Archive for May 2019

3 Steps I Took to Reach Financial Independence by Age 32

Do what this man did to become a millionaire by 32, starting from nothing. This man's story of growth is moving as we went from poverty in a rural area to massive wealth in a few short years. See what he did to accumulate his massive wealth and become a millionaire.The news feeds seem to be filled with story after story of people retiring at a very young age and how they did it. Most of the stories are very similar and goal always seems to be retirement and world travel. 

But what about the rest of us who want to continue making a difference in the world and refuse to bow to hedonism? 

Most people, I think, are unhappy doing nothing for long periods of time. Travel is fun until it becomes your full-time job. 

There are the hyper performers — the Steve Jobs’, Elon Musks’ and Warren Buffetts’ of the world — who never stop working and then there are the folks we see in the news feeds looking to check out at the earliest date. 

Most folks, however, are somewhere in the middle. They want financial independence for the freedom and security, but enjoy the social and productive nature of gainful employment. These people might work a traditional job, run their own business, consult or volunteer. 

That is what this story is about: How I reached Financial Independence (FI) by age 32, defined as net worth north of $1 million, and the steps I took to get there while retaining a happy and productive life.

The finish line will not include exotic travel. Instead, I focused on what I considered important: family and community. I still run the same business I did back then and I’m married to the same woman (31 years and counting and it just keeps getting better!). I’m most proud of my successful and happy marriage, though that doesn’t seem to sell considering the number of stories on long and happy marriages in the news feeds. 

So this is my story of how I accidentally discovered I was a millionaire.

 

Humble Beginnings

I never inherited a penny in my life and if I am so blessed in the future it will make no difference in my lifestyle. Born to a poor family in the backwoods of Nowhere, Wisconsin, I learned of family and hard work from little on. When Vince Lombardi said “Winning isn’t everything; it’s the only thing”, he gave my dad the adage, “Family isn’t everything; it’s the only thing.”

And good thing, too! When you live on a farm in the middle of nowhere there are not many folks to socialize with other than family.

We never had much money growing up is what I’m saying. We always had food on the table, but I remember when I was very young my dad put a piece of plywood across two sawhorses as our kitchen table. (Well, it seemed like luxury living to me!) We were happy because the outside world had not yet crept in to educate us to how backward we were.

Somewhere in this utopia I decided I wanted to be rich some day. It was probably the outside world sneaking in and corrupting a certain accountant in the room, but I had to be receptive to be tainted.

But there was trouble in paradise. The late 1970s were a difficult time for farmers. By 1982 when I graduated high school the writing was on the wall and I was oblivious. 

Less than six months out from graduation the farm was gone. I had no skills to sell in a world not hiring. In 1982 no employer was hiring in the county I lived in. It was so bad employers no longer kept up the illusion and didn’t waste paper giving you an application. The answer was NO!

I managed to save a bit in this environment. I turned 18 with a couple thousand to my name and no debt. 

 

Budding Entrepreneur

The money I had came from a variety of sources, a common theme in my rise to FI. In high school I got up every morning to milk cows at 4 a.m. After school I started milking cows again for 4 hours. I pulled a lot of teats, folks. You might laugh at that, but you would lose that grin if you were there.

For 56 hours per week I milked cows, plus other farm chores, and was paid $40 per month for the effort. I spent nothing! Not because I was smart, but because there was no place to go to spend the money. Town was a long walk and there weren’t many stores in the closest towns.

My freshman year of high school I joined the Future Farmers of America (FFA). To raise money members of FFA sold light bulbs. (Back then we only had the incandescent bulb which burned out a lot.)

I took to selling like a duck to water. I talked to everyone in town and every farmer within a day’s drive (I might be stretching the truth a bit). And when the light bulb drive was over I had sold more light bulbs than anyone in FFA history by a very large margin. 

I could sell. That is an important trait other articles on FI don’t mention. Working a job with good wages and benefits and living a frugal lifestyle has several glaring problems.

First, you might not have a high paying job. Minimum wage is not going to get you there by age 32.

Second, you might live in a high cost area of the country. 

Third, formal education and high IQ — and EQ — also make a difference

Forth, it assumes you are in good health.

Fifth, that you never lose that high-paying job while running for FI.

I certainly wasn’t connected and let me be honest here. I, ah, ahem, don’t have a college degree either. {cough} 

You heard me! I did take some college courses, but not enough credits or the right combination for even an Associates. And here I am with my enrolled agent license (the EA is a licence, not a degree) teaching other tax professionals and hiring highly educated people, some of whom have moved on and work for the IRS now.

Not being the smartest guy in the room or with the right education (or pedigree, I might add), I wasn’t on anyone’s radar as Most Likely to Succeed. So what did I do to reach FI so young?

 

3 Steps to Financial Freedom

From graduation day to my 22nd birthday I put those selling skills to work and managed to accumulate a $200,000 nest egg. And remember, this was back in 1986 when $200,000 was serious money. A $10 an hour job was good money in those days. (And I walked up hill to school (both ways) in snow all year around. Just sayin’.)

FFA decided to expand their light bulb fundraising to include garden seeds. There were no records to break as it was the first year offered. Needless to say, I sold a lot of seeds too. (Would you like some light bulbs with those seeds, sir?)

Ditch the job and start living. No more daily grind for the man. Instead, use these 3 steps you build your fortune. #retirement #job #finance #work #wealth I bowed out of selling for the school my junior year and started selling imported goods wholesale to retailers (and anyone else who would buy). I got my supply from a company called Specialty Merchandising Corporation (SMC). Oh yeah, those were the days. And, oh what a lesson I learned.

You see, people will buy over-priced cookies from young girls when it feeds corporate headquarters of a non-profit. But start selling stuff to line your own pocket and the number of “yeses” to “nos” changes radically!

So I improved my skill sets.

By the time I reached the age of majority I accumulated more experience than wealth. Sure, I had some money, but I wasn’t flush. The family farm was gone and that avenue of gainful employment with it.

I worked a short time in my dad’s agricultural repair business. It was tough sledding for dad back then, too. He’s doing well now, but in 1982 it wasn’t a pretty sight.

While working for dad earning a meager wage (money was preserved to pay other employees and to get the business profitable enough to feed a family of four) I worked 80 or more hours per week (record week on the job: 122 hours). I supplemented my income preparing taxes in the winter months. 

Before we knit our eyebrows in dad’s direction, understand it was survival back then. I worked long hours 7 to 9 months of the year (depending on the weather); January and February were light so I had time to prepare taxes. Late May got really busy and for the rest of summer and autumn. So I could earn more in a few months doing 50 or so tax returns than I could working day and night the rest of the year.

To be fair, dad paid me $40 per week, if memory serves, and later, $100 per week. (After I got a raise I quit. Ungrateful kid.)

Readers quick at math will realize this doesn’t add up to $200,000 in 4 years. And that is where we begin our journey of Steps to FI:

 

Step 1:

Unless you make a lot of money at your traditional job you will need multiple sources of income

Let’s count where all my money came from. 1.) Dad was paying me $160 a month, 2.) I was still selling SMC and profits were growing, 3.) I was preparing a small number of tax returns with virtually no expenses (gross margins approached 100%!) and, 4.) interest and dividends.

Interest rates were sky high in the early 1980s. Passbook savings accounts (remember those) paid a minimum of 5%, but most bank products yielded near or over 10%.

While bank interest was guaranteed and the rates mouth-watering, I decided I wanted to own a piece of America by owning stocks. I fondly remember one of my first purchases, a company called, ah, what was that now, oh, Phillip Morris (MO). And I owned a piece of Wrigley, too, until Warren Buffett screwed it up by funding the buyout of Wriggly by Mars, Incorporated for cash. 

I still own those shares of Big MO, now called Altria. The dividends were and are a growing part of my income and don’t think for a moment I didn’t realized the value of getting paid for not working; just for own a piece of a business.

I can’t stress enough how important it is to have more than one source of income. If all your income sources are in one basket and that basket withers you are screwed. You might put all your eggs in one basket with a business since each client is a separate income stream, but relying on one traditional job as your only financial resource is problematic. A simple layoff can destroy all your plans.

 

Step 2:

A few years later I got it in my head I would invest in real estate (RE) and go full-time as a tax professional. SMC died on the vine as I focused on building my practice and managing my RE investments.

Which leads to the second step I took toward FI: I owned income producing things (RE and the business) that I had a reasonable amount of control over. 

A job can disappear just like that through no fault of your own. The company can go belly up, the economy can slow, or your job gets outsourced.

Business and real estate have plenty of risk, but it was risk I could control. The Tax Code is never going away and when people try to stop paying less in tax I’m in trouble. Until then I’m golden. 

RE is also risky and comes with a mortgage to increase the incentive to get those units rented. Doing proper research before buying and joining your local apartment association (as I did) and applying some sweat equity increases your chances of success.

I used Step 1 above in RE as well. One vacant unit, if that is all you own, is a 100% vacancy rate. I bought several properties fairly quickly because I knew a few vacancies would only be a nuisance then rather than a catastrophe. 

I worked hard at my businesses. There was no free ride for this backwoods boy. Sometimes it hurt, a lot. There were times I didn’t know what to do. But I never stopped learning and never backed away from labor: manual or desk work.

In Step 2 I structured several income streams into something I had at least some control over.

 

Step 3:

You would think after my business was profitable and the rentals started throwing off reasonable income I could lean back and enjoy the ride. And if you think that you are wrong!

Retire early with these 3 steps used by a wealthy accountant to retire at 32. Early retirement can happen if you follow the simple steps this man used. #FIRE #financiallindependence #money #wealth #earlyretirement Before it was made popular by the tech industry, I always pushed my business into new territory. My goal was to create the company that would replace my business before competitors do.

I was the first in my community to offer free electronic filing. That might not seem like much now, but back then it caused my tax practice to grow explosively. When Wisconsin offered e-filing I was first on the list because the state knew I offered it for free and had no fraud cases. In other words, I could offer State of Wisconsin e-filing in my Wisconsin community for free before competitors could even offer the service. By the time e-filing was rolled out for all I had a commanding lead.

I also sold life insurance in the business for a while. I was never big on traditional life insurance, but key-man and for buy-sell agreements it made sense.

I was also a stock broker for a number of years before I realized I’m a tax guy first and hawking high-fee investments rubbed me wrong.

You can read this blog and see example after example of things I tried. Some ideas worked great; others I’d rather not mention (but share anyway so you benefit from my experience). 

And that is Step 3: Try an idea. If it doesn’t work, step back and reevaluate, then try again until it works. Never over-commit. Test small before jumping in with both feet. You don’t want to do something that destroys what you’ve built to-date. Once you determine you have a winner you can expand. Remember, most ideas don’t work! Trying a lot of ideas to see what works best before committing serious resources is a better way to reach FI at a young age.

 

Accidentally Get Rich

Of course, you need to avoid debt as much as possible and pay it down quickly when it arrives. You also must spend less than you earn if you are ever to build real wealth. You’ve heard it all before. It’s really simple. Spend less than your earn; invest in index funds; wait. If you want faster you better be good at sales or business; preferably both.

And this is where it gets interesting and how I discovered I blew past a $1 million net worth without even knowing it!

From age 22 to 32 a lot happened. My business grew and I got married. (Marriage brings in additional considerations.) Mrs. Accountant was open-minded, allowing me to funnel excess cash into investments rather than a higher lifestyle. I went from around $200,000 in cash to $1.2 million.

Remember the real estate investments I had? Well, eventually my dad, brother and I started a partnership with one-third ownership each. We bought a lot more properties. 

The bank that funded our RE holdings required we provide a personal financial statement every year or so even if we were not borrowing more money.

So I sat down to figure out what I was worth. I valued all RE holdings at what we paid for them rather than what I thought they were worth minus mortgages. I added retirement and non-qualified accounts. I valued my tax practice at zero and the practice had no debt (I only had real estate debt at the time).

As I added the values of all the accounts it started to dawn on me I might be a millionaire. I had a good idea what my share of the mortgages were and the assets were climbing too far above $1 million to drop below that level once mortgages were subtracted. 

When I struck the double lines below the bottom number it was clear I surpassed $1 million by a large enough margin to say I was a millionaire. 

Mrs. Accountant was in the dining room clipping coupons. I shared the good news. All she said was, “That’s nice,” and kept clipping coupons.

You see, I was more important to her than any amount of money. She lives frugally as I do and enjoys every day we are together. She saw, better than I, what was really important.

It was a let down in so many ways. Mrs. Accountant wasn’t excited about the money! I didn’t feel different either. I missed the big day when I crossed that magical seven-figure number. There was no bump or turbulence to indicate I crossed into another zone of existence. In reality nothing had changed; only my mindset.

Once I digested that it was only a number I decided to do what I always did. I tried lots more things, grew my business and expand my sources of income, much of it passive.

You see, I learned the most important step of all: It’s the journey that matters, not the destination. And I had the best mate in the world along for the ride.

It was that day when I was a 32 year old man that I learned to live life for the first time. Live, for Real. 

And I discovered I was always wealthy as long as I had my family.

 

 

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. 

The Best Rental Property You Can Buy

Fool-proof real estate investing. Investing in real estate is easy and profitable if you know a few secrets to success. Buying right is the first step. Real profits are found by renting to the right tenant and keeping them.It’s official. I’m back in the real estate business!

Before you get too excited, let me explain. Waaaay back in the day I was a third owner of a real estate partnership with my dad and brother. We bought investment properties of all kinds. We specialized in single-family homes, but owned plenty of multi-unit buildings, storage and rooming houses. 

My partners were more along the lines of the silent kind. I, of course, could bounce ideas off them, but the workload fell on me. I hired maintenance staff and crews and was always interviewing potential property managers. Before we closed shop we had taken an interest in 179 buildings (not all at once). At the peak we had somewhere north of 80 units scattered all over NE Wisconsin.

We sold properties frequently once our inventory grew. We held some properties longer — our first property was one of the last to be sold.

After we were in the business a few years we gained a reputation for renovating run-down properties. I used these as a way to generate cash for long-term real estate investments.

Eventually a few local cities had us on speed-dial when they condemned properties. We picked up these rat-traps for pocket change ($5,000 or less). Spent $40,000 or so renovating and sold for $70,000 or so; rinse and repeat.

Buying and selling (and managing) so many properties eventually caused me to burn-out. It was a good (if not sometimes a dirty) business. I washed my hands of investment properties and sold en masse.

For years we were buying and selling multiple properties per month. Now I was just selling. 

 

Investing with a Purpose

The last rental property in the partnership was sold in the year 2000. I never thought it was more than a passing phase of my life. I did the real estate thing and was content. 

Except I wasn’t really out of real estate.

When $40 million of real estate transactions cross your desk in 12 years you learn a few things:

  1. Real estate agents are full of schmoo. They are in the business of selling real estate and will say whatever necessary to earn a commission. (I have changed my opinion on this and think agents are vital in the buying, selling and managing of RE.)
  2. Real estate investments are “passive” only in the Tax Code! Buying the right property takes work. Maintaining properties — even with a property manager — also takes work. Index funds are truly passive.
  3. Real estate isn’t a free ride to wealth.
  4. Tenants are people and people are not always fun to work with, especially when they owe you money and while they live in your property.
  5. Good tenants are awesome and should be considered for inclusion in the next family reunion.
  6. Bad tenants cause normal accountant’s to reconsider bringing back debtor’s prisons.
  7. People are destructive, especially when they don’t own it.
  8. No money down deals are not the best deal going unless you’re selling a real estate investment course on late night TV (back in the day) or on Facebook (today’s version of late night TV).
  9. Work doesn’t get itself done so stop crying.
  10. All this said, RE can be a powerful income source with plenty of wealth building qualities. And that is why I am back.

The Best Tenant

As I alluded to earlier, I never really got out of the RE business. In 1995 I bought the current office building I rent to my tax accounting practice. This building generates $36,000 of annual rental income and the tenant is the best I ever had! For some reason the tenant and I always agree. Go figure!

How to find the best and most profitable tenants. Buying a rental property is only the first step. Finding an keeping the best tenants is vital to success. Supercharge your real estate profits and make it fun at the same time. #realestate #investmentproperties #tenants #rentals #profitsSo, the best tenant you will ever have is you. But if you don’t have a business (treated as an S corp, I might add) this opportunity is unavailable.

There is a runner up option nearly as good, however.

To understand this second option I need to explain my mindset. When researching an investment (or tax deduction, or investment or. . . ) I prefer more than one out.

What do I mean? More than “one out”.

As an example I recently commented that I prefer more than just a deduction for my retirement contributions. This means the tax break isn’t enough on its own. When planned correctly, a retirement plan contribution can open up additional tax breaks. This is the doubling and tripling of benefits I call more than “one out”.

In real estate it is the self-rental concept that provides multiple values: a dream tenant, fills a business need, rental profits and tax benefits all go to my best friend (me) and no bad tenants. Under the Tax Cuts and Jobs Act of 2017 it also opens the opportunity for more of a Qualified Business Income deduction. 

 

Another Awesome Tenant

This Sunday my oldest daughter, Heather, graduates from college. She had a lot of false starts as she found her way and daddy refused to provide a free ride. (The first test of college is getting there. Loans and daddy are not a part of “getting there”. Scholarships, a job or business and hard work are.) 

The best and most profitable investment properties to buy. No matter how high real estate prices climb, profit is made by renting to the right tenant. This fool-proof method of property management can send your profits to the highest ever while virtually eliminating problems. Make being a landlord fun. #landlord #rentals #profit #realestate #investmentpropertiesHeather won several awards along the way and served as an officer in PTK this last year. She has matured a lot.

She also fleshed out a business. She is returning to China this summer after finishing a tour in South Korea teaching English as a second language. 

Her business involves tutoring and she has several product ideas and services coming online. And, smart girl she is, tested everything and never quit just because an idea failed. She learned and grew with each step. And now it is time to move out and tackle the world for real.

And this is where my renewed RE adventure begins.

Heather tried living near the campus while in college, but got an eyeful of the idiocy of the average young adult. She also experienced bad landlords and roommates.

So Heather took control and decided she would pick her roommates this time versus the school or landlord. She wants to keep costs low, sharing the expenses of renting with a roommate, while being closer to her clients (she’s been invited to several local schools and universities to teach). 

She found the right roommate after screening out several. Then she started researching accommodations and running numbers. 

Then she told daddy. Daddy almost lost it!

Rent has changed in the last 20 years! (God, I’m getting old.) Rents were from $850-$1,200 per month on average and they were nothing fancy either. (Yes, we live in a pretty reasonable market yet.)

This caused my accountant mind to start shaking out the rust and think about this situation a bit. It became clear, after a cursory review of available local duplexes and 4-plexes, that it would be better if I bought a property and rented to Heather and her friend. 

And that is where we are at. I’ll purchase a property this summer before Heather returns from her South Korea/China trip and her friend starts her next semester of classes. Both have jobs and adequate income. 

 

Doing it Right This Time

All this assumes you have a responsible child. There are plenty of horror stories of parents buying a home for their child and getting killed financially. 

I would not have considered this even a year ago. (She could have remained living at home with mom and dad if necessary.) But Heather has finally reached the tipping point. Her business has reached critical mass and she has a waiting list looking for her services. 

Heather was ultra picky when vetting potential roommates. She wanted two roommates, but could only find one worth keeping. For now.

You might be tempted in a situation such as this to have your child manage the other units. It’s an insane thought so drop it fast! Heather is a teacher and business owner with no skills in — or desires for — property management. 

Heather and her friend will pay rent to me with a regular rental contract like any other landlord/tenant relationship. We do it by the book.

The remaining unit/s (I have my eye on a 4-plex, but will settle for a duplex) will be managed by a professional property manager.

I have no interest in managing RE ever again so a manager is a must. The only advantage of having my daughter live there is the updates on the needs of the property (something needs fixing or updating). Unless she says anything, the other tenants will not know her relationship to the landlord. Squeak, squeak. 

 

Final Notes

This wasn’t a numbers post on how to buy the right property at the right price; I did that previously

This post should help you start thinking about the additional benefits of RE ownership beyond the mere rental income (the doubling and tripling of benefits). 

Renting to your own business is a no-brainer in most real estate markets. The high-priced coastal cities of the U.S might be an exception, along with Denver. Of course that could change over time.

Rent has an element of profit (or at least it should). Slumlords take shortcuts to keep their rents lower, but you don’t want to live there. Good properties, good apartments, cost money. And good landlords are as hard to come by as good tenants. There are plenty of them out there but they are already renting their apartment from a good landlord and have no intentions of leaving anytime soon.

The next best option is renting to a responsible family member. This isn’t an easy road. My youngest daughter isn’t close to being there. Heather made the leap recently which gave me the idea and hence this post.

Doing it right means buying the right property that cash flows out of the gate and having a property manager handle the rest. 

Heather may find additional tenants for me from her work, but it still will all go through the property manager. I’d rather pay a fee than spend time managing the property

It’s the right thing — and profitable — thing to do.

And, of course, this assumes you buy a quality piece of real estate and maintain it.

 

 

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. 

Hiring a World Class Tax Professional

It's your money. Finding the right tax professional to serve your needs is important. It's not just about adding a few numbers to a return; it's about helping you pay less in taxes and build your nest egg for retirement. Your family is counting on you. Make sure you have the right accountant on your team.What is the largest expense you’ll have in your life?

Some will say it’s the purchase of their home or their college education. Others, thinking about it a while, feel transportation expenses lead the list of lifetime expenses. You would be justified in thinking medical costs, including medical insurance, are the biggest expense you will face in life.

Yet none of these expenses are close to what you will pay in taxes over a lifetime. 

Taxes will consume over half of what the average American earns over a lifetime. This means no other expense can possibly be larger.

The list of taxes in nearly inexhaustible: federal income taxes, state income taxes, sales taxes, excise taxes, payroll taxes, property taxes and now tariffs are being added to the costs of many goods you buy.

Let’s take a look at the taxes a typical American pays:

  1. Federal income taxes: 20% (yes, you get deductions and credits, but many pay 20% or more after these tax reductions)
  2. State income taxes: 5% (some states are higher while some have no income tax)
  3. Sales taxes: 5% of spending (some items are not subject to sales tax however)
  4. Property taxes: 5% of income, but is levied against the value of the property so it can be a larger (or smaller) slice of your income
  5. Payroll taxes: 15.3% (half paid by employee, half by employer)
  6. Excise taxes: What isn’t taxed? From alcohol to fuel to tobacco to vehicle registration and so on.
  7. Import taxes: Tariffs are a tax paid by consumers of the country levying the tariff and that is going up in the U.S.
  8. Other taxes: As a consumer you pay the taxes of businesses in the form of higher prices. Taxes are built into virtually every product and service. Medical expenses are usually exempt from sales taxes, but the taxes on the system are passed on to consumers. If they didn’t they would go broke meaning the survivors do pass on the cost of their taxes.

No one tax seems insidious by itself, but added together they take a massive chunk of your wealth unless you take actions to lower your tax liability.

Some taxes are difficult to reduce. If you buy gasoline you will pay the excise tax, for example. 

You can avoid many taxes by refusing to consume. That is easier said than done after a certain point. Frugality can save a lot of money, but go too far and you cross the line into being cheap. And there is still something to be said about quality of life.

Reducing consumption doesn’t avoid all taxes. Less consumption means less sales tax, but your wages still get hit with payroll and incomes taxes. 

The good news is you can use the tax code to reduce taxes beyond the mere consumption taxes (sales and excise). The United States has a progressive tax system which means your tax bite increases with your level of income. The first $24,000 of income on a joint return is tax-free because that is the standard deduction. Earn several hundred thousand and your top dollar earned can be taxed at over 30%. And that is just federal taxes. The state you live in wants a chunk too.

 

Investing in Tax Avoidance

Tax avoidance can be a dirty word in the tax profession since it is often the words we use when illegal activities are involved to avoid taxes. However, tax avoidance can be 100% legal!

There are two type of tax avoidance you need to consider: tax deferred and tax-free.

Tax deferred strategies push the tax into the future when you pay them with deflated dollars and potentially a lower tax bracket. Tax-free strategies avoid income taxes completely.

Is your tax professional Wealthy Accountant Certified? The right accountant can  reduce your taxes, help you accumulate wealth and achieve your financial goals.The Tax Code is massive and changing all the time. At the risk of sounding self-serving, you need a qualified tax professional if you are serious about reducing your tax liability. The Tax Code is too complex to navigate effectively without experienced help.

I could go into several tax reducing strategies today, but this isn’t a post on specific strategies. Besides, your facts and circumstances will probably dictate a slightly to radically different approach to meet your needs.

This is where you might think I would recommend my office for your needs. Except that isn’t going to happen.

I closed my office to new clients six months ago until June 1st (which is fast approaching). Unfortunately, a few factors will not make that a good choice for you after June 1st.

First, my regular clients filled May and June to the hilt so in reality July is the earliest I can get a new client in for a consultation.

Second, I decided (with my team) to focus more on local clients. (I owe my community my services. They breathed lifeblood into my firm and spreading myself too thin is very problematic.)

Third, my health had deteriorated significantly.

Before we continue onto solutions you can use I will take short detour into my health issues.

 

Learning to Breathe

When I was 18 or 19 years old I entered a silo with silo gas. Like a good worker I toughed it out to finish the work. Unfortunately, silo gas damages the lungs.

The best accountants do more than prepare taxes; they advise their clients for maximum wealth. You work hard for your money. Keep as much as legally possible while growing your net worth.I’ve since had short bouts of difficult breathing. These bouts are accompanied with persistent coughing. Cold weather makes it worse.

This past winter started early and lasted long. It isn’t hard to say we had a good six months of winter in the Northwoods of Wisconsin this year. 

I started out good this winter, but didn’t travel south for a short respite from the cold this year.

Around mid-February I started losing my voice (some might actually think that is a good thing). The cough soon followed. With tax season in full swing I was never granted a reprieve. The cough got seriously worse.

Here it is mid-May and the cough is still running strong; three months of hell and still going. The doctor said there is nothing she can do and recommended extended rest. (Well, that doesn’t work well with me.) 

I hurt. A lot. Nothing I do or take seems to work. Summer heat can’t come soon enough.

The cough has sapped my strength to the point I nearly faint when coughing spells hit which is often (like 5-10 times an hour).

To top it off my voice is gone. It has started to come back a bit, but the last days of tax season were so bad I couldn’t talk and breathe at the same time. It was difficult breathing at all! I still find it hard to breathe often. (And I never smoked, in case you’re wondering.)

 

Finding an Ace Tax Professional

No one person can be the go-to guy of the industry. I might be good, but pushed my body too hard and now the price is being paid. 

My openings available this year will be limited so I can produce two courses you will find valuable and to make Camp Accountant a reality. If my health does not improve I will take no additional clients this year.

But that doesn’t mean I’ve been sitting around twiddling my thumbs! I am fully aware of my limitations and have taken steps to provide more qualified choices for you.

Hopefully you have noticed the Finding a Local Tax Pro link at the top of most pages of this blog. The list of tax professionals is still small, but growing.

Not all areas of the U.S. are covered. If you are a tax professional who follows my philosophy, consider adding your name to the list. If you know of a tax professional who does outstanding work, consider nominating them for inclusion on the list. I will contact them before adding them to the list. (They have to want to be a part of this.)

 

Certified Wealthy Accountant Tax Professionals

And that brings up a good point. What level of quality do the tax pros on the list have?

The question recently arrived via email. A reader wanted to know what I thought of one of the tax pros on the list. In that instance I confessed I did not know the tax pro mentioned and could not vouch for their level of competence.

However, those on the list had to take action to get there. They either read this blog or follow my work as I post it around social media. I would be surprised if they were below average. (Let me know your experience. Too many bad marks and they will be off the list. The good news is I have received no bad comments on any tax pros on the list! Fingers crossed that continues.)

Still, it is not good enough to just put names on a list without vetting them. Over the next year I will take steps to “certify” tax pros on the list as Wealthy Accountant Approved. (They can be still be on the list if not “certified”, but I think people visiting this blog will steer toward the “certified” names.) It might eventually roll out to a national designation showing tax professionals who not only are competent, but can add value to their clients by consulting and providing actionable tax strategies to increase wealth (like maxing out retirement plans, maximizing tax credits, et cetera).

Tax professionals who attend Camp Accountant will be offered the “certified” designation. Tax professionals I have worked with personally and trust their work will also gain the designation. 

Rather than simple testing, I plan an in-depth vetting process to include the best of the best tax professionals on this blog’s list with the Wealthy Accountant Approved designation.

This is a valuable resource for you and the tax pro. You know the tax pro meets a high standard and the tax pro can charge more for their exceptional level of professionalism. (Smart people are never afraid to pay more for quality. It is the high price for mediocre quality that irritates.)

 

Putting a Good Tax Pro to Work

Top-notch tax professionals are always busy. The good news is you don’t have to settle for one tax pro!

As the tax pro list grows you will have more opportunities to find a Wealthy Accountant tax pro locally. Until then you can keep your current accountant while gaining the full benefit of using a Wealthy Accountant tax pro.

You work hard for your money. The right accountant can help reduce your tax burden while helping you build your retirement accounts. Save for your future; have more time with friends and family; travel the world. It all starts with the right accountant on your team.Tax season is not the time you save money tax planning. Tax season is triage in ALL tax offices! The options for saving taxes on the return being filed is massively limited (y’all want an IRA deduction with that, is about all we can do).

Reducing your taxes happens now, outside tax season. A few hours of consulting can pay off with a massive return. It is not uncommon for my clients to save 10 times or more than my fee in taxes. This is a 1,000% return! Some clients save even more. In some cases I don’t reduce their taxes but help them understand their tax and financial situation better so they can maximize wealth creation even if taxes are not reduced.

It is rare for a client consultation to end with tax reductions less than my fee. In those cases the value is usually increased wealth from other sources or fixing a tax issue that is sure to bite the client in the future.

I encourage you to use this resource: the Finding a Local Tax Pro list. I do NOT charge anyone to be on this list! This is for you, kind readers. There is no financial benefit to me. You get the value and I get the warm fuzzy feeling more of you are getting the service you deserve and that I can no longer provide. Yes, Camp Accountant has a fee, but that is to cover the costs of the Camp. I want Wealthy Accountant Certified to mean something everyone can trust. I want a day to come when everyone demands their tax professional be Wealthy Accountant Certified whether on this list or not.

 

As much as I want to help the world, I am one man who has pushed his body too far. I have to think smarter if I am to help every one of you kind readers. Just because I can help someone doesn’t mean I should. Too much work can break the horses back. Well, this horse is struggling with health issues as a result. 

I’m never one to shy away from work. I love what I do, even when it hurts. But if I go down no one is helped. I owe it to you, every one of you, to act and think smarter. The audience is too large for one small office in the backwoods of Nowhere, Wisconsin to handle. 

I need a team and one is being built. I will give all I have because you deserve only the best. When I push too far it is impossible to give the best. 

With the expanding team of tax professionals around the nation we can serve you at the highest level possible.

Don’t be afraid to hire a tax pro from the list. Ask the right questions before hiring. I published two posts on this in the past: 7 Questions Rich People Ask Their Accountant and Finding a Good Accountant.

Ask questions to verify the tax pro can serve your needs. Many tax professionals specialize. As long as you’re going to pay for the service you may as well get the best one possible.

 

In parting, do not worry about your favorite accountant. I thought the end of tax season would give me a breather (pun intended), but so far the cough and breathing issues have not improved. Warmer weather and time off (tax season really doesn’t end until June or so as extensions and questions come in rapid-fire until then) should allow me to heal. I am a bit worried this has lasted so long and so strong.

I’ll survive, no matter how much it hurts. I always do. I am fully aware of your presence and need, kind readers. I will find a way to get every one of you served to the level you deserve and more.

 

 

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.