What you spend on is more important than frugality.

When it comes to the blogs and other tracts providing information on building wealth, frugality carries most of the weight. And it makes sense. The greater the difference of income over spending is a strong determinant of the level of wealth an individual will achieve during their lifetime as compared to their income level. 

As important as frugality is, spending is even more important, even if it doesn’t garner the column inches the matter deserves. Spending less than you earn is the seed money for investments and without investments it is impossible to build significant wealth.

As an accountant I see people from all spectrums of income. Frugality, even hyper-frugality, is the hallmark of those with modest levels of wealth. Even the lowest income earners can amass a half million or more in a working career when frugality is taken to religious levels, with the excess invested in equities like index funds.

Mid-levels of income also do well with only the single tool of frugality. As their wealth grows they sometimes seek out professionals to help them. These clients tend to want short consulting sessions once a year with a review at tax time. 

Then come the serious achievers. These people sometimes have modest incomes, sometimes large incomes.  Regardless their income level, these people smack it out of the park. Their level of wealth is well beyond what would be expected for their income level or level of frugality (the excess of income above spending).

Super-achievers in wealth building focus on spending rather than frugality. They know spending is more important. And they know most spending drains their energy and wealth while proper spending can actually make them richer!

They also know that wealth is fleeting. The highway is littered with the corpses of wealthy people of yesteryear. A lifetime of building wealth can be lost in less time than it takes to snap your fingers. That is today’s topic. Wealthy people that keep it long enough to leave a legacy spend on the 5 things listed below in a disproportionate amount compared to the general population. As you flex your frugality muscles you want to consider spending some of that excess on these things to grow and preserve your wealth. Because, remember, when you have money there are always those looking to separate you from it.

Millionaires and Health

How wealthy can you really be if you are chronically sick? In pain? Or dead! 

If you have your health you are already wealthy and rich people know it and take steps to keep it that way. Eating quality food and exercise are primary. Proper medical care also plays a key role.

I see poor people and those looking to super-charge their frugality, to achieve goals like early retirement, refuse to pay for quality food or a gym membership or a piece of exercise equipment. It is counter-productive behavior.

I have a membership at Lake Park Swim & Fitness. Mrs. Accountant attends two or three exercise groups per week and I hit the floor (where the weights are) three times per week. This is a part of our routine! Physical activity is a priority in our life. Mrs. Accountant loves it so much she took a part-time job their working two nights per week cleaning up a bit (and for a free membership).

Outside the gym I also remain active. I walk an hour each day and sometimes jog. My sneakers see at least 3 miles of travel daily above and beyond normal movements (walking to the water cooler, et cetera). I chop wood on my farm, plant trees and work the garden. I recently bought a step meter to see how I’m doing. Rare is the day with fewer than 10,000 steps and many days are well above 20,000. Mrs. Accountant has similar numbers.

Lake Park isn’t the cheapest gym, but they also are not the cheapest gym. (Yes, you read that right.) It is the cleanest gym (and friendliest) gym I’ve ever been a member of.  I want a clean environment and working equipment. My workouts are serious business and I want a gym that feels the same way.

Food is another important expenditure for the wealthy. I grow much of my own food, but nutritious food can be had from the grocery store and it doesn’t require the “organic” label. Processed foods are limited in my household. Fresh fruits and vegetables are a common sight. We freeze and can lots of homegrown produce. Home prepared meals are the best so we do it a lot.

Health includes medical services. I see many poor people (and even some earning a reasonable wage) foregoing medical care and recommended treatments. Modern technology has given us the longest lifespan in human history, but it does no good if you don’t use the technology. 

Reasonable medical insurance to deal with a big medical issues is a must in the U.S where there is limited national healthcare for people under age 65. Regular checkups and taking required medications are all part of the program. Wealthy people know it is easier to stay healthy than to regain health. And as a reminder, without health, financial wealth has far less meaning.


Millionaires and Legal

Most people know they need to take care of their health. Fewer understand the importance of legal protection.

What takes a lifetime to build can be sued away in a fraction of a moment. Wealthy people know it, too. Keeping wealth already accumulated is vital to keeping wealth all the way to the finish line. 

It blows this accountant’s mind when people set up their own business entity. They have no experience (in most cases) in how to do this correctly, but they do it anyway. These hard working people put in the hours for years and even decades. Yet, their first step is to take a shortcut, the cheaper way. (Notice I said cheaper, not frugal. Frugal doesn’t take shortcuts; cheapskates do.) 

The same applies to wills and other legal documents. Of course, if you do it wrong you will not be around to clean up the mess; your friends and family will. (Nice memory you left the kids.) 

In all my 37 years in practice I’ve never seen a truly wealthy person take legal shortcuts. I have seen many people lose a lifetime of work, sometimes while in retirement, over  not using a qualified professional to handle their legal needs. 

I keep a law firm on speed dial for legal questions and other legal services. They have my retainer. When in doubt I go to the professionals to help me make quality decisions. I understand tax laws well (and still rely on other tax professionals for research all the time), but legal matters not so much. Attorneys sometimes have a bad reputation. It should not be that way. My legal team is a vital part of my financial plan. Their advice is always welcome. Attorneys can save you a massive amount of money and grief when planning ahead, or, they can cost even more trying to fix a mess that might end up with a settlement costing you decades of your invested savings (work or lifeforce, as some say).


Millionaires and Tax and Accounting

I’ll admit this part is self-serving. It is also a vital part of wealth creation and retention. 

When you add up all the taxes you pay (income, property, excise, gift, sales and more) it is the biggest single expense in your life. Even your home doesn’t cost as much as all taxes combined are pealing from your wallet. Even a modest income can see half or more lost to the litany of taxes the government has devised to separate you from your hard-earned money.

In my office the tax professionals sometimes laugh when people say they prepare their own tax return. “We always enjoy summer work,” is their response. There is some truth to that.

Frugality is not enough if you want to be wealthy. How you spend and what you spend on will make the difference in how wealthy you become. If you want to be a millionaire you need to spend like a millionaire. That means frugality one one hand and intelligent spending that serves your needs on the other.But it gets worse. To this day I have never had a consulting session with a client or someone from this blog where I didn’t save that client several times in taxes what they paid me. There have been cases where a $1,000 consulting fee yielded 6-figures in additional wealth, much of it from tax savings. 

I have no problem with people preparing their own return when it is very simple. However, a tax professional is worth her weight in gold if she works with you! Rare is the non tax professional that knows when it is best to elect to treat their side hustle or business as an S-corp over a sole proprietorship. If you own income properties do you understand the mechanics of a cost-segregation study? If you own any investments are you aware of tools to defer and eliminate taxes on the profits? Like-kind exchanges? Opportunity funds? Delaware Statutory Trusts?

Even something as simple as  professional bookkeeping can send your net worth skyward faster. One of my accountants just helped an investment property owner from Mississippi clean up his books. Now he knows where he is financially at all times. He can make better decisions; I can give him better advice. Banks loans are easier to get and rates lower. He really has professional looking books! (It would be bragging if I did the work, but Dawn gets all the credit.)

His taxes are also lower because I can help him plan instead of react. He refers to us as his OCD accountant. Yes, we take pride in our work and pay attention to detail. It is never enough to have clean books. We demand we provide guidance to optimize wealth building for every client we serve. 

It doesn’t come cheap, of course. But I deliver greater results because I am incentivized to do so and invest in growing my arsenal to better serve clients. The cheapest isn’t always that cheap.

The income property owner discussed above had several accounting firms who could not get his fast growing rental business under control. Dawn even struggled in the beginning. There was, and is, a lot to digest. I kept applying steady, yet firm, pressure. While the client benefited, I was training an accountant on how to handle the difficult cases. Now that the books are clean it isn’t so challenging anymore.

And this brings up another important point. Not every tax and/or accounting professional is cut from the same cloth. Some are better than others and some are outright incompetent. In a previous post I discuss how you can find high quality tax professionals and accountants for your wealth building team. The same applies when looking for a legal professional.

With so much on the line it is worth hiring a competent tax professional. If your return is simple you can prepare it yourself. I have many consulting sessions with people who prepare their own tax return. I review the prior return as part of the consulting session and it is usually okay.

Tax and accounting  professionals are worth their most when consulting. Their large reservoir of knowledge and experience can help you make better career and investment choices. It is difficult at best to build serious wealth without a highly qualified tax professional.


Millionaires and Education

Primary and secondary schooling, along with a college, is designed to teach you how to learn. Until you learn how to learn nothing else will matter. Yes, college will educate you on the basics in your field of study, but it is just the basics, as hard as those final exams were.

The most powerful tool the millionaires has to create and build wealth is never-ending education. Learning never ends for the wealthy.Nothing prepares you for real world. College textbooks have nice neat questions with exact answers. Real life rarely delivers such a neat package. Thinking on your feet and designing answers on the go is vital to success. That is why doctors spend so much time in college and even more time sharpening their skills as interns and in residency.

Once you learn how to learn the world is at your beck and call. What you learn in college can quickly become dated. Your “real” education begins after graduation!  

Many professions require continuing education (CE). Doctors, attorneys, accountants and enrolled agents (a tax professional designation) all are required to take continuing education courses each year. And for good reason. Bad habits can set in and CE can bring behavior back in line. New technologies and changing laws all require more learning, more education.

Application is harder than theory. I see tax professionals and accountants come out of college and struggle when they move from the legal facts to applying those facts in real world situations. Clients don’t always bring in all their paperwork. Some (all too many) are trying to game the system. Your job is to keep clients in line (they didn’t teach you that in college, did they?) and use the material at hand to build the most accurate record.

Doctors face a rude awakening when the classroom makes way for the medical theater. Answers are not always easy to define or find and time is of the essence. It’s an open book test with a human life on the line and the clock speeding forward.

You don’t have to be in a profession to benefit from education. In all facets of my life I have continued learning. Reading is a daily part of life (a big part of life). Every day is a learning experience! Even after all these years of study and thousands of books digested, I still feel like a neophyte most of the time. The more you learn the more you realize there is to learn. It is humbling.

Learning is one of the great pleasures in life, too. Wealthy people find this compelling. They spend a disproportionate amount of their income and wealth on education at all times of their life and enjoy the process. The wonder of discovery never grows old. 

Spending on education is a guilty pleasure wealthy people never skimp on. My personal library has pushed past 3,000 volumes and I make prodigious use of several local libraries as well. I am a sponge for knowledge and people pay me a lot of money to see how I put the pieces together as it applies to them. And there is nothing more pleasurable and fun than that.


Millionaires and Insurance

This expenditure of the wealthy might come as a surprise to many. That is because you need to sift the junk insurance from the stuff that matters when it come to building and retaining wealth.

To start, we are not talking about the insurance you purchase for small electronics at retail outlets. If you can’t afford to fix or replace an $86 item you can’t afford the item. This is junk insurance and wealthy people don’t buy it. Besides, most credit cards provide similar insurance for free just for charging the item on their card.

Wealthy people strategically target their insurance spending. It has to protect wealthy adequately or build wealth.

Large assets require coverage. Homeowners should have adequate insurance to protect against large losses. Wealthy people frequently have high deductibles, however. Small losses are easily handler out-of-pocket and insuring for small losses is always a losing game.

Home and auto insurance are more than just protecting the asset’s value. Many wealthy people don’t have collision on their vehicle or have a high deductible. That is because a damaged car is a mild inconvenience when it comes to building serious wealth. 

Lawsuits, on the other hand, are a different story. A minor fender-bender might set you back a few thousand; the lawsuit several hundred thousand and a boatload of time, anxiety and stress.

Wealthy people almost always enhance their insurance with an umbrella policy, extending liability coverage beyond the original policy limits. Damage to property almost always  is a minor issue when it comes to wealth, but a lawsuit can eliminate all vestiges wealth ever existed in your portfolio. And, as already mentioned, it can happen faster than the snap of the fingers.

Other insurances wealthy people use fund legacy planning and business protection. Protecting a business protects the income stream, an important consideration for the wealthy and those soon to be. Legacy planning frequently includes insurance to deal with tax issues, fund charities of choice and provide long-term for family after our wealthy friend departs this realm. You would be surprised how much income can be generated with a proper insurance policy and it isn’t the insurance policy providing the income, only the protection and/or framework to provide such additional income.

Non-wealthy people fight this expenditure the most. I even saw a popular blogger a few years back claim he forewent homeowner’s insurance. I can only imagine the risk and damage readers taking his advice faced. (The real value of homeowner’s insurance in the liability protection, not the casualty coverage, by the way.)

Wealthy people buy insurance that protects against serious losses to wealth while poor people insure items on Amazon with a sticker price under $100. That one simple fact tells a very large story.

The right insurance is important. The insurance agent might not be the right place to go to find out the best values in insurance (insurance agents don’t always understand legal and tax issues). That is why we consult with educated attorneys and tax/accounting professionals. Your accountant and attorney are a vital part of your plan to build and retain wealth, and frequently have a fundamental understanding of all the wealth issues involved, including insurance.



There are other things wealthy people spend on too. The 5 above are areas wealthy people generally do not skimp on. Too much is at stake if they do.

Thinking like a wealthy person is the first step in building wealth. Keep yourself as healthy as possible, adequately protect yourself with qualified legal professionals, also hire qualified people in the tax and accounting field, never stop learning and protect your current and future assets with proper insurance.

You might have other priorities. Many wealthy people travel more than I do, but it isn’t required. Some buy more home than I would feel comfortable living in. To each their own, I say. But the 5 categories above are where all wealthy people focus their spending if they plan on keeping it. That might be a hint you should, too. 

Engage frugality and put the excess monies to work. Learning to save and spend properly is the only way to reach financial goals; to reach true levels of significant wealth.


More Wealth Building Resources

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

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?

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.


Five months ago COVID-19 was just getting started. Fear was rampant. People and businesses made rushed decisions with long-term consequences. In the U.S. fewer than 10,000 people had died from the virus, yet fear was many more would die. 

Over concerns clients and readers (that is you my kind friends) would make poor financial decisions, I published an article encouraging caution and recommended people relax, breathe deeply and think before making a decision. By thinking before acting, I felt my people would be in a better position to make decisions that would serve them well. 

Then I watched my readers act and react on social media. The spread of COVID-19 should have run a chill down the spines of any normal human being. But social media does not bring out the “normal” in people. Some over-reacted with the attitude everyone should shelter in place forever. But as always happens, the disease became “normal” as we saw it every day. Before long people wanted to get out and act as if nothing was wrong or that the risk had ended. The middle, sensible, ground somehow lost out. 

It is sad the intelligent solutions lost out. Again, social media was rife with conspiracy theories, questionable remedies and outright lies. Social distancing, washing hands and masks are three simple things everyone can do to slow the spread of the virus until a vaccine can end its rein of terror.

Logic didn’t work 5 months ago, so now I have to get blunt. This is a financial blog so there is a reason for the focus on a medical issue. Your reaction to COVID-19 is a large part of the way you think. If you conduct stupid, risky behavior with your life, you probably do even worse when it comes to money. The best way for me to convey this message is with the good cop/bad cop routine. 

There are two parts to this post. Part 1 is a mild comedy sketch of the facts. In Part 2 we will put it together and pull out meaningful and valuable data you can use. This value will increase your wealth and allow you to live long enough to enjoy it. Remember, Part 1 is dark comedy and not my opinion. I don’t want hate mail before you read the whole story.


Part 1: Dark Humor

I have noticed some interesting posts on my Facebook page recently. It seems people are eager to spread the word that COVID-19 is either a hoax or not that bad or the people dying from the virus would have died in a short time anyway. I also noticed on Facebook (and even in my office) people claiming they have a medical reason to not wear a mask. 

This is just stupid! Doctors have been wearing a mask for over 100 years when working with patients and when in surgery. To date, there is no record of any doctor passing out while wearing a mask. None! In the winter, folks here in NE Wisconsin (and other northern locales) bundle up with thick clothing all over their body and one or more layers covering their face. Then they venture outdoors and slog through snow, wind, ice and frigid temperatures. No more than 5% or so of the population ever passes out in any given week while doing this. The police simply come by and pry the dead bodies from the ground as they clear the roads and sidewalks. Acceptable losses.

Of course that isn’t true. Very few people have any issue with a mask during cold weather. Those that pass out or die don’t do so because of wearing a mask, but because of the cold weather and heavy clothing. And it is usually from a heart attack.

Perhaps people up nort (only folks from northern Wisconsin and Upper Michigan will know how to pronounce that correctly) are built of hardier stock. Warm weather year-round could be making southern people soft and ruining their lungs, preventing them from wearing a thin piece of cloth over their face. Manufacturers will need warning labels on shirts and undergarments similar to plastic bags. WARNING: RISK OF SUFFOCATION! DO NOT COVER FACE WITH THIS UNDERWEAR! The CDC needs to warn people to put their t-shirt on fast for health reasons.

The face mask is a real problem for the majority people, all whom struggle to breathe even with no facial covering. I understand. I once had a hair from my beard get in my mouth and I thought I wouldn’t make it. Witnesses said I was turning blue from lack of oxygen.

Enough about masks; they aren’t needed anyway because COVID isn’t killing all that many people in the first place. The government is padding the numbers to scare us and most people who die from COVID would die eventually anyway. (You read that right.) 

Let’s look at the facts; you know, statistics.

I’ve heard it so often on social media it must be true: COVID is just like the flu. Only old and sick people are dying from COVID, right? They were all going to die anyway. Right? So why the fuss. Who cares if some old guy 35 years old dies? Young people need to get out, party and have fun. They’ll be 35 soon enough so they need to get their partying in now! Those young people dying from COVID is fake news and a hoax anyway. Saw that on Twitter.

Talking about flu season, only 12,000 Americans die each year from the flu. A really bad year can be as high as 61,000, but that doesn’t happen more than once or twice a decade.

And you don’t worry about dying from the flu, do you? Do you wear a stinking mask just because some slim ball sneezes, do you? No you don’t! You are an adult and have your rights! Besides, NyQuil ™ makes you feel happy. 

So COVID isn’t that bad. It’s like a bad cold season. When was the last time you worried about dying from a cold? during the summer?

COVID only killed 174,165 Americans as I write this.  That isn’t that many. And don’t use that sorry line COVID did in 5-6 months what the flu does in a year. We all know the flu doesn’t do its damage in just a short period of time. Who ever heard of a summer cold? Thought so.

It really isn’t that many! I mean, think about it. I have to give up my God-given rights and wear a mask? and social distance? and wash my hands!!! I’m an American and have my rights! I don’t want any of that socialist stuff from Europe (well, actually pretty much everywhere, including the U.S. is socialist, but I digress). 

Now that we have that straight, that my rights are more important than your scaredy-cat facts, I propose a few more changes to our American lifestyle. If we can have a biker rally in Sturgis during a pandemic we can have a lot of other things, too. As Americans, we have our rights. 

First, we have to stop acting like wusses when a mere 3,000 Americans die in a terrorist attack. Taking off my shoes at the airport, along with the rest of the security check, is unacceptable to a man from a free country. And why should I pay for all that waste? And as long as we’re at it, the cockpit (the boys are giggling now) doesn’t need a bullet proof door. One terrorist attack and billions are spent. . .  of our money! Besides, what happens if the pilot and co-pilot have a heart attack at the same time? It’s possible! Go long enough and it is bound to happen. Just as many dead and broken people as 9/11. Insane! (FYI: Prior to 9/11 I secretly hoped a flight deck would go down so I could land a 737 the way a civilian with no fight experience does in the movies.)

We need to put death into perspective, too. Only 174,165 dead from COVID to date? More died in WWII than from COVID (so far); 291,557 American soldiers died in combat during the Big War. During the entire Vietnam War America only had a mere 47,434 battle deaths. And we started the nightly news back in the 1960s with the number of Americans who died in Vietnam each day. And there were protests! On college campuses! I don’t know what they were protesting for. Today Americans should be protesting for a re-institution of the draft so we can go back to Vietnam and finish the job. The military will also save money since Americans can now bring their own gun to work

As long as we are at it, there are a few more rights we have lost, my fellow Americans. Talking about gun rights, only 15,498 Americans were killed by firearm in 2018. Such a small number of dead Americans and we pass laws restricting firearms, a constitutional right! Heck, COVID kills that many in 10 days and we don’t bat an eyelash. Toughen up America. 

Here is another right we lost. The government, yes that insane group of left-wing liberals, passed laws requiring you to wear a seat belt. Can you believe that? Over half the people killed in auto accidents in 2017 were wearing their seat belt. Lot of good that did them. And the rest of us have to suffer with the constraints of a belt to hold us in our vehicle in case of an accident. That’s as bad as wearing a mask.

Here is the worst government intrusion of all on our rights: drinking and driving laws. In 2016, 37,461 people died in vehicle accidents. Only 10,497 involved alcohol! A week of COVID deaths at best!

For some reason the government has decided it was no longer okay to have one more for the road. Here you are, enjoying a pleasant evening out with friends, and a bored police officer pulls you over, delaying your return home. You get arrested for only having one drink. One! They put you in jail, waste the court’s time and fill the prison with your carcass. All over a measly drink! 

Now I know what some of you are thinking. People who drink and drive have more accidents, but you miss the whole point. The people who drink and drive are just fine, except for the people with impairment problems. These people were going to die sometime anyway.

I hear you. What about the children? Well, in 2016, we saw 1,233 children die in alcohol related auto accidents. But when you think about it, that is a really small number compared to COVID. I also bet you noticed all those young people out partying during the current pandemic. These people aren’t afraid of dying. The number of dead kids is a fraction of a percent of all kids in the country. A small price to pay for their freedom. Besides, some of them will die in Vietnam when we start the war back up.

Then there are. . . 

No. I can’t take it anymore. These arguments are insane alright. COVID deaths are too high and people are making excuses because they are either callus, ignorant, lazy or all of the above. Let’s turn the discussion to something more serious; something that will make the world and our life better.

Part 2: The Fuzzy Math of COVID-19

The statistics above are all true, only twisted in a way to distort the truth. This is prevalent on social media and even from trusted news sources. I included links for your review so you can find answers closest to the actual truth based on facts. 

The faulty logic used in our dark humor skit is more than a risk to our physical health; it is the same mindset that harms you financially. We actually have people who believe 1,000 or more dead Americans a day isn’t that bad. There are people who think it is okay to carry on as if nothing has changed because only old people suffer the consequences. They forgot their Hemingway: Do not ask for whom the bell tolls; it tolls for thee. (For exact quote use the link.) The clock keeps counting for all of us and since I see no old people saying, “I don’t care if young people do stuff that might kill me,” I assume today’s young people will want respectfully behavior from the future’s youth.

Except the young are not exempt! Some young people do get sick from COVID. Fortunately, many have few or mild symptoms. Yet, some younger people get very ill and even die from the infection. Worse, there seems to be long-term health issues in some young people. The medical community still doesn’t have answers to why this is. (The Economist, pgs. 65-6, August 22, 2020 print edition

If anyone really believes this faulty logic they would be demanding (and protesting) for the end of seat belt laws, drinking and driving laws and incarceration. But nobody actually protests these laws seriously because we know they do good things for all of us. These laws flatten the curve, so to speak. It is estimated that 14,955 people died in 2017 in auto accidents that would not have died had they been wearing a seat belt. 

Drinking and driving laws are even more advantageous. The 10,497 people who died in 2016 in alcohol related accidents doesn’t tell the whole story. I never heard the argument from young people that “only” 1,233 children died in alcohol related auto accident in 2016 and conclude drinking and driving is less risky for young people. We know that stiff laws on drinking and driving flattens the curve. 

Many social media arguments claim that anyone who dies with COVID is listed as dying from COVID. This isn’t true. Yes, it is possible some people who died in an auto accident with COVID were inadvertently included in the COVID statistics. The number, if there are any, would be extraordinarily low. Making such a claim is like arguing people who die in alcohol related auto accidents would have died from other reasons anyway. Who can say the guy that wrapped his car around the tree would not have died an hour later at home of a heart attack? It is a fallacious argument and should not be used for COVID or alcohol related auto accident deaths.

We could write a book of examples on the faulty logic used to downplay any medical situation. Tobacco companies have been doing it for decades and you are better than a tobacco company, I hope. Instead, we need to turn our attention to what matters in this journal: personal finance and taxes.

Part 2a: The Fuzzy Logic of Personal Finance

We see the faulty logic every day on social media and news outlets. The issues of faulty logic were quickly debunked in Part 2 above. Unfortunately, too many will be distracted from this message before they even read this far. That is too bad because the same faulty logic, carried into your personal life, will cause great financial harm.

The lesson should be simple: Spend less than you earn, invest in broad-based index funds and wait. You tell me how much less you will spend compared to your income and I’ll tell you your net worth at any point in the future within a few percentage points. Then insane illogic takes hold.

Like COVID, young people are less affected in the near term if they don’t heed the mantra above. And even if you do internalize spending less than you earn and investing the difference eventually, you need less money set aside each month to reach retirement or financial independence goals the younger you start. Waiting to start saving and investing is the crime! It’s a simple product of time, as in, the more time your money has to grow the more it does. Call it Keith’s Rule 34. 

Again, like COVID, young people feel invincible and spend to their desire rather than to common sense. Somewhere between youth and their 50th birthday they have a come to Jesus moment and realize the clock really is ticking and who keeps tolling that bell! Then the crazy logic used to start this post is tossed out the window because stupid doesn’t cut it anymore. 

And some never get the message. They don’t walk into my office much anymore since I’m not the kind of tax office you visit if you are 80 years old with a 30 year mortgage and working a job for the man at that ripe old age because you have debt and bills to pay. So much for the gold in the Golden Years. Long-time readers know I’m not a big fan of traveling, but I do like to get out of the house now and again. In retirement it would be nice to visit a few places, even if they are only a skip, hop and a jump away. If I’m working when I’m 80 it’s because I want to and doing the things I want to work at, not out of necessity.

You can delude yourself into believing it’s not that serious when you are young, but it is. Everyone has seen the chart where twin brothers take two investing paths. The first brother starts saving (and investing those savings) $2,000 per year at age 18 and stops when he reaches 24. His twin starts saving $2,000 per year at 24 and keeps at it until age 65. Both brothers end up with about the same amount of money. Only, the first brother invested a mere $14,000 while the second brother invested $80,000 of his earnings.

It is serious: COVID and starting yesterday to save and invest money. The stock market is on a tear after the initial COVID scare. There are people who hit it out of the park owning Apple, Facebook, Tesla and a few other stocks. What we don’t hear about is the people who got taken out behind the woodshed for a whooping. 

The faulty logic of COVID is, “I am young so it will not affect me, I can carry on a normal, I don’t have to wear a mask.” The faulty logic of the poor is, “I’m young and have plenty of time to start saving and investing, I can party and have fun while I’m young because I can, I don’t have to worry about my health because I’m young and healthy.” Notice the overlap?

Too bad a couple percent will not be so lucky. If you have your health you are already wealthy. Medical problems are expensive. Medical bills are more painful than the disease! And lost income due to health reasons is the financial double-whammy health issues can cause.

You will never get another chance to spend less than you earned today and invest the difference. Sure, you can start tomorrow, but today is lost as it bleeds into history. The only questions is: Will you keep buying into the faulty logic of COVID-19 and extending that faulty logic to your retirement and financial independence plans?

Only you can decide that.


More Wealth Building Resources

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

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?

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.

Now that we are firmly in the dog days of summer (as I write and published this, not as you are probably reading it) it is time to turn our attention to how pets actually make us richer in so many ways, including financially. And since it is the dogs days of summer we will focus on cats. This isn’t to take anything away from dogs and dog lovers (we always had a dog on the farm growing up). Dogs are cash machines, same as cats. It’s just that your favorite accountant currently lives with two cats.

Now I can hear some folks out there taking exception to my premise that pets are a cash machine when pets actually cost money. Food, litter, toys and vet bills add up. A few years back a blogger in the FIRE community let the world know pets were a frivolous expense and in no way frugal. I disagreed then and now. Unless you have a herd of animals in your home, pets increase your health and wealth in many ways. And our furry family members do it in such a stealthy way.

Of course I’m biased. I enjoyed cats in the home since high school. We always had a dog or two around the farm when I was growing up. A farm dog is a great help when getting the cows in at milking time. They are also a great companion when working in the barn and fields. There is a wealth beyond financial that friendship brings. And cats take care of important business, too.

You know you are in trouble when you get this look. Usually it means, “FEED ME!!!”

1. Medical Expenses

a. Health Insurance

 The biggest financial benefit of owning cats involves health costs. Pets, and especially cats, have been shown to lower blood pressure and cholesterol levels.

Medical costs are a serious percent of the family budget. Lowering cholesterol and blood pressure can not only save on prescriptions and doctor visits, but also open the door to savings with lower cost health insurance plans. A high-deductible health insurance plan that is health savings account (HSA) qualified reduces costs up front while opening the door for tax-deductible savings you can use for future out-of-pocket medical expenses or for retirement if not used by age 65. 

The financial benefits of owning a cat can exceed the expenses of owning a cat. That should come as no surprise. with medical cost so high.

b. Heart Health

Heart disease is the leading cause of death in the U.S. with ~650,000 people dying from this single cause every year. Stroke claims around another 150,000 Americans each year.

Due to the cholesterol and blood pressure lowering benefits cats bring, owning a cat could help you live longer. According to a Goodnet.org article, owning a cat can lower your risk of certain heart diseases and stroke by ~ 30%. 

Interacting with your cat also lowers cortisol levels. This means merely playing with your cat can lower the hormone responsible for weight gain. Excess weight is a major factor in many illnesses in the U.S. as well. Lower weight can also increase quality of life which comes in handy if you are going to live longer.

c. Faster Healing

The purring sound cats make when happy reduces stress and facilitates healing of bones, muscles and tendons. Something as simple as your cat laying on your lap and purring as you pet her can improve your health.

Vibration frequencies between 18-35 hertz have been shown to promote healing. The vibrations the purring of a cat creates fall within the 20-140 hertz range. It is no wonder a purring cat helps us get better sooner.

In a February 2018 report from the NIH, cats can also increase your mood, reduce loneliness and help children with developmental disabilities. 

d. Stress

Stress and anxiety is endemic in our modern world. Petting your cat actually lowers anxiety and stress levels by causing the release of calming chemicals in your body. 

Costs for stress and anxiety have reached $300 billion per year in the U.S., including: lost work hours, lower productivity, accidents, medical and insurance costs. 

Less stress improves mental health, too. Our furry family member improves our life on multiple levels. Taking care of our cat releases feel-good neurotransmitters. These neurotransmitters reduce stress and thereby, reduce health costs.

e. Fewer Allergies for Kids

A study from the National institute of Health released in 2002 indicated children exposed to cats in their first year of life were less likely to suffer from allergies. It seems high exposure to cats in a child’s early years reduces pet allergies later in life, but also for other common allergies: ragweed, grass, pollen.

I run this place and don’t you forget it.

2. Social Life

a. Family Life

Dr. June Nicolls, a leading pet researcher, found women are more attracted to men with cats. This isn’t a minor benefit either, guys. According to Nicolls, 90% of single women found men with cats nicer and more caring than men without a cat.

While I found no research proving the following statement, I think it is fair to consider owning a cat can improve your home life and interactions with family members. Instead of a fight escalating, the aggrieved party can talk it out with the family cat. Also, caring for a cat improves parenting instincts. By providing for your cat you train yourself to care for others and consider their feelings. This is good for everyone involved.

b. Energy Levels

There is a study from Indiana University (link no longer available) that says simply watching cat videos can boost energy levels and create positive emotions. There was also a reduction in negative emotions. Even if you don’t own a cat, watching videos of cats can provide health benefits. The sound of purring, even from a computer speaker, is valuable if you are healing from injury.

Cats talk! Pinky says, “It’s okay for food to fall from the dinner table.”

3. Making Money with Your Cat

Up till this point we focused on the money you can save from having a resident cat. Even a minor reduction in medical costs can turn your tabby into to a financial dynamo. Add the personal benefits and joy of petting and playing with your furry friend and it becomes clear cats really are a member of the family.

But saving money is only one financial benefit of cat ownership. You can also make make money with cats. 

a. Social Media

Rachel Miller is a self-acclaimed Facebook marketing geek. In the past she had a cat page on Facebook and made money from it. Countless others have turned some coin with cat videos on YouTube, Instagram and other social media sites. Here is one of my favorite YouTube channels (and a profitable one, I might add).

Cats are always a great selling tool. (Animals in general are. That is why so many firms use animals in advertisements.) If you are lucky you might get your cat into a marketing program with nice residuals. (Think Grumpy Cat.) If you have a business or side hustle your cat can bring home the bacon by providing your business a friendly face.

b. Cat Business

There are a variety of cat businesses to choose from. Cat grooming, training and cat-sitting are a few ways your cat can earn money for you. I have a client who makes kitty clothes; she turns a tidy profit. Her cat models the outfits and helps her size the clothes and costumes.

c. Rodent Control

Another massive benefit of having cats is they keep rodents away. Every so often a mouse makes its way indoors as the weather turns cooler in the autumn. We never need to spend on poison or traps. One mouse; two cats. What odds do you give the mouse? 

Mice and rats carry disease. Cats keeping a watchful eye 24/7 means rodents never get established in your home. The cost of an exterminator is significant and the household cats do it for free. 


Several years ago a personal finance blogger (as stated in the open of this post) nixed the idea of having a pet because it wasn’t frugal. He caught heck for that post (it wasn’t me!). Having too many pets can be a drain on the family finances. However, life is  series of trade-offs. You can’t spend on every item that glows in the dark and party all the time and have money for a pet. Your cat also needs love; while they soothe you, you soothe them. So you need home time with kitty daily.

It isn’t hard to make money with a pet in our modern world. I picked cats because I have cats. A dog or other pet can work just as well. People love watching animal videos. There was a time(it might still be out there) where people would put a video on their TV of a fish aquarium. And people binge watch cat videos on YouTube all the time.

Animals relax us. Cats are special. They don’t take a lot of work (feed them and clean the litter box and you are good to go). But too many cat owners miss the financial opportunity their furry friend provides. 

It seems cat pictures and videos sell. With that said, I will be starting a Facebook page for my kitties soon. I then can share the antics of my cats, along with other funny cat videos and placards. Who knows, my cats might pay the light bill one day soon.

Pinky is enjoying the last of the Dog Days of summer.


More Wealth Building Resources

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

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?

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.

It is the one thing that could put you on the fast track to the top. A-list actors, international rock bands, name-brand athletes, successful business people and the uber-wealthy are the kinds of clients that turn your business into something special. Selling an actor’s home, consulting with the wealthiest people in the world and business planning with an athlete automatically changes the nature of your business. You are now working with the elite and that takes a proper mindset.

Having a name on your client list from the zeitgeist gives you instant credibility. People will want to do business with you when they know you work for a famous individual. Better still, once you manage to add one superstar to your client list it has a habit of growing into a larger list of famous names.

Brad Pitt in wax.

And the income isn’t bad either. Someone pulling $28 million a year needs more tax and accounting advice (using the author as an example in this post) and they pay more for it because much more issues are involved. In a way, having famous people on your client list makes you famous, at least in a small group comprised mostly of other superstars.

There are two levels to the process of adding well-known names to your client list. In the last twenty years my tax practice has added names from the NFL and other professional sports, rock bands even non-listeners would recognize, actors on the big and small screen and high net worth clients. Prior to that I had few rock bands and wealthy business people and professionals visiting me. Then something changed and my business was never the same.

The first level to dealing with superstars involves expectations, sort of like a list of do’s and don’t’s. Knowing this before you attempt to attract household names increases your chances of building a relationship with these uber-achievers and keeping the relationship for more than a month.

The second level is the behaviors necessary to acquire the desired client. Once you serve one household name it becomes easier, but only modestly so. These people work together and share information. They are looking for qualified professionals to handle their needs, same as you. It is hard to understand A-list actors struggling to find competent tax professionals, but they frequently do. And when they find a keeper they whisper among themselves. If you are game you will have an entire client list of wealthy, famous and successful people.


What Celebrity Clients are Looking For

Anybody can find a house for you or sell your home. Most tax professionals can pound out a tax return for an athlete. The basic service is a given no matter who the potential client is. Celebrities have needs well beyond these basics. In most professional services these clients spend more time consulting than in the actual process of the actual work. In short, I consult over 10 hours with a celebrity for every one hour I spend preparing their tax return. Sometimes more.

Some celebrity clients speak with me monthly; some once year at tax time. Celebrities are normal people just like you and me. Some want very detailed help while others want something straight to the point. The only difference is they are well-known due to their profession. Most of my celebrity clients speak with me 3-5 times per year outside tax season. The conversation lasts from a few minutes to several hours, depending on what is happening in the celebrities life.

Before you start your celebrity search (we’ll discuss that in a bit) you need to understand the unique characteristics of working with celebrities.


1. Confidentiality is of Vital Importance

Confidentiality should be common sense (and frequently the law) for professionals. This is also a two-way street. As an example: I had a famous family mention I was their accountant. Instantly my phone (I have a store front in my business so it isn’t hard to find my business number) and email exploded. People who could not contact this family through the normal channels hoped they could use me to get them a message. First, it is distracting as all get-out when someone does this (and unprofessional). And second, playing telephone between celebrity and the endless spam requests is a sure way to get fired.

Non-disclosure agreements are sometimes (always) necessary. I started using a special engagement letter with celebrities where I require the celebrity to not reveal publicly I am their tax professional. They can discuss the engagement with family and other professionals, of course. But stating on public television my position is a recipe for massive disruption in my office and so it is forbidden. 

Having celebrity clients does not allow you to use their name to promote (or brag about) your business! This isn’t about your ego; this is about serving a client with unique needs and with unique challenges. Don’t worry about missing out on new superstar clients. If you prove reliable and know how to keep your mouth shut and perform professionally you will find more referrals than you can serve.

Confidentiality also includes keeping a row of your client’s movies off the back shelf of your office if other clients can see them. Your home shelf is sufficient. A Realtor® listing the home of a famous person should consider asking the client to remove identifiers when the home is shown: family pictures, awards and other personal items that would reveal the current owner of the home. Realtors also want to consider an NDA and vetting buyers.


2. Celebrities are Normal People

Celebrities love when adoring fans acknowledge their work. Usually. The pressure of standing in the limelight can become tiring. And like all professionals, celebrities like to loosen the tie, sit back and test a cold one. 

Just because a lot of people know who you are and witness your work doesn’t mean you put your pants on any different than the next guy. (Okay, there is a story about this and it involves putting on pants a bit different than normal, but confidentiality forbids I discuss the details.) 

They talk normally; celebrities that is. They are interesting and interested in things. Believe it or not, they many times want to know more about you! How weird is that? But yes, famous people also like to work with people they like. Their public or stage persona is not what they are like behind the curtain in some instances; sometimes they are. Regardless, they are always genuine people with feelings, desires, fears and dreams. 

The worst thing you can do is act star-eyed. As said, celebrities love recognition. They don’t always like the endless demands of fame. As they say back at the farm, it’s all fun and games until somebody pokes an eye out. Well, the eye poke is turning a professional relationship into ogling. Respect your client! Treat them with dignity. You can admire their work and act professionally at the same time. And yes, they are a lot smarter than you think.


3. High Maintenance

Several years ago at a continuing education conference a tax professional said he hated working for doctors. He felt doctors were too high maintenance, always demanding things on the spot and flighty. I looked around the table as my peers broke bread. The entire group was nodding in agreement, except me.

I kept my mouth shut and kept eating. I love doctors as clients and have many on my client list. Sure, doctors have greater demands at times. They are under a lot of pressure and earn a large income in many cases. They need a tax professional who can be a powerful team member for them. 

Doctors are a lot like celebrities. Both earn a high income and are under constant stress. I would say celebrities earn more but that isn’t always true. I have more than one doctor cashing a seven figure income. 

Take this example: A famous client asked me to lunch and I accepted. I was in town so he picked the establishment. We never got a moment to discuss any business or even small talk during that meal as the interruptions were incessant. We conducted business in private afterwards. Imagine that kind of pressure in your life!

High maintenance is not a bad term in this instance. High net worth people, business people and entertainers, have more needs and a lot more to talk about. They like to get out, but need private time for mental health and to clear their mind. They relay heavily on their team of professionals to give their life a moment of sanity.

Taxes, money, investments and professional decisions take more time with celebrities. The numbers are bigger and the considerations more involved. Whereas, your friendly accountant typing this can live normally in the backwoods of NE Wisconsin, many famous people would have serious issues doing the same. Scam artists find the wealth of these people irresistible. Often times I am called to determine the correct course when something doesn’t feel right. Other than their attorney or fellow celebrities, I might be the only disinterested third-party they can count on to give an honest answer. And since I tell you exactly what I think, my advice is highly valued. 


4. Know Your Client

This goes without saying for any professional. In this case it goes much deeper.

Knowing your client when they are famous takes more time and effort than for other clients. Don’t assume they are what you see in entertainment outlets. Also, there are more celebrities than you can possibly have knowledge of. I have had several bestselling authors who I never heard of prior to them contacting me. In one case I still haven’t blocked out a week to digest even one of her tomes. 

I watch no TV. None. Actors who contact me need to know I have no idea who they are unless they are Brad Pitt, and truth be told, could not pick Mister Pitt out of a crowd. I’m not much of a stargazer which helps if you want several celebrities on your client list. When it comes to music I listen to Chumbawamba, a rock band long since disbanded. But it is great music to work to. . . for me. Every other rock star will have to accept I have no idea who they are (unless they were big around 1980).

This means I must dig deep, hard and long to know my client at the level required to do an extraordinary job. It requires time and several meetings before a full picture develops. And lots of questions, even some that seem really dumb (So that is a science fiction movie? No? Rom com? Ooooooo. I see.)

Knowing your client also includes expectations. I tend to check in with celebrity clients periodically to make sure they are okay. Normally they contact me more than typical clients. It is common for a celebrity to ask me to “just” prepare their tax return and before the first consultation is over they have 15 more things they would love me to help them with. 

Knowing your client means speaking with them and asking engaging questions. Taking an active interest is the best way to serve your client best.  Example: Once a celebrity is a client I watch them online, checking to see if there is anything they forget to tell me that would help them. I once got a big non-cash tax deduction for a celebrity for a trip he didn’t keep receipts for. When you are my client I take an active interest in serving at the highest level possible.


5. Part of the Team

Always know you are part of a team of very successful professionals. As an accountant I have worked with hedge funds (was hired to advise a very large one, too), investment advisors, attorneys, and yes, even other tax professionals. 

If a celebrity is on your client list know that you are not a one-horse show. There are other players and you need to work with the team. Also, the high needs of celebrities means they frequently need a referral. Recommending an investment house, attorney or doctor is not unusual. 

Celebrities can have very tight schedules. While some want more face time, many work remotely, communicating via email and social media messaging. For some celebrities it is a quick answer before they have to run. Don’t worry about it; it is nothing personal.

Always be clear and think out your answers. Your client depends on it. Celebrities can do strange things sometimes, but that is the world they live in. I have listened to tears and celebrated successes with household names. Every one of them is driven. That is how they became successful. They built a team that you are now a part of. Carry out your role at the highest level of professionalism and you will have a great client relationship.


Mrs. Accountant and I are standing with Mark Green (left) and Speaker of the House, Newt Gingrich (right). In the lower right hand corner I’m shaking hands with Zig Ziglar, the motivational speaker.


How to Find Celebrity Clients

Now that we have a basic understanding of what celebrities need and want we can turn to the activity of adding these wonderful people to your client list.


1. Meet the Team

Cold calling is a brutal business at the best of times, but with celebrities you will starve before you land the account. Celebrities have people trying to contact them non-stop. I have a celebrity on my client list who decided to mention I handled her work and instantly my email and phone exploded with people wanting me to give the celebrity a message. That is not the way to do it. The gatekeepers are brutal (or fired). 

Depending on the service you provide determines how you approach the celebrity. Using my practice (tax, accounting, business and personal planning) as an example, the direct approach rarely works, especially if the celebrity is very popular. 

Sometime you can get face time with an acquaintance of the celebrity as a way to meet, but again, this is usually the wrong approach.

I find if you want to get a celebrity to take your call you need to work with the people they already trust and work with. This means they (the celebrity’s team of professionals) are the contact, not the actual celebrity. If you are interested in working with a specific celebrity you can attend an event they have informed the public they are attending. When the crowd crushes in to get an autograph or a few words, you stand back. Around the edges will be the team members supporting the celebrity. They are usually easy to spot. They stand just far enough back to be outside the crowd, but close enough to lend assistance if necessary and they are always watching closely. Your job is to strike up a conversation with one of these fine people because if you are hired by the celebrity you will need to work with them so you may as well start early. It is these professionals already working with the celebrity that can get you an audience with the celebrity.


2. Speaking Engagement

This idea appeals to me the most and works for the type of client I most enjoy working with: business owners.

But how do you get even a few seconds with some of the top business executives in your community? What I have successfully done many times is find a listing of where these high performing executives in the community meet. If the social event allows I will give a presentation. 

The nice part about this strategy is that the celebrity comes to you. Imagine you know several executives of a local business with nearly $1 billion in annual sales will be attending a community event. I will prepare something very social and community oriented for one of the sessions and speak with the organizers to get a slot. It doesn’t work every time and it does take work. If you are persistent you will eventually get the chance to give a 15-30 minute presentation. Bring your A-game! You can approach the high net worth executives, but it is always much nicer when they come to you after your presentation. They are already finding value in working with you before you even shake hands. It’s the easiest close ever!

The same works for entertainment celebrities. Large social events are difficult, but the community and non-profit events are different. These venues frequently love the extra help. If you can provide a powerful presentation for improving the community you have a better chance of getting a face-to-face with the entertainment celebrity. Professional sports players, popular music groups and A-list actors attend these events on a regular basis. It is part of their program to build their reputation and meet people to help them with their career. Be part of that and they will need you on their team. Which means you increased your chance of adding the celebrity to your client list.


3. Political Events

Back in the 1990s I wanted to take my practice in a different direction. I wanted fewer, but bigger, clients. A letter came across my desk that informed me of a political event in Green Bay, a 40 minute drive from my home. The Speaker of the House, Newt Gingrich, would be there. So would several starters for the Green Bay Packers and business leaders of the community.

This strategy did require an investment. The event was free. However, for $2,000 I would get a private meeting the Speaker of the House and several other leading political leaders of the republican party. In the same meeting were about a dozen people, including two Green Bay Packers starters, Mark Green (running for Wisconsin governor — he lost) and top business leaders of NE Wisconsin. I still have the picture in my office of Mrs. Accountant and me standing with Newt Gingrich and Mark Green (see image above). 

I still have a celebrity client to this day from that event. 


4. Small Events

The small event is the best of all worlds as it allows for more opportunity to speak with the celebrity. These can include religious or civic retreats. Many times these are several day getaways where you get the chance to work closely with the celebrity.

It is never a good idea to run up to a celebrity screaming how much you love them and then unload a business proposition. Remember, you might know who they are, but they have no clue who you are. Think how you would act if a complete stranger attending a social or civic event did that to you. Yeah, you would be just as freaked out.

Take your time. Treat the celebrity like a human being. They enjoy that. Celebrities are being sold at every turn. Acting professional and learning about who the celebrity really is instead of their public persona will work much better than the bull approach. A celebrity rarely hires you right out of the gate. It is a process. If they feel comfortable with you, that there is a fit, they will ask you if they can be a client. That is always preferable. I hate selling. If I can prove my value by providing it even before hired, everyone involved is happier.


5. Blog

This blog has brought in its fair share of celebrities. Speaking on podcasts has done the same. 

I’m not recommending you go out and start a blog, podcast or start planning an appearance on a podcast. That takes a lot of work and time. Without the commitment of a regular writing schedule a blog requires, you can write something for a social or civic event celebrities will attend. 

It’s always about visibility! The group you want to serve needs to see you. Be present where your desired clients gather. Celebrities are normal people like you and me, only with bigger issues to solve. They buy and sell bigger homes. Their tax returns have bigger numbers. But the issues are still the same. Celebrities are just as in need of good tax advice as the guy working at the mill. I hear this stuff all the time from household names. It blows my mind. How can these people struggle to find good tax, legal, or financial advice? But they do. And if you can provide the service in a professional manner you will be a lifelong friend and confidant. 

Yes, you heard that right. Celebrities are unique in that they want someone they can trust because they meet so many questionable people. They want long-term relationships. Forget what you read in the tabloids. When the curtain is pulled they just want to let down their guard and know somebody has their back. 

Celebrities are a unique challenge. They are also some of the best people I have ever worked for. With rare exception, I have found celebrities are the highest quality people you will ever meet. They are hardworking and smart. They are NOT an easy big commission check or fee. 


As we wrap this up, there are a few more things I want to share. Once you have a celebrity client or three you will get new celebrity clients by default just from their referrals. Celebrity clients are a lot of work because of the issues at stake. Don’t take on a new client just because they are a celebrity. It is your job as the professional to know if it is a good fit.

My client list includes NFL starters, a world top 10 ranked tennis player, rock bands, New York Times bestselling authors, actors and more. Every one of them is different in a good way. They are challenging clients due to their unique status. I am not a star-struck person. Most celebrities I work with I never heard of before they contacted or approached me. I watch almost no TV and only a few movies. I don’t listen to recent music releases or watch sports. My celebrity clients enjoy my business approach to their account without the fan behavior. My job is to protect and help these people when the world is always trying to crash their party. That is my goal, my job. To make a difference in the lives of the people who are forming the world we all live in. And if you want one of the few jobs in the arena you will need to follow the advice above.

I look forward to working with you serving our clients



More Wealth Building Resources

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

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?

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.

The Tax Cuts and Jobs Act (TCJA) passed in late 2017 heralded lower tax rates for businesses and individuals. There were a few tax increases as well. The elimination of unreimbursed employee business expenses caused problems for sales people, truckers, entertainers and more, but was easily resolved with an accountable plan.

And then there is the most hated tax increase of all, the limitation of state and local taxes (SALT) deduction. While the standard deduction did increase, the SALT deduction limited to $10,000 caused many taxpayers pain, especially in high tax states.

Before the ink was dry states offered up plans to circumvent the SALT deduction limit. The IRS shot each attempt down in order. The new tax rule was in place and states could do little to provide tax relief for their taxpayers. Even so-called low tax states heard from disgruntled taxpayers. The pain was felt widely. 

But that has changed for some taxpayers.

Partnerships, S corporations and LLCs treated as such are pass-through entities. For years states have assessed tax at the entity level for non-resident owners of pass-through entities. In those situations a tax payment is made at the entity level and the member or owner gets a credit on their state taxes for the payment made by the entity. This is not considered an actual tax payment by the entity, however; it is considered withholding on the profits, distributed or not.. The entity does not get a deduction; the taxpayer does on their personal federal tax return if they itemize and are not over the new SALT limit.

The idea several states came up with was similar to the required withholding on profits for non-residents. They proposed allowing entities to pay the actual state taxes at the entity level, which allows a deduction on the entity’s federal tax return, without consideration for the $10,000 SALT limit on personal tax returns. In effect, the taxes paid at the entity level are in addition to whatever SALT deduction a member has on her personal federal tax return. Like the tax withholding on profits, the tax payment would be a credit on the state tax return of the entity’s member. 

The best part is the current IRS interpretation allows taxes paid at the entity level to be deducted by the entity on it’s federal income tax return. This isn’t a perfect solution to the SALT deduction limits, but it helps taxpayers in states where the pass-through entity tax has been enabled. 

Seven states (Connecticut, Louisiana, Maryland, New Jersey, Oklahoma, Rhode Island and Wisconsin) have passed legislation allowing pass-through entities to pay their tax at the entity level as of this writing and more are considering it. 

We will briefly review the laws for each state that has legislation allowing for taxes to be paid at the entity level. This is a state level tax issue so the rules will be different between states. Once we complete our review we will turn to strategies to maximize this new tax benefit. There are a few instances where a taxpayer might not want to make the election to pay their state tax at the entity level. But many more taxpayers will want to use this new tax strategy even if they do not itemize or are affected by the SALT limits and even if the SALT limit were removed. 

We will start with the author’s home state of Wisconsin and progress from there.


The Wisconsin pass-through entity program is elective and is available to S corporations and LLCs treated as such effective January 1, 2018 and for partnerships and LLCs treated as such effective January 1, 2019. 

  • The tax rate for entities making the election is 7.9%. Note that this is higher than the individual tax rate (7.65% in 2020) and may not always be the best course, depending on the situation of each owner on their individual tax return. 
  • To make the election over 50% of owners of capital and profits must consent. The consent is required annually.
  • The election must be made on a timely filed return (by the due date, plus extensions). 
  • Revoking an election must be done by the due date, plus extensions. 
  • Income taxed by other states do not count unless also taxed by Wisconsin.

Wisconsin has multiple credits available to businesses which can require some adjustments to the pass-through credit and income on the personal tax return. The benefits of taxing income at the entity level can be significant, but for some businesses it can be a complex calculation on Wisconsin returns. Here are more detailed rules from the Wisconsin Department of Revenue for S corporations and partnerships.



Connecticut is the first state to enact pass-through entity tax legislation and is mandatory for tax years beginning on or after January 1, 2018. This applies to sole proprietors, partnerships, S corporations and LLCs. 

  • Connecticut uses a multiplier which reduces the value of the credit.
  • Connecticut has modified this multiplier to further reduce the value. The state’s actions indicate that this is considered a tool to raise revenue from businesses whenever the state desires. There is no reason to think Connecticut will not continue reducing the multiplier to the state’s benefit. Since it is mandatory there is no way for businesses to avoid the increased tax bill.

You can read more about Connecticut’s pass-through tax here



Louisiana’a pass-through entity tax is effective for tax years beginning after January 1, 2019 and covers S corporations and all partnerships, except for entities filing a composite partnership tax return. The pass-though tax allows electing entities to be taxed as a C corporation.

The election for a pass-through entity to pay tax as a C corporation must be made in writing by the the 15th day of the fourth month following the end of the tax year. Then election can be made in the preceding year as well. Electing and revoking the election requires partners or members with over 50% of ownership consenting.

Shareholders and owners may exclude this income from their personal Louisiana return as long as the entity filed their corporate tax return properly.

The pass-through tax is calculated on a graduated scale:

  • 2% for income from $0 to $25,000
  • 4% for income from $25,001 to $100,000
  • 6% for income over $100,000



Maryland passed entity pass-through tax legislation May 18, 2020. The law is effective for tax years beginning January 1, 2020 and after. Detailed regulations on the legislation are still forthcoming as of this writing.

The Maryland pass-through tax works similar to the other states where the state tax is paid at the entity level and deducted on the entities federal return without consideration for the SALT limits on personal tax returns. The pass-through tax rate is set at the top marginal tax rate for individuals, plus the lowest applicable county tax rate or the corporate tax rate for corporate owners of the pass-through entity.

Some additional issues to consider:

  • Regulations will probably require the deduction be added back on the personal return to be allowed a dollar-for-dollar credit.
  • The maximum tax allowed by the entity is capped at the distributable cash flow level of the entity.


New Jersey

In New Jersey pass-through entities can elect to pay the Business Alternative Income Tax (BAIT). Pass-through entities for tax years beginning on January 1, 2020 or after with at least one least one member liable for New Jersey income tax can elect to pay the BAIT. This applies to S corporations, partnerships and LLCs with 2 or more members. The tax rate is graduated with rates from 5.675% to 10.9%.

Facts to consider with the New Jersey’s BAIT:

  • No retroactive elections allowed.
  • The election must be made by the 15th day of the third month following the close of the tax year and must be made annually.
  • All members must consent to the election or by a member authorized to do so (officer or manager).
  • Revoking the election must happen by the due date of the tax return, excluding extensions.
  • The credit by electing the BAIT can not reduce the individuals tax below New Jersey’s minimum tax. Unused credits are carried forward up to 20 years.



Oklahoma enacted legislation allowing the pass-through entity tax for tax years beginning on or before January 1, 2019. Once again sole proprietors and disregarded single member LLCs are not included. S corporations, partnerships and LLC electing to be treated as such are included in the Oklahoma legislation only.

The type of member determines the tax rate and is based upon the highest tax rate for the type of member:

  • 5% for individuals (the highest 2020 tax rate), and for corporations
  • 6% applies, the corporate tax rate.

Important points:

  • The election is made by filing Form 586 and can be filed in the preceding year through two months and 15 days after the close of the tax year.
  • The election is binding until revoked.
  • To revoke the election fill out Part 2 of Form 586.
  • The election revokes any election to file an Oklahoma composite return.
  • Oklahoma is similar to Louisiana in that a credit is not provided to the member. Members instead subtract items of gain and add items of loss on their personal return, the opposite of what happened on the entity’s state return. 


Rhode Island

Details involving the pass-through entity tax for Rhode Island include:

  • Effective for tax years beginning on or after January 1, 2019.
  • Eligible entities include S corporation, partnerships, LLCs, trusts and other entities not taxed as a corporation for federal tax purposes.
  • The tax rate is: 5.99% for individuals in 2019 and 2020 (the highest individual rate), but lower than the 7% corporate rate.
  • To make the election Form RI-PTE must be filed by the 15th day of the third month following the tax year.
  • With the election the pass-through entity will not be required to comply with non-resident withholding.
  • Member receives a tax credit.
  • Rhode Island does not address revoking the election.


Applying the Pass-through Entity Tax

As you can see by the details of the states that have some form of pass-through entity tax that the rules vary widely between states. Many use a credit to pass-through the benefit while others adjust income on the member’s personal tax return.

Many considerations need to be taken into account. Even if the SALT limit were eliminated there would still be instances where the pass-through entity tax would be beneficially to entity members. Even if you don’t itemize there can be a tax benefit as the entity’s state taxes are now deductible on the entity’s federal return, giving the member the state income tax deduction before it hits their federal income tax return, plus the standard deduction.

There are also reasons not to make the election (except in Connecticut where it is mandatory). The pass-through entity tax can affect the Qualified Business Income Deduction, Earned Income Credit, Saver’s Credit, Premium Tax Credit and more.

The tax professional preparing the entity income tax return and that of all the members will have an easier time determining the best course of action.

Let’s use Wisconsin, my home state, as an example. Most taxpayers in Wisconsin are currently paying 6.27% tax on their top dollar with high incomers paying 7.65%. The pass-through entity tax is 7.9% and is treated as a credit on the individual tax return. However, if there is no other income for the individual it is possible to create a larger tax than necessary. 

If all members can deduct the state tax attributable to the entity without hitting the SALT limit it probably does very little good to make the election while making the tax returns involved more complex. Likewise, those hit by the SALT limit and even those who do not itemize will normally get otherwise unrealized value.

Special attention has to be taken as it affects other areas of the tax return. The amount of state tax paid by the entity is deducted on the entity’s federal tax return. This will lower the value of the Qualified Business Income Deduction in virtually all cases. 

Using Wisconsin again, electing the pass-through entity tax can increase complexity of the tax return on the entity and individual returns. If, for example, the Manufacturer’s Credit is taken, adjustments need to be made on the Wisconsin personal income tax return. Manual calculations will be required.

There is a balancing act with this tax strategy. It appears many, even most, members of pass-through entities will benefit from the pass-through entity tax. However, the cost to prepare the returns will undo some of the gain and the loss of tax credits or deductions elsewhere on the return might make this a less appealing tax strategy.

There are numerous small businesses where the complexity will not be an issue and the benefit will effectively side-step the SALT limitations. Complex returns will require a seasoned tax professional. Talk to your accountant! Determine if the pass-through entity tax will lower your taxes and what it will take to prepare the return with the election. The pass-through entity tax is probably here to stay regardless where future federal tax laws go. And for those holding an interest in a pass-though entity it can add to serious tax savings.


More Wealth Building Resources

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

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?

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.

  • Business owners can deduct contributions to charities as an advertising expense if the expense is for a sponsorship.
  • Income property owners also have a limited opportunity to deduct charitable contribution as an advertising expense for sponsorships as well.
  • There are some caveats to deducting sponsorship expenses. The itemized deduction could be more valuable in certain instances due to the partial loss of the Qualified Business Deduction (QBI).
  • There are some hidden benefits, too. Planning sponsorships can maximize certain tax credits and deductions for small business owners. 



The Tax Cuts and Jobs Act (TCJA) of 2017 changed many of the rules. Personal exemptions were eliminated while the standard deduction was increased. With the state and local taxes deductions limited to $10,000 in aggregate, mortgage interest and charitable contributions carry virtually all the weight when it comes to itemizing deductions now.

Fewer taxpayers can itemize after the TCJA, hence, fewer get a tax benefit for supporting charities. This makes it more difficult for charities to raise funds to carry out their mission.

As with so many tax issues, there is a work-around for some taxpayers. Business owners and even income property owners can utilize a strategy that has worked for a very long time deducting monies paid to charities and other groups.

Whereas individuals face issues when deducting charitable contributions, business entities also have rules to follow that limit charitable donations. A sole proprietorship treats charitable contributions as having been given by the owner of the business and is reported on Schedule A. Partnerships and S corporations claim charitable contributions, but pass the deduction to owners on Schedule K-1 where the deduction is again claimed on Schedule A and the deduction is limited by the new realities of itemizing.

Regular corporations (sometimes referred to as C corporations) face even greater limitations. These entities can only deduct up to 10% of taxable income for any given year, with the excess carried to the next year.

Considering all these limitations when supporting a charitable organization, it requires planning to maximize the tax benefits so you can maximize the benefit to the charity. Individuals can clump charitable deductions in one year so itemizing comes into play those years. Regular corporations may find the restrictions too limiting to support an organization at the level desired under any circumstances. 

Deductible Sponsorships as Charitable Giving

It is tempting to throw up your hands in defeat with all the new limitations on supporting your church or favorite charity. But not so fast!

Sponsorships are technically not charitable giving; they are an advertising or promotional expense to the business. It requires only a modest amount of planning to gain full deductibility of monies paid to non-profit organizations and other social groups. 

It is easiest to think of this small at first. My tax office gets requests each year from local high school and junior high sports teams to buy a sponsorship. In exchange for a $250 fee, for example, they will add my business logo to the flyer handed out to all attendees. Sometimes they add the logo to signage at the sporting event. These small organizations may not even qualify as non-profit organizations so anything other than a sponsorship is not deductible by anyone. But as a sponsorship my business can deduct the full payment as an advertising expense.

A bit larger example is the $1,000 my office pays to CommunityFest some years in exchange for my business name and logo presented at the local community event over the Independence Day holiday. 

These types of sponsorships don’t always bring in enough new business to cover the advertising cost. It does build goodwill for your business so it still counts as a business expense. Public exposure of your business offers the opportunity for new business so it is a deductible expense.

On these small scales an income property owner could also support charities in a similar fashion. If you have a brand name for your properties you can increase exposure and attract better tenants with strategically placed sponsorships. For businesses and income property owners the expense has to be reasonable. That is a wide road, but does have its limits. An income property owner with one small property probably cannot deduction a $200,000 sponsorship expense. 

The numbers can be large, however. Recently I worked with an actor in a highly rated television program. He wanted to donate $1 million to his church that needed funding for an addition. He eventually settled on a sponsorship of $300,000 because a million dollars is a lot of money even for a successful actor.

Our actor friend was looking for a career shift and the sponsorship held possibilities. Even such a large sponsorship expense was acceptable due to the size of his income and the possibilities for more acting jobs in the future. I noticed he was picked up for a movie in a very popular series. I would say the expense qualified considering the results (though the expense is not required to generate large results which would be impossible to predict).

I use sponsorships to control my level of profits in my business, too. Keeping my income lower has its advantages, especially when there is a desire to support non-profit organizations. A surprise benefit is that I qualified for the recent stimulus checks due to my heavy level of sponsorship spending in past years. 

Note: A sponsorship cannot support any particular individual, like a Special Olympics athlete. Fees to attend the event are also not allowed as a business expense. A logo on team uniforms would count as a business expense, however.


Sponsorship vs Deduction

Throwing money into the plate on Sunday morning is a charitable contribution no matter what way you cut it. I have business owners who try to add weekly tithes to their expense sheet. A quick inquiry eliminates the business expense and puts it back on Schedule A where is has less, if any, value.

However, there is nothing that says you have to drop money into the plate when it is passed. You can use sponsorships at the same level as your regular contributions. When your church has an event your business can sponsor the event for a business deduction. The biggest issue for some is not giving money during the church service. I suggest you give a token amount at the service or even drop an empty envelope in the plate. You are still meeting your charitable goals because of your support through sponsorships.

The non-profit also needs to follow some rules. As a sponsor you would qualify for an advertising deduction regardless the non-profit’s behavior. But you need to be aware certain behavior subjects the non-profit to UBIT (Unrelated Business Income Tax). 

  1. The non-profit should never promise a certain attendance level to the event, media ratings or any other promise of the level of exposure that will be provided. The business still gets the deduction for the sponsorship, but the non-profit is subject to UBIT is such instances where the promise is made.
  2. A sponsorship should not require the business to allow the non-profit the use of business’s logo or products for unrelated event promotions. If the business allows the activity without the requirement it probably is okay. But if the sponsorship has the requirement the non-profit could be subject to UBIT.
  3. Conventions, trade shows, annual meetings and similar events can be sponsored by a business with the expense a deduction. The non-profit in these situations might be (probably is) subjected to UBIT.

I mention the three issues above so business owners do not demand the inclusion as part of the sponsorship. The biggest issue for the business owner is the promise of a certain attendance or ratings level. If the non-profit includes any of these items the non-profit may have tax issues to consider; the business owner still gets the deduction regardless, but the non-profit could suffer tax consequences.


Problems, Benefits and Solutions

The biggest concern with deducting sponsorships as a business expense is that it reduces your QBI, as mentioned in the opening bullet points. I can’t think of an instance where this would result in a worse outcome, but I throw it out there because it could be an issue for a minority of readers. QBI is generally 20% of profits. Therefore, a $10,000 business expense would only be worth an additional $8,000 because the non-cash QBI deduction is $2,000 without the deduction. 

There are significant tax benefits from deducting sponsorship expenses. If your income is too high for the QBI deduction, a properly planned sponsorship could reduce your income so you do qualify. That would never happen deducting the expense as a charitable contribution as an itemized deduction.

I actively seek sponsorship opportunities to support organizations I like. Rather than a charitable contribution I invest (notice my choice of words) the same monies as a sponsorship. The organization gets the full benefit, my business gets a deduction and I pay less in tax. 

The “lower tax benefit” is larger than first perceived. By lowering your income before it ends up on Form 1040 you also potentially increase the number of tax credits you qualify for. For lower income taxpayers the Earned Income Credit and Saver’s Credit become possible and may increase the credit. For taxpayers with higher income it can lower taxes on qualified dividends and long-term capital gains, and reduce or eliminate the Net Investment Income Tax (NIIT). 

In all but the rarest of situations it is better to have a business expense than an itemized deduction. Turning charitable contributions into legal business expenses is the Holy Grail. With proper planning you can control your tax burden, maximizing the tax benefits each year. I was able to qualify for the stimulus check because my income was low enough thanks to the business deductions received from sponsorship deductions. If you didn’t qualify for a stimulus check due to income level, you may wish to review the options outlined above because you have one last chance to qualify on your 2020 tax return. 

Finally, as my actor client illustrates, a desire to fund a non-profit organization can lead to very profitable outcomes. Of course then you have to deal with all that extra money. I’ll keep publishing blog posts with tax ideas your accountant forgot to mention to help out. You hold up your end of the bargain by funneling monies to awesome organizations and I’ll keep showing you how to pay less tax when the wheelbarrow of cash rolls in. 

And it is all for a good cause.



More Wealth Building Resources

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

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?

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.

There are so many reasons to ask, How can I make an extra $10,000 this year? Maybe you want to retire early and a small extra income will do the trick coupled with your savings and investments. The economy might be bad, your hours cut or are unemployed. Maybe you are retired and just want something to do that adds value to the lives of others while providing extra income for bills.

Regardless your reasons for wanting to earn extra money, what you need is a list of ideas for accomplishing the goal. Below is a list of 10 ways to earn an extra $10,000 this year (unless you are reading this New Year’s Eve, then you can start next year). Each of these opportunities are used to earn extra money by family members or clients in my office. If you read to the end I have two bonuses.


Home delivery is the biggest opportunity for side hustle money today.


Grocery Delivery

This growing trend has turned into a very good paying job you can work whenever you feel like it. You can work as many or as few hours as you want. Mrs. Accountant (my lovely bride) works with elderly and shut-in people. One of the most requested tasks is grocery shopping.

Finding clients is easy. Instacart and similar services are always looking for more people to deliver groceries. You can do an internet search for companies looking for delivery people in your area. The pay is good, the tips better. And best of all, you choose your hours and which orders you want to fill. Remember to keep good records. Miles are tax deductible so if you don’t drive a Ferrari you will probably have some income that isn’t taxed, too, since the mileage deduction might be larger than the expense of operating your vehicle.


Delivery Services

This is a broad category. Groceries are listed above, but that is only one type of delivery service. I have clients who deliver meals from local restaurants. If you respond to requests quickly the tips tend to be quite generous. 

Food is only the newest fast growing delivery service. If you have a truck (or a trailer) you can deliver large items from hardware stores and other retail outlets. One of my clients turned a small delivery business into a 7-figure business. He handles a large percentage of deliveries from several hardware stores. 

Almost anything a person or business buys needs delivery. The hours are flexible, coupled with a high income. You can start your own business, making a few calls to set up the service, or use online companies already in the delivery business. Either way, the delivery business is the biggest opportunity for above average income and flexible hours in our economy at this time.


Selling Tradelines

This idea has been around for a while. I published several times on the issue. You can start your research here. 

I don’t sell as many tradelines as I used to. I still earn around $4,000 per year for about 2-4 hours of work. The biggest drawback is it takes time to get your first payment (typically about 2 months). 

The reason I pulled back is time. Yes, the money selling tradelines is really good, but I also have a tax practice, this blog and more people than I can count who want consulting services. Selling tradelines is about the easiest way to make side money I ever saw, especially if you only want a couple thousand extra for fun money. Tradelines would not be a good option if your goal is $50,000 per year. However, when I worked it hard in the beginning I did approach $30,000 the first year. For a modest effort it is possible to earn $10,000 per year and more.



Consulting needs clarification. Making money consulting is different than coaching (another possible idea I will not cover) and requires a narrow niche to do well. 

There are plenty of people selling coaching/consulting courses on social media that basically tell you to do what they are doing. That is not consulting! At least not a kind of consulting that adds value and is worth buying.

The trick to successful consulting is focusing on one issue. For example, I consult on tax issues. That makes sense. I run a tax office and stay up-to-date on the tax laws. Of course my consulting services expand beyond the original topic. People ask about investments, retirement planning, legal issues, starting a business and even personal problems. Many times I’m qualified and comfortable expanding the scope of the consulting agreement. Retirement planning and business issues rise to the top. Legal issues I defer to an attorney. Personal issues many times require a professional social worker or medical professional. When possible, I try to help the client find the appropriate professional. 

Consulting done right is very profitable. A 6-figure income is not unheard of. Focus if the key. As I write there are several new tax laws to stimulate the economy. Just that one topic will keep you busier than you want if you choose to focus on it. Businesses and individuals are in desperate need for quality consulting and accounting firms like mine can’t handle all the work. BTW, I turn away over 90% of consulting requests because there are not that many hours in a day. Consulting is a good business.

Remember, focus if you want a consulting side gig. You don’t want to and can’t be everything for everyone. 


Elder care services is a fast growing full-time or side hustle opportunity.


Elder Care

Demographics provide the direction jobs are going. An aging population is going to need more services for the elderly. As you will see below and in the first bonus, elder care is not about working in a nursing home. 

People want to stay living in their home. They want their independence. It is cheaper for families and communities to give as many people as possible the option of living at home. 

Elder care extends to the disabled. Mrs. Accountant works for a company very part-time helping an elderly couple and a disable man. She cleans their homes, cooks meals and runs errands for them. She works less than 15 hours per week. It’s something Mrs. Accountant wants to do and she enjoys it. Of course you can work more hours if you want.

Clients are found one of two ways. Most counties hire, along with private companies contracted through state or local agencies. You can also provide cleaning, cooking and shopping services outside government supported programs. 

It is easiest to work through a company handling all the back office work or government agencies. For part-time work you can add $10,000 or more to your income in a year without working long hours. You can also choose your own schedule.



Do you like working outdoors? Growing a garden? Did you know you could get paid to garden?

This unique side gig is overfilled with benefits. You get to work outdoors during the summer months doing what you love most and get paid for it.

It is a seasonal job, however. Where you live determines the scope of your gardening side hustle. Northern areas have a shorter growing season. Southern areas might include planting fruit trees. It all depends where you live.

Here in NE Wisconsin I have three clients who help people who can’t handle all the gardening chores. There are farmers outside the Fox Cities with plots divided in a field people can rent to garden. One of my clients helps elderly people by driving them to the garden plots and helping them with the gardening chores.

Best of all is that most gardens provide more produce than the client can eat so you get a wonderful supply of fresh fruits and vegetables as they come into season.


Lawn Care

There is a theme forming in this list. Lawn care services for those folks who want to stay living in their home, but can’t handle pushing a lawn mower are ideal clients. 

Don’t forget businesses! Business owners and landlords are always looking for high quality lawn services at a reasonable price. My office pays to have the lawn cut.

Lawn care is more than clipping lawns, too. Dealing with weeds and fertilizing lawns is also part of the deal if you want. There are also plenty of opportunities for light gardening work here as well, though many times it involves working flower beds. rewarding work that also fills in for healthy exercise, too.


Tax Preparer

I have encouraged this side hustle for years. There are an army of people pulling $10,000 per year and more working part-time seasonally.

Once again there are two ways to address this opportunity. First, you can run it as your own small business. A 15-minute presentation at a local Optimist Club or apartment association and you will have more clients than you want unless you want a very full-time business. 

The second way to earn a hansom income in spring is to work for an established tax office. Tax offices are always looking for good seasonal employees. (God, don’t I know it!) Not every tax office is for you; choose which fits best. There are the low cost tax offices where basic returns are prepared. If you can run a computer you can handle the returns they prepare. As your skills grow you can work at more traditional tax offices and CPA firms. Starting wages generally are $10-$17 per hour, depending on the part of the country you are in. Office like mine and CPA firms frequently pay people with tax experience $20 per hour and up. Very experienced preparers can demand $50 or more per hour. Not bad for part-time seasonal work.

For readers in the northern climes this is perfect. When the snow melts and you feel like running around outside tax season is over. 


Dog Walking

Mrs. Accountant enters again. The same elderly couple who has Mrs. Accountant buy groceries for them also has her walk their dog. Coco the dog, I am told, goes wild when Mrs. Accountant arrives. He is so excited to go for a walk with his human.

Mrs. Accountant wears a lot of hats when performing elder care services. However, there is no reason you can’t focus on a narrow niche. Dog walking is getting to be big business. If you love animals I can’t think of a more rewarding side hustle.

And the pay can get very generous.


Pet sitting and dog walking are high paying side gigs you can do on your own schedule.


Pet Sitting

If you enjoy animals and walking outdoors, dog walking is for you. Married to that side gig is pet sitting. The demand for pet sitting services is massive and growing, at $440 million in 2017. 

There are several avenues to earning extra coin in this hustle.

First, you can pet sit at the pet owner’s home. Second, you can provide pet sitting in your own home. This option does require the space and the ability to have pets in your home or apartment. Third, you can work part-time at a pet sitting service or kennel. Generally the pay is low, but getting paid anything to pet cats and dogs and feed them is beyond awesome.

Finally, humane societies and shelters are always looking for help. Again, this is a low wage route. But if you love animals and there is no other option available, this can be the perfect option to earn some extra income on your schedule doing something you love.


Bonus #1: Friendship Service

In 2019,  36.48 million Americans lived in a one-person household. That is a lot of lonely people. Many are older and have lost a spouse or significant other. Many times they have no surviving family. Some suffer disabilities.

Loneliness is an extremely painful experience you can resolve by providing a friendship service. There are clients in my office who spend 10 or so hours a week visiting their client just to talk. Sometimes they need help finding someone to help with a household need, such as hiring a plumber, or for repairs to their home. 

Usually all they want is someone to talk to. Local social services sometimes cover the cost of friendship services, other times not. The work, obviously, is not hard, but it is important. Not only are you providing human contact to people alone, but are also visiting to assure they are safe and healthy. 

As our society ages and people have smaller families, friendship services will become more and more common. At this time demand far exceeds the supply of people willing to be a friend. I can’t think of a better way to earn some extra money than by providing a ray of sunshine to the life of a wonderful human being.


Bonus #2: Tutoring

I have a large number of clients (and my oldest daughter) earning a good income tutoring. There are several levels you need to consider with this hustle.

Tutoring can be a work-at-home business with all the tutoring done online. You can focus on local primary and secondary students or college kids. There are numerous online options for tutoring. I have a client who teaches at the local high school and also teaches (not technically tutoring) at several online schools. His income is well into the 6-figures. 

Companies that offer tutoring services are also a good place for a part-time side gig. It can turn into a full-time job if that is your desire, or it can remain small, falling within our discussion of earning $10,000 per year.

My daughter tutors online, but also meets with students at the local library. She works closely with the parents and the teachers so she can provide the best help. In these cases the parents pay the tutoring fee. Generally, the parent pays for a package of 10 tutoring sessions at a time. It doesn’t take many of these to start earning some generous side money.

Teaching English as a second language is in high demand. My oldest daughter traveled to China for a year to teach. She lived with a host family and was paid by them as well. It has been a highlight of her life. She is now working to teach/tutor not only in the US, but in countries around the world online. 

Group tutoring is also an option in all these situations. An important point to consider, if you want to be successful tutoring, is to focus on the kind of client you want to serve. My daughter has a few local clients she tutors, but her passion is to tutor children around the world. Being everything to everyone is usually a recipe for failure. Focus on the type of student you want to tutor and you will find tutoring a rewarding side hustle providing a nice income. You can always change your mind on the kind of student you wish to tutor.


Our 10 ideas turned into 12 way to earn an extra $10,000 or more this year. Extra money is always nice, filling the vacation or holiday fund. Or invest it for long-term income stream. No matter what the economy does there are always opportunities to earn extra money doing things you enjoy. 

Do you know side hustles I haven’t mentioned that pay $10,000 or more per year? Do you have experiences with the side hustles I mentioned? Please share them in the comments section below. Thank you. 



More Wealth Building Resources

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

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?

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.

  • The large number of new programs for small businesses is causing choice overload.
  • Tax professionals and small business owners are confused by the conflicting guidance from the IRS.
  • The Employee Retention Credit (ERC) could be worth more to a small business owner than a Payroll Protection Program (PPP) loan.
  • Business owners are focusing on the forgivable PPP loans and forgetting about the possible better value in the ERC where you do not need SBA approval.
  • Time is running out for small business owners to make a choice before some benefits are lost forever.


In 1970 Alvin Toffler introduced us to the concept of overchoice in his book Future Shock, where many people freeze instead of taking action when offered too many choices. Choice overload has been studied extensively over the past decade with the evidence overwhelming that more choices does not lead to better results. Rather, too many choices makes people less happy. And worse, causes many to do nothing even when any action would be preferable to doing nothing at all. 

Too many choices can cause you to make the worst choice of all: doing nothing.

While choice overload is a common discussion in investing circles, overchoice is rearing its ugly head again with the CARES Act and other stimulus measures to deal with the pandemic. Seasoned tax professionals are challenged by the new programs and the IRS and Treasury Department have been less than helpful in their guidance, changing the rules time and again. 

Overwhelmed small business owners and tax professionals stunned into inaction need to snap out of it fast. Many of these programs have an expiration date. Businesses need to access these resources while they can — even if they don’t have a current need — so the funds are available when they are needed later in the year.

This article will focus on the Employee Retention Credit (ERC) and how it relates to other stimulus programs. Unlike the PPP where loan forgiveness is based upon set factors, the ERC is a tax-free credit that never has to be paid back. 

Business owners are focusing on the forgivable PPP loans and forgetting about the real value in the ERC, where you do not need SBA approval. Just because you qualify for a PPP loan does not mean it is the best course of action. Some business owners may want to return the PPP loan in favor of the ERC. 


Qualifying for the ERC

The best way to determine if the ERC is a better option for your business we will need to review the details of the ERC program and then compare those details to various features of the PPP.

Here are the general facts of the ERC:

  1. The ERC is a refundable tax credit of 50% of the first $10,000 of wages per employee, including health insurance benefits paid by the employer. The maximum credit is $5,000 per employee. Wages after March 12, 2020 to December 31, 2020 qualify.
  2. The ERC applies to any qualified business in operation in 2020. For the ERC, the business must have had full or partial suspension of operations at any time during 2020 or Point #3 below. This is probably an easy hurdle to jump because current IRS guidance states that limited group meetings or travel would satisfy this requirement and most states have limited these activities.
  3. A qualified business must experience a greater than 50% decrease in gross receipts unless the business qualifies under Point #2 above. The ERC starts the first quarter of 2020 that gross receipts are below 50% of the 2019 gross receipts for the same quarter and continues until gross receipts are greater than 80% of the 2019 gross receipts of the same quarter, or until the end of the fourth quarter of 2020, whichever comes sooner.
  4. For employers with an average of 100 or fewer full-time employees in 2019, qualifying wages are all wages paid as outlines in Point 1 and 3 above and 5 below. If the employer has an average of more than 100 full-time employees in 2019 the credit is limited to wages paid to employees while not working. Wages must be no more than the equivalent amount paid the 30 days prior to the suspension or reduction of services. Full-time employees are defined as employees who average 30 or more hours per week or average 130 or more hours per month.
  5. Employer paid health insurance premiums not included in employee’s income are included in qualified wages.
  6. The ERC is taken on Form 941 starting with the second quarter of 2020. The IRS, as of this writing, has not issued an updated Form 941 to reflect this credit. You can check here for the most current Form 941.
  7. The credit reduces the employer’s payroll taxes to zero before becoming refundable. 
  8. Any credit over the payroll taxes reported on Form 941 are refundable. 
  9. Employers can apply for an advance refund of the ERC, sick and family leave credits on Form 7200. 
  10. An employer needs to decide between a PPP loan and the ERC, as both are not allowed for the same employer.
  11. Sick and family leave credits are allowed along with the ERC, but not on the same wages.
  12. The ERC does not cover self-employed income (sole proprietors filing on Schedule C). However, wages paid to employees of a sole proprietor do count, except for related individuals. Wages paid to employees of a partnership qualify (except for related individuals again), but not guaranteed payments to partners. Wages to owners of regular corporations and S corporations with a direct or indirect ownership of greater than 50% do not count. Household employees also do not count for the ERC.
  13. The ERC is not included in income for the employer or employee.
  14. However, the IRS currently states that the amount of the ERC reduces the amount of the employer’s deduction allowed by a similar amount. Note: This matter is not settled as Congress may change this requirement and some tax professionals disagree with the IRS’ position. If Congress does not act, expect this issue to be litigated in Tax Court.


The coffee house, the perfect gathering place to share good times with friends.


Maximizing the ERC Benefit

In most cases the PPP will be a better option for the small business. However, there are a variety of issues where the ERC is either the only choice or the preferred choice. In my office I consult with a large number of business owners. In nearly all cases the result was that the PPP was the preferred route when available.

Under the PPP the owner’s wages are included. This is a significant advantage. Under the ERC owner’s wages are specifically excluded, along with wages paid to related individuals. 

Another serious issue with the ERC is determining if gross receipts are less than 50% of 2019 gross receipts of the same quarter. Early in 2020 gross receipts were probably little changed. If businesses reopen this test could be failed for future quarters as well. IRS guidance says we can claim the ERC if we later discover we would have qualified by filing an amended Form 941. However, a business should know their gross receipts shortly after a quarter end so the ERC should be taken as soon as it is determined you qualify.

But is there a claw back if the economy (and your business) have a spectacular comeback later in 2020? Not really. Once your gross receipts exceed 80% of 2019 gross receipts you no longer qualify for the ERC. Therefore, once business activity exceeds the threshold you should no longer claim the ERC.

PPP loans are forgivable in whole or in part. When consulting with clients I found that if wages would reach at least half of the PPP loan, the PPP loan was superior to the ERC. Since wages of owners are included with PPP loans it is much easier to allocate the entire loan to wages. 

If the PPP is superior to the ERC, who should use the ERC?

If you have been denied a PPP loan your next course of action is to determine if you can still get some refundable credits with the ERC. 

Another possibility where the ERC is better than the PPP is when the small business has a lot of part-time employees. Since the ERC is 50% of wages up to $10,000 — the maximum credit is $5,000 per employee — there are situations where the ERC provides a better result than a PPP loan when many part-time employees are involved. Therefore, if you have a lot of part-time employees with low wages the ERC could be the better option. The only way to determine if the ERC is better is to put a pencil to paper for your specific situation. Be aware you still need to qualify for the ERC as stated above, such as a required full or partial shutdown at any time during 2020 and gross receipts less than 50% during at least one quarter of 2020 over the same quarter of 2019.

I suspect IRS guidance will soften on many of the issues surrounding the PPP and ERC. Businesses already struggling would fail in large numbers if the IRS takes a hard line approach. I doubt Congress would tolerate such action. 

A large number of business owners have avoided the many benefits the government has offered in these trying times. The large number of choices has led to a perfect example of people’s behavior when confronted with too many choices. Even tax professionals are struggling to understanding all the different programs. Alvin Toffler’s overchoice is clearly hampering small business owners. Too many options reduces the number of businesses that will apply for any, even if they qualify. That is the biggest risk facing the American economy in 2020. If business owners shy away from programs designed to help them through these unique times more will fail, costing jobs and long-term damage to the economy and harming America’s competitiveness. 

I encourage you to discuss your situation with a competent tax professional. Yes, the IRS is still playing with the rules because they haven’t figured it all out yet themselves. But you can still plan accordingly. Whether a PPP loan or the Employee Retention Credit is best for you, you owe it to your employees, community and yourself to explore all the options.


More Wealth Building Resources

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

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?

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.


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