Posts by Keith Taxguy

5 Secrets to Giving a Killer Speech

How to give a powerful speech or presentation. Move the crowd. Create engagement and interest. Get more sales. Turn your speaking gig into profits. #speech #sales #motivation #engagement #presentation #speaking #publicspeaking #profitLast Monday I attended a one day seminar on Reading Financial Statements. While I am not a CPA, I am an enrolled agent (tax professional). Working in business my entire adult life in the tax field means I have a working knowledge of financial statements. I also took accounting, business and economics courses in college.

Having a strong background does not always mean you are good at it. Sometimes we fall into bad habits or forget some of the more esoteric details of the craft. My hope was to learn at least one new insight into reviewing financial statements that would give me a better or clearer view of the report.  

Financial statements are the lifeblood of business and investing. Running an efficient company requires solid recordkeeping and the ability to understand what basic financial reports tell us. Without a firm understanding of the financial reports you are guessing when making important decisions in your company. 

The same applies to investing. Warren Buffett said that accounting is the most important class he took in college. Buffett feels business classes are important, but accounting gives you the knowledge you need to run virtually any business. A firm understanding of financial reports means you understand details about the firm. You don’t need a world class business school to acquire a firm grasp of accounting. A local tech school or extension college is just as valuable.

Even in personal finance financial reports are important. If you don’t understand your own financial condition (the balance sheet) you are at risk or serious financial error and loss. The same can be said if you don’t understand where the money is all going (cash flow statement). Tracking your income and expenses (income statement) is a powerful tool for building wealth. Guessing is not a substitute for knowledge when money is involved.

 

Train Wreck

Last Monday promised to be a day of review with a few additional insights. The promise took a left turn quickly.

I was the first to arrive at the class. (I am like that; teacher’s pet, showing up early.) About 20 students filled the room. Kimberly, a fine young lady from Florida, was our instructor.

From the beginning she looked nervous. I was quiet, yet attentive as she struggled to deliver the message. 

A small class of 20 student should not shake a speaker. At first I thought she might have personal issues or feel ill. 

Then she interspersed light comedy pieces between sections. They didn’t match the curriculum and were very out of place.

 She decided not to follow the workbook, instead, using a PowerPoint of her own design as her teaching tool. 

There were several glaring errors. At one point she had the accounting equation on the screen and proceeded to  explain how the equation worked on the balance sheet. This is what her slide showed:

Asset=Liabilities-Owner’s Equity

Can you see the problem? The formula is really:

Assets=Liabilities+Owner’s Equity

Some people call Owner’s Equity Capital or just Equity. The point is that liabilities and equity are added, not subtracted, to equal assets.

Kimberly went on to explain why her equation was how accounting worked. Nothing added up. Something was very wrong!

I bit my tongue. It isn’t my place to embarrass her. However, it did bother me the other students were getting bad information. Some of the other students were drinking it in because they really didn’t know the right answer.

 

Some Education is Better than None

By mid-morning it was painfully obvious Kimberly was in over her head. Situations like the formula above and statements like, “accounts payable should never exceed accounts receivable” were blatantly false. 

The course provider (name withheld to protect the innocent) had a workbook we did not use. By going off on her own PowerPoint Kimberly was reinventing the wheel. I still has not put the pieces together as to what was really wrong with our speaker. She has 17 years experience in bookkeeping. You don’t survive that long (and get hired to teach a course) if you are that bad at it.

The few questions asked by the class I answered. To help the group move in a more appropriate (and hopefully more accurate) direction I asked a few questions and guided the responses. I decided to gently mention accounts payable (AP) can, and in many instances should, be higher than accounts receivable (AR).

It was time to drop a golden nugget to return interest to the class. I went back to an earlier discussion on cash versus accrual accounting and asked: When should a small business use accrual accounting instead of cash accounting?

The room looked like a herd of deer in the headlights. Small businesses can use cash accounting for taxes by default. You can elect to use accrual if you choose. (The upcoming Halloween post on  Financial Horror Stories II includes a story where a client made a big time mistake I fixed by understanding why accrual accounting can be a powerful tool. Be sure read it.) 

Most small businesses have an accounts receivable. Not all, but a large percentage do. If your receivables are larger than payables you want to remain on cash accounting, especially for taxes. However, if your AP tend to always be larger than your AR you will want to consider accrual accounting. 

The reason for this is clear. If AR are larger you don’t want to pay tax on money not yet received so cash accounting is better. If AP is larger you can deduct the expense before it is paid under accrual. 

With this it was time for lunch (fifteen minutes early). Thank God.

 

Time for a Break

Kimberly did not join us for lunch. As some of the students ate together we talked. One student was a retired CPA from a large CPA firm. He was not happy.

I admit I expressed concerns over lunch. It is my policy to never denigrate another person pouring out their soul to a group. I am by no means always innocent myself. In this instance I was reasonably true to my policy, and as will soon become clear, I am glad I was.

A third of the class never returned from lunch. Kimberly looked worse than in the morning. 

From what I gathered, she ran out of material in the morning.

The afternoon session was worse than the morning. We returned from lunch at 1:00 and by 1:30 it was getting ugly. The material was all over the map and did not make sense. Most was a glossing over of the morning material. 

Either I had to take action or the class would be over on the spot.  

I interjected, “I read the workbook over the weekend and would like to review some of the material there.” 

Everyone, including Kimberly, was happy for me to provide some direction. 

“On page 32 of the workbook there is an income statement. What is wrong with it?”

A good discussion on fraud prevention ensued. In a short period of time I was able to pry from the financial statements many details of the company presented.

What glaring problem do you see with this balance sheet?

What glaring problem do you see with this balance sheet? I’ll answer in the comments in a few days after publication. Hint: The company is in trouble.

I will not give a play-by-play of the remainder of the afternoon. What I will say is the discussion picked up and for the few that remained for the afternoon we had a good discussion with value.

Class ended early.

 

The End was the Beginning

When the curtain came down the remaining students left. Many grabbed my card (I didn’t bring my business card so I handed out my card for this blog).

The first to arrive I was to be the last to walk out with another student, a retired teacher.

Kimberly walked behind us and said, “Thank you for asking questions and moving the class forward.”

I replied it was no problem. I mentioned I could tell something was wrong.

“This is my first class,” Kimberly said. She was nearly in tears. It was a long, hard day for her.

The pieces all fell into place. 

“I can’t understand what went wrong,” Kimberly continued. “I spent two weeks planning this class and practiced.”

The school teacher and I stayed for about an hour helping Kimberly improve her game and good thing. Kimberly was headed back to Illinois for two more presentations of the same program before heading home. The reviews from today’s class were brutal. If she didn’t make a comeback she was at serious risk of losing her job.

I recommended she dump the PowerPoint. The school teacher said she might want to use a meme.

I gave an example of how I would conduct the class: Use the workbook, ask students questions, get the students thinking. Tell stories. Engage the class. Find the reason they came and work it. 

Kimberly recorded some of my remarks on her phone for review as she drove back to Illinois. She wanted to listen to it again and again. In less than an hour I outlined how I would conduct the class. It would be impossible to finish it all in a day. That makes for a good, fast-paced class.

Mostly, I told Kimberly, she needed to have confidence. She has almost 20 years experience as a bookkeeper. Yes, she is not a CPA, but she is very familiar with financial statements. There is plenty of material to engage and peak the interest of any group. Focus on what is relevant to the attendees. Each presentation, as a result, will be slightly different.

Kimberly looked very tired when we left. She also looked like she had hope. The company had a workbook with plenty of material to easily fill a day. Mixing in personal stories would keep the group awake and engaged. 

 

For the Sake of One

I made it clear to Kimberly she had nothing to lose. It is unlikely she will ever see any of these students again in her life. Just give the best darn presentation you possibly can, I suggested. Give a piece of you. Make it real. Go in with the goal of helping everyone present learn at least one new thing this day.

The knowledge doesn’t have to come from you, I continued. You would be surprised how often the best insights come from other students as they ask questions and debate answers. 

As I said to Kimberly, it is unlikely we will ever cross paths again. There is nothing to lose. Nothing to be embarrassed about. This was not about personal gain; it was about paying-it-forward. It is the only thing that gives life meaning; helping others find meaning in their’s.

Kimberly did not contact me afterwards. I have no idea how it turned out in the Illinois classes. 

Steve Jobs asked John Sculley if he wanted to change the world. Well, I haven’t changed the world at the level of Steve Jobs.

But I may have changed the world for one. And it was worth the effort.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

Health Update and Camp Accountant

Don't check out and travel the world; check-in and change the world. Make a difference. Make the world a better place. #love #travel #help #success #friendsThe extended 4th of July holiday here in the states was a do or die situation in The Wealthy Accountant offices this year. Illness had plagued me for some time and became acute just as tax season got underway. The pain was exquisite and unrelenting. It was time to decide if I can continue doing the things I most love.

In July I published a late post letting readers and clients know where things stand. You can read the prior post if you wants details from the trenches.

Things have changed a lot in the last three months. Clients and readers should be pleased my health has improved enough that I no longer consider health issues an existential crisis. 

The second part of this post is an update on Camp Accountant. 

 

Check-in or Check Out?

My writing process requires time. Usually I have a good idea what I will write about days in advance. As I think about the topic I gather materials and scribble notes. This post is no different.

Where this post is different is the material covered. I always want to tell a story that engages, drawing the reader in. Repeating what I already published seemed redundant to me and since this post is really an extension of the post linked above I will pick up where I left off. 

 

Thinking about the nature of my illness caused ideas to keep flooding my mind. For the first time in my adult life I seriously had to consider retirement and an old nemesis returned: depression. I prefer discussions of solutions over complaining about the inequalities of life. 

Earlier this summer, I had to face the real possibility of life without purpose. What would I do if I no longer could do what I was good at? 

I visualized a life of leisure with stacks of books and nothing to do all day long. As much as I love reading and books I knew a life of accumulating knowledge I would never use or share was still meaningless. And longtime readers of this blog know my disdain for travel.

That is when this little verse popped into my head:

 

Don’t check out and travel the world;

Check-in and change the world.

 

I don’t know what you can do with that. It sums up my philosophy on life. Hopefully these words give you the motivation to do great things. 

When health declines strange thoughts enter the brain. My journey is not done. There are many things I must do; things that could change the world at least for one person. I now know this blog is only practice for a much larger stage. I also know, from this blog, that I do not handle the large stage well so I need plenty of practice. 

When the purpose is important enough you will find a way. Somehow God, life, something, just comes together to make important things come to life. Our worst moments of life eventually become the most important events of life. True value is impossible without these moments of crisis.

All I know is that I am not ready to check out. This blog and my accounting career have more room the run; things that must be done.

But there is one more thing I must do. Something so important (in my egotistical mind) it will change the world for the better for at least a few people. I wish I could flesh it out here and now, but you would not understand without the full context. All I can say for now is that it will start with a TEDx talk, a book and a larger public presentation. It will be the hardest thing I have ever done; the hardest thing I will ever do. And I have to stand in the light on a stage. And travel.

You see, I had to get well enough (and experienced enough) to complete these tasks. 

Before you think I flipped my rocker, let me say that my purpose will change the world for at least a small number of people. Not at the level of Bill Gates, Elon Musk or Steve Jobs. No, my earth shattering world change may only make a difference in the life of only one. But for that one person it will mean everything. And the odds are good more than one will be served. Too much is at stake to be diverted over a simple illness.

 

What was Wrong with TWA

The short version of my illness is I had a sinus and lung infection that required several rounds of antibiotics to resolve. Recovery is still in progress.

The cause of the infection probably came from a serious issue with acid reflux. Several years ago I noticed reflux issues but thought little of it. Acid reflux is such a minor issue (in my mind) that it didn’t need attention. 

Jogging would cause coughing bouts. Even flying was an issue. (Maybe that is why I hate traveling so much?) As the reflux worsened I reduced my workouts to adjust and my diet declined. Weight went on and round and round we go down the drain.

The doctor said the acid reflux did not cause the infections (in her opinion). The infection just made the reflux more noticeable. I disagree. I would wake up at night choking. It was painful. It felt like it got in my lungs.

Regardless if the chicken preceded the egg, I ended up with a serious infection coupled with serious acid reflux. I was unable to talk and breathing was difficult. And I was in constant pain.

The infection is gone; the acid reflux is more of a constant friend. Diet and exercise improved after the infection was removed. (I gained nearly 40 pounds!) I can talk again to the chagrin of family and employees. I can even sing in church on Sunday morning, though I would not sit too close. I’ve been know to etch glass with my voice. Now we will see if my voice survives the upcoming tax season.

 

Where do We Go from Here?

There is no doubt I took the additional time allotted me while I healed to reflect on what life means to me.

I enjoy my work and always have. There is more work than any one man or business can handle. That is a hard lesson for me; the ability to say “No” when it is the right thing to say. 

Just because you can do something does not mean you should!

The tax practice lives on. Current clients stay. I will not say I will never add another new client. What I am saying is that any new client will probably be local. I can’t be everything to everyone, taking the most complex tax returns from around the country. (Refer to the point before this paragraph.)

This blog also stays. The once per week publishing schedule works nice and if I want to pound out a few other ideas I’ve been working on I can always have an extra post now and again. 

To compensate for fewer clients (some old clients leave and fewer replace them) I will focus on helping the largest number of people with a course on taxes tips. (News coming soon!) The same questions keep coming up again and again. With a course I can say it once and help thousands instead of one-on-one. A few other courses are also planned.

Consulting is still on. My consulting this year is way down due to that nasty loss of voice. If you contacted me on a consulting session you may hear from me soon. While consulting is still a go, understand I can’t consult with every request I get. There are just too many and I really do not want a relapse of the first half of this year. 

And then we come to Camp Accountant.

 

Camp Accountant

Yes, Camp Accountant is now a real thing! Use the link for details and sign up.

Several false starts have finally ended in a real Camp. Changes were important. In the past I was pushed to do a Camp by someone else’s rules and it kept falling apart. I finally decided to have the Camp right where I want it: a short walk from my tax office. (Sorry Colorado fans. The Upper Midwest also needs some love too.)

Camp Accountant: Where you go to learn the simple path to success, wealth and financial independence. #FI #FIRE #CampAccountant #Simple #Path #success #wealthI also decided I would run it my way. These things are a lot of work and I was expecting somebody else to do all the lifting. My contribution would be showing up. That wasn’t working.

Instead of the traditional FI and FIRE camps around the country, I settled on a one-day event. I brought in two speakers and all attendees get a Wealthy Accountant t-shirt. We also will tour my office so the proletariat can see how the bourgeoisie works in his natural habitat. Warning! You might be underwhelmed.

The morning will be presentations with guest speakers. I will share thoughts on the topic as well. After a nature walk to my office and lunch I will give a presentation followed by a Q&A. (Think of the Q&A as a consulting session without the cost.) If no one has any questions (that would be a first) I have an additional topic to cover. 

Camp Accountant should be fun and informative. It is for everyone looking to build wealth, reach financial independence and make a difference. CPAs, enrolled agents and attorneys get CPE, but this doesn’t mean only these people will benefit. We are offering the CPE so these professionals can get a tax deduction as they satisfy their continuing education requirements.

 

I hope no one was too worried about my health. People were asking so I thought it best to publish an update. Camp Accountant is something people have asked for as well. I am very happy this is happening. 

Now I am working to keep balance so I don’t relapse. I am grateful for the best clients and readers anywhere. This is important to me because I know it helps you. So I repeat:

Don’t check out and travel the world;

Check-in and change the world.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

How We Are Addressing Climate Change All Wrong

We are all in this together. Climate change isn't the problem; how we frame it is. Global warming can be solved if we work together as a team. This is not political; it is will. No winners and losers, just winners. #climatechange #globalwarming #reframing #co2 #environment #businessgrowth #greenhouse #greenhousegasesClimate change (really global warming with a better brand name) has been in the news these past few decades with dire warnings. Climate models have underestimated the warming trend. 

The old story of the frog tossed into boiling water and immediately jumping out comes to mind. With climate change the warming is so gradual (and sometimes welcome) we don’t notice we are getting boiled. Yet the temperature inexorably continues to climb. Like the frog, we will stay in the stew until the meat pulls away from the bone.

Fresh faces periodically jump onto the scene. Al Gore made a big splash over a decade ago with his Inconvenient Truth documentary.

This past week a new face entered the drama with Greta Thunberg scolding Congress. After delivering a groin kick to deserving members of Congress she met with allies in Congress and told them, ” I know you’re trying, but just not hard enough.” 

As much fun as it is to watch a 16 year old girl knock Congressmen around, the most important point has been missed: Greta “is” the problem.

 

Same Old Tactics

“The world is coming to and end!” It has been the battle cry of environmentalists from the beginning. Scare tactics worked when pushed hard enough and often enough in the past. Now, after hearing this battle cry for longer than most readers have been alive the echo rings hollow.

Climate change is a money issue. Those against taking action do so on financial grounds. “It will cost too much for something we are not sure will really happen and even if it does it might actually be a good thing,” is their battle cry. And it is easier (and cheaper in the short run) to do nothing.

Then we come to Gore and Thunberg. Remember I said they ARE the problem. 

All the while I watched and read about the smack down in Congress I couldn’t help but think about how much CO2 Thunberg dumped into the atmosphere flying* to Washington to give Congress a piece of her mind. Thunberg is right; she needs to try harder.

If the people most concerned about climate change are injecting the most most amount of greenhouse gases into the atmosphere, is there any hope to solve the problem?

Actually, there is.

 

Re-framing the Argument

Fear stalls people in their tracks. This accountant has strong beliefs about climate change and prefers to call it what it really is: global warming. Gore showing charts of CO2 rocking to the moon did little to move the deniers. It’s not that climate deniers believe climate change is a hoax; it’s that they believe it isn’t a serious problem compared to the costs of mitigation. A warmer winter is welcome in their minds and the negative consequences will not affect them (in their minds).

Continuing to bash on deniers will not work! I’m sympathetic to the cause and know the problem is serious and needs immediate attention. And even I am exhausted by the constant assault by climate doomsayers. If it is so bad and their is no hope, why bother.

There is a solution, but it requires a radical rethinking of the climate change rhetoric. 

Cutting greenhouse gas emissions is a good goal that can satisfy climate change crusaders while appealing to the pocketbook of the deniers. In other words, if we reframe the issue as a win/win the message will resonate with virtually everyone. The best part is nobody even has to mention that four-letter word: climate change or global warming.

 

Solutions that Work

Every time a new solar or wind project is proposed it lists the amount of CO2 that will not be emitted into atmosphere. That is a massive mistake!

Green projects have to be proposed with economics in mind. 

This wind farm will drive down costs to local businesses, increasing the competitive advantage of our community in the world market.

Everything wrong with the climate change debate. Rather than accusations, all sides can win if framed correctly. Global warming can spur economic growth, create jobs, lower taxes, improve the environment and provide serious investment opportunities. #climatechange #globalwarming #environment #greeninvestments #green Who is against that? No mention of climate change. Politics is removed. To be against this is to be against jobs and local economic growth. Not one mention is made about climate change. 

A local town hall meeting might sound like this:

CROWD: Is this wind farm going to help climate change?

PROMOTER: Screw the climate. We are about business and economic growth. This will create jobs and increase business profits. Our cost advantages after this project comes online will make us a world leader in multiple industries.

The Republicans will snicker after the event about how they pulled a fast one over on the Democrats. Citizens concerned about climate change will have a similar, yet opposite, conversation in private.

Everyone wins!

Your favorite accountant is sick to death of good ideas getting shot down because climate change was attached to it. Want to kill a good idea? Say is will lower CO2 emissions. Doesn’t matter how good the idea is. Could you imagine tax cuts associated with reduced greenhouse gas emissions? You’d never see another tax cut in your lifetime.

Businesses understand this. Doing environmental good CAN and frequently IS good for the environment. Both sides of the debate are really in the same room, only they got comfortable bashing each other’s faces in and don’t know how to change their behavior. 

It is self-defeating to frame trillions of dollars in spending as a climate change expense. Even those who know the problem is real have a hard time wrapping their head around seriously higher taxes to pay for something that will help other nations and people of the future. The “What’s in it for me” thought is strong. It is unfair to complain some are shortsighted on this issue. We all are to some extent.

Solutions where many will lose (taxpayers and business owners) will always have a problem getting their message across. 

 

Changing the Way We Think

Business owners understand the power of changing the way they think in problem resolution. Individuals need to do the same.

Buying an electric car is NOT about saving the environment! It might be a status symbol. But in the end it should make economic sense. If the cost of owning the electric car is less over its entire life than an internal combustion engine (ICE) vehicle it is a logical choice even if the up front costs are higher.

The opposite is also true. There will always be a limited number of people willing to shell out for an expensive car that costs more than similar ICE alternatives. This limited demand will not be enough to reverse the global warming trend.

It smacks me as insane when some lowlifes rejig their truck to belch more smoke or keys an electric car when walking past. The smoke is a different kind of pollution and actually is better for the environment since it settles out of the air reasonable fast. (Think of that if you rigged your truck this way. You actually are saying you are trying to help reduce climate change emissions. Makes you look foolish, doesn’t it?) And keying someone’s car is not only stupid, but ignorant. You are better than that.

Current thinking is politically charged. Greta Thunberg made a splash in the news. Yeah, she got a good one on Congress. And nothing will change. You don’t make friends or solve problems by finding new ways to insult people you need to help you solve a problem.

Instead of focusing on what is in it for us, we need to highlight the advantages to our opponents. 

Electric vehicles will give America a competitive advantage.

Changing the electric grid will create jobs.

Businesses will generate an estimates $868 billion (this number is illustration only, not a fact) in additional profits if electric vehicles are fully implemented.

This solar field will reduce reliance on foreign oil, create 328 new jobs, lower utility bills for businesses and consumers and lower taxes over the next decade.

Of course the losers haven’t changed. Big oil is behind the fight against climate change initiatives for good reason; they stand to lose a lot. I don’t like leaving businesses or people behind even if they were part of the original problem. Remember, oil was a solution to a problem a century ago.

The synergies created by good economic policies can be used to create incentives for businesses and individuals negatively affected by the changes. 

Climate change solutions can create jobs, increase business profits, lower taxes, improve the environment and reduce utility bills. #environment #utilitybills #propertytaxes #taxes #climatechange #globalwarming #jobs #profits #business profitsBig oil should receive serious tax credits when pushing into these new areas of business. The transition will be painful, but manageable if proper consideration is given.

Self driving trucks will not need to convince business of the value. Trucks able to run 24 hours a day without payroll expenses is all business will need to hear. Once self driving vehicles are safe enough they will happen. Just as climate change causes issues so will self driving vehicles. 

Every problem has a solution that eventually leads to more problems. As long as the improvement overall is steady we are golden. Truckers losing their job will need tax incentives to get them from where they are to where they want to be in a world with out truckers.

Gas stations will always have a place as long as people are on the road. Electric vehicles and people still need to fuel up. Gas stations will need help with the expensive conversion to electric charging stations.

These are not insurmountable problems! We HAVE solved much worse than this. Climate change is real. Unfortunately we are the frog in the water getting cooked at a slow simmer. 

Finger pointing is wrong. It never works. You never convince someone of your viewpoint by starting with, “You’re an idiot!”

We must reframe the way we look at climate change. We must change the way we think. This is not us versus them!

Change can be good. And profitable! If only we have the will. Otherwise another kid with a cute message will get a good jab in on Congress thirty years from now when the problem is still unresolved and much worse.

 

 * Some comments argue this statement isn’t fair since she used a “zero emissions” boat to get here. No word on how she gets home after her 5-man team brings the boat back without her. Many reports and newscasts have stated the large carbon footprint of her journey. Thunberg has a 5 man team delivering the yacht back home and some of them presumable flew. At this point we still do not know with certainty if she will fly home or use another source. What is certain is the greenhouse gases emitted from this publicity stunt is reported to be greater than the emissions from a village in India over the course of a year. I stand by my claim.

 

 

More Wealth Building Resources

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

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

It's not us versus them. Solving climate change can be a win/win solution. #climatechange #environment #smallbusiness #investmentopportunitiesSide Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant. Call 888-844-8910, email Darren@TradelineSupply.com or read my review.

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

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

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

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

 

 

$20 Million “Change the World” Giveaway

This blog post is part of the 4th Annual Suicide Prevention & Awareness Month blog tour*. If you are feeling suicidal, please call the National Suicide Prevention Lifeline at 1-800-273-8255 or text HOME to 741741.

 

Eliminate old debt problems with this $20 million giveaway. Stop debt collectors in their path. No more annoying calls and harassment. #debt #giveaway #debtreduction  #debtcollectors #reducedebt #debtproblems #suicide #helpSeptember is National Suicide Prevention Month. Each of the last three years I participated in a Suicide Prevention & Awareness blog tour. Last year I published on the tragic story of a young woman who changed her life forever in an attempted suicide gone wrong. I pointed out how this is important even for the FIRE community, a group of people that accumulates wealth and avoids debt.

In 2016 I shared my personal struggle with depression and seasonal affective disorder (SAD)

Two years ago, in 2017, I outlined how I got into the hedge fund industry buying charged-off receivables. And that is where our story begins today.

 

Trouble in Paradise

Money problems are a leading cause of suicide. Debt is usually the culprit, but medical bills also play a meaningful role.

You can read the 2017 article for more details, but the short story is I got into the debt buying business many years ago. When I bought a package of debt I ran a LexisNexis report to screen the accounts. 

Debt was parsed into categories and then sent to collection agencies and law firms. Most of these firms worked within the law, but some were fired when it was discovered they used inappropriate tactics to collect. 

Each file would have a LexisNexis report pulled once or twice per year in addition to what the collections firms did. And one of the disturbing trends was the high rate of divorce, job loss, medical issues and suicide. It was hard to work within an industry doing so much harm.

Monthly reports were filed by each collection agency and law firm with a remittance of what they collected the prior month, minus their fee. 

At this point it would be a good idea to review the John Oliver video on how the debt buyer industry works so understand how evil some of these people are.

 

 

I had to wash my hands. Unfortunately I had a fiduciary obligation to investors. 

To sooth my conscious I started sending copies of personal finance books to debtors who made any payment toward their delinquent debt. Dave Ramsey’s The Total Money Makeover was reasonably new so it was the go-to gift. 

The hedge fund’s attorneys soon caught wind of my behavior and warned me against sending the personal finance books. They felt it added litigation risk so I stopped as it put investors at risk.

Soon after I made my exit from the industry. Emotionally it was too much to handle. I could not push people over the edge to line my pocket.

 

Putting Experience to Work

Both debt buying hedge funds I managed did well; the first significantly better than the second. More important than the money was the experience I gained. I know the intimate details of buying, selling and collecting debt.

And I have contacts. 

When I ran across the John Oliver video I had to watch. Nothing much has changed since I ran those halls. 

As a debt buyer I could buy debt for pennies on the dollar. In many cases I could buy for less than a penny on the dollar! (You read that right. I could (and still can) buy massive packages of debt for a fraction of a cent on the dollar. One quick email or phone call and I can have a $20 million package of debt on my desk before the day is out for a mere $50,000.)

Debt kills. My actions within the debt buying industry, while always legal, was still part of the problem. Of course I was a small fish in the debt buying industry. However, the raindrop never blames itself for the flood, but they all play a role. 

It still bothers me all these years later. My legal team collected a lot of money from a lot of people. Most got into debt with their eyes open and really owed the money. Still, everyone does stupid stuff. There has to be a way to start over—an out, if you will. 

And more than I want to count, we forced too many people with medical debt to the edge. (Do you push a parent over the edge just to collect on a debt caused by their child’s medical bills?)

 

The Plan

John Oliver gave me an idea. What he did was buy a package of old medical debt and then wrote it off (didn’t collect on the debt) to the tune of $15 million. 

There are some tax issues with this, however. to solve the tax issue Oliver found an organization that handled the debt so the debtors didn’t get socked with taxes when the debt was forgiven.

However, I think Oliver got the tax issue slightly wrong. 

In the debt buying industry we don’t give anyone a 1099 for cancelled debt unless the debt is settled for less than full value. If the debt is never paid, no 1099 goes out! (The debt buying industry has good lobbyists.)

Also, a large percentage of these debtors have a negative net worth so even if they were to have cancelled debt it is not added to income to the extent the debtor is insolvent (Form 982).

This is where my plan comes in.

 

$20 Million Giveaway

End debt problems with this giveaway. It's raining money! Check if you qualify. No signing up. If you make the list your debt is automatically deleted. #debt #bills #collectors #billcollector  #deardebt #debtdrop #olddebtDelinquent debt keeps sloshing around, even when it is out of stat (statuette of limitations), getting sold again and again. When a new debt buyer takes over the collection actions ramp up again. The phone call are a serious distraction to the debtor.

The out of stat debt is really uncollectable. In some states—like Wisconsin—it is illegal to attempt to collect an out of stat debt. 

This is the dirty part. If a crooked debt collector can convince you to pay even a small amount the debt is then considered fresh and the clock starts all over again. In other words, you take a debt worth a half cent on the dollar and make it worth 10 cents on the dollar since it is now considered a debt with a recent payment. A simple $5 payment is all it takes to restart the clock and open the option the legal action.

The debt buyer can now go to court to collect the rest, plus interest! Or sell it for 10 times what he paid for it. The debtor can never get away from a financial bad spot, even debt older than a decade. The merry-go-round of debt selling never stops.

 

This blog has done modestly well. There are funds in the checking account looking for a good purpose. 

John Oliver (and I guess Oprah, too) bought $15 million of old medical debt and had it eradicated. 

The Wealthy Accountant had an opportunity to buy a $20 million package of old mixed debt, mostly credit card and medical. 

And that is exactly what I did. Most of it is out of stat and technically uncollectable. The only way to stop the debt buyers, however, is to stop the selling of the debt which is exactly what I did here.

I know it is a spit in the ocean. There are hundreds of billions of this charged-off debt floating around out there. This $20 million gesture will not even make a ripple.

Unless you happen to have an old debt in the package purchased. Then you will get a reprieve from the harassment.

The debt will sit in a desk drawer in my office gathering dust. No 1099 or tax issues because I will not officially retire or write-off the debt. It will just age. And unlike a good wine, it will stink up the office for sure.

 

Dreams

Your debt is forgiven. Wealthy accountant has a $20 million giveaway reducing debt so people can have their life back. Reduce stress and money worries. Has your debt been forgiven? #debtforgivness #debt #stress #worry #moneyproblems #suicide debthelp Packages of this old debt are always large. I have seen some small packages when I ran the hedge funds, but it doesn’t allow me the chance to game the system.

You see, I buy this debt for almost nothing. The $20 million package cost just under $50,000. Could you imagine if you could buy your old $20,000 credit card or medical debt just one account at a time for a half cent, or $100? 

If thousands of accounts were not packaged together you could pull yourself off the conveyor belt.

Most debt buyers also sell their debt. If they are selling a package of debt for 2 cents on the dollar, they usually allow you to cherry pick for maybe 3 cents on the dollar. 

If I ever get time I will build a course showing people how to track their old debt down (see who owns it) and buy just their own old debt for next to nothing. 

Until then, I did what I could.

 

 

 * The Annual Suicide Prevention & Awareness Month blog tour is technically over. Melanie Lockert sponsored the blog tour from her Dear Debt blog for three years. Her publishing schedule has become Spartan this year as her interests and focus seem to have changed. I decided to continue the blog tour solo this year. There is so much work still to be done. Money problems are a leading cause of suicide. My experiences and skills allow me to make a difference few have the opportunity to do. So I present this post in hopes that at least one is saved.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

Frugal Exotic Dining

3 frugal dining options the whole family will enjoy. Home cooked meals under $5 prepared with a variety of home grown food. Even expensive meals like salmon are very low cost. #food #meals #frugalmeals #frugal #dinner frugaldining #dining #qualitymealsIt is easy to get spoiled living in the backwoods of Nowhere, Wisconsin. Cool, crisp mornings and fresh food straight from the garden. Food we don’t grow ourselves is frequently purchased from neighbors who do grow it. 

As you can imagine, the cheap quality fast food peddled in urban areas these days does not live up to the bill. Even the so-called high end (and expensive) restaurants just don’t compare to what we grow and prepare ourselves.

Going out to eat is not a treat; it is something we do when home cooked meals are not an option. 

The cost is what really bites. Dining out is expensive and rubs my frugal nature wrong. I can’t help thinking They charge that much for this! as I chew the cardboard.

There is a solution. Good food is available at a rock bottom price if you know where to look. In some cases you can’t prepare at home any cheaper. And they use high quality, real food in their preparations.

My delicate palate has found three sources of excellent value when dining out that are cheaper than virtually any other venue, save self-prepared.  

So put on your bib and start licking your lips. We are going on a culinary journey.

 

Hospital

Hospitals don’t always have edible food. However, when they do you might want to fake an illness. 

Years ago when my oldest daughter was born I made a discovery at least as important as sliced bread. Mrs. Accountant was having a difficult time of it and even under stress, I eventually knuckled under and went to the hospital cafeteria. 

And was it good! 

Once the stress of child birth passed and we settled in, Mrs. A and your favorite accountant had a discussion. Mrs. A was all for going for a meal periodically. (Yes, Mrs. A is an awesome cook, but she needs a break now and again.) 

St. Elizabeth’s Hospital in Appleton, Wisconsin is the place you want to go for lunch. Trust me. They have a variety of food to choose from, all of it prepared like grandma used to and right in front of you. 

The best part is it cost less than a fast food stomach pump meal. Most restaurant food is barely edible and here we were enjoying REAL! food for under $10 for the two of us at the hospital where they can afford to serve terrible food because medical care is really close.

There is one more best part. You don’t need a sick friend or family member to eat at the hospital. Though you sometimes have to answer questions if you see someone you know. I just tell them the truth and they always agree; it is worth visiting the hospital when you’ve worked up a powerful hunger.

Caveat: I found St. E’s by accident. I tried the other hospitals around town and found them wanting. (Note to everyone: If I ever get ill I want to be taken to St. E’s or just let me die.) Even St. E’s had a dry spell several years back. But they soon returned to top form to my delight.

I suggest you do some medical culinary research.

 

Culinary School

I hear you already. “I don’t have a culinary school near me.”

Oh, yeees yooou dooooo!

My oldest daughter (yes, her again) exposed mom and dad to this one. She was attending the technical college and made a new friend which happened to be taking classes in culinary arts.

Well! What do you know about that?

Heather (the big kid) explained to Mrs. A one day that she needed to visit her at college. Heather took Mrs. A out for lunch at the school. 

Looking for reasonably priced dinner options? Look no further. Here are 3 frugal dining out options most people don't know about. So now you know the secret! #diningout #food #dinner #lunch #secret #meals #inexpensivemealsThe real risk—if I would have known in advance—would have been to warn Mrs. A to NOT eat college food. It could make me a widower. 

That night Mrs. A bragged to me about how good the food was at the college. I checked the calendar to make sure it wasn’t April 1st before taking her seriously.

Not to let a good meal pass, Mrs. A and I made a point to visit Heather shortly thereafter. 

Heather made sure we took the correct lunch line. You see, some food is the normal college rot gut, but, if you went over here to this line is was the creations of the culinary class today. 

So we stepped into the right line.

I filled my plate (as I am wont to do, evidenced by my waistline) and figuring it would set me back $10. 

Mrs. A was in front of me. The friendly student on work-study rang up Mrs. A’s plate. $5.50!

“Five dollars!” I said a bit too loud. 

“Oh, no sir,” the kind work-study student said. “Your meal is $6.50. You have the salmon.”

Here, just take my money.

Once again, I was pleasantly surprised by the food. It looked, smelled and tasted delicious! And both of us ate for a bit more than $10! Yes the fish was slightly more, but who is complaining when it tasted this good. 

Since then I’ve had to take back all the things I said about my daughter and apologize for not paying more than a token amount of her college cost (and here to learn more).

Periodically you will hear in the nether regions of the Wisconsin backwoods, “Maawwww! I got the buggy hitched to the the horse. Want to ride with me to town to visit the yung’en?”

I highly recommend the Fox Valley Technical College in Appleton, Wisconsin if you are hungry. You probably have a similar option where you live.

 

Church

Before you say one word, bite your tongue.

From a young age on I always knew a good meal was coming when church put on a feed. It was the one thing I missed (along with the fellowship with awesome people) when I lost my faith.*

The ladies** at church know how to cook. In our parts a meal is frequently served after a funeral. On Election Day in November St. Martin Lutheran Church (Chilton, Wisconsin) has a Chili Supper each year. Easter morning is a brunch after Sunrise Service. There are many other event when a meal is also served.

 The food at church is the best of all three options I have shared here. (Yes, I saved the best for last.)  

Here are 3 budget friendly diner option the whole family will love and cost around $5. Dining out doesn't have to break the budget. Home cooked meals with real food! Bet you never thought of dining at these 3 places. #budget #budgetfriendly #meals #dining #lowcostmeals #goodfood I understand some readers don’t have faith in God, yet I never saw our church turn anyone away from the dinner table for any reason so you don’t need faith to eat. Church people are like that. Very welcoming.***

The churches love to advertise their upcoming events with meals and usually encourage the  public to attend. Keep your eyes open for these excellent dining opportunities.

I have enjoyed meals at other churches around town when they served. Even other denominations! And never once did I get a lifted eyebrow. The Catholics fed this Lutheran as hastily as any of their own parishioners. 

A church setting is about fellowship. The food is excellent. What more could you want. There is nothing to be embarrassed about. Just bring an appetite.

Next Sunday (September 15, 2019) is Bring a Friend to Church Sunday. After the service St. Martin in is having a brunch. You are all invited!

You will love the cost. Many times it is a freewill offering. Sometimes they have a token fee, but it is always so low I feel guilty and donate a bit more. I’m willing to pay for a good meal.

Looks like a certain backwoods accountant is hooking up the buggy to the horses again.

 

I hope you enjoyed my unconventional list of great places to dine at a very reasonable cost. I don’t dine out often so I’m sure I missed a bunch of great ones. Share your favorite places to eat where the food is excellent and the cost family friendly.

 

 

 * I’m working on a TEDx talk on my darkest hour that led to my loss of faith. 

 ** I say “ladies” because the ladies do most of the cooking. The men sometimes help out, but the women deserve the credit for their labor. No offense is meant, nor should it be taken.

 *** My journey back to faith is a long and arduous one. When this blog started I was still clinging to atheism and if you read closely you could tell. But I was far enough along to know lack of faith had as many issues as faith. I was coming home even if I didn’t know it. I’m busy writing a book on my journey back to faith. There is a lot to it and it isn’t all religious. Once the book is finished and ready for publication I will be giving a presentation. My hope is I can convince Valparaiso University in Indiana to allow me to make my debut public presentation there. I promise to take you to hell and back. There will be no dry eyes at the end. It will be the most emotionally draining 90 minutes of your life, I promise. I’ll share details on this blog when this happens.

 

More Wealth Building Resources

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

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

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

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

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

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

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

Financial Horror Stories

PROTECT YOUR CASH!!! Investments too good to be true are. Learn the language of business before investing. #accounting #investing #Buffett #WarrenBuffett # money #cash #realestate #stocks #alternativeinvestmentsMy office manager, Karen, sat with a new restaurant client. Ten minutes later Karen was in my office with the financials of the client.

“She doesn’t understand why she is losing money, boss,” Karen said. “She says business is good, but she loses money every month.”

I looked at the profit and loss statement for less than ten seconds when I asked Karen, “Is this correct?” 

Karen named the bookkeeping firm the client used. It was a reputable firm. Karen said the client reported all income daily and reported it to the bookkeeper. The bookkeeper paid all the bills and provided a statement each month.

If the P&L was correct there was only one explanation. “One or more of her employees is embezzling.”

“Can you talk with the client?” Karen didn’t know what to tell her.

I went to Karen’s office and explained to the client she had at least one employee embezzling. 

“How do you know?” she asked.

I held up the P&L. “The cost of goods sold compared to wages compared to revenue are off. Someone is either walking out the back door with steaks and seafood or someone is stealing cash receipts.”

The client assured me she had honest employees. With only a glance at her financials I was certain there was malfeasance. 

“It might be a waitress. Do people leave money at the table or take it to the checkout person?

“Checkout person.”

“Okay, it probably isn’t her because the amount is too large. And while steak and seafood might be walking out the back door, the cost of goods sold is somewhat in line with employee wages. It is revenue that is off. 

“So tell me, do you have a security camera on the cash register?”

She told me she had no security cameras. 

“The employee at the cash register might be the problem.

“No,” she said. “That employee has been a friend since we were in kindergarten.”

That was all I needed to hear. With rare exception, embezzlement comes from people you trust the most. Either a family member, close friend or the faithful employee who hasn’t taken a vacation in eight years. There is a reason accountants demand business clients require anyone in their business handling money to take a two week vacation every year. You would be surprised how much embezzlement is uncovered when someone is on vacation.

“Your friend is robbing you blind,” I confirmed.

She still insisted her friend would never steal from her.

“Okay. This is what I want you to do. Go back to your restaurant and call a meeting with your employees. Tell them your new accountant is a real a-hole and demands a security camera be placed over the cash register.”

She did as I asked. Her friend since kindergarten quit on the spot. And profits arrived for the first time at her restaurant.

Unfortunately the theft had gone on for too long and the financial damage too great. A year later she closed her restaurant, deep in debt.

 

Warning Shot

A few weeks ago I published on the Fleecing of the FIRE Community. Some readers were irritated while others were concerned. I wrote things like:

Since you managed to acquire a respectable nest egg you think you are an experienced investor. It is doubtful you are!

and

Buying into an unconventional investment, which these bike communities are, should never happen unless you are very experienced financially and have the ability the lose 100% of your money without changing your lifestyle one iota.

and

You have no idea of some of the people on my desk I’m helping. These are serious issues; small fortunes completely destroyed unless I can find a way to preserve their wealth. I don’t always win.

When I published:

To keep this short I will close with one last suggestion. If you can’t read and interpret financial statements like a seasoned accountant you have no business being in any kind of exotic investment, real estate included. Stick to index funds and money market accounts.

You might not shoot the moon, but you will not suffer a catastrophic loss sending you back to square one, as a neophyte in the FIRE community once again.

people wanted to hear some of the horror stories, hoping to learn from other’s mistakes. 

I stand by my original advice: Don’t invest in things you know nothing about. If you can’t read a financial statement how will you understand if a rental property is a good buy? Or a business?

The next time you are tempted by a slick sales pitch at a conference (this is being published while FinCon is running in D.C.) or camp, come back and read a few of these true stories. Names are changed to protect the guilty (yeah, I think I’m funny); the stories are all true.

 

Supper Club

I have a group of clients that own several businesses around town. Two from this group with several outside investors own a supper club near my office. They called me in to handle taxes and consulting. It was bad from the start.

Once they bought the supper club they hired a manager. This was a guy they knew from running some income properties they owned. 

The manager and his wife handled the books.

The club was open for a bit before I was called in. I would review the books monthly and consult before preparing the annual corporate tax return.

I was to meet with the manager. When I arrived it didn’t take long to know something smelled bad. From the front door to the bar was all it took for me to know embezzlement was rife.

The bartender game me a cold attitude. There is no reason an employee of a business client should ever give the accountant an attitude. This told me the employees knew or suspected the malfeasance. The environment was bad.

I was shown to the office where I waited as the manager was running late.

I noticed a gap in the security cameras between the back office where I was and the safe. 

When the manager arrived he was livid. He made it clear I was never to touch the books unless he or his wife were present.

After the meeting I called one of the owners. I told him he had serious misappropriation of funds issues. I told him it was the manager bleeding him dry.

I was assured the manager was a good guy. I pointed out:

  1. The bartender’s attitude was unusual to see. Employees should care less if the accountant shows up. They should have been more interested in serving me a drink, hoping for a tip.
  2. The security camera gap between the office and safe was a serious issue.
  3. Any manager who is that adamant the accountant not see the books without supervision is practically an admission of guilt. There is only one reason to control what the accountant sees.

I knew who was embezzling (manager), where they were doing it (security camera gap near the safe), when they were stealing the funds (at closing the manager or his wife handled the money with no oversight) and how much (I estimated between $100,000 and $150,000 based on revenue).

When I was not taken seriously I said I was not interested in the account and hoped it would not affect my work on their other accounts. 

A year later one of the owners was in my office. It seems I was wrong. The manager was embezzling just as I said he was, except he misappropriated at least $300,000.

I reminded my client he probably did the same when he was managing their rental properties which always seemed to lose money, too.

 

Fish Farming

The moral of the first story is: If you can’t read a financial statement you have no business being in business.

The moral of the second story is: When your accountant’s BS alarm goes off, listen.

Invest in what you understand. Know your circle of competence. It is better to pass on a good investment than to invest in a bad one you don't understand. #stockmarket #business #sidehustle #sidegig #investmentsIn the second story the business survived and even later thrived. (Though I never got the account, but never lost the accounts of their other businesses.)

Now we turn to an income property story.

This didn’t happen to my client. I was a member of the Fox Cities Apartment Association many years ago when I owned a massive amount of real estate when I heard the story.

It seems a neophyte watched late night TV when he discovered he could be a gazzillionaire buying income property no-money down and cash flow right out of the gate. 

This guy bought an up/down duplex, filled the unit and enjoyed his new-found cash flow machine. 

As winter approached the tenant called and said the furnace was not working. The landlord went over to see if he could fix the problem without calling an expensive technician. 

When he gets to his property he finds the problem right off. The basement is filled with water!

It seems the tenant wanted to raise fish. Thank God he didn’t fill the basement to the electrical panel.

The foundation of the building was shot. Insurance didn’t cover the damage because it was the tenant’s fault. The landlord sued the tenant and won, but the tenant had no money and later disappeared. 

The city condemned the property and the bank foreclosed and socked the landlord with the shortage when the bank sold at a fire sale price. The landlord later declared bankruptcy. The stress destroyed his marriage. He lost his easy money investment, wife and had to pay 29% of his gross income in child support. I have no idea how he ever recovered.

The morals of this story are:

  1. Income property is NOT easy money,
  2. Always screen your tenants (his tenant had prior litigation with landlords),
  3. Always check your property, even if you have a property manager. An annual (or more often) personal inspection is a requirement in my opinion,
  4. Alternative investments, including income property, require a reserve to handle maintenance and excess damages, and
  5. No-money down deals are rarely a great deal. They are desperate deals.

This guy did everything wrong. He bought a crap property which attracted crap tenants. He put no money down and had no reserve, He never screened his tenants or inspected his property. What did he expect would happen?

 

Bad Advice

Some readers might notice I have no hair. It’s because I pulled it all out.

What non-bloggers might not understand is that bloggers can see when other blogs link to their site. Usually I’m curious to see what is said; usually I’m sorely disappointed.

For example, a blogger once published she never has an LLC for her income properties and linked to this post of mine as her reasoning. It was a 100% misunderstanding of what I said!

I have no problem with, and even recommend, income properties be held inside an LLC. What I also say is that you should never place real estate inside an S corporation or LLC electing to be treated as such for tax purposes.

The post this blogger linked to is about small businesses and not real estate so she read it all wrong. Which leads us to our last example so I can take an aspirin to dull this throbbing headache resulting from pounding my head into the corner of my office.

 

When it rains, it pours. I’m not talking salt either.

Last summer I had two consulting appointments with the exact same issue: income properties inside an S corporation. 

Since I could kill two birds with one stone I tried my darnedest to find a solution. I even hired a law firm in California to help. Alas, nothing could be done. Once real estate is inside and S corp it stays there, regardless the negative consequences. 

No-money down real estate is rarely a good deal. Usually you are buying something with lots of problems that is hard to sell. These steps can point out the ones that are really a bargain. #realestate #investing #nomoneydown #investment #goodinvestments(If you transfer real estate from an S corp to an owner of the S corp it is still treated as a sale at fair market value, triggering a capital gain (or loss). )

There are several reason why you should never, ever, ever put real estate inside an S corp or LLC electing to be treated as an S corp. 

First, if the S corp spent any time prior as a regular corporation (C Corp) it probably has accumulated earning. An S corp with any C corp accumulated earnings and 25% or more of the S corp’s earning are passive (rent, interest, dividends), the S corp is taxed at the highest C corp rate.

I know that is a mouthful and a lot of details are disregarded. (It’s actually more complicated than that tongue twister indicates.) Regular corporations now have a flat 21% tax rate so it might not be as bad as it once was. Still, it causes an S corp—a vehicle for managing a business with fewer taxes—to be taxed at the regular corporate rate.

It also adds complexity to the tax return. Good for the tax professional (if he can keep his sanity); bad for you.

This problem is easily avoided by going straight to an S corp which many do.

The real problem—and this is a big one—involves basis.

I know basis is hard to understand, but it is of vital importance here. 

Most people understand they have basis in their S corp if they invest money into their business. What is harder to understand is how loans affect basis.

S corps are unique in that loans by the corporation do not add to the shareholder’s basis unless the loan is from the shareholder. Even if you guarantee a loan taken out by the S corp it does not add to basis!

We will not bog ourselves down today on S corp basis nuances so don’t take my next statements as complete answers; they are not.

The two clients I consulted (and latter prepared their tax returns) have serious S corp basis issues because they had real estate in their S corp and the S corp took out loans. 

When this happens it is possible to show a loss (real estate depreciation can cause a loss while still cash flow positive) and use up basis. When that happens it is possible in some circumstances to pay a capital gains tax on distributions when the S corp shows a loss. 

Accelerating depreciation can really complicate this issue. Current tax law allows faster depreciation in some instances. Repairs and improvements are deducted easier now. And cost segregation studies can super charge depreciation deductions.

When real estate is in an S corp you always have to keep an eye on basis from the corner of your eye. 

Nothing is worse than paying taxes on losses! And it can happen in an S corp when the rules are not followed.

The clients’ intentions were never to break tax laws either. They did what they thought was correct or might have even read some tax articles and misunderstood the complex issues surrounding S corp taxation.

To fix this problem I’m working with the client to verify all loan are from the shareholder. Loans are structured so the shareholder takes out the bank loan and lends the funds to the S corp. That does add to basis! (This is the opposite of what banks do so they have to be told the consequences. If they don’t listen, get a different bank!)

The moral of this story is: Always seek the counsel of a competent legal and tax professional before buying real estate and/or starting an entity.

I know people around here love saving money, but you don’t save when you make a serious tax error. A small investment in an attorney and tax professional can yield massive returns and peace of mind. 

 

Coda

Warren Buffett once recommended you focus less on business school and more on taking a few accounting classes. I couldn’t agree more.

You can’t make an investment or run a business optimally without understanding the language of business: accounting. 

While business classes are great, a fundamental understanding of accounting will serve you in every facet of your life: personal finance, investing, work, side hustle, small business.

You would be surprised at how many people doing their own books record loan payments as an expense. (The interest portion of the payment is an expense; the rest is principle which is recorded against the liability on the balance sheet.) If something as simple as this is not understood, how can you possibly trust your judgement in running the business or in any investment decision?

My original comments are correct: People have no business making investments in things they don’t understand! My buddy Warren has said at least a googolplex times. 

All these crazy ideas brought to conferences and the various FI camps are accidents waiting to happen. You can make informed decisions when you understand the language. You, like me, might enjoy making small investments in strange products just to see how it works and plays out. Nothing wrong with that as long as you understand what you are doing.

Making large investments without understanding the investment is insane. Index funds and bank deposits are what you should limit yourself to if your accounting knowledge is limited. In fact, you shouldn’t even listen to any investments offers. All that could happen is you get sold and then God help your net worth because no one on the earth will. 

It is also never too late to learn. Colleges and tech schools around the country have superb accounting classes.The great news is accounting has been around a long time is and virtually unchanged in that time. You don’t need a prestigious college for a good accounting education. Even local night classes will make you a better investor.

 

It is temping to think you know more than you do when your stash grows. Success gives the illusion of intelligence. When the crisis arrives the illusion evaporates. 

Please, kind readers, use common sense. If you don’t fully understand the concept and the financials then take a pass. Better to miss a deal than to go all-in on a scam.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

Your New Mission: Plan For the Future

Image via Pixaby

 

If there is one thing I don’t understand it is the military and the unique financial challenges facing active military personnel and veterans. Lucille Rosetti has provided another post helping fill the gaps in my experience.  She has provided several valuable resource links helping veterans plan their future. She is part of the Wealth Legacy Institute, has graced the digital pages of this blog before and elsewhere on the web. Enjoy

 

 

Your New Mission: Plan For the Future

by: Lucille Rosetti

 

As a U.S. veteran you have served your country, but now more than ever it’s time to serve yourself and your family. As you get older this means making a plan to ensure your finances are in order. Avoiding this can harm you financially and could leave your family struggling later down the road. Here are some practical tips to help you complete your most important mission yet: taking care of yourself after you retire. 

 

Utilize VA Loans to Refinance or Buy

 

Even if you don’t have perfect credit you still have to have a place to live. As a veteran, you may be eligible for a lower-interest VA loan, which can save you a significant chunk of money each month. If you qualify, a VA purchase loan doesn’t require a down payment or private mortgage insurance like a conventional or FHA loan. Refinancing can also help you save money by lowering your interest rate if you already own your property. Keep in mind, however, that the property appraisal must be higher than the selling price.

 

Discuss Your End-of-Life Wishes

 

Thinking about your own death isn’t pleasant, but making plans in advance is important. If you haven’t already, one of the first things you should do is have a conversation with your family about your final wishes. Do you want to be buried or cremated? Do you want a formal funeral service or a casual end-of-life celebration? While it will ultimately bring everyone peace of mind and allow you to begin making financial plans for final arrangements, know that it will still be a difficult conversation for you and your loved ones. Approach the subject with sensitivity, and be ready to have multiple discussions with anyone who can only talk about a few details at a time.

 

Supplement Your VA Burial Benefits

 

In order to offer some support to your loved ones during what will already be a traumatic time, you also need to make a plan about how to pay for your final arrangements. Military.com explains that the VA offers a small stipend to help your family pay for your funeral. At most, this is $2,000, a sum that only applies if your death was directly related to service. A funeral can easily cost $8,000 or more. Consider supplementing your VA burial benefits with a funeral insurance policy, which can also provide your family with a small injection of cash to help cover outstanding debts. Before you decide how much coverage you need you’ll need to know the kinds of arrangements you would like and how much money should be left over for other needs.

 

You Can Still Save Money

 

When you enrolled in the Armed Forces you likely had the opportunity to open a Thrift Savings Plan. Even if you had matching contributions this might not be enough. This is especially true if you had to make withdrawals to cover your living expenses as you transitioned from military to civilian life. If you are still working you have the option to add funds to an IRA up until you are 70. There are special rules, however, and if your only income is from an annuity, pension, or disability, you won’t be allowed to contribute to an IRA. There is nothing stopping you from putting money into a high-yield savings account or, under the guidance of a respected financial advisor, a low-risk investment vehicle

 

VA Medical Benefits Offer Broader Coverage Than Medicare

 

You’ll become eligible for Medicare when you turn 65, but it may not be enough. If you have significant health problems or are considered low-income VA medical benefits may be a better option. This coverage, which is explicitly set aside for veterans goes beyond Medicare benefits by providing dental care and long-term residential nursing home care. You may be eligible for lower co-payments and deductibles. Reach out to the VA by calling 877-222-8387 and ask for VA Form 10-10EZ. This is the Application for Health Benefits and is the first step in understanding what you may qualify for. You can also apply online at VA.gov. 

 

Although you’re no longer on active duty, it’s still your duty to take care of yourself and to protect your family’s financial future. You can do this by paying close attention to your benefits. Some, such as a VA loan, can help you save money. Others, like VA funeral reimbursement, aren’t enough to cover your needs. Knowing what you have and what you don’t is the best way to make a plan that will allow you to defeat the enemy of time and live out your golden years without the weight of financial woes.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

The Fleecing of the FIRE Community

The con artists have a new target loaded with cash: the FIRE community. They are walking in, head held high, when they make their offers. It might look like the investment of a lifetime. Here is how to protect yourself. #protection #risk #investments #scams #fraud #FIRE #financialindependence #independence #retireearly #retirementThey call us snowbirds.

Every year as the the temperatures turn south, so does the traffic from the northern climes, bleeding into the sunny south on the latticework veins of varicose highways. 

Mrs. Accountant and I have enjoyed warmer weather in January with a trip to the land where summer never ends for many years now. Some years we miss, but most years we take a pre-tax season gander south before the pace of a busy tax season sets in.

For several years we made the trip south dual purpose, mixing business with pleasure. The last time we did this we were walking the streets of Gainesville, Florida waiting for one of the various FIRE (financial independence/retire early) camps to begin. 

The camp was outside town a few miles. These gatherings generally are a reasonable mix of fellowship and education. But this one was going to have a surprise.

One of the presentations had a slick offering of real estate. A small community was planned with narrow street for bikes only. Each house was small so everyone was forced to spend more time outdoors. Home was for sleeping and not much else.

A large centrally located community building had a community kitchen. Each night members of this community would dine together. Families would take turns preparing meals for the entire group.

I turned to Mrs. Accountant and she knew what I was thinking instantly. This project didn’t have a snowball’s chance in Hades.

It was a nice presentation, but what part about the “I” in FIRE don’t you understand? These people value independence highly and this was the exact opposite of “more” freedom. These people would never think of buying a non-conforming home with massive community rules and a requirement to feed the town periodically.

Then I turned to view the reaction of the room. After I winched my jaw back into place I understood what had just happened. 

The FIRE community had reached a critical mass and was prime for a fleecing.

 

Baa, said the Sheep

A few weeks back I published a critical review of the FIRE community. As expected, many readers agreed with my assessment, while a few disagreed. The disagree camp didn’t have a lot to stand on because their argument (in one comment) boiled down to ‘I was wrong because I made a spelling error.’ Of course, those who follow on social media knew I hid Easter Eggs in the post, noting there were several layers to unravel. (I needed certain letters!)

Ya also know ya hit the nail square when the arguments take those kinds of turns.

However, I was wrong on at least one account. My allegory of these communities as ‘communistic bike towns’ were off base and it wasn’t the message I wanted to convey. My connection to mid-19th century Russia was a stretch for sure.

But I wanted people to think about what they were doing! I saw a slick developer looking to pluck a relatively naive groups of potential investors.

Non-conforming homes will have a harder time holding value, especially in weak markets. The number of people willing to live in these communities also reduces the number of potential buyers.

And what about conflict resolution?

Well, they had an answer for that. The problem again is that this group of people looking for more ‘independence’ would lose a large part of that independence with a serious amount of their time and assets if they invested. 

The old adage: Good fences make good neighbors, was forgotten by this crowd.

 

Two Problems FIRE Must Address

I saw a seasoned developer carefully carve the group.

The willingness of so many to embrace this concept without serious thought made me nervous. The only relevance we got from the developer was, “They are doing it in Europe with great success.” And since we are in Florida, I have some land I’d like to sell you, too.

One thing was clear. The FIRE community, the FIRE movement, has reached critical mass. There are enough people with cash available to fleece. The old Microsoft Support Scam and IRS Scam are peanuts to what can be pried from the fingers of this group.

Many who follow FIRE bloggers are quick to crack their wallets when a leading blogger thinks an investment is a good idea. This is a terrible idea! You understand many of these bloggers have something in it for them and even if they don’t there is no guarantee they know what they are doing. They might be retired, but they still line their pockets with blog revenue. 

And I’m no exception! Everything I say or do should be questioned! I throw out ideas and tax strategies non-stop. My record of wealth creation is solid, no doubt, but I have no lock on smart investing. Remember, good ‘ol Warren Buffett is taking a shellacking on his Kraft-Heinz investment and he is probably the best investor of all time. The lesson: do your own research.

If the FIRE community is ever to survive it must address two serious issues. 

Scams are hitting the FIRE community at a torrid pace. FIRE is now a large enough movement that scammers are focusing on the group and their large pile of savings and investments. #savings #investments #scammers #risk #FIRE #FIREcommunity #FIREmovementFirst, many in the FIRE community are relatively new to the movement. They had their come to Jesus moment, crucifying debt and massively funding their retirement accounts. Then they start building their non-qualified accounts. And don’t think the shysters of the world haven’t taken notice.

The acolytes are fresh from foolish financial decisions and with a small amount of knowledge built serious wealth. Most are not millionaires, but sitting around with $300,000 incubating inside an index funds is a ready source of cash if you can offer the right deals these suckers, ah, fine young people take a fancy to. 

The second problem is the neophytes now as a group command a serious amount of money. The old ‘invest in an index fund and forget it’ advice isn’t going to cut it.

FIRE members love buying real estate. Several bloggers act like it is all easy money. Well, it isn’t.

I have well over $40 million in real estate transactions in my own account. This is more than some real estate sales professionals ever sell. My stories include the good, some really bad and the down-right ugly. I live this stuff.

Real financial education is lacking. I know this because I get more consulting requests than I can handle. Maybe 10% get a hearing and I charge $350 an hour. People in the FIRE community are digging some deep financial holes and some are creating massive tax and legal problems for themselves. 

 

What YOU Must Do

Neither you nor I can fix all the problems in the FIRE community. I can preach from my small perch of this blog, but in the end it is up to you.

The FIRE movement is such a desperately needed movement. People are so lacking in basic financial knowledge. 

The illusion of saving half your income in index funds salves all financial woes is misleading. 

The seasoned hucksters have noticed our quaint little group. They know exactly what to say to get your money. They will not peal a couple hundred dollars from your stack; they want six figures!

Scams are tricking even experienced investors. Take these steps to avoid being scammed. #scam #experience #investing #thewealthyaccountant #assetprotectionSince you managed to acquire a respectable nest egg you think you are an experienced investor. It is doubtful you are!

What you MUST do is step back from any new investment. If the deal needs immediate action you MUST take a pass. Don’t worry. Another deal will always come along. The hurry-up deals are all too often scams anyway.

Buying into an unconventional investment, which these bike communities are, should never happen unless you are very experienced financially and have the ability the lose 100% of your money without changing your lifestyle one iota.

I’ve been publishing more on investing lately. (It is outside tax season so I wanted to write about something else for a bit. More tax posts are coming soon.) The reason for this is the number of readers crying out for help.

You have no idea of some of the people on my desk I’m helping. These are serious issues; small fortunes completely destroyed unless I can find a way to preserve their wealth. I don’t always win.

To keep this short I will close with one last suggestion. If you can’t read and interpret financial statements like a seasoned accountant you have no business being in any kind of exotic investment, real estate included. Stick to index funds and money market accounts.

You might not shoot the moon, but you will not suffer a catastrophic loss sending you back to square one, as a neophyte in the FIRE community once again.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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