100 watts per bulb when incandescent bulbs were used. My research showed an equivalent CFL used only 26 watts. Each hour of operation used 76 fewer watts per unit.

The hourly savings didn’t amount to much. However, when a light is operating an average of 12 hours a day 365 days a year we get 4,380 hours of annual use. 4,380 hours of use times 76 watts of reduced energy consumption per hour equals 332,880 fewer watts used per year. Reduced energy consumption of 332 kilowatts times $.12 per kilowatt and we save 39.84 per unit! We have twelve units.

The lighting replacements paid for themselves in less than a year! And they lasted longer.

 

Inside the office we have 40 of those 4-foot tube CFL bulbs. We use as much natural lighting as possible, but we still operate half the light banks most days.

The typical office uses what is called a T12 linear fluorescent bulb. Each bank has two or four bulbs. T12 bulbs use 40 watts.

Offices are turning to smaller T8 bulbs. The length is the same but the diameter is a bit smaller. T8s kick out the same light as a T12 and tend to last somewhat longer (modestly in my experience), using 32 watts per hour.

The office has on average 20 lights on each day for 10 hours. Two-hundred lighting hours using 32 watts instead of 40 watts reduces electricity usage 1,600 watts per day or 320,000 watts on a 200 day work year. (I cut the work year to adjust for reduced summer hours.) 320 kilowatts time $.12 adds to a modest $38.40 in saving per year.

T8s are easier on the eyes and don’t fade as much as T12s. You might remember seeing one side of these linear bulbs in an office turning black. This happens as the bulbs ages. The bulb still works, but output is reduced. T8s have fewer problems with dimming as they age. For accountants this is a blessing for our eyes.

 

Security lighting has since converted to LEDs which use even less energy. We’ll forgo the math to keep the story moving. Lights with heavy use are worth the extra cost of LEDs. Security lights, the sign and the entrance are LED lights. LEDs also weather the outdoors and cold better.

LEDs have one additional advantage. Incandescent and CFL lights blast light in every direction. LEDs focus with a narrower footprint. This means our security lighting is brightest where we want it.




No More Complaining

You can hear the groans when Mr. Money Mustache reiterates once again the necessity of biking over an automobile. The complaints follow fast on his heels. You can’t haul stuff with a bike. (MMM proved that wrong.) It’s too cold, hot, dark, rainy, blah, blah, blah. You can’t bike where I live because of the piles of snow, or, it’s too far to bike.

MMM doesn’t buy the complaints and neither do I. Small changes can add up to big savings. There is a point of diminishing returns. As my office lighting energy use has declined, every additional capital expenditure to reduce energy use further has less bang for the buck. With security lights now using 12 watts per hour of operation I need to focus elsewhere to reduce energy use.

LED flood lights available at Amazon.

Driving sucks a lot of cash out of the pocket. Lighting can put a few dollars in your pocket per month; biking can keep hundreds in the First National Bank of Wallet. My commute is a hefty 30 miles round trip. If Pete knew this we’d need the paddles to bring him back. (Don’t walk into the light, Pete!)

Even driving an older vehicle squanders $9 per commute, or $45 per week, or $2,340 per year. (I think I’m going to be nauseous.) Biking when the sun is shining (as I do) cuts perhaps as much as $1,000 per year from my transportation budget!

 

It’s true. Our frugal efforts alone will not change the world. At best it will allow us a lifestyle with a smaller carbon footprint. A couple thousand tax-free dollars doesn’t hurt either.

Where it starts to add up is when we work together as a team. When thousands and millions start adopting better choices in lighting and transportation the numbers become mind-boggling.

An unenlightened major corporation like Walmart was able to shave $6 million per year off their energy bill. The number is already big enough to make a difference.

Now it’s your turn to join in.

Save yourself, save the world. Love frugal without giving up a thing.

 

Compare LED prices at Amazon. A few minutes of math could lower your energy bill.



#MeToo

This week’s Stalking the Accountant edition is special. We had another drawing for cash prizes here at The Wealthy Accountant and it ended up a humbling experience where dozens of people will benefit far more than the minor investment of cash would indicate.

The drawing pulled names from subscribers who opened their email of the latest blog posts. The winners of the $50 prize are:

Ben O of Essex Junction, VT, and

Jeff H of Santa Barbara

The prize is awarded as either a PayPal transfer or an Amazon gift card. Both took the Amazon card.

Here is where it got real. When I informed Jeff of his win he sent the following email:

Keith,

 Awesome! It’s great to be a winner!

 I’m actually a blogger myself (www.themoneycommando.com) and rather than sending the money to me I’d like to propose something else.

 My wife is on the board of a local charity called Domestic Violence Solutions (DVS). Basically, they provide a shelter for women and children who are the victims of domestic violence. The shelter gives the women and children a place to stay while they look for a new place to live. They usually leave at a moment’s notice and don’t have kid’s clothing, a crib, bottles, etc. DVS supplies these things in the shelter and lets the families keep them to help them get on their feet. 

 How about if you donate the $50 Amazon gift card to DVS? You get the tax deduction, DVS gets a bit of exposure (maybe it will encourage somebody else to donate too), and DVS can use the gift card to get whatever baby supplies they need (it’s always changing from week to week).

 Here’s the DVS website: https://www.dvsolutions.org/en/

 What do you think?

 Jeff H. from Santa Barbara

 

Of course I agreed! It was an awesome idea!

This was a perfect opportunity to put some of TWA profits to work. I’ve dedicated 100% of the profits of this blog to charitable causes. I doubled the award to Domestic Violence Solutions to $100. Not a lot, but a gesture of good will.

Jeff’s wife responded as such:

Hi Keith,

Thank you so much for matching the gift card! Our emergency shelter is in great need of about 25 new pillows and this will allow for us to buy almost half!

We are deeply grateful.

 Heartfelt thanks,

 

I couldn’t let it alone. A simple comfort most people take for granted — a comfortable place to lay your head — is unavailable to some victims of abuse. I knew what I had to do.

If $100 bought nearly half the pillows needed, another $150 should finish the job. A drawing meant to engage my readers has turned into a $250 gift to a domestic violence shelter giving dozens of people comfort.

Here is the reply:

WOW, you just made our day Keith!!!

 Most of us take having a soft pillow for granted, but when a victim and her children enter our shelters (usually in the middle of the night) they arrive with nothing but the clothes on their backs, traumatized and thankful to be alive. Having a warm, comfortable and safe place to sleep means so much to our clients.  

 From the bottom of my heart, THANK YOU!

Would it be OK to acknowledge your generosity on our social media?  

With sincere gratitude,

 

Before I take a bow, let me remind you I didn’t do this. You did!

This blog has revenue because of you, kind readers. That revenue is destined to change lives for the better in our communities. You need to take the bow. I’m only the conduit. You did this. You changed the lives of those women, often times kids in tow, surviving violence.

I know you’re as moved as I am by this. It’s okay to take a moment here to reflect on what our group has just done.

Finally, if you want to add to the gift to Domestic Violence Solutions you can do so here:

Please provide comfort to a child – donate now at https://comfortandjoyforachild.funraise.org/

A child’s future is in your hands.

 




The Other #MeToo

In 2017 women started to speak out in waves. It was 100% necessary! It had to happen. The violence and assault of women had to be exposed before the problem can be addressed.

Even some men came forward. We sometimes forget about men who suffered sexual assaults as children.

The #MeToo movement has another side gaining ground fast. This part of the #MeToo movement is dedicated to supporting the survivors of violence in any way they can.

Guys can come across as dicks at times. We are not talking about that kind of behavior. When a man does something to offend a woman it may have been with good and honorable intentions. What we are talking about is verbal, mental and physical assault. Violence against a woman of any kind is never acceptable. EVER!

The other #MeToo movement, the movement of men determined to support the rights of women to live peaceably without threat of violence and intimidation, needs to grow more.

I’ve supported the women who have come forward (and the silent survivors struggling with the demons) from the beginning. Now, finally, I can stand up and say, “#MeToo.” Not as a survivor, but as a supporter of every woman who has had to deal with the trauma of assault.

Please join The Wealthy Accountant and me in supporting this cause.

 

After such a heavy start to the weekend edition it’s time to relax with some entertainment.




What I’m Reading

The stock market was tame for so long (every month of 2017 was a winner) I had to pull out an old favorite when we experienced a mild correction. Stocks for the Long Run by Jeremy J. Siegel is a classic. It’s not an advice book for investing in the market. Rather, the book is a treasure trove of data on the market’s performance from the beginning. The accountant in me can’t resist.

 




What I’m Watching

Elon Musk sent a rocket into space the week before last with a Tesla Roadster as the payload. The publicity stunt gave Musk plenty of bang for his buck and I’m adding to the benefits by sharing the following video here. In this video we learn what space will do the Starman and the Roadster. We also learn about several Easter Eggs hidden in the Roadster traveling to the stars.

 




What I’m Listening To

I worked in silence most of the week. Tax season is in full swing now and time is tight. I’ll be at the office for a short day on Sunday to get some larger returns done without interruption.

Here is one album is listened to earlier in the week:

I know my taste in music can be out there. But by sharing hidden gems I uncover is the reason for the weekend edition of Stalking the Accountant.

 

Have a great weekend, kind readers. See y’all back here in a turn.



The FIRE Community is Killing the Economy and Society

[Note: This post  is intended as an in-your-face response to complaints against the FIRE community. I’m getting plenty of email telling me how wrong I am only to hear what I said at the end of the article.  Read to the end! I explain why all the negative comments on the FIRE community are wrong and how the community is saving the economy and societal values, not destroying them. I could have written more to clarify, but I was over 2,000 words already.]

 

Members of the FIRE (financial independence/retire early) community might want to sit this one out. It’s going to get rough and I’m naming names!

 

The concept we now know as the FIRE community has been around for a long time under different names. Frugality and minimalism come to mind. Talking with grandpa they held many of these values 70 plus years ago without a fancy name to make it cool. Many of the personal habits of members of the FIRE community sound very familiar when reading the ancient Stoics: Marcus Aurelius, Seneca, Epictetus.

Guys like Jacob Lund Fisker (Early Retirement Extreme) and J.D. Roth (Get Rich Slowly) put frugality on the map. J.D. made getting out of debt and financially independent cool!

Then Pete (Mr. Money Mustache) showed up the game changed radically. Pete resonated with his “I retired at 30 and doing fine” message. It struck a chord. Some loved the idea and took to it like ducks to water. Others called BS and think Mustachians are ignoramuses.

As a part of this community I’ve had one serious gripe since the beginning. It’s easier to show what I mean.




Would You Like this Person?

What kind of person would you want to work for? Someone dedicated to doing good work and is a team player or someone saving and investing every dime so she can blow this place the first chance she gets?

Employers and those with a side gig, who would you rather have as a partner or employee? The dedicated individual or the guy itching to scream out the door?

What about friends? Or a mate!

That’s the unspoken problem of the FIRE community. They are terrible employees, friends, co-workers, mates and even business owners. As a group their goal is to amass barely enough to pay the bills with a frugal lifestyle and dump the rat race to dick around all day!

Before we start pointing fingers, let me share a story.

Before I stumbled upon the FIRE community I was frugal. The community attracted me due the similar philosophy.

With decades of experience in the accounting profession running my own practice I started to burn out. Like traditional employees I started to feel drained and wanted a different path.

Over the years I set up countdown clocks to mark the date and time I planned my exit. As each date approached I chickened out. The thought of selling my business made me nauseous. What I really loved would be gone so I stayed. I also convinced myself I could milk the business for a lot more cash than a mere sale.

What an idiot I was!

I stayed at the desk for a few more dollars when I wasn’t completely happy with what I was doing anymore.

My introduction to the FIRE community was Mr. Money Mustache. I drank it in like a desert rat.

I also concocted an idea to have my cake and eat it too.

The DIY tax program you see on this blog was something I always wanted to make viable. My goal was to meet Pete and strike a partnership with him.

Pete, the ever gracious man he is, said no. Buuuuut! He was willing to give my business a push, including the DIY tax program. All this activity also meant I needed to start a “real” blog in the demographic as there was a growing demand for my opinion. (Ah, yeah.)

I had no idea what a 5-10 million pageview blog could do to my tiny office in Phuket, Wisconsin. I planned on some added emails, expecting most of the action to hit the tax software and the blog. Well, two out of three ain’t bad!

Ill prepared, my business suffered under the strain. I lost clients as fast as I added them. I stood the real chance this would spiral completely out of control and grant me my dream of retirement whether I wanted it or not.

Every skill I possessed was no match for my epiphany. For the first time my little world was exposed to a much wider audience.

After serious soul-searching I realized I was doing exactly what I wanted to do. It was enough with the countdown clocks and retirement. I’m an accountant, dammit! And account I shall do.

The opening of this post I mentioned what kind of business you would like to patronize or the kind of employee you’d like to hire. When my left foot was pointed to the door it showed in my performance and attitude.

My original thought to milk the business for all it was worth came tumbling down when new clients poured in. New clients expressed concerns with hiring my firm if I was soon to quit. I had to lie and say I was going to stick around when my heart said otherwise.

Once the BS was scrubbed from my gray matter I had to get serious if I was to save my baby!

Once my attitude changed the results followed. Slowly I turned the corner. I wore out countless employees and killed myself working seven days a week during tax season. There were no other alternatives. I screwed up bad and if I wanted to salvage my practice I had to get serious PDQ.




Stepping Back from the Edge

I’m glad to announce the corner has turned! The client list is growing and we are getting work done in a timely manner for the first time in years. Business is good and getting better. It’s not the economy, it’s my attitude!

Employees are finally staying and enjoying their work. The workload is heavy but not drowning the entire team. Technology I refused to consider in the past has been implemented, saving hundreds of man (actually a lot of woman) hours.

Accuracy is up, stress is down. What looked like it would collapse a few years prior was starting to be fun again.

I blame it all on Pete because taking responsibility for my own actions is too much to ask. (That’s a joke, kind readers.) Pete made it look easy. (Michael Jordan makes a layup look easy but I didn’t think I could do that without effort or practice.) There was actual work involved.

Pete sold me on an idea. The people calling BS on Pete had a point, in my opinion. We can’t all do this! The economy would collapse! Chicken Little was never so proud.

Then I started thinking about what Pete really did.

Pete called it retirement, but it wasn’t a dead retirement! He had a rental property at the time. Played with a construction business for a while until he experienced partner problems. And eventually started his very successful blog.

Retirement didn’t mean checking out of life for Pete! Sure, he spent more time with his family, the important stuff. He also became extremely efficient with his time.

He produced value for the economy and society in ways he never could have if he didn’t retire from the path he started on as a young adult!

Killing the Economy or Saving It

A frequent complaint against the FIRE community is that everyone can’t do it! Somehow spending less than you earn would destroy the fabric of the universe. The sun would dim; birds would fall from the sky. Hey, look! There goes Chicken Little again.

The oft repeated complaint is stupid at its best! When has saving and investing ever been bad for the economy? Ever?

The age you retire has nothing to do with how the broad economy will perform! And virtually all members of the FIRE community don’t bow out of life when they hit their magically arbitrary number they consider wealthy.

Pete had a property and business early on. Later his blog added millions to the national and worldwide economy with no end in sight. Now he opened his MMM HQ in his hometown as an education and social center of his community. Not bad for ol’ lazy bones taking the knee of early retirement at 30.




New Kid on the Block

There is a new kid on the block taking the FIRE community to another level. Gwen (Fiery Millennials) took the retirement knee at 27 with 200 grand in assets! What the hell is the matter with that kid!? (Gwen, if you’re reading this, don’t ditch me now. You know I’d never throw you under the bus.)

Gwen’s announcement caught the eye of MarketWatch (I’m jealous). Gwen started to feel my Mr. Money Mustache moment.

People thought Gwen was insane. And she is!

But when you think about it . . .

There is a certain accountant in the room who ditched traditional work in his early 20s after a whopping 14 months on the job to start his own practice. And I had less than $200k at the time! Yes, my $150k or so went further back then, but Gwen has something I didn’t at the time: real estate.

You see, Gwen accumulated a couple hundred K and recently purchased her second rental property. (I read on social media the deal didn’t close so she still has only one property to the best of my knowledge.) Investment property can produce enough free cash flow to live a frugal lifestyle with a very low net worth! Small amounts of investment property can leverage to a very comfortable income stream.

The new kid on the block was taking a path reasonably similar to your favorite accountant’s. By my late 20s I owned income property too.

Now comes the serious question. From the viewpoint of the world at large (according to the numerous negative comments on her MarketWatch article) she is nuts and it never will work. She will fail if some of the comments are to be believed. And she isn’t a contributing member of society anymore!

Okay. Let me ask this. When has providing shelter for families not been a benefit to society?

Ooooh! You didn’t think of it that way. Well, maybe you should.

If every business owner or investor waited until they were 100% financially secure and sound before taking a risk the economy would be screwed!

This concept of only traditional working environments producing value is flawed. Richard Branson runs a coterie of businesses technically under the Virgin brand. The work is done by thousands of employees. Branson’s job is to formulate ideas and to promote the businesses. He doesn’t book passengers on his airline, yet I bet we agree he adds serious value.

Steve jobs never wrote a line of code yet built from the ground up the largest company on the planet in the computer industry.

Imagine the same reasoning applied to Jobs or Branson and it becomes silly fast. Of course Jobs provided value before his early death. Of course Branson provides massive value around the world.

And so does Gwen, early retirement and all.

Retire and Travel

We can’t end this discussion without mentioning the folks who retire early and travel the world.

What a lazy good-for-nothing group of miscreants. To have the audacity to save and invest so you can cash in your chips before the clock strikes 40 and gallivant across the continents is the height of arrogance.

Travel isn’t in my blood so I can feel that way at times.

But when you start to think about it. . .

Traveling and sharing your adventures so others can enjoy their more limited adventures is actually providing value! Travel blogs are not new. Mark Twain wrote several travelogues. I think we can all agree Twain provided incredible amounts of value to society.

I admire those who can slow down more than I can. Elon Musk runs even faster than me.

It comes down to personality types. I speak out against travel because I don’t want to do it personally. But if you want to travel you should!

There is nothing wrong with following your bliss. The world is a better place for it. Imagine how boring this place would be with thousands of weaselly accountants running around and no one else.

Pete continues to expand his impact on his community. I still stamp out tax returns and advice at a rapid clip. J.D is back at the helm at Get Rich Slowly. Jim Collins is a force behind Chautauqua.

Source: The Washington Post

The economic miracle of the 1980s wasn’t the Reagan tax cuts; it was business creation. Small businesses were started at a rate of over 700,000 per year in the early 80s. Job growth and wage increases fueled that economy.

Today we struggle creating 400,000 businesses per year. The FIRE community is the only one I know of that encourages people to step out of their comfort zone, leave their job and start a side gig.

Side gigs are what we call business creation. Tomorrow’s business leaders are the people leaving their job today to think about a new path in life. Every business with rare exception started as a side gig. Apple started in the garage of Steve Jobs. A common story.

The FIRE community is not killing the economy or destroying society. Far from it.

They are the saviors. Our only hope.