Archive for January 2019

Challenges of Running a Successful Blog

Learn how successful bloggers grow their business.

Blogging can be fun, but takes a lot of work.

Blogging is a business. Sometimes it’s hard to believe, but it is true. Along with podcasting, speaking and every other form of training and education, blogging is a business. Sometimes a really big business. And businesses take work to manage and grow.

It is easy to forget that those friendly bloggers you communicate with work some serious hours to bring you information and perhaps a laugh or two. Most people don’t realize bloggers are sweating it out at the keyboard in the wee hours of the morning to get a post out on schedule. 

And then there is the invisible work. It seems like blogging is about the cheapest hobby going until you realize that every part of the platform demands a fee and usually loads of time. And that is where this blogger enters.

I originally planned a detailed post of the coming collapse of China when the IRS released another 249 pages of regulations on Section 199A. The ink wasn’t dry before the calls flooded in for a brief post on the IRS release. The good news is we finally have a definition for a trade or business as it applies to 199A. The bad news is those 249 pages contained a lot of material and one simple post wasn’t going to cut it. A series was in process before the next hammer fell.

 

Time to Get Social

If I’m going to put in all this work I may as well bust tail to acquire a few readers. You see, people don’t magically find my glistening prose. (Yeah, I know. Surprises the heck outta me too.) I’ve done all the obligatory stuff: auto-posting, email list, attend conferences, remind everyone I see I have a blog. And traffic has been good for a tax blog with heavy doses of personal finance mixed in. 

But more is always better, I heard, so I purchased a few courses to hone my skills. First I attended a course on Pinterest and saw my Pinterest traffic go from nothing to several hundred page views per day and still climbing.

Then I cracked open my wallet for a very in depth Facebook marketing course called Moolah. (Hint: Rachel is one awesome lady when it comes to Facebook. She knows her stuff.) Here is an example of some of the free stuff she offers from her course, banned words on Facebook, for example. The free Facebook group alone will send your traffic higher

Increase your blogs ad revenue with tricks used by the most successful bloggers today.

Automate the hardest part of blogging.

The Moolah course is an intense 10 week program. (You have access to the videos and other materials for at least a year afterwards and there is a special Facebook group for graduates to keep pushing their traffic and sales to the moon.) While in the course I was informed I wasn’t handling ads correctly. I used Google ads, of course, and another platform called IMS. It was a small, yet steady stream of income to cover blog costs. With my traffic levels I was informed I needed to move to a more robust platform like Mediavine. So I took the plunge.

As this was happening another serious request came into the Facebook private group. (Y’all are invited to join our august group and The Wealthy Accountant business page. It is a great place to meet like-minded people and learn how to cut your taxes and manage your money for greater returns.) A reader asked about stock options, the kind granted by an employer, and that wasn’t a simple answer.

So, the China post was on hold even though this reporter has inside information about China that will shock most readers. I will post on this soon due to the serious financial consequences. The 199A post is also delayed due to the imminent incentive stock option issue. 

And now all those posts are on hold as I just spent 30 hours of my weekend before the approaching tax season ripping code from this blog. Why? It seems Mediavine is a vibrant platform requiring all old code removed before they go live. Well, once the process was started my other ad revenue was reduced to zero as the transfer took place. What was supposed to be a quick flick of the switch turned into a detailed review of all 454 published posts to pull out rouge ad code and other issues from the early days of the blog. This became priority if I wanted this blog to stay viable.

The good news is I did it. It is Sunday night as I type and I think I got all the problems fixed. I’ll find out tomorrow morning (probably as you read this). If you don’t see an ad anywhere on the blog you will know I’m still toast. Now I have to sweat it out as Mediavine is an automated system; I have no idea how they will display ads. I demand it is tasteful and useful to my readers. Time will tell.

 

Writing Shtick

The best news is that publishing posts from now on will be faster and easier. This weekend opened more of my time in the future with the improvements. (As long as I live long enough to reach the time break point.) 

But publishing a post is not the most time sensitive part of the process: research is. Tax issues take time to unravel. Answering a client question is faster because I only deal with one facet of the issue facing the client. When writing I must take into consideration all other possibilities a reader might encounter. This is more challenging than it sounds.

The China post requires a modest amount of research. I already have the links built. However, I need to pull from multiple sources, including a source inside China, to complete the post. Still, there wasn’t enough time to do it justice.

The 199A issues are so massive and time consuming I don’t know when I’ll be able to tackle the issue for the blog, but I am committed to a short series before tax season gets too far along. This is important for readers! The weekend workload just didn’t offer anywhere near the time I needed to get a quality post out on 199A.

The same applies to the incentive stock option post.

So, if time didn’t cooperate, offering me the chance to write a detailed financial or tax post, what was I to do? Well, you’re reading it. A post outlining some of the back office headaches of running a blog is easy to write because I can just tell the story of my weekend. Other bloggers should find value in this post while non-bloggers will gain a greater understanding of what it takes to keep a web page up and vibrant.

 

Whether You Believe it or Not

And if all the stuff above isn’t enough, we get some wonderful Wisconsin weather. The forecast has a foot of snow in it for this evening with plenty of blowing to make it as miserable as possible. Then temperatures will dip colder than -20 F. Wednesday’s high is forecast at -12 F. Yes, that is the high for the day. Welcome to the backwoods of Wisconsin.

None of this is meant as whining. I should have known better things wouldn’t transfer to Mediavine as smoothly as predicted. It’s still an excellent learning experience which should increase ad revenue by a significant margin and save time posting from now on. 

As for the weather, there was a hint the weekend would end with snow so I brought plenty of work home with me Friday. Technology today allows me to work from home and it’s as if I’m sitting at my desk. The bad news is I don’t know if any employee will make it in tomorrow. Everything is closed tomorrow: every school, program and every business I checked. 

Write viral blog posts, increasing traffic, revenue and sales. Write something meaningful for your readers. Provide value. Killer titles meant to go viral.

Write something meaningful for your readers. The rest will take care of itself.

And good thing. I can’t get the tractor running tonight so I need to get up early if I’m going to get snow moved so I can get out my driveway. Ah, when it rains, but it pours. Snows, I mean

Actually, I had a great and productive time last week and this weekend I killed it. Things were looking ugly for a while when I found some crazy code from the legacy platform when this blog was set up. But I broke through to the other side. It looks like the code is clean now.

Technology also bails me out. Twenty years ago a snowstorm would devastate my schedule. Today I log in from the living room couch and get more work done than if I was at work because there are no interruptions. 

By noon or so things should be clearing out as the plows get the roads open. I’ll break down and wander into the office if possible. 

I just wanted you, kind readers, to understand why I didn’t provide a tax post as tax season bares down on us. There is plenty of powerful stuff in the queue, but those golden nuggets take work to produce. Frequently it is required I call experts to dig deeper into issues these days. It’s almost like journalism for advanced tax strategies. 

Before I sign out I want to whet your appetite with a few more items from the queue: investing in conservation easements for massive tax deductions (special handling required to avoid problems), Medicare complaint annuities (the one annuity members of the community I run in will want to own), the wealth gap, income inequality, Form 3115 (for cost segregation studies), and more. My guess is I’ll need to live to 135 to get all these things published. 

One thing is certain; I enjoy tackling the difficult issues. And for good reason. The stuff regurgitated ad nauseam in the traditional press doesn’t really help you. I want to provide the power tools you need to control your taxes and financial life. It’s a lot of work and worth every bit of effort. 

Before I sign out, can I ask a favor? I busted tail this weekend (and a lot more) working on this blog. The upgrades make it easier and more user friendly to share posts on social media. Would you be so kind as to help out an old wayward accountant by sharing a post or three on Facebook, Twitter, Pinterest and other social media. I need the ego boost. Thanks.

Now I need to get back to the tractor. The snow isn’t going to move itself.

 

More Wealth Building Resources

Credit Cards can be a powerful money management tool when used correctly. Use this link to find a listing of the best credit card offers. You can expand your search to maximize cash and travel rewards.

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Side Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant. Call 888-844-8910, email Darren@TradelineSupply.com or read my review.

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here. 

Why the FIRE Movement Will Never Die

The worldview of financial independence and early retirement has been under assault recently. Suze Orman proclaimed to the world her hate for the FIRE movement on the Afford Anything podcast and set off a firestorm that culminated in a Washington Post article and a belated apology in the form of back-stepping her comments; seems she misunderstood the FIRE movement before passing judgement. (Or, perhaps, books sales were involved. Just throwing that out there.)

One of our very own, Sam Dogen of the Financial Samurai blog, has also turned a critical eye to the nascent FIRE movement. In a MarketWatch article Dogen is reported as saying FIRE stands for:

Foolish Idealist Returns to Employer

rather than Financial Independence/Retire Early.

Ouch!

The promise of financial security and early retirement will never grow old. The FIRE community has delivered since the invention of money and is still going strong. Learn the ancient lessons for a better today.

The promise of financial security and early retirement will never grow old. The FIRE community has delivered since the invention of money and is still going strong. Learn the ancient lessons for a better today.

What precipitated the rebuke was a simple one-month market decline. December 2018 was the worst stock market performance by most broad indexes since 1931. And the death of the movement was declared and a new acronym was created with the hope of replacing the Old World Order. What has so far been the shallowest of bear markets (defined as a 20% or greater decline from a recent market top) has heralded the end of times once again. And we barely (pun intended) entered bear market territory!

It is true the market could once again turn lower and inflict pain on the foolish. It is also true I’ve been critical of the FIRE community myself a time or three. And don’t think for a minute I didn’t catch hell for it too, only on a smaller scale. (Guys, you know when you link an article on Reddit, the web host—that would be me—can see it. I heard the nasty things said about my pedigree.)

As critical of the the FIRE community and the movement as Orman, Dogen and a certain wealthy accountant who shall remain unnamed are, the movement is never going to die! That’s right. The FIRE movement has grown large enough it can make the economic needle wobble now and again and that makes some people nervous. But the movement, the community, will never die.

Who Started the FIRE Movement?

Modern acolytes can be forgiven for thinking Get Rich Slowly, Early Retirement Extreme or even Mr. Money Mustache kicked this whole thing into gear. The truth is the concept of the FIRE movement has been around for a very, very long time.

Retirement, or at least the ability to to live a hedonistic lifestyle, appeals to many people. Age has nothing to do with it. Punching a clock working for the man gets old real fast when you don’t have perspective. Until you realize how useless life becomes when you spend each day creating no value and have no real reason to live do you begin to understand. Then the job looks more appealing. Or starting a business. In either case you get real interaction with people on a similar mission and it brings the spice back to life. (Redditors, fire up your engines!)

Join a community where financial freedom is the phrase of the day. Early retirement and other financial goals are possible when you become part of the FIRE community.

Join a community where financial freedom is the phrase of the day. Early retirement and other financial goals are possible when you become part of the FIRE community.

But I contend, as I often have in this blog, that retirement had nothing to do with the FIRE movement. It was never about retirement; that was the dream sold to get victims in the door. FIRE has always been about wealth, about independence and freedom. People never wanted to be retired like and old worn out machine. They wanted meaningful activities. Financial independence allows the freedom to choose and that is what people really wanted all along.

And still they keep searching because they don’t understand what it is they really desire.

The beauty of the FIRE lifestyle is it encourages elimination of debt and all the stress it brings and investing intelligently in index funds with a long-term time horizon. Without debt you can withstand a lot of economic instability. Every minor wobble in economic activity has the debtor soiling his, ah, well . . .  We’ll leave it at that.

People hate living paycheck to paycheck and love the idea they can choose their destiny. FIRE delivers on that promise. And the concept is not a modern one.

Benjamin Franklin spoke often of money and wealth. In a way he was the father of the American FIRE movement. But if you go back 2,000 years you can read the parables of Jesus and see that over half his recorded teachings involve money and wealth. But even that isn’t the beginning! Proverbs in the Old Testament teaches plenty of lesson about money. I don’t want to go all religion on you, but I do want to point out that the teachings of the FIRE community are not new.

In fact, if you want to know who actually started the FIRE movement you have to go all the way back to Grog, the caveman, as he taught around the evening campfire. He would say to the young and old, “No debt!” Grunt. “Debt bad. Invest in community coconut index fund.”

As funny as I might think I am, man discovered these principles early on. Shakespeare peppered his verse with financial wisdom. Every religion I studied speaks about wealth, debt and money. Great leaders in business from the beginning of time had to acquire the skills of the modern FIRE community if they wanted to survive.

The truth is the FIRE movement discovered some of the oldest lessons of the species and dressed it up in contemporary clothing. Nothing wrong with that. Except some, the snake oil salesmen, don’t get it because they are peddling large loads of manure and they need to discredit the wise to move today’s load of. . .

Evolution

The FIRE movement is not dead; it is evolving. A long bull market in stocks has lured many new converts. Secretly they kept their debt while plowing at least a bit more into index funds. As long as the elevator raced higher on the back of a SpaceX rocket things would be good. Besides, you saw how Elon Musk developed rockets that gently land themselves, ready for instant reuse.

A short market decline will not end the FIRE movement. The Great Depression didn’t kill the philosophy of the FIRE movement, though it had different names back then. The worse the economy the stronger the FIRE message appeals! Mild economic downturns and market corrections will not slow this animal down. If the economy and/or stock market get vulgar the FIRE community message will evolve as it should.

“It was the worst of times, it was the best of times, it was the age of wisdom, it was the age of foolishness. . . ” wrote Dickens to begin A Tale of Two Cities. Things haven’t changed much in 160 years. It doesn’t end any better either. (You can read the book to understand what I mean.) Things are good right now. Jobs are plentiful, prices relatively low and many investments have moved significantly higher over the past decade. But government, corporate and personal debt are all at record highs, some precipitously so. The best and worst of times. Especially when you realize the debt will be a harsh slave in the next economic cleansing, same as the last.

The best is ahead of us! The longest bull market in the U.S. lasted a decade, starting in the early 1990s until the current bull market. To put this in perspective, the two longest bull runs in the market happened in the past 30 years. The vast majority have no idea what it was like prior to 1980. For the old guys who do, we take extra caution to keep debt low, if we use the acid at all, placing our wealth in a broad mix of businesses throwing off a steady stream of income. We know there are no guarantees, but we structure our financial lives to withstand a very strong storm.

FIRE of the past was about frugality (it always was about frugality) and retiring from enforced labor due to financial condition. This is changing to something more valuable for the acolyte and society at large. Retirement is becoming less the goal and creating value the new mantra.

It’s not about work to fill the day; it is about fulfilling work. It’s about creating something of value, something we can be proud of. Curing a disease, building an advanced rocket or electric car is part of the New World Order inside the FIRE community.

We discovered it was easy in the modern world to save money and invest it. We discovered how easy it was to build a massive net worth, negating the necessity of work. But we also discovered it left us empty.

FIRE’d Up

The modern incarnation of the FIRE movement is young, made up of millennials who thought the dream of retiring at 30 would make their lives meaningful. They now have the experience to know that was a lie.

Travel has been a massive draw for many entering the FIRE lifestyle. What was discovered is extended vacations or a gap year are perfect for exploratory travel. Then, when the road turns weary, there is a home where people gather most days of the week to create an even better world. Call it work; call it your business. Call it what you want.

Financial freedom and retirement are not hollow goals. Join the FIRE community and feel the Strength of a community versed in helping people achieve their financial goals.

Financial freedom and retirement are not hollow goals. Join the FIRE community and feel the Strength of a community versed in helping people achieve their financial goals.

Social media is filled with people in desperate need of financial help. Maybe it’s a tax issue, or debt or other unique challenge. A few weeks ago I saw in a private Facebook group a young lady who was worried about the market. She put the down payment to a home they wished to purchase in an index fund last June and the fund was now down 25%, or $20,000 for her. She wanted advice. Many offered. I said: If you put a home down payment in the market what you are saying is you will buy your home five or more years in the future. Any sooner and you should not have put the money in the market. It was shallow comfort, I’m sure. But if I’m lucky I helped two or three people thinking of making the same mistake.

Orman was wrong. So are most people inside the movement!

The FIRE movement is nothing to hate and the people inside the community should grow some thicker skin. It is said: Of which much is given, much is expected. Those in the community have built a larger fortune than most. Jealousy is a given, especially from those unwilling to take the simple steps outlined for thousands of years by one FIRE community after another.

People will hate you for being rich and hate you for being poor. I’d rather be hated for being rich; it’s less painful.

The modern FIRE community has a gift unlike previous FIRE movements. We are not limited to the few wise locals living the FIRE (or whatever name it was called in the past) lifestyle. We are a worldwide movement, community. The internet has made us legion. We have a massive support group and an awesome responsibility to our world, our community, our family, ourselves.

We have a gift we must share! A market decline, even a large one, will not unravel the FIRE movement. I disagree with Dogen and the MarketWatch article. We don’t need another acronym to identify with responsible financial activities.

The basics make us great. Michael Jordan wasn’t great because he could make the three-point shot (though he was darn good at it, too); he was great because he mastered the basics, like the layup.

Money basics are not that hard and work extremely well. Teach your children, family and friends. Teach your community and share with the world. Together we can make a difference; together we can change the world.

The FIRE community will have its challenges and may soon go under a different name. For those in the know, we know exactly what the message is. It is as old as Grog and his nightly chat around the FIRE.

Remember to share the same message with your children around the hearth.

It is our future. Our only hope.

 

More Wealth Building Resources

Credit Cards can be a powerful money management tool when used correctly. Use this link to find a listing of the best credit card offers. You can expand your search to maximize cash and travel rewards.

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Side Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant. Call 888-844-8910, email Darren@TradelineSupply.com or read my review.

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregations studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here. 

 

Pricing Your Product in Your New Business or Side Hustle

Finding the right price to charge for your product or service will determine the success of your business. Learn how successful businesses find the price that maximizes profits.

Finding the right price to charge for your product or service will determine the success of your business. Learn how successful businesses find the price that maximizes profits.

“Start a side hustle or small business” is a common refrain when working to reduce debt or retirement planning is involved. It all sounds easy on paper until you realize most businesses fail within a year or so.

The problems with starting a business are myriad. Most businesses fail because they either have too little or too much business and the problems begin with the price or fee charged the customer.

Yes, some businesses fail over financing and other financial issues, but price frequently is the destroyer of small businesses. Charge too little and you end up with too much work and no profits to show for the effort; charge too much and nobody will even waste their time kicking the tires to see how good you really are.

The type of business also plays a role in pricing. A cheap attorney or doctor (or accountant!) is never a good idea. Even if it is a good deal you are unlikely to trust a cheap attorney. But what if you have a side hustle dog sitting? Is cheaper better then?

Then we get the loss leaders. Using our dog sitting example, do you offer a free trial to get clients in the door? It might work, but it costs the business owner money and time to promote in such a fashion. Research also indicates it is a poor way to promote your business.

Too Good a Deal

When I started my practice in the 1980s I subscribed to the “cheap is better” promotional school of thought. I was the first guy in town offering free e-filing for federal and was the only guy who could offer state e-filing the first year it was available because Wisconsin wanted to test their program with firms that offered the service for free and had no fraud cases. I fit the bill and the rest is history.

The free e-filing is a good example of giving something for free to grow your business. I still was paid for preparation services; only the e-filing was free. The benefit cost me nothing and saved time. My software provider only charged me a dollar and I saved that in toner and paper not printing copies to send to the government. This also saved time so I was a net winner. The best deal around town outside my office was $25 for e-filing. By the time other firms caught on it was too late. I was well established and well known for my progressive business ideas.

There was still one small problem. I prepared tax returns for a low fee. The goal was to grow the business fast and large. This is a massive problem when the service provided frequently required I personally work on or review most tax returns. I was providing value added service but not charging for it. That led to long hours and lower profits. Something had to change.

Quality or price, you can't have both. When you provide high quality service you deserve a higher price. See how professionals set price to maximize profits.

Quality or price, you can’t have both. When you provide high quality service you deserve a higher price. See how professionals set price to maximize profits.

By the time my practice reached 2,000 returns I was exhausted. Sure, anyone in the office can prepare a return. So can any other tax office. But not many can reduce a clients tax liability legally the way I can. That takes experience, skill, research, and most of all, time.

Around the year 2000 I was preparing about 1,600 individual returns  with another 400 business returns, amended returns and returns from prior tax years. Many clients walked in the door when I was giving my services away and I wasn’t bringing their fee to a reasonable level fast enough to regain my sanity. That, and attempts to increase prices brought loud complaints. It was exhausting. People wanted more and more without paying for it. Worse, clients didn’t take my advice seriously! What was it worth anyway? I gave the consulting away for fee and clients treated it as worth exactly that much.

The first year I decided to make a draconian cut. The tax software I use allows me to pull reports based on time spent preparing the return and the fee charged. I ran a report showing the least profitable to most profitable clients. To my surprise I had almost 400 clients that were money losing accounts! (I know, I know. I’m not proud of it either.) Those 400 clients were send a letter kindly asking them to leave.

That was the best tax season in years. Prices were not increased much, but the money losing accounts were out so I had time to breath and profits actually climbed because expenses dropped faster than revenue.

The next year I raised fees significantly. My real clients stayed. Fewer people left than I anticipated. Something else also started to happen. Clients, especially business clients, started saying it was about time I raised my fees so people would start respecting my work. Clients saw what I was blind to! People actually wanted to pay me more because they saw value and all the bottom feeders were sucking me dry, hurting the serious clients. In hindsight, I’m feel great gratitude these clients were willing to wait until I regained my sanity.

Perceptions of Value

How much do you value the endless supply of news online? Do you trust it? What if you pay for a newspaper? If you are like most people, paying for something causes you to value it more. It may have something to do with the sunk-cost fallacy businesses fall prey too. Regardless, we understand “free” does not bring out the best. A free report is valued lower than a report you pay for and for good reason. When a payment is made/received all parties expect a certain level of value to be provided.

But free works so well! But not really. In my line of work I see plenty of businesses. I know what does and does not work. The “free” thing has been done to death. The philosophy has destroyed more businesses than any other policy I know of. Free meals mean nothing to a restaurant if the food is no good. All free does is sink your boat faster.

Back to our dog sitting example. Giving away a free day when you have no way of creating more time is a rabbit hole you do not want to fall down. Instead, a free doggie treat might be a better way to promote the business. You still charge your regular fee, but you give something extra of value. The perception of value remains intact. The people who would turn their pet over to a free service are not the kinds of clients (and dogs) you want.

 

Finding the Right Price

Over the years I tried many methods of pricing my services. Checking the competition and pricing comparatively is the most common method of pricing I see and used it myself in the early days. It’s also the worst, except for the free or super cheap thing we talked about above.

Setting your prices/fees similar to or a nickle below competitors means you get paid nothing for any added value you provide. Here we are again at the trough of free stuff. If you charge what the other guys charge what is the incentive to use your product or service? If you provide greater value there is a reason to patronize your business, but you don’t get paid for the superior product if your only pricing method is to undercut competitors.

All these pricing issues lead to two problems: 1.) you are either too busy (or people don’t trust you’ll do a good job) due to your under-priced goods and services which leads to poorer quality as you are run raged, or 2.) your fee becomes over-priced compared to what competitors are selling due to market changes before you differentiate your product.

You can’t win if you do not differentiate your product or service. The differentiation is where the value is created and where clients are happy to pay your fee even if it is high.

There is a better way and I learned this trick from two men I highly admire: Seth Godin and Tim Ferriss. Seth Godin is well known from his numerous best-selling books; Tim Ferriss from his books and podcast.

Recently Tim invited Seth to join him on his podcast. It may have been the most important podcast I ever listened to.

Seth shared his method for setting prices for his speaking engagements. He said he only has two prices: free and full price. If Godin really wants to do the gig and if it is for a good cause he will sometimes do it for free. Otherwise his fee is full price, no discounts.

Wonderful! But how does Seth Godin find his price? Simple. He started by setting his price so a few people would hire him. Once someone—anyone—offered him more that was his new price. As simple as that.

However, this is simple theory, difficult in practice. Godin admits it’s tempting to take a gig when your calendar is empty. It takes time to learn the skill of saying “no” when you have lots of white space on your calendar. But if you don’t stick to your principles you dive head first down the aforementioned rabbit hole. And it is going to hurt really bad.

Higher is Better for Everyone

It may sound crazy, but a higher price is frequently better for the business and the customer! People will pay for quality and those who will not are not the kinds of people you want to serve. Remember, you’re a business, not a slave! You solve problems, fill a need. And do it well! You should get paid for that and paid well. If you don’t it is only a matter of time before you either quit or sacrifice your ethics and provide cut-rate products and services.

The fear business owners have when raising fees is the worry clients will leave. Well, I hope so!

Not everyone wants or needs the higher level of service and quality. Your choice is to produce crap and sell a manure spreader load full of it or to sell a respectable amount you can comfortably provide  at the highest quality money can buy. Either way is fine. But, crap gets old fast while quality instills pride and that carries you a lifetime and makes you feel proud of the work you do.*

Last year my small tax firm prepared around 550 tax returns in total. This is a long fall from the heady days of 2,000+ returns annually. It was the best tax season in years as I worked hard to adjust to my new worldview of a tax office with national exposure. This is easily the most difficult transition I ever went through. There were times I didn’t know if the firm would survive.

Here it is mid-January and I’m nervous. One of my preparers thinks I committed to around 650 returns for this tax season. (Was it that may?) If it’s true I have a real problem. I spent heavily on increased automation and productivity enhancements. However, the clients I serve now are of a different caliber than of the past. These are large returns with serious issues and I’m one guy. (Yes, my team does most of the heavy lifting, but I need to be in the final review process for virtually all returns so clients get maximum value.)

Finding the right price to charge is as important as the service you provide.

Finding the right price to charge is as important as the service you provide.

Fees have steadily climbed. As fees climbed some clients left. Revenue still climbs because fewer people leave than the fee increases. The higher fee allows me to add more value to each return. This means lower taxes for clients so my fee is really free after tax savings are included. But, Dawn, my ace tax preparer, and I will sit with every client this year. The last few years we allowed other team members to handle this. I hated it because I need to know my client better and the new system will allow for it as long as I don’t grow the business too large. (Clients living further away will have more phone time with us.)

The goal is to always provide a better experience for the client. Quality is important as long as the client feels respected. Doing the best work and ignoring the client is still bad form.

And don’t worry about losing all your clients. I’ve experienced that emotion all too often. Let me sooth your nerves with a story: This blog has produced an excessive flow of consulting clients. I love the work and with rare exception the client walks away from the consulting session with thousands or even tens of thousands in tax savings. There is a reason for the high demand.

I consult with new clients from June to December on Tuesdays and Thursdays. The max, I discovered, is two consulting sessions a day. Any more and the research and face time exhausts me too much. (Regular clients can have consulting sessions any time of year, even tax season.)

The past year I charged $275 an hour. When the new consulting season starts in June the fee is $350 per hour. Still a good value when thousands in taxes are saved.

You would think the fee increase would slow things down. It didn’t. June is already filling up six month in advance! Kind readers, please understand. People are hungry for top-quality service and products! They are sick and tired of junk. The more I raise my fee the more people know I’m focusing on increasing the value even more. And they want this even higher value product more!

Let me make one thing clear as we wrap this up. This is not about bilking the client. This is about serving the client at the highest level possible and pushing higher from there. You are good today; you’ll be even better tomorrow as you learn and accumulate more experience. People want that!

The increased consulting fee means I will work slightly fewer hours and, of course, will make more. But cutting the hours just a bit allows me to learn and grow more as I have the time to research ideas and strategies. This makes every hour of my time purchased worth significantly more.

Tax preparation fees are the same. Cheap is NOT better. Cheap means a shortcut was taken. You can’t do it profitably any other way. What you save in accounting fees is lost to your least favorite uncle in Washington. I’m not close to the cheapest. I played that game before. I’m embarrassed to say it because that means my clients were screwed by my lack of experience in those days. If I’d have raised priced I might have done a better job earlier in my career.

As for the dog sitting side hustle: People love their pets and want the best for them. Charge more and include a doggie massage and doggie treats. The dog and the human will thank you for such kind consideration.

As a bonus, you’ll have a profitable and successful business you enjoy running ever day. No retirement for you; you’re already living the dream.

 

* If you work at a job and hate it there is a good chance you work for a company peddling as much crap as they can flush out the door. People who work for companies that provide high quality products or services are almost always a pleasure to work for also.

 

More Wealth Building Resources

Credit Cards can be a powerful money management tool when used correctly. Use this link to find a listing of the best credit card offers. You can expand your search to maximize cash and travel rewards.

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Side Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant. Call 888-844-8910, email Darren@TradelineSupply.com or read my review.

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

PeerSteet is an alternative way to invest in the real estate market without the hassle of management. Investing in mortgages has never been easier. 7-12% historical APRs. Here is my review of PeerStreet.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregations studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here. 

 

The Anatomy of Wealth

Every fortune starts with the first small investment. See how this man turned a small investment into a large fortune with a steady stream of income.

Every fortune starts with the first small investment.

I did something different this holiday season than I ever did before: I took two five-day weekends. This may sound like a minor thing considering the FIRE* community I supposedly belong to**, but to me it was a serious adjustment.

The first long weekend over Christmas didn’t feel like a true long weekend. Every day was filled with family events so I didn’t have to worry about filling lots of dead time.

The New Year’s weekend was the opposite. I had a full five days to do anything I wanted. Sure, I still checked the office email a few times and kept current with social media, but for the most part I stayed the course and enjoyed five days without the obligations of work.

As most people know, it is easy to waste a day or five if necessary. For hyper-productive people this is more of an issue. Can you imagine what Elon Musk, Bill Gates, Warren Buffett or the late Steve Jobs would do with their free time? You guessed it. They do exactly what they do every other day. Either you create value in the world or you don’t. One has a reason to be alive; the other does not. You choose.

The extra days off were delightful, actually. I enjoyed several good books and extra time with Mrs. Accountant and the girls. Still, I was reading the stuff I always read. I was learning and growing. The only difference is I was on my couch versus my office chair.

But this story isn’t about my long holiday weekends; it’s about money; the reason you stopped by this place.

Anyone Have Some Spare Change?

As the holiday came to an end I was sitting on the living room  floor reading a book as Pinky, my cat, pawed underneath the edge of the couch. I put my book down to see what she found. (I was hoping it wasn’t a real mouse (as opposed to the toy mouse we gave her.))

Pinky had her paw underneath the edge of the couch as far as she could reach and kept trying to push further. Whatever she found—or lost—she wanted back badly. I nudged Pinky to the side and lifted the edge of the couch and reached under and found the elusive prize.

A quarter! Pinky’s keen eyesight found a shiny quarter deep under the couch. A guest over the previous weekend must have lost the coin and it finally fell through the cushion to the floor beneath the couch.

To most people this coin is a modest 25 cents. If found in a casino most people would immediately drop the coin into a slot machine with the outside chance of turning the coin into serious cha-ching. Most people would be just as broke as the moment before they found the coin.

Pinky is not a gambler; neither am I. As small a prize as the coin was, Pinky still wanted it. It was shiny. That was it’s value and Pinky knew it.

The Gift that Keeps Giving

Like any cat, Pinky soon gave up her prize when she realized I wasn’t giving it to her. (In my defense, I retrieved the coin she couldn’t get. A smile emoji might go nice here.)

Proud of the prize I stole from Pinky, ah, earned, I should have dropped it into my coin bucket I use for playing cards Friday night. But I didn’t. Something else entirely different crossed my mind.

Why does one man succeed and another fail? It comes down to one simple rule. Follow it and you win; break it and you lose.

Why does one man succeed and another fail? It comes down to one simple rule. Follow it and you win; break it and you lose.

You see, that simple coin is money! Add enough of them together and it becomes a serious nest egg. Even a mere 25¢ has value! If you respect money—which is a store of value—then a simple quarter will be respected as much as a hundred dollar bill. You don’t toss it away in a mindless casino game.

Even Pinky understood the coin has value (as a toy). But it’s worth a heck of lot more than that to me.

The first thought that entered my mind when I saw the coin was how much of a fraction of a share of an index fund will that buy and how much of dividend (an income stream) will it throw off? Pinky, our resident diva, placed a more immediate, hedonistic value on the coin. Pinky’s human (me) was thinking longer term.

Now I know what some of you are thinking. How much income can one simple 25¢ piece actually throw off? Well, by my calculation, the same amount as every other quarter in my portfolio.

Think about that a moment. From this perspective, your entire investment portfolio is made up of a bunch of quarters throwing off an income stream.

This isn’t a hard concept to understand. Your body is made up of a large number of cells. Cells are made up from numerous chemical compounds constructed from atoms. Atoms are made of electrons, protons and neutrons. And the components of atoms consist of a number of elementary (sub-atomic) particles.

All things of size are composed of many parts. Each part alone seems small, but remove the infinitesimally small part and the house of cards starts to crumble. Remove an electron from an atom and the atom is different; responds and reacts different. Helium has two protons. Take one away and the atom is now hydrogen, a very flammable element. One small change does make a difference.

Anatomy of Wealth

What makes one person rich and another poor?

Two people working the same job side by side earning the exact same wage can have radically different financial conditions. One worker can squander her paycheck each week while the other maxes out her retirement plan and saves even more for a rainy day.

The worker spending all her income as it comes in is under a lot of stress. A slow economy is cause for concern. If her hours are reduced, or worse, she is let go, hard times will follow quickly. The worker saving a large percentage of her income feels virtually no stress. A lay-off or reduced hours is nothing more than a reallocation of life-hours. She can always do something else productive with her time. Since she has plenty saved, money will not be a problem.

How much can you turn a 25¢ coin into to? How much of an income stream? If a man and his cat can do it, so can you.

How much can you turn a 25¢ coin into to? How much of an income stream? If a man and his cat can do it, so can you.

So why did one worker save/invest and the other live paycheck to paycheck? It might take a series of questions to get to the bottom line, but I bet the final answer sounds something like this, “I save so I have an income stream when I need it or when I retire.”

The concept is simple in theory; difficult in practice. Everyone knows they need to save and invest for the inevitable day when the money will make life easier. But some see money as a chance to spend and party. So why do some save? What motivates them? Triggers them?

Once the thought entered my head when I saw the quarter Pinky was trying to dig from under the couch it seemed silly. Why was my first thought to invest the newfound wealth for an income stream? And do other people think this way or am I just weird? (Don’t answer that!)

My guess is about the same number of people who have financial wealthy have the thoughts I have about money. Financial wealth is a simple process. Start investing early as much of your income as possible, reinvesting the income stream except in extreme emergencies. Yet, some people can’t do it. If they have it, they spend it.

It comes down to mindset. The ancient Stoics talked about visualization. Well, investing money for an income stream tomorrow requires vivid visualization. I could see the income stream from that quarter the second I saw it. It’s the reason my first thought was to invest it.

People who spend most or all their income can’t see the benefit of saving/investing some of their hard-earned income. “I don’t want to be the richest guy in the cemetery,” they say. “Can’t take it with you.” To which I reply, “You’re right. But I’d like to have some while I’m here!” Perhaps it is time to train your mind to visualize yourself with lots of money and the income stream it provides.

If Pinky can see value in digging a coin from under the couch you can visualize the value and benefits of investing a significant portion of your income.

Warren Buffett is known to keep personal expenses low so he has more to invest. Wealthy people think this way and you need to adopt the financial mindset of the rich if you want less stress and more options in the future.

Every dollar that passes your paw is an opportunity to create an income stream. Even a bank deposit throws off a limited amount of interest. The income stream is vital to your financial health and future.

My grandfather always had a saying that has stuck with me: Never take off the pile. Granddad was an old farm boy living the dream in the backwoods of Nowhere, Wisconsin. He lost the farm in the farm crisis of the early 1980s and then rebuilt his fortune doing nothing more than saving a serious portion of all his income. Most money was only deposited in bank accounts. And he still managed to re-grow his liquid net worth well into the seven figures starting over from an old age. His rule of only consuming the income from an investment had a lot to do with his success.

The corpus of your investments, that original seed money, is sacred. If you never touch the sacred you will always be safe! The income stream keeps growing larger with time. Dividends reinvest to earn more dividends. You don’t need a pension when you have one far safer and personally designed.

 

As for the quarter I commandeered from Pinky? Well, I tossed it into the coin bucket I use for Friday night cards. Seems Vanguard requires a deposit larger than 25¢. Guess I’ll up next month’s auto investment.

 

* FIRE: financial independence/retire early

** Before someone takes these words wrong let me clarify. There is no doubt I’m a member of the FIRE community. I handle tax issues for several key bloggers of the demographic and attend conferences periodically. I say “supposedly” because I don’t feel like a member to the FIRE community. I’ve never been a fan of retirement—I like doing productive activities as long as I’m breathing. As readers may notice, I don’t chum with many members of the community either, instead choosing to keep plugging along in my tax practice. I’m a rural guy who likes his rural life without the bright lights of center stage.

 

More Wealth Building Resources

Credit Cards can be a powerful money management tool when used correctly. Use this link to find a listing of the best credit card offers. You can expand your search to maximize cash and travel rewards.

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Side Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant. Call 888-844-8910, email Darren@TradelineSupply.com or read my review.

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

PeerSteet is an alternative way to invest in the real estate market without the hassle of management. Investing in mortgages has never been easier. 7-12% historical APRs. Here is my review of PeerStreet.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregations studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here.