Archive for March 2018

Peer Street Review

Show me the money!

Building wealth is simple when you understand the rules. Spending less than you earn provides seed capital for investments. Index funds provide the opportunity for superior growth with reduced risk due to diversification across the broad economic spectrum.

Once you have the basics it becomes clear you need additional cash management tools to serve your financial needs. Short-term cash for emergencies or living expenses are best held as bank deposits or in high-yield accounts like Capital One 360 or Discover Savings.

With long-term investments set in index funds and short-term needs covered by liquid money market type products it’s time to fill in the remaining gap. And there are some reasonable alternatives paying a respectable rate of return.

Business owners understand the need for liquid fund to cover seasonal fluctuations. In my office tax season fills the coffers used during the slow times of the year. November and December are traditionally slow in the tax industry while expenses tend to be high. Some year-end tax planning brings in some revenue, but the cost of mailing organizers, employee training and property taxes take an ax to the budget. This is the gap I refer to above.

Individuals face the same gap. Planning for a vacation or allocating funds for property taxes are an example. Individuals may also become uncomfortable with the level of the stock market. Selling index funds to store in a money market at a percent or two doesn’t make sense and becomes painful when the market continues climbing.

I never encourage market timing. However, there are times to take some chips off the table. Example: As you approach retirement (or if you are in retirement) I always recommend keeping about two years of living expenses in cash. If the market keeps climbing you can fund living expenses with dividends or small index fund sales. When the market has a temporary setback you can use the liquid funds to live. This assures you never have to sell at a market low! If the downturn becomes prolonged you can stop reinvesting dividends and capital gains to fund expenses. The goal is to never find yourself forced to sell in a down market.




Investing Gap Funds

Money market funds and online savings accounts at Capital One and Discover are good tools to store excess funds in retirement, for future investments or to pay large one-time expenses. The interest rate is low, but better than nothing.

For several years I used Lending Club and Prosper (notice I don’t include links because I no longer recommend these options) to serve as a high-yield investment for such funds. Then we had the Lending Club fiasco I was out the door. Where there is smoke there’s fire. I could be wrong, but I’d rather be a living coward than a dead hero.

Enter Peer Street.

Another bright idea.

Lending Club and Prosper issue unsecured loans you can invest as little as $25 in. The goal is to spread your investment over as many loans as possible to avoid one bad loan destroying your portfolio. There are lots of loans that default as borrowers have no skin in the game.

Peer Street offers loans in a similar fashion to the Lending Club/Prosper model with a few notable exceptions. Peer Street loans are backed by real estate with loan to value (LTV) typically below 75%. Borrowers have skin in the game!

The minimum investment is $1,000 per loan. This is still a micro loan, but not nearly as small as the $25 minimums at Lending Club or Proper. Since there is something backing the loan (real estate) the risk is likely much smaller. (Loans backed by assets default at lower rates than unsecured loan with rare exception.) You can still—and should—spread your investment funds over several loans to mitigate risk. (More below.)

Most Peer Street loans are short term (6-24 months) and generally yield 6-12% over 12 months. Peer Street periodically has very short loans (one month) that yield a lower rate, but more than Capital One or Discover currently. This can be a powerful cash management tool.

The short-term nature of the loans makes it easy to ladder your portfolio for consistent cash flow and liquidity. A small investment can provide a steady stream of available cash while earning a higher than average yield.




How I Use Peer Street

I don’t like to over-commit to any investment. My style is to dip my toe in the waters first and then stepping slow into the shallow end until I’m comfortable.

I started investing in Peer Street a few months back. Every loan I invested in is for the minimum: $1,000. So you understand my style, I currently have $6,000 invested with intentions of reaching $100,000 over the next year or two. As long as the wheels don’t fall off (remember the Lending Club issues) I’m happy. I’ll never put everything into Peer Street, but I will invest enough to move the needle eventually.

Every week or two I’ve been adding another $1,000 or so. Peer Street reports interest income and loan maturity funds on the 15th and last day of the month. The money appears in my account a few days later. I use this opportunity to add new funds to my account to bring the cash balance back to $1,000 so I can invest in another loan.

My slow approach is for two reasons. First, I can sample how Peer Street works before committing a level of funds that would hurt if I misstep. This allows me to acclimate to the investment. Second, the slow approach means I have loans spread out over a wide range. In a few months I will have loans maturing practically every month. Coupled with the interest stream I’m in a good position to benefit from the investment.

Investing in income properties can be a lot of work with plenty of risks. Peer Street makes real estate investing easier, smoothing the income ride along the way.




Taxes

Interest income is taxable. Landlords have several tax advantages due to real estate ownership. Peer Street investments are loans and income is treated as ordinary income. If you are familiar with Lending Club or Prosper you will find reporting Peer Street income looks a lot the same. The main difference is loan losses. Lending Club/Prosper have a lot of loans that default. This can play havoc on your tax return in some instances. Peer Street has had a few loans default, but according to a conversation I had with a Peer Street consultant on the phone, investors lost no money. The LTV metric does offer a level of protection to investors. (Loan losses would be handled in a similar fashion to Lending Club should they occur.)

Recommendations

Time for a reality check. Most loans offered on Peer Street hover around 7%. Yes, the sales literature says you can pull up to 12%. Real world experience says you will have plenty of opportunity to invest with a 7% return. Some loans are lower, more are higher. Loans paying 8% or more require a strategy.

Peer Street allows for automatic investing of funds in your account. What I do is keep $1,000 in the account and set the parameters of the auto-investing feature at 8% or higher, LTV up to 75%, loan term up to 60 months (I don’t mind a longer term investment, but you may wish to tighten this parameter) and $1,000 max per loan.

Peer Street sends an email when they invest in a loan automatically. If you don’t like the look of the loan you have 24 hours to cancel from time of notification.

New loans are available most business days. The higher interest loans usually are filled with automatic funds. The 7% and 7 ½% loans are frequently available for manual investing.

 

There you have it, kind readers. No fancy stories today. This is an idea I’ve been working personally on a small scale for a bit and wanted to share it with you. As a reminder, the links in this post are affiliates. Peer Street graces your favorite accountant with $30 for every new account I send their way. I have affiliate links for Prosper and Lending Club, but do not include them because I no longer support their programs. I’d rather be safe than sorry.

I can’t make a real recommendation for you personally since I don’t know you personally, along with all the relevant facts. My only recommendation is to take it slow if you find Peer Street appropriate for your portfolio. No heroes; just another nice product to handle funds living in the gap.


Real Estate Investing Platform



Attributes of a Wealthy Individual or The Smartest Guy in the Room Isn’t the Richest

Twin brothers walk into the Wealthy Accountant’s office. One brother is as smart as a whip with an IQ of 147 and a wiz with numbers. The other twin, while looking identical to his brother, is a bit short in the mental category. The less bright brother is hard working, but knows he can’t outthink his twin brother.

Which twin do you think has the greatest financial advantage? Which one is likely to become a millionaire?

Would you believe me if I told you the super-smart twin is orders of magnitude less likely to amass a financial fortune? Yet time and time again I see it in my office: smart people underperforming and average people hitting it out of the park.

Here’s the funny thing. Both brothers are probably equal in intelligence. Life experiences caused one brother to think of himself as average. Perhaps the less intelligent brother preferred working outside with his hands while the high IQ brother pursued a profession.

Doctors and attorneys are awesome at playing financial offense. Many professionals share this quality. But high levels of intelligence don’t correlate well with high levels of financial wealth.




Big Hat, No Cattle

Thomas J Stanley argues in his 2001 book, The Millionaire Mind, that many professionals with a high income don’t have a corresponding level of net worth. Decamillionaires (people with a net worth north of ten million) have a term for people with high levels of income and little to show for it: big hat, no cattle.

These high earning professionals are also extremely intelligent. So intelligent, in fact, they start to believe they can outsmart the markets by timing them. They also have another weakness. Professionals need to maintain an outward appearance of affluence to convince other they are really good at what they do. Who would ever believe an accountant driving around in a bank reposed beater or attorney living in an 800 square foot home?

Average people in average income jobs are more suited to seven and eight figures of wealth! You read that right. The salvage yard owner is far more likely to have a serious level of net worth than a doctor, attorney or (gulp) accountant. Stock brokers and other financial advisors should have an inside track, but spending levels and a high level of understanding of how markets work causes many of these professionals to trade or time the market. The only traders with a snowball’s chance in hell of winning long-term are the market makers and financial newsletter publishers.




My Side of the Desk

Swing around, if you will, to my side of the desk. From my perspective you can see things clearer.

Every day people from all walks of life wander through my office. I have law firms, doctors and even accounting firms as clients. By and large this group enjoys a higher income than average. They also have a low level of net worth compared to what they earn. Worse, I’ve seen more than a few of these professionals pulling in upwards of a half million annually with only a low six figure net worth to show for it.

Before we continue, re-read the last sentence of the last paragraph. For some reason I find it vaguely important to our discussion.

There are plenty of excuses as to why these people are worth only slightly more than their last paycheck. None of them resonate with me.

High spending coupled with high income leaves you just as poor as if you never earned a dime in your life! It’s not the level of income; it’s the level of spending!

Don’t leave my side of the desk yet. I have a few more clients to introduce you to.

Oh, here comes Sam. He worked in the mill his entire life. Not the smartest guy in the world, but a helluva family man. He goes to church every Sunday. His wife died a few years back. Worked in the paper mill his entire life before retiring with $4.7 million. By looking at him (or his car or his home or his . . . ) you would never guess he is rich. (Sam is a real client with a different name.)

Here comes another wonderful client. Jack has a landscaping company. He clips and maintains lawns for businesses and rich people, you know, the doctors, attorneys, financial advisors and accountants. Don’t say anything, but the guy maxes out his retirement accounts before adding more to his non-qualified accounts. Oh, and he is a millionaire too. Didn’t expect that considering the rust bucket he’s driving, did you?

The same pattern holds for farmers (they’re not all poor!), truckers, salvage yard dealers and guys laying concrete.




Reality Check

Don’t bite your tongue so hard. They aren’t all rich. Yes, I know guys in the military (or retired from) who are pretty darn rich. Many are pretty darn poor, too.

Not every doctor and attorney is net worth poor compared to their income. Many people in average jobs struggle. What I’m getting at is the people you expect to be rich are putting on a show. They have a big hat, but no cattle. They spend all their money putting on a façade. There’s nothing left to fund real wealth!

People with average incomes in jobs where there is little to no expectation of wealth have an easier time hiding their financial accumulations. A worn pair of jeans is more than fine to wear to work at the salvage yard or auction house. It’s expected!

When I first started investing in micro-loans on the Prosper platform I was able to see a few details on the borrower. Prosper provided a credit score and income range along with the borrower’s occupation. For some reason accountant’s needed loans in May. This blew me away for two reasons. First, an accountant should be flush with cash after tax season.

Second, some accountant’s work outside the tax field so they could need additional funds. Prosper also listed the reason for the loan request. When an accountant requests a loan to pay bills in May I’m dubious. Online lending platforms are not the cheapest way to borrow money! Any accountant worth his salt would never make such a poor financial decision. I say “his” because no woman would ever do something so foolish. (Yes, that was a joke.)

Prosper confirmed what I suspected from serving my clients. High income professionals frequently are poor handlers of money.




Smarticus

There is a lesson for the wise in this tale. You do NOT need a high income to be wealthy or financially independent! Average people in average jobs with average income can excel financially. The statistics are clear.

Sure, a high income can get you to seven figure net worth status faster if you can avoid the siren call of excessive spending to play the role. Even a below average income can grow into a tidy nest egg if handled properly. Minimum wage is a hard racket, for sure. But once your income climbs to a level even below the national average you have plenty of resources to fund an early retirement!

Excuses will show up in the comments. It goes with the territory on blog posts with this topic. They are still only excuses. Income level plays a role in your net worth. By age thirty you should have at least two years income invested. Once you reach 40 your net worth should exceed at least 10 times your annual income. If you are pulling down a $50,000 annual salary you should have a half mil tucked away in an index fund by your 40th birthday. As each decade passes the net worth report card should grow larger.

This is where the rubber touches the pavement. Really smart people want to trade stocks and bonds. They want to time the market because they did all the research. Of course the market makes a fool of the well educated.

There are only two ways to accumulate money in the market. The first is to drop the money into an index fund, or, if you are so inclined to engage an actively managed fund, a growth and income fund. Forget about aggressive funds and other crazy ideas. Your goal is to be rich!

The other way to get rich investing is to research listed companies for undiscovered value. Buy these gems and hold them for somewhere in the neighborhood of forever. Then go out and find another undervalued business to invest in.

Remember, you don’t want to be the smartest guy in the room. The smartest guy is often broke!

I want to be smart.  Just not that smart.

It’s been a while since I showed you my working papers. Below are my unedited notes for this post. It should also be noted the working title of this post was Attributes of a Wealthy Individualor The Smartest Guy in the Room isn’t the Richest was added at the last minute as a tribute to the Rocky and Bullwinkle cartoon. Hope the insight into my writing style helps you with your writing.

What characteristics are most common in the wealthy? High intelligence doesn’t guarantee wealth, it actually hurts! Smart people think they can outsmart the market and time it. Professionals have an appearance to keep. Doctors and sales people need to look the part. The massive spending required to “look good” reduces savings and all the profits those savings generate.

Average people have a much better chance. The salvage yard owner has nothing to prove so she socks away a massive percentage of her income and puts it into index funds because she know she can’t do better,.

I see it in my office all the time. A recent client picked up his return. He is retired with a serious seven figure retirement account before looking at non-qualified monies or other assets. He is an average guy from an average family retired from a mill job. And he’s rich.

Don’t be so smart to talk yourself into poverty. Intelligence can only dig you out of so deep a hole.



Stalking the Recreational Accountant

As regular readers will attest, I’m getting punchy at this point of tax season. Don’t worry. The insanity will pass (maybe).

This is the point where very difficult and unique tax returns show up on my desk. To clients: I’m making headway. Slower than the early part of tax season, but still peeling off work at a good clip. I still need to focus on quality over speed and some of these issues just take time.

I’ll be sleeping Saturday and back to the office Sunday for uninterrupted time.

Also, a reminder we have another drawing this upcoming week. Details on the Where Am I page.

 

What I’m Reading

Earlier this week I introduced you to a short story by Kurt Vonnegut. It’s worth reading, takes a few minutes and is free. If you haven’t already, take a moment to read Harrison Bergeron (& Activity). You’ll think of inequality in a whole new light.

 




What I’m Watching

I have no words for what I’m about to show you. FTL is really good and worth the time to watch.

 

What I’m Listening To

Simon & Garfunkel never fail to entertain. Enjoy Scarborough Fair.

 

Enjoy your weekend, kind readers.



Countdown Clocks

Countdown clocks abound. The most ominous is the doomsday clock counting down to Armageddon. With 26 days to the tax due date here in the States tax professionals are counting down to a less tragic event.

Early retirement was something I dreamed of from high school on. I was attracted to the seasonal nature of the tax profession. The ease at which tax offices can be sold also held my interest. The original goal was to build the business, save like crazy, invest said monies and take an early bow. I decided I should at least enjoy my profession if I’m going to give it my all. The unintended consequence was that I couldn’t unplug as planned.

By the time the birthday cake reached 40 candles I was ready to retire to a quiet and secluded life. Pulling off the Band-Aid fast was tried to no avail so I started a countdown clock. I published it on an old blog. The countdown clock listed the years, months, days, hours, seconds and even tenths of a second. That baby really had a lot of action on the right side.

So I could adequately plan my transition to Easy Street I set the clock at three years. I started an active search for buyers. Serious investors showed up. As the clock ticked down I started to visualize my life in retirement. I hated what I saw and chickened out.




Time Counts and Keeps Counting

When I was a young man I tagged along with my dad as he went to meet the owner of a restaurant in a small town near where I live. The restaurateur was in the final stages of selling his baby. He put 15 years into the venture and did rather well. I was perplexed over why he would quit at a time when he was at the top of his game. Now I realize how often professional athletes make the same mistake I did back then. He then gave a nugget of wisdom that has never left me. “If you can’t make enough to retire from a business in 15 years you never will.”

As the conversation went on he expanded his philosophy. He said the first five years you work like crazy to get the thing off the ground. The second five year period you start making real money. The final five years you should turn obscene amounts of money and if you save and invest there should never be a demand to work again for you.

Wisdom shows up from unlikely sources. An afternoon ride with dad turned into a learning experience. Learning experiences are everywhere when you are open to the knowledge.

In a way the restaurateur had a countdown clock he started the day he opened the doors. In a way I did too. The difference is I didn’t follow through.

Life is too short to waste on things you don’t enjoy. Part of the excitement of life is the feeling we had as kids on Christmas morning. Wanting is far more pleasurable—and memorable—than having. Once the gifts are opened the excitement is over!

Countdown clocks provide adults with the same opportunity. It’s common for people to have a countdown to vacation or retirement. Expecting parents countdown to the expected delivery date. Now if baby would just adhere to the schedule mom and dad would be grateful. (Baby will provide many more disappointments after messing up the delivery day. And a diaper or two hundred.)




Should Everything Have an Expiration Date?

We’re all familiar with countdown clocks in all their manifestations. The real question is: Should we embrace the countdown clock?

I personally think the countdown clock is one of the most powerful tools we have if used properly. As much as I love tax work I’m still feeling the burn as we approach the deadline. I don’t start the countdown clock in February. I’m still fresh and full of lust for another tax project. Now, with a couple months of endless sitting and pounding out returns, I’m ready for the expiration date to arrive. (Twenty-six days and counting as I write, but accountant’s already know that.)

Life should be exciting and filled with anticipation. Expecting a child is awesome (I’ve done it twice so I know), but as Mrs. Accountant can attest, there comes a time when you want that creature cut out of the womb!

Anticipation only works if there is a release at the end. My business exit countdown clock lost its punch when I removed any chance of an expiration date. It also lost meaning.

There will still come a day when I no longer can walk the mile. It would be a dirty shame if I continued on my current path until I was unable to perform in an acceptable manner. There is a sad story behind that.

When I started my practice I hired an extraordinary tax professional. Her name is Bev. For decades she lived the dream of seasonal labor with plenty of time the rest of the year to pursue additional dreams. Bev’s husband worked for my dad’s business. Bev handled books for another business of my dad’s. She also had experience working in other tax offices. She was good at what she did.

Then that thief we call time left his mark. Bev grew older and I sometimes like to say she lost a step as she approached 70, but that isn’t the reason I didn’t call her back one year. The last few years she worked for me the weather of NE Wisconsin made life miserable on Bev. When the temperatures dipped below zero as it does every winter, Bev struggled getting from her vehicle to the door of the office. It wasn’t a long slog either. The cold just took her breath away and it started to scare the hell out of me.

If anything ever happened to Bev because I kept inviting her back for one more year I could never forgive myself. I planned the exit for the last few years she worked for me. Eventually there was no question. She had to take a knee.

Bev is now a client. She is due any day now. I am grateful for all the years she gave to my firm.

If only I could garner the courage to treat myself with the same respect.




Expiration Isn’t the End!

Only one expiration is the end and we all get that one right the first time.

A countdown clock can create anticipation for a vacation, wedding day, retirement party or any other event. Letting go is really hard for some people. Remember who you’re reading.

A countdown clock, an expiration, doesn’t mean the end; it should signal the beginning of a new adventure. Bev was hurt when I told her my concerns for her health. She knew I was cutting her loose. Bev is a lot like me. She would have died running the obstacle course for my company. As her employer I had an obligation to make sure she didn’t die for the cause. Bev deserved an awesome retirement and is enjoying one. Another tax return isn’t worth risking your life over.

There are countdown clocks I have adhered to. When this blog came around I had a difficult choice to make. I have a farm, a tax practice and a new blog. One had to go. I farmed most of my life so I decided it was time to take a different path. There might be a day when I return to my roots. (You can count on it.)

I started a countdown clock to liquidate the farming obligations. Now I have a few chickens for personal consumption. Breakfast is on my ladies.

One end was also a new beginning. You can do anything, just not everything. Choices must be made. Everything should reach an expiration point.

Expiration opens opportunities. I can set a countdown clock in my office without walking away from the profession! I can hire more qualified tax professionals and train them. I still get the thrill of tax season without the pain of endless hours in a chair. (For the record, that sounds mighty nice about now.) Clients sometimes hate I don’t take every last stinking step myself. They don’t know what they are asking for. Most men (and I say men because we are weak compared to the more civilized gender) run until they break. Clients will not like that either.

Now that we have the farm sold (okay, I still own the farm; it’s just devoid of animals at the moment) and the tax practice has an expiration date, what about this blog? Oh-oh! Did I strike a nerve?

I haven’t started a countdown clock for my practice though it is for sale at the right price. (Note: It’s cheaper now than latter in the year.) Realistically I’ll be around for the foreseeable future. But I may not pound as many numbers as I once did.

A flashback to the days when Bev and Jeff haunted the halls of Tax Prep & Accounting Services, Inc.

I’ll let you in on a secret. I spend more time reviewing tax returns than preparing them. Keep it quiet though. Clients don’t have a clue. If clients ever find out they’ll be glad to hear I reviewed every return this year. (So far.) That will change as the calendar rolls a few more years into the future. It’ll be gradual. New and old employees will do more of the work and the world will never know.

The countdown clock has begun.

And as for this blog? I’ve been writing since high school. Finished my first novel my senior year. (Or was it my junior year? I always forget. Age.)

I’ve written other blogs, published books, sold magazine articles and short stories. I even published on content farms. (Notice I didn’t provide any links. Not all material is worth reading. Even your favorite accountant needed a growing and maturation phase.) There is no doubt I will write until the day I die.

But I also wrote what I now call my skanky blogs in the flash fiction TG community. I did it for four years and the traffic was seven to eight times more than this blog. I had my reasons for writing the material. One reason was I always wanted to learn to write flash fiction people would read. I worked that out of my system. Next!

All good things must end. Today isn’t that day for this blog or my practice even, regardless what I say while in a sleep deprived coma. Tax work, consulting and this blog are here to say for at least a few more years.

But if I did start a countdown clock and place it front and center on the home page it might bring back some of that excitement and anticipation.



Inequality is Welcome in the FIRE Community

Inequality isn’t all bad. I think we can agree Mrs. Accountant is smoking hot while yours truly is a bit drab. Then again, if you have a tax issue you probably want the drab guy.

Kurt Vonnegut, Jr. published Harrison Bergeron in 1961. His short story illustrated the ultimate end of inequality as only the humorist could. Today we think of inequality in term of race, gender or income. Vonnegut knew this was only background noise to the real issues of inequality.

In Harrison Bergeron the attempt to erase all inequality is taken to a whole new level. Beauty, strength and mental capacity were also dished out in unequal portions to the masses. To compensate, the beautiful wore grotesque masks; the strong wore heavy weights to hold them back; and intelligent people were hit with a mental pulse of sound every twenty seconds to dumb them down.

Inequality is all the rage today. We demand income inequality between genders and race. On the surface it all seems good and honorable. Beneath the hood something else might be at play.

In Vonnegut’s story Harrison has a keen mind and wants to use it. He breaks free from the shackles holding him to the lowest level of mediocrity. The government action is swift. Harrison is killed, along with his newly discovered girlfriend of tremendous beauty. The government snuffed out inequality before anyone could feel infringed by another’s superiority in anything.

The inequality debate isn’t completely about levels of pay or rights. In many cases it’s about more about “me”. Groups of people demand more because they think as a group they have a better chance for more as individuals.

As we saw in Harrison Bergeron, erasing inequality doesn’t always lead to desired results. Making everyone the same lowers the bar for all involved and it doesn’t have to be that way.




The Joy of Inequality

Inequality is in part a choice. A woman may choose a lower annual income to garner more free time with family or to have a child. Men are starting to join that movement, asking for more paid leave, even if it means a lower salary or fewer other benefits, to spend time with family. On the surface, again, it appears—if you only consider annual wages—that an inequality has arisen between employees with a family and those with a smaller family or fewer family issues.

The perceived inequality is actually an increase in quality of life. What one person desires is completely different from that of another. Offering family leave has less value to someone with a small or no family. Those with family, young parents for example, might find family leave the largest inducement an employer could offer.

Another benefit growing in popularity is student loan reduction. Some companies now offer young employees additional services to help them reduce their student loans. The benefit is worthless to those with no debt.

Inequality can be unfair. Some is a conscious choice. Working part-time or a side gig fits the temperament of some people better than a stress filled, high pressure environment. Some thrive on pressure. It isn’t unfair to pay people in the high pressure jobs more. Putting a mask on the beautiful, weighing down the strong and interrupting the intelligent doesn’t make things more equal!

True income and wealth equality comes at a heavy price. I discussed in the past the only ways income and wealth became more equal historically: war, famine/plague, revolution and societal collapse. Walter Scheidel does a better job of fleshing out the details in his book, The Great Leveler.




The FIRE Community and Inequality

A powerful movement in our society today is the FIRE community. Their dedication to financial independence (FI) and the ability to retire early RE), or at least at a reasonable age, is making headway into previously cherished traditions of lifelong labor in the organized workplace.

From the beginning the FIRE community understood wealth and retirement was not a product of equality for all. Most of the inequality was either by choice or slight in nature. Some members of the community powered their way through to FI as fast as possible to engage the life they wanted. Others took a slower route. The gap year or years became part of the lexicon. Net worth became an interesting discussion in closed quarters.

What surprises the most is the range the group holds as FI. Some say a couple hundred thousand should do it. Others still want to pack the crate with several million. One unique animal in the crowd bows out well before FI to take a slower pace the remainder of her life. Part-time work or side hustles fill the gaps.

A millionaire roundtable meeting at FinCon17. All were not equal while all were equally welcome.

As a community it is felt: to each their own.

The FIRE community is special! Judgment is withheld when matters of finance come to the fore. If somebody is happy never engaging in a full-time serious career, nobody thinks twice about it. A few eyebrows are raised when a member want to work like a dog until death do him part. But desire to continue working doesn’t revoke membership.

The original Star Trek series has a unique underlying philosophy connected to Mr. Spock and the Vulcans called IDIC. It stands for Infinite Diversity in Infinite Combinations. The novels covered the topic more than the television series. What was meant by IDIC is that the more diversity, the more combinations of different people, makes us stronger.

A glaring example is shown us by the recently departed Stephen Hawking. Hawking was a genius on every level. Unfortunately, life didn’t give him an equal measure. His body suffered from a degenerative disease. His mind more than made up for it. Could you imagine Hawking in Vonnegut’s story? Society would be forced down to Hawking’s physical level while Stephen’s mind would be throttled to the lowest mental member of society.

Inequality can make us stronger. What we need to eliminate, or at least reduce, is discrimination. Race and gender is not a crime. Sexual orientation isn’t either. These are the hard problems to solve. Inequality, income for example, is not always bad.

Underpaying people is a form of discrimination. The FIRE community doesn’t discriminate. The FIRE community example is to accept all people from all walks of life. Workers should be paid a fair wage and provided a safe environment. That doesn’t preclude dangerous work. Risky jobs are secure when the company treats the team as family.

The FIRE community is the most diverse of any I know. It has the Vulcan IDIC philosophy. Color of skin doesn’t matter. Religious beliefs, or lack thereof, don’t affect membership. Both genders and in-between are welcome.

You will find people deep in debt taking their first steps toward financial freedom in the community and those with millions in investments. Side hustles abound. Travel is indicative while accepting those who prefer the closed quarters of home. The homebodies experience the world through the eyes of the world travelers. Once again IDIC turns weaknesses into strengths.

Vonnegut showed us the foolishness of demanding equality in all things. Too much inequality can damage the whole. But Inequality isn’t bad in and of itself. There is nothing wrong with accepting less, an unequal portion, for the same job. In my profession there is the free VITA tax service. There is also plenty of room for professionals to earn a living too. This is not damaging inequality.

As a society we need to embrace inequality. Differences force us to think in new ways. Those on the lower end may not enjoy the process. I get that. But it is rare to find a genius in the lap of luxury. Elon Musk is from South Africa; Steve Jobs had a difficult early life. Equal didn’t make them stronger. Inequality did.



Dealing with Resentment

It happens to everyone eventually. Long hours at the office or illness or other stress leads to fatigue. Then you get behind the wheel. Distracted by your own issues, another driver cuts in front of you and you react in the nick of time. Your heart races as you speak in a foreign language consisting entirely of four-letter words.

The other driver waves a quick apology and keeps going. Angered by the mishap, you tell your co-workers about the idiot on the highway. The rest of your day is ruined. At home you tell the wife, kids and cat (if she’ll listen to your ranting and raving) about your early morning near catastrophe.

The next day you’re still irritated by the event of the previous morning. You are rightfully angry. Yet you allowed another human being to affect how you felt for over a day while they went blissfully along unaware you even exist!

Minor distractions happen all the time. A car cutting you off in traffic is annoying, but some people take to road rage. Most often the transgression is unnoticed by the offender! The manic that cut you off, causing all kinds of outrage and stress, goes merrily along without a clue of you are. Yet you still suffered an extended period at your own hands. It wasn’t the other driver who harmed you! You did that all by yourself.




Deeper Wounds

We resent careless drivers, especially if they interfere with our journey. Unless an accident is caused the transgression is minor at best. Resentment is the acid which destroys the container which holds it.

There are times we can’t shake feelings of resentment. Betrayal is worst. When a significant other has an affair the wound cuts deep. When a friend stabs you in the back it is hard to shake it off. Even if the wound can be healed a scar remains.

I recently was betrayed by two people I highly respected. I never saw it coming. I was at a conference when I received a late at night text to visit. The individual who texted had recently discussed a business venture with me so I expected he wanted to move forward with the project. I’m notorious for my willingness to work any hour of the day when business is involved. I texted my room number.

A few moments later there was a knock at the door. The potential business partner brought along a friend I also knew and respected. It seemed odd but I let them in.

The two trusted friends then proceeded to destroy said trust. Mrs. Accountant was in the room as they dissected my life with accusations, demanding a detail by detail explanation. They had an incomplete story and didn’t care. If Mrs. Accountant and I had a less firm marriage they could have caused a divorce. It was that serious.

I was furious! How dare they question me? My personal life is just that: personal. And none of their damn business I might add.

All could have been forgiven up to this point. Misunderstandings happen. You hear a rumor or gossip or read something on the internet where it must all be true and act on the faulty information. Most of us have had moments where we’ve choked on our tongue, present company included. When it’s discovered it was an overreaction you apologize and hopefully move on.

That didn’t happen in this instance. The friend who texted doubled down on the stupid and destroyed the relationship forever.

Near the end of the conversation he said, “If your business and blog are destroyed you don’t care anyway with all the money you have.”

The temperature reached boiling in record time. Let me make something very clear. I don’t do this solely for money. We call that a chump’s game around here. I do what I do because I enjoy it and some second rate schmuck screwing it up isn’t going to make me happy.




Inappropriate Response

My reaction, and it was pure reaction, was to fire from the hip, all guns blazing. I was hurt and betrayed. I wrote a post about it since unpublished. It was terribly written because I was writing in the heat of anger. I was hurting everyone around me over my wounded pride.

I removed the offending parties from social media because I wanted nothing to do with them. I only use social media as part of my business, but I didn’t want to see or hear from these people again. I was cut deep and it wouldn’t stop bleeding. From an enemy I could expect this, but a friend? No, a friend’s betrayal cuts to the bone.

Now it’s tax season and the hours are long and sleep minimal. My natural defenses are weak. Sunday I went to the office for a quiet day of productivity without interruption. Lack of sleep powered with a heavy dose of coffee lit my fire. The anger bubbled to the surface.

Declining blog traffic set me off. I put serious hours in this thing and neglected any promotional efforts after the fateful night last autumn. Long hours and fatigue reached their boiling point again. Resentment rose to the surface when I started crunching the numbers. Traffic dropped from a high several months back to 44.6% lower in the last 30 days.

This blog isn’t about padding my wallet. But money is still an important factor. All the profits are destined for charities. The problem is that the profits are pretty minimal right now so any philanthropy is coming from other sources. I enjoy the writing, but am addicted to the acknowledgement of my efforts. Donations to charities (and a very coveted award I won) express acknowledgement. Without something to give I’m not feeling the warm and fuzzy lately.

For a few weeks now I started to feel like quitting. I’ve joked in the past you can buy my practice at a reasonable price right about this time of year. In August I’m happy as a clam so the price is a lot higher. Now, with constant pain from all the sitting and fatigue, I’m looking for the exit. I need a nap to recharge my batteries and the next scheduled nap is four and a half weeks out. It always hurts this time of year.

I cried on Twitter about the traffic issue. (I’m working on my presidential qualities for the next election.) And I blamed it all on you know who (the midnight visitor).

Anger and resentment set in. My visitors hurt my relationships with other venues. Jealousy happens in all fields, but I was unprepared for the vitriol from people I trusted and respected. And the resentment never went away.




I Thought This Was a Personal Finance Blog?

It is. That is why resentment is such an important topic. The traffic issue is in large part my problem. Out of anger I retrenched. I know I’ll never go back to the route of advancement I was formerly on. Still, even with other opportunities, I dragged my feet.

Writing brings me great pleasure. Even tax work! Long hours can physically hurt, but it’s all worth it in the end. I make people’s lives better and that feels better than all the pain the profession dishes out.

This is where I provide meaningful steps to solve issues of resentment. In the past I would always say something from the Stoic literature. In life I usually just let stuff go. It might bother me for a bit before it dissipates, but before long it is forgotten.

This time was different. Interpersonal relationships cause deeper wounds. Flesh is blown from the body. The wound may scab over, but a deep depressed scar is plainly visible.

What I want to communicate is that you must find ways to cope. I’ve included two YouTube videos I found helpful. It’s important! Throwing away the most valuable things in life over a slight is borderline crazy. Nix that. It’s totally batshit crazy!

There is more for me to share. Writing does need an audience to ferret out the juicy pleasure. Most successful blogs in this demographic have more traffic in a day than I garner in a month. Part of the reason is my lack of desire to use Pinterest and other resources to spread the word. Facebook and Twitter send minor traffic and search engines are just starting to notice. I spend all my time pleasuring myself, ah, doing what I like most, writing, and avoiding things I don’t care to do: promotion.

Now that I’ve written close to 1,500 words about resentment and why I’m currently feeling it, I feel better.

That is my advice. Talk to someone about what is causing your resentment. The one who caused the resentment might not be the best person to talk to about it. The guy you flipped off on Interstate 7 is unlikely to want a stimulating conversation on your feelings.

In relationships conversation is vital. Mrs. Accountant and I have always had a strong relationship. We weren’t luckier than everybody else, experiencing fewer challenges. Quite the contrary. The challenges levied against us would bring regular army to its knees. It is all about the communication.

Keep a journal. Write your thoughts and feelings. Ranting to yourself like the crazy guy who talks to himself as he walks a crowded street is not always effective. It could get you locked up in the loony bin if you’re not careful!

My Sunday at the office wasn’t as productive as it should have been as I wasted time walking the halls ranting over my resentment. It cost me money and got me further behind. Blame it on lack of sleep or whatever. It doesn’t matter! The consequences are all the same.

Writing is better than talking. Writing allows you to think about what you are saying. Writing has a way of getting it out so you finally get some closure.

If you have been cheated on, abuse or betrayed, write about it. Get it all out! The sooner you do, the faster the healing can begin. Yes, there will be scars. Yes, it will still hurt. But you will learn to deal with it and get the pain out so it can scatter to the wind.

The only thing you should never do is publish your rant. You don’t want the public to think you are that crazy guy walking the street talking to himself. Worse, you could get a midnight knock on the door of your hotel room.



Stalking the Accountant at the Finish Line

 

I see what you’re up to. Don’t even think about it.

Thursday this week was the due date for calendar year S corporations and partnerships. We are in the heart of tax season and your favorite accountant is feeling the strain. Stress is okay as workflow is moving reasonably well with a few notable exceptions I intend to rectify. The April 17th deadline looms.

 

Money was handed out this week: $100 to a subscriber and $100 to commenter.

Brett S. from Lake Havasu AZ is our subscriber winner. He took the PayPal cash transfer. Congratulations!

As a side note, Brett is a really lucky guy. He was the third person chosen, not the first. The name pulled out of the random generator hat would have been our first non-U.S. winner, but he/she had unsubscribed. The second name pulled also unsubscribed within the last few days. Yikes! Ya gotta be a current subscriber to win the subscriber drawing.

 

Our second winner is “Jason E. of Providence, RI (originally from Minnesota….and hope to get back to the Midwest soon)”. He took the Amazon gift card.

There were 186 comments in the last 30 days; Jason’s was number 117, the number the random number generator called as the winner. My comments are excluded from the drawing for obvious reasons. (Hey, look everybody. I won so I get to pay me!)

Here is the blog post with the winning comment.

This is the short and simple comment that put $100 in Jason’s pocket:

Thanks for the find. I will definitely be reviewing this within a short period of time.

Consider using an Amazon link from this blog with the winnings as it helps fill the coffers used to fund future drawings and gifts to charities.

 




What I’m Reading

An interesting short book I enjoyed this week is The Lessons of History by Will and Ariel Durant.

 

What I’m Watching

I’ve never been a Suze Orman fan and this video didn’t help me think better of her. Of course, take anything you see online (actually anything from anywhere) with a grain of salt. It’s easy to manipulate facts in our modern age.

 

Every so often I go back and review a documentary on the 1929 stock market crash. It was such a fascinating time.

 

The water dispenser died on my fridge. A YouTube video and I’m off to do it myself, saving some serious dough.

 




What I’m Listening to

As regular readers know, my youngest daughter reached the age of majority this week. I’m having mixed feelings.

Here are two songs I listened to this week to reflect my melancholy.

 

I also found this nugget. I like The Good, the Bad and the Ugly theme song. When I saw this scroll through I expected a laugh. Was I surprised! The theme song finishes with The Ecstasy of Gold, another excellent song.

 

Have an awesome weekend, kind readers. See y’all on the other side.



The Bittersweet Joy of Raising Children

Alone.

My youngest daughter turned 18 on Wednesday and while Mrs. Accountant and I are not yet officially empty nesters the handwriting is on the wall. High school needs to be finished and an adjustment into adulthood is in order before she leaves. The timing is the only thing undecided.

My oldest daughter (I have two girls) stuck around home milking mom and dad for all it was worth. At first the prodding was gentle. As the years passed the cattle prod was more insistent. It’s wasn’t about her behavior either.

Both my girls are well behaved and quiet. Neither took to drinking, drugs or promiscuous behavior. Brooke, the youngest, enjoys playing on the computer and working outside. Heather buries her nose in a book or online research. In many ways it was like they weren’t here.

Quiet and well-behaved doesn’t mean we didn’t enjoy quality time with the girls. We spent many hours outside throwing Frisbee. “Puss arm!” and “Butter fingers!” were shouted often as we laughed away an afternoon. Walks to the creek or around the farm are all fond memories. Fire pits, cook outs, and farm animals filled the formative years of my girls. I hope it was enough.




Where Did the Time Go?

Intellectually I knew my children were growing up and working toward a life of their own. Somehow it never sunk in that it wouldn’t last forever. Still, I managed to sprinkle each day with my wisdom and sorted humor. It’s amazing my kids survived at all with a dad like me.

It was impossible to know if my lessons were sinking in. Advice on interpersonal relationships was hardest because your choice in life mate determines a serious percent of your wellbeing and happiness. A good marriage or dedicated relationship (or whatever they call it these days) is one of the most important decisions you will make in life. Money is important, but I can be very happy and poor with the right woman next to me. I was extremely lucky in meeting Mrs. Accountant. Very lucky indeed! She stood firm through the roughest of storms. We weathered a lot and grew stronger over the years.

Here I am with Mrs. Accountant, my girls and nieces at the Jingle Bell Run.

Money was also a common discussion. I kept repeating my mantras hoping something would stick. Instead of demanding my girls live frugally I repeated things like, “You don’t save money by spending it.” Of course I had to qualify the statement as they got older. Spending money on your health is usually a good investment. Changing the oil in your car is spending money, but it does, in a way, end up saving you a lot more.

The two areas you are told never to talk about in public—politics and religion—were common discussions in the Accountant household. We’ll skip the religious conversation for brevity and to allow time for a short detour through politics.

Remember, the original, and still primary, goal of this blog is to leave my children a legacy of my knowledge and experiences. You are here to observe and comment if you want (and do it respectfully). My political ideology is definitely centrist with mild detours to the left and right.

Ronald Reagan was president when I reached the age of majority. I liked Reagan and voted for him when he ran for a second term. It was my first presidential election. Age and experience have tempered my appeal for Reagan, but I still like the guy. The first Bush got my vote, but his performance and communications skills left me wanting.

I voted for Clinton twice. The Monica Lewinski thing didn’t bother me. I knew it was dirty politics only. Considering what we see today neither party is much concerned with ethical behavior when it comes to women. It’s a talking point until they get caught in their hypocrisy.

What I liked about Clinton was his understanding of economics and government finance. The Republicans cried about the deficit once a Democrat was in office. President Clinton knew exactly how to balance the budget and he did it! Clinton knew he could keep a strong economy with growing government spending and balance the budget if he kept spending increases to 1% below the inflation rate. A deficit at 4% of GDP was resolve in about four years on its own. I thought it was genius and few ever talked about it. I guess you have to be an accountant to understand.

Bush II never thrilled me and I voted for Gore and Kerry. My opinion of George W. Bush has improved over the years. I never disliked the man, but I felt he was ineffective and too much a puppet of the establishment right. I’d still sit and have a beer with the guy. I think he is an honorable man forced onto a very big world stage.

I liked President Obama. He was cool under every kind of pressure. I voted for Obama the first time around and would have voted for McCain f he’d have picked anyone else for a VP. John McCain would have been a good president. His just right of center ideology sat well with me. He also played fair with both sided of the isle. Something I admire as professionalism.

Trump is dangerous in my opinion and I’ve shared my thoughts personally with my girls ad nauseam on the subject. Leadership by tweet is not leadership in my world.




Back to “Where’d the Time Go”

Politics is an important discussion point to have with your children. Your children will pick up your position on the political spectrum and that isn’t a bad thing. They’ll stray when they’re ready, also a good thing.

Politics is important and an important part of this discussion because politic affects many money issues. Tax laws can help or hinder you on your way to financial independence. Retirement plans offer tax advantages. The level of advantage is an inducement toward solvency.

Enjoying an ice cream at Frogg’s in Sherwood, Wisconsin.

My disdain for Trump doesn’t cloud my judgment because no matter how much I like or dislike a political leader I know some ideas they have will sit well with me and others less so. For example, I agree we needed tax reform. I’m not as excited the final result will allow for a long-term lower adjustment in rates, but since my crystal ball is cloudy on all future events I withhold judgment. Trump’s willingness (and last I heard a soon to be real event) to have a face-to-face discussion with Kim Jong-un is something I highly approve of. I also think Trump is more qualified on this one issue (face-to-face with Kim) than any president to ever deal with North Korea. I’ll withhold judgment, of course, but am guardedly optimistic. (As I read this aloud to Mrs. Accountant and Brooke I was informed the meeting will not take place. I hope Trump reconsiders. This is his strong suit.)

And then we realize the years have got behind us and the kiddos are finally adults.

After a slow start getting off dad’s couch, Heather has shown real maturity as she gains new friends in college. She is heading to China this summer with future plans of living permanently abroad. I wanted her to get off my couch, but I didn’t think she would travel so far away.

Heather works most Friday’s in my office. She is starting to miss more and more as she continues to spread her wings. She was coming home every weekend. Now she misses some weekends. Soon she’ll be gone for a month or longer and then. . .

Yeah, I miss my sweetie. A good parent teaches and then allows, even insists, their kids build a life of their own. Mom and dad are always there as a sounding board. However, flying is a solo sport. I gave them the tools. It is up to them now. I’d be a liar if I said my heart doesn’t flutter as I watch.




The New Kid in Town

For the Accountant household there are no new kids in town. The kids are all gone. Brooke is an adult now as she reaches for high school graduation and big plans of her own. She has no plans of moving out at this time. But before long the call will be heard and eventually answered. It is the way life is meant to be.

The house feels emptier without Heather around most of the time. She stays up really late (midnight or later) while Brooke and mom go to bed early (around 8). My bedtime is in between. I love the quiet time and house to myself for reading and writing. Yet, there is an emptiness causing me unease. I doubt it will ever go away.

No Regrets

I don’t regret the path I’ve chosen. Mrs. Accountant was better at staying at home than I ever was. Sue raised our girls with incredible patience. She has been a guiding angel for our children and her wayward husband. I can only imagine what she feels as the house grows quieter.

Whenever the girls had an event I was there. Except for 14 months I was self-employed my entire life. The drive which pushes me incessantly also knows when to back off. When it comes to family nothing is more important. I’d rather be poor in cash and rich in family than the other way around. Money is something nice to play with and fill time, but family is the real meaning of love and happiness. Family is what makes life worth living.

Tax season keeps me in the office long hours. Early in my career the office was our remodeled basement. Since 1995 I’ve enjoyed a storefront to escape to when practicing my passion. For nine months a year I am home a lot. Tax season is a nice reprieve for the family from a crazy dad. Then it’s time for the prodigal dad to return home.




Alone, Naturally

The day is fast approaching when Mrs. Accountant and I can sit alone together and enjoy uninterrupted time. It’s a skill we haven’t had much time to practice. There is a sadness in the approaching moment.

No goodbyes, just good memories.

I’ve always idolized older people who have the time to satiate the lust for learning. The ability to while away a day immersed in books appeals to me. I do also understand it is better to want than to have. It may prove difficult to concentrate when my thoughts keep straying to the years when my girls roamed the house.

I hope I don’t second-guess myself. That would lead to misery! I made the choices I made because I thought they were right at the time. There is no value in torturing myself with paths I didn’t take.

The lessons have been taught. All that remains is gentle support and guidance. It is a bittersweet joy raising children. Never once did I dream I would feel like this. Honestly, I can’t remember a time when I thought about the instant my last child would leave our home to live her own life. I never prepared because I was unaware of what should have been obvious.

Still, I have no regrets. I brought two fine young ladies to adulthood. For all my flaws they turned out darn good. There is no doubt Mrs. Accountant had a lot to do with it.

Even Pinky, our cat, sits in the front window more now. She stares to the distant horizon and chirps with thoughts I can’t even begin to imagine. Pinky probably feels it’s time for her to roam free too. She might also want to consider the difference between wanting and having.

Soon the house will be empty. Then I can start dating that young lady again I met oh so many years ago. No kids. We can dream again of our future.

Forever.