Christmas Every Day of the Year

Find some place comfortable to read this post.

Sit back, relax. Close your eyes. Empty your mind of all thoughts and worries. 

Now I want you to go to a special place, a place in your memories. The memory is of a good time, a happy time, a time you want to last forever. 

The memory might involve a family gathering or a time of recognition. For many, the memory is connected to a holiday or social event. For many in the Western world it will be a time from childhood and Christmas time.

Hold that memory. We will return to it shortly.


A Modern History

Johan Huizinga begins his book. The Autumn of the Middle Ages, with these words:

When the world was half a thousand years younger all events had  much sharper outlines than now. The distance between sadness and joy, between good and bad fortune, seemed to be much greater than for us; every experience had that degree of directness and absoluteness that joy and sadness still have in the mind of a child.

It is impossible to understand the deep despair of an event unless you lived through it. We can read all we want about the Spanish Flu pandemic of 1918 to 1921. You still only know facts. There is no risk to you from the event; it is history.


I am writing this for Christmas 2021. Contemporaries will understand what I am about to explain; those who stumble across these words decades from now will never understand what it was really like to live in 2020 or 2021. Rather than spew facts, let me do my best to convey the emotions of the event.

January 2020 was a time filled with preparation and hope. Another tax season was upon my team and me. Plans were in place for a smooth execution of affairs. Client work would flow through a well designed process to assure accuracy and timely filing.

Early February was like any other tax season and I had no worries. There was a rumbling in the news of a disease in China that was spreading the planet. I paid no heed. 

Within a few weeks nervousness took hold as the virus was spreading rapidly. Hospitals were filling and people were dying. Rumors began of locking down the United States. This kind of thing hasn’t taken place here in living memory.

It still wasn’t in Wisconsin, where I live and work. I prayed this virus would hold off long enough to finish tax season. Then the calendar turned to March.

On March 9th two Wisconsin residents tested positive for COVID. The writing was on the wall. This would be a tax season like none experienced before.

Two days later a basketball player tested positive. Game over.

March 13: All Wisconsin public and private schools were closed by order of the governor until April 5th. Any hope I could finish tax season before the full force of the pandemic hit home evaporated. 

Three days later several counties closed bars and restaurants.

Another three days and Wisconsin now had 155 confirmed cases of the virus. Hospitals were filling fast and people started dying. 

March 23: Wisconsin governor, Tony Evers, by order, closed all nonessential businesses. I called my attorney to find out if I was required to close my business. It wasn’t. It didn’t matter.

Soon, an eerie quite descended. It is hard to explain the sound or the lack thereof. The closest I can come is a particular Christmas morning. I wrote about that experience here

You have no idea how much noise humans make. The sound of machines is everywhere. Even out in the boondocks where I live it is noticeable. Now it was all going to stop.

The sound of traffic disappeared. There wasn’t a plane to be found in the sky. With nothing to do, I walked out my office and stood in the middle of the normally busy highway. There were no cars in either direction as far as the eye could see. All sounds of human activity had stopped. It was surreal.

Eighteen months later 6% of my clients would be dead.


Personal History

More than 1 in 17 clients died in the following year and a half. I may have attended more Celebration of Life ceremonies during this time than the rest of my career combined. 

COVID did not kill them all. In fact, the virus played a relatively small role in direct deaths. However, the restrictive rules (wear a mask, social distance (even from loved ones), shelter in place) took a toll. Many clients that left this world were clients from the early days of my practice. People do get old and die sometimes.

I would tell you about how old I feel, knowing I have worked my business for so long clients who seemed young when they first arrived have aged and now died. Perhaps the feelings I feel is a late arrival mid-life crisis. Or maybe, just maybe, I’m getting older, too. I don’t feel old so that can’t really be it.

Yet, I would be absconding my duties if I did not share the story of a client who died a few months ago.

It was about this time of year. Not Christmas, but New Year’s Eve. I don’t remember the exact year, but it had to be somewhere in the years 1992 -1994. I know this because my office was in the basement of my home at the time. 

Christmas is important; New Year’s Eve, not so much.

It is rare for me to leave the house on the last day of the year. Normally I stay up late and read a book until midnight. I smile at the new year and go to bed. This New Year’s Eve would be different.

Around 11 I was snuggled into my easy chair with a book on my lap for the year in question. Mrs. Accountant was in bed and we had no children yet.

A loud scream interrupted my reading. I turned to look out my living room window to see a woman fall from the window of a car. She fell hard and lay curled like a child on the pavement. 

Earlier it rained, turning to freezing rain. The ice on the road had sharp dimples.

The woman cried as she lay in the roadway. She was half clothed and was not wearing shoes. If a car happened by she would be hit and killed, or worse.

I quickly put my book down and ran out the door. 

“You can’t stay on the road, ” I said to the woman as I reached her side. “If a car comes you will be hit. You need to get to the side of the road.”

She tried to stand. The cold, sharp needles of ice and a heavy level of intoxication made it difficult for her to move. I held her hand as she gingerly made it to the curb.

I questioned her about what happened. She stammered about her abusive boyfriend. 

Getting nervous he might come back, I encouraged her to let me take her into my home. She could not walk the distance in her condition so I carried her. I set her down inside the entranceway. She slid to sitting.

I told her I was going to call the police. She begged me not to call the police. “Call my brother. He will pick me up,” she said. She gave me the phone number.

“I have an office in the basement. I will call from there. I will be right back,” I said. I went to my office and called the police.

Within minutes the police were in my home and Mrs. Accountant was awake wondering what her husband has gotten into now. The injured woman ducked when she saw the red and blue lights. The police made her nervous. 

Paramedics came. The woman was helped. The boyfriend returned to the scene of the crime before the excitement was over. The police had a serious talk with him. Then, all was quiet. Like the moment on the highway 25 years later.

By now it was midnight. Time to say goodbye to the old year and welcome the new. 

But the story doesn’t end there. The gooseflesh part of the story is yet to be told.


A few months later I was deep into tax season and totally forgot about the prior New Year’s Eve’s event. A husband and wife client came in to drop off their taxes. They owned rentals and the husband even did some repairs and maintenance on my rentals owned at the time.

The wife started telling me this story about a tenant that was in an abusive relationship and was pushed from a moving car New Year’s Eve. “A kind man helped her, even taking her into his home and calling for help,” my client said.

A lump developed in my throat.

The client told me how the injured woman finally was able, due to the events of New Year’s Eve, to leave the abusive man.

I finally said, “I know about the woman pushed from the window of the moving car.”

“You do?”

“Yes. It happened between my driveway and the corner,” I said pointing in the direction of the road.

I paused, concerned about what my client would say if I told her my involvement. Finally, I said, “I was that nice man.”

We filled in details for each other on the woman’s situation for the next half hour before life once again returned to normal. Well, as normal as this accountant’s life ever seems to get.


What are the odds? I lived in the Fox Cites at the time. The metro area has something like 300,000 people. What are the odds a woman would be thrown from a moving vehicle in front of my home and that she would be a tenant of a client? How long are the odds I would help a woman in an abusive relationship before the year is out when less than an hour of the year remains? 

100%, it seems.

For some reason, everything we do comes full circle. You have experienced similar situations where one action leads to another that leads to another that brings you around back to the beginning. 

All our thoughts and feelings do not happen in a vacuum. What you say, do and even think, will play a future roll in your life.

And that brings us full circle in this blog post. Remember how I asked you to close your eyes and think of that wonderful time and place in your memories? Well, we are ending up at the beginning.

Father and child. One of the best memories you can have.

Christmas Every Day of the Year

In Huizinga’s quote he lays out the dichotomies in life from time past compared to the present. He states how in times past the highs and lows were much wider, and that only the experiences of “that joy and sadness still have in the mind of a child” comes close to the extremes of historical times.

How can anyone reading this even come close to knowing what it felt like to live as the middle ages crawled to a close? Can anyone in the room understand what it was like in 1918? With a war raging in Europe and a disease killing by the truckload? Not a chance.

Kind readers, even if you lived the pandemic I currently live in, it will be hard to fully grasp the world I describe. Your children and children’s children will have no clue what the world of 2020 and 2021 was like. The pain is so great many contemporaries deny the reality of what is happening. What is the chance a future generation can comprehend what we are living as I write these words?

Those memories of wonderful times will be different for each of us. They will not be the same as being there, of course. Like the stories above, there is no substitute for living heightened emotions of the time as they happen.

Yet, there are only a few things you can do that nobody can stop you from doing. Namely, you can control what you think, about how you interpret what happens to you and to others around the world. You control how you respond mentally, unless you give that up, allowing others to think for you. 

You can be forced to take a vaccine or refuse to take the medicine that ups the odds of ending the pandemic sooner.

You can wear a mask or rip the mask off another. The choice is yours.

You can act responsible, talk responsibly. This is not 100% in your control. People or natural events can restrict any physical action you take. 

But not your thoughts! What you think, how you think, that is up to you and you alone. You choose. The only way to loose that right is to give it away voluntarily. 

Marcus Aurelius reminds us: Feel as if you have not been harmed, and you haven’t. 

This is knowledge as old as the Stoics. It is their major tenet. We can learn a lot from wise people of history.


People are dying. They always have been. And in the end we are all dead. It is what we do in the interim that counts. Do we go to that special place in our memories? That place where life was carefree? Back to our childhood and Christmas Eve? Or do we give away the only thing we have complete control of?

Do we get vaccinated because it is the right thing to do or do we whine about our rights? Yes, vaccines are not perfect. But the vaccine will up the odds the pandemic ends sooner and that we survive if we get our virus lottery ticket. We also reduce the chance that we spread the disease. Do you come to the aid of an abused woman, pushed from the window of a moving car? Or are you the kind of person that worries about your comfort so much, that the abuser may return while you are present, that you turn your back and risk additional injury or even death to an innocent victim?

The same applies to wearing a mask, social distancing and other behavior that reduces infection risk.

The latest variant of the virus, omicron, is very contagious. More contagious than any pervious variant. The good news so far is that it seems to be less deadly. 

Still, old variants continue to roam the populace. And omicron still kills, if only at lower percentages.

You might get the infection. It may not harm you. But. . .

As every gambler knows you have to play to win. You only need one ticket to win the lottery. 


Merry Christmas

and a 

Happy New Year

to all.

Hold your dearest memories close and commit to doing the right thing as you create new memories.

It is all any of us really have.



More Wealth Building Resources

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

Blockfi pays high interest. (Currently 9%)

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

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

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

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

Recovering from Identity Theft

  • Identity theft has become a common problem in my tax office. Rare is the day when news of another data breach passes. 
  • Data thieves can open credit accounts in your name and more often now attempt to file a tax return in your name.
  • The sooner you deal with identity theft the better. Criminals keep on victimizing you until you discover their behavior and take steps to stop their activity.
  • You can take proactive steps to make it difficult for the identity thieves. These steps can prevent criminals from filing your tax return, opening accounts or stealing your money.

Identity theft is not a game. Serious damage can be done to your credit, reputation and wealth. Use this information to recover from ID theft quickly.

Identity theft went from a nuisance to a problem nearly everyone needs to address. It has become the number one question from clients this year as more people fall victim.

There was a time identity theft meant you did something wrong, exposing your personal data. A few simple precautions prevented problems.

Today it is rare for a day to go by without news of yet another data breach or ransomware attack. Through no fault of your own criminals can gain access to your personal data, account information (including login credentials) and tax returns.

There are no indications you are about to become a victim until the damage starts accumulating. Often times it is a call from your accountant saying your tax return was rejected with the IRS saying it was already filed or a bank declining a credit request.

A quick response is needed. The longer identity theft goes unaddressed the more damage that can be done. 

There are steps you can take to recover from identity theft. Some of these steps are good to take even if you have not been victimized as they prevent (or at least make it harder) to use your identity to open credit accounts or file your tax return.


What is Identity Theft?

Before we discuss how to recover from identity theft, we need to review the several flavors identity theft comes in. 

Personal Identity Theft

Personal identity theft involves someone you know. It could be a friend, family member, business partner or anyone with physical access to your data using the information without permission. 

Aggravated Identity Theft

In aggravated identity theft your information is used to commit a felony. Criminals no longer just look to steal your money, they look to commit crimes in your name. The consequences can be devastating.

Criminal Identity Theft

This is what most people think of as identity theft. Criminal identity theft is the use of another person’s Social Security number, credit accounts or bank information without permission. This includes filing your tax return without permission.

Medical Identity Theft

Your medical records and personal information are used to file fraudulent insurance or Medicare claims and to acquire prescription drugs. 

Criminal identity theft is rampant. Credit card fraud and the outright theft of money are the stock and trade of the ID thieves.

Recovering from Identity Theft

Contact Your Insurance

Most homeowners policies do not provide much identity theft protection. But some do so it is important to contact your insurance agent or carrier to verify how much help they can provide. Many homeowners policies provide coverage with an endorsement.

A few credit cards provide low-cost or even free identity theft protection. Since the time and cost involved in repairing the damage is large it is worth exploring resources available to you. Call all your credit cards to check what services they provide.

Services, such as Credit Karma, have monitoring services. Periodically check you records and sign up for free email alerts when someone tries to open an account in your name. Credit Karma might be the best deal going when it comes to monitoring your credit accounts. A basic Credit Karma account has no cost and provides a listing of your open credit accounts.


One of the easiest and fastest ways criminals victimize you is by filing a tax return in your name before you file your return. You can rest assured the criminals will claim children that are not yours and maximize all the tax credits they can think of. Then the IRS wants the money back. . . from you.

If your identity has already been stolen you will need to file Form 14039 (Identity Theft Affidavit) with the IRS if your information was used to file a fraudulent return in your name. You also use From 14039 if a dependent child had a fraudulent tax return filed under her name.

 It is vital you apply for an Identity Protection Personal Identity Number (IP PIN) from the IRS using Form 15227 or applying online even if you have not experienced identity theft. The IRS will issue a 6 digit number to you that must be included with your tax return.

Add a Fraud Alert to Your Credit File

Credit Karma can help with this. By adding a credit alert to your file banks will give added scrutiny to anyone trying to obtain credit in your name and Social Security number before approving a loan.

The fraud alert is free, stays on your file for a year and only needs to be reported to one credit bureau (that bureau will inform the other two credit bureaus).

File a Report with the Federal Trade Commission

File a report with the FTC if it is truly ID theft. A stolen credit card, for example, would not fall into this category. The FTC will supply the information to numerous police agencies around the U.S.

Inform Creditors and Banks of the ID Theft

It is important to also inform all your creditors and banks. This will flag your file so additional credit is not extended until the request is verified it came from you. 

File a Police Report

Police are limited to their jurisdiction in their ability to arrest criminals. Still, you should file the report in case someone in the U.S. or even locally is using your identity. 

Prepare all your documentation when file the report. The police will need this for their record and to assist in tracking criminal activity under your name.

Freeze Your Credit

A fraud alert is not enough. Freezing your credit prevents anyone from obtaining loans with your Social Security number, including you. If you need credit you will need to lift the freeze temporarily until you have been approved for the loan.

There is no cost to freeze your credit. However, you need to contact each credit bureau to place the freeze.

Tighten Passwords and Other Security

Simple passwords are so 1980s; reusing the same password across multiple websites is very 1990s. In the modern world where criminals are much more sophisticated and have powerful tools in their arsenal, it is vital to use complex and different passcodes on every online platform you have an account.

Shred documents before you throw them out. Keep your Social Security card in a safe place and do not carry it on you. Never place personal information on social media. 

Reconcile Your Bank and Credit Card Statements Every Month

As an accountant I am amazed at the number of people who do not reconcile their bank accounts monthly. When we handle the reconcile in my office we discover bank errors. On average, a bank account reconciled in my office contains two errors per year. We also catch fraud very early in the game. It doesn’t always have to be ID theft either. Sometimes it is embezzlement of company or personal funds.

Suspicious charges are an indicator your identity or the account involved has been compromised. You have 60 days from the statement date to report the error. Since most bank errors are in favor of the bank (in our experience), it is up to you to verify all your money is where it belongs.

Check Your Credit Report For Unusual Accounts or Credit Requests

There is no cost to get a copy of your credit report. is the official place to get your credit report at no cost from each credit bureau. There are many offers that say “free”, but those are not official sites and usually require you sign up for their plan that does have a fee.


Once upon a time I told clients they were generally safe if they used best practices when handling their finances. That is no longer the case. 

Rarely does a day go by without another data breach reported. Your information has been hacked multiple times already unless you are the luckiest person alive.

I encourage all clients to get an IRS IP PIN. Monitoring your finances also includes a Credit Karma review. You must reconcile all banks accounts monthly; you must monitor your credit report activity; you must use complex passwords and different passwords on every platform you have an account. 

Criminals are no longer interested in stealing small amounts of money. They want to peal off thousands, tens of thousands, each time they hook a victim. Do not be the low hanging fruit to victimize. The harder you make it the less likely you will be victimized.


More Wealth Building Resources

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

Blockfi pays high interest. (Currently 9%)

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

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

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

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

The Way to Wealth

Ben Franklin quote

Today we are graced with a blog post by a dear and close friend of mine, Benjamin Franklin. Ben is legend in his financial advice, especially as it applies to frugality and debt. You might even say Ben is the father of the current FIRE (financial independence/early retirement) movement.

What may strike readers strange is that Ben Franklin also retired early. He avoided debt as much as possible and paid off what he borrowed as soon as possible. He invested his excess funds in what he understood: print shops. Ben made a fortune at a relatively young age which allowed him to retire to a life of service to his country.

In 1758 Franklin published in his Poor Richard’s Almanac a preface in what was called Father Abraham’s Speech. In this preface he brought many of the wealth maxims of the almanac over the years together. The writing was so powerful it was later published as a pamphlet with the title, Way to Wealth.

Never before or since has such financial wisdom been shared. 

Unfortunately, Ben Franklin lived at a time when the English language was in flux. People just don’t understand anymore what, Many a Little makes a Mickle, means anymore. Caught between Early Modern English and Modern English, reading Ben Franklin is only slightly easier than reading Shakespeare at times.

The message is too important to leave to history unread and unstudied. Therefore, I have decided to translate Father Abraham’s Speech, aka, The Way to Wealth, from Early Modern English into Modern English. I hope you find Benjamin Franklin’s words as important to you as they have been to me. Enjoy.

Ben Franklin quote

It has been understood for a long time that the second million is always easier than the first. And that money has a habit of growing faster than you think.

The Way to Wealth

By: Benjamin Franklin (as translated by Keith Schroeder)

A government would be considered intolerable if it taxed people 10% of their time in service of the government. Yet idleness taxes many of us much more if we consider all the time spent checking email, our phone, social media and news feeds. All these activities add nothing of value to our lives or to those around us and is no worse than the government taxing you a percent of your time.

Idleness is harmful to good health. Medical research provides proof it absolutely shortens lives. Laziness, like Rust, destroys faster than Work wears things out. A used key is always shiny. If you want a long and fulfilling life, then do not waste time! From the richest to the poorest, all have the same amount of time in each day. Do not spend more time than necessary sleeping. The best did not become the best by sleeping in late. You will have plenty of time to sleep when you are dead.

If time is our greatest possession, then wasting time is our greatest crime. Wasted time is never returned. What we call “time enough” ends up as “there is never time enough.” And still we waste this precious gift. 

Knowing the value of time, we should treat it as the precious gift it is. We need to do the things we were created to do, and with purpose. Our goals are attainable if we remain committed. Laziness makes our goals more difficult to achieve, while hard work makes them easier. 

Greet each day early and with excitement. Starting your day late forces you to run hard all day, only to barely meet your day’s goals by late evening, if at all. 

Laziness travels slow. Poverty soon overtakes the lazy. Work your business; do not allow your business to work you. Yes, early to bed, early to rise, makes a man healthy, wealthy and wise. (That needs no translation.)

Hard work does not wish for success. Living on hope will ends in poverty. Stay motivated on the tasks set before you and you will achieve your goals.

There is no free lunch. Sometimes things will get very hard. There are no gains without the pains. 

If you have a business, trade or side hustle you must diligently work at it. Planning is vital. Work the plan. Modify the plan when needed. The same applies to early retirement goals. Build a plan and work it every day.

Luck favors the prepared and those who work hard toward their goals. Do not dream of winning the lottery or an inheritance from a rich uncle. God favors those who work hard. Perseverance is the mother of good luck.

Today is more valuable than tomorrow. One today is worth two tomorrows. If you have something that needs attention tomorrow, do it today.

You would be embarrassed if the boss caught you sleeping on the job. Much more important, never catch yourself wasting time or sleeping on the job.

Persistence works like magic. No raindrop will weather a mountain. Yet, storms over the ages wither a mountain to a plain. One swing of the ax will not fell a tree, but a steady rhythm eventually will drop the mightiest of trees.

Do I hear you say that I have provided no time for leisure? If you employ your time well you will have time for leisure. If you do not know what to do this minute, do not throw away the whole hour as well. Plan and prepare! Leisure is time for doing something useful! Persistent people gain this leisure; lazy people never. A life of leisure and a life of laziness are at opposite ends of the spectrum.

Work your business and financial wealth and your business and financial wealth will take care of you. If you have business to get done, do it now. If unable to do it now, hire qualified people to do it for you.

If you desire a faithful employee, one that you like; employ yourself.

Putting off your responsibilities leads to big trouble. Neglect routine maintenance on your vehicle and the vehicle is lost; without your vehicle the dream job offer is lost (or investment opportunity); without your dream job or the profitable investment opportunity, early retirement is lost, all because you neglected to maintain your vehicle.

Hard work is vital, but we must add frugality.

The cost of bad habits will cost you decades of retirement. You might think a $5 cup of coffee, or a soda, or a quick smoke is of no consequence. The latest gadgets, fancy clothes, cars and the latest iPhone may seem no big deal. But remember, many small expenses add up to one large one.

Be leery of small expenses. A small stone in a jet engine can crash a plane and the mightiest ship is sunk, even if slowly, from a small hole. Demand not luxury of everything or you will end up a beggar. Do not start building a home without a plan or you will make the investment and the wealthy banker will end up owning your home.

Buy things you don’t need and before long you will not have the money to buy necessities.

If you know the value of money, why do you beg for others to borrow you more?

Lying is only the second worst vice; debt is the first. 

Lying and debt are partners. Honest people put their integrity on the line when they are dealing with debt. The bigger the debt load the greater the risk to your integrity. 

Poverty drives meaning from a man’s life and destroys virtue. Even modern ears understand Ben Franklin when he said, “It is hard for an empty bag to stand upright.” Where there is poverty, there is crime. Poverty does not bring the best out of people. Wealth is man’s true flowering. Mankind is designed for wealth. We shine brightest when in possession of wealth.

In conclusion, experience is the best schooling you will ever get, but the price is high. Only a fool refuses to learn from other’s experiences.  If you can not take advice, you can’t be helped. Listening to the voice of experience is the surest way to avoid the painful lessons learned from experience.


More Wealth Building Resources

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

Blockfi pays high interest. (Currently 8%)

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

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

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

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

18 Tax-Free Sources of Income

Not all income is treated equal. Ordinary income is treated the worst by the tax code. Long-term capital gains are granted preferential tax treatment. And some income is excluded from income entirely. 

When planning for retirement or any financial goal, taxes play a vital role in how quickly the goal is reached. The more tax-free income you acquire the better.

The tax code in the U.S. taxes all income unless specifically excluded by the code. Many sources of tax-free income is limited in scope, applying to very unique and special situations.

The list below contains 18 sources of federal tax-free income. States usually follow federal, but may have more or fewer items of tax-free income. Every reader should find several types of non-taxable income available to them from the list. 

What is not on the list is phantom tax-free income. Loans are a prime example. Loans are not income! They are a liability. Cash-value life insurance is another tool sometimes touted as providing tax-free benefits when the touted tax-free benefits are a half truth (usually a form of borrowing your own money).

You can also save and/or print out a shortened version of the list by clicking the image below. Keep this handy guide close so you don’t miss any of the juicy opportunities for tax-free income.

18 tax-free sources of income. Click on the image to open in a separate page for easy download and printing. Note: This placard only provides the highlights. It is important you review the source material in the blog post for the details on the non-taxable source of income.

Credit Card Rewards

Credit card cash back and bonus awards are tax free. So are the airline miles. The IRS considers them a rebate, treating the bonus as a reduction in the price paid for the products and services purchased with the credit card.

If you enjoy playing the credit card game you might even get more cash back than you spent using the credit card. And it is still non-taxable.

WARNING: While credit card rewards are tax-free and not included in income or reported on your tax return, bank product bonuses are considered interest income. You will get a 1099-INT from the bank if you received a sign-up bonus for a savings or checking account.


Life Insurance Proceeds

If you are the beneficiary of a life insurance policy, the income is not reported on your tax return or subject to income tax. The proceeds must be from the death of the insured (§101). Interest paid on the proceeds after the insured’s death is taxable.

Life insurance might be included in the insured’s estate.

Accelerated death benefits are excluded from income if the ensured is terminally ill, where death is expected within 24 months. A physician’s certification is required.

Accelerated death benefits for the terminally ill, used for long-term care services, are also excluded from income. Per diem benefits over $400 per day in 2021 are included in income.


Insurance Claims

This one is tricky. What appears to be tax-free income might really be an adjustment to the basis of the property. 

What is clearly tax-free income from an insurance claim? Damages paid to you due to physical injury or sickness, including emotional distress related to the injury (§104(a)). 

Medical reimbursements not previously deducted are excluded from income. 

Insurance claims paid in excess of basis of the property damaged is included in income. A totaled auto is usually excluded from income unless the value of the vehicle increased since you purchased it and the claim exceeded basis. Vehicles used in business have a reduced basis; some of the insurance claim for property damage might be included in income.

Property damages to your home (fire, burglary) paid by insurance are excluded from income unless the payment exceeds basis or is used to replace the damaged, destroyed or stolen items. 

Note that insurance proceeds from lawsuits, like punitive damages, are included in income.


Health Savings Account

The HSA might be the best thing going in the tax code. 

If you have an HSA qualified health insurance plan you can make a deductible contribute to an HSA savings account. The contribution limit for 2021 is $3,600 for self-only coverage and $7,200 for family coverage. All gains are tax-free if used for qualified medical expenses. (Generally, if the medical expense can be claimed on Schedule A the expense is qualified for payment from your HSA.)

The HSA savings account can not be used to pay medical insurance premiums. But can be used to pay Medicare premiums when you reach age 65. 


Roth IRA and Roth 401(k) Gains

Roth retirement plans are funded with after-tax income, but grow tax-free.

Note: Contributions to your 401(k) can either be traditional or Roth. However, the employer’s match is always a traditional contribution.


Long-Term Capital Gains, Part 1

There is currently a high cap for long-term capital gains (LTCG) taxed at 0% ($80,800 for joint returns; $40,400 for single and married filing separately returns; $54,100 for head of household returns for 2021).

This means if your only income is from LTCGs in 2021, those LTCGs can be $105,900 ($25,100 standard deduction + $80,800) before you begin paying tax.

When other income is involved the amount of LTCGs in the 0% tax bracket is reduced. A back-of-the-envelope way to think of this is to add all your income, putting the LTCGs at the top. Any amount under the threshold is taxed at 0%. Some readers would be wise to tax-gain harvest if they have an unused amount of 0% tax bracket for LTCGs.


Long-Term Capital Gains, Part 2

If you want to get serious about avoiding taxes on your long-term capital gains, consider moving to Puerto Rico.

Long-term capital gains earned while a bona fide resident of Puerto Rico are exempt from federal income taxes. (Puerto Rico taxes may apply.) 

A bona fide resident of Puerto Rico can still work remotely and keep their investments and real estate in the U.S. as long as you don’t keep a tax home outside Puerto Rico. The catch is that you must be a bona fide resident of Puerto Rico. If you are interested in this tax strategy I recommend reading the link in this paragraph.


Foreign Income Exclusion

Up to $108,700 (for 2021) of foreign income can be excluded from income. You must be physically present in the foreign country or countries for at least 330 full days of 12 consecutive months.

Opportunity funds can still save your serious tax dollars by breaking the income into more than one year, converting short-term into long-term capital gains and, until the end of 2021, a 10% reduction in the capital gain.

Opportunity Funds

This tax strategy made a splash when the Tax Cuts and Jobs Act of 2017 first became law and is not heard of much anymore. That is too bad because there are still two serious tax plays to reduce taxes using opportunity funds (OF).

OFs are a way of deferring capital gains. No like-kind exchange is required. Simply invest the gains, or a portion thereof, into an OF within 180 days of realizing the gain and exclude that portion of the gain from your taxes. There is no income limit or limit on how much capital gains can be deferred.

A portion could become tax-free in five years with a bit more in seven years. The seven year window is closed and the five year window closes at the end of 2021, unless Congress acts to extend the deadline (not expected).

Also, OFs can turn a short-term capital gain windfall into a long-term gain. If the gains are invested in an OF within the 180 day window, the gain is deferred. If held in the OF for at least a year and a day you now have a long-term capital gain, along with the lower tax rate for such gains.

The second tax strategy is a timing issue. You are not required to invest all your gains into the OF. Therefore, you can have some of the gain taxed in the current year and the remainder in a future year of your choice up to December 31, 2026. At the end of 2026 the gains are added back into income regardless if you take your money out of the OF. 

You can read more about OFs here.


Employer Benefits

Smart employers compensate their employees with a litany of tax-free fringe benefits. The employee gets tax-free income while the employer gets a full deduction. Here are just a few of the possibilities:

  • Retirement plan matching or profit sharing
  • Health insurance
  • Noncash gifts such as a holiday ham
  • Up to $50,000 of group term-life insurance
  • HSA and MSA contributions
  • Adoption assistance
  • Qualified transportation 
  • Retirement planning services
  • Qualified dependent care benefits
  • Employee discounts of goods and services normally offered to clients
  • Education assistance

There is one more monster tax-free fringe benefit employers can offer for a limited time. The CARES Act expanded, and the Consolidated Appropriations Act extended, the education assistance benefit to include student loans through 2025. Up to $5,250 of student loans payments are excluded from the employee’s income while the employer enjoys the deduction. Note: Educational assistance is capped at $5,250 for all educational assistance, including student loan repayments.


Workers’ Compensation Benefits

If you are injured at work, the workers’ compensation paid for lost wages, medical expenses and settlement are excluded from income. This includes workers’ compensation paid to survivors. (§104(a)) 

Survivors of public safety officers killed in the line of duty receiving a government plan annuity exclude that income. (§101(h))

Sick pay and on-the-job injury for railroad workers is excluded from income. (§105(i))

No-fault car insurance benefits for loss of earnings or earning capacity are excluded from income.


Foster Care Stipends

Foster care stipends are excluded from income if there is no profit motive. Expenses are not deductible unless expenses exceed the stipend. The excess expenses are a charitable deduction.


Caring for a Disabled Family Member

The Caregivers Act provides resources to pay people caring for a disabled family member. The wages paid in such situations can be excluded from income. The disabled family member must live with you. 

This Medicare funded program attempts to keep disabled persons out of nursing home facilities and with their families. You will get a W-2, but no income will be listed, only the total payment in Box 12. 

The author has personal experience with this. Frequently you will receive a W-2 claiming the income as reportable. Have the organization paying the wage amend the W-2. Normally future W-2s will accurately show no income to include on your tax return. If the W-2 shows a wage and you can not get it amended, include it in your tax software and mark the W-2 as not included in federal income.


Disability Benefits

Generally, if you pay the premiums with after-tax dollars for a disability policy, the benefits are tax-free. If your employer pays the premiums the benefits are taxable. 

Tax-free income in retirement is the best kind. With a modest amount of planning, your tax liability can tax a serious hair cut.

VA Benefits/Military Pension/Social Security

VA payments to veterans and their families are excluded from income in the following situation:

  • Pensions for disability
  • Disability payments
  • Subsistence, grants, education, training, insurance proceeds payments
  • Dividends and death gratuity

Social Security benefits are either fully or partially excluded from income. Regardless of income, 15% of Social Security benefits are excluded from income. You can determine the amount of your taxable Social Security benefits here.

Generally, none of your Social Security benefits are taxable if your combined income is $25,000 and under for singles and heads of household; $32,000 for joint returns.

Up to 50% of benefits are included in income if your combined income is between $25,000 and $34,001 for singles and heads of household; $32,000 and $44,001 for joint returns.

Up to 85% of benefits are taxable if income is above $34,000 for singles and heads of household; $44,000 for joint returns. 


Scholarships, Fellowships and Tuition Discounts

§117 states amounts received by a degree candidate used for tuition and fees required for enrollment, books, supplies and required course equipment is not taxable.

Reduced tuition when the student or parent of student in an employee is not reportable income.

Reduced tuition paid to a graduate student performing teaching or research activities is not considered payment for services.

Degree candidates receiving amounts from the National Health Services Corps or Armed Forces scholarship program for tuition, fees, books, supplies, and equipment is not taxable, even if for services.


Municipal Bonds 

Municipal bond interest is not taxable on your federal tax return. However, the income can affect the taxability of other income in some instances (Ex. Alternative Minimum Tax)

Municipal bond interest is also excluded for residents of issuing states, with some exceptions.

Capital gains on municipal bonds are taxable.


Gifts and Inheritances

Gifts and inheritances received are not included in income. 

However, the giftor might be required to file a gift tax return.

If you inherit a traditional retirement account or non-qualified annuity you will include the income on your tax return when distribution are received.

Doing good can be good for your wallet. Some caregiver and volunteer work is excluded from income.

Volunteer Income

Most income from a volunteer organization is taxable income. There are a few exceptions:

  • Payments from the Peace Corps for living expenses
  • Supportive service payments and expense reimbursements received from the National Senior Services Corps programs or from the Service Corps of Retired Executives (SCORE)


As I researched this blog post I came across additional tax-free income opportunities. The 18 sources of tax-free income listed above were common enough to make the list. Non-taxable income is frequently very specific in nature. That is a blog post for another day.

Be sure to subscribe (link at the top of this post) and comment on which sources of tax-free income you use or ones that I missed.

As always, thank you for visiting.


More Wealth Building Resources

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

Blockfi pays high interest. (Currently 8%)

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

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

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

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

10-Step Map for an Early Retirement Plan

Retirement is the one universal goal. Some plan for a traditional retirement while others dream of cutting their own trail sooner. Early retirement is a worthy goal and achievable with a modest amount of planning.

There are 10 things to consider before you submit your resignation. If you cover each issue properly early retirement will fulfill your dreams. Poor planning could put you back into the workforce.

The map below is a handy guide for your journey. Click on the map to enlarge and print. This map, along with the information below, can have you enjoying early retirement in record time.

Map and considerations for Early Retirement


Retire to Something, Not from Something

The first step in your early retirement plan is to make clear your future plans. In my accounting practice I see people as they enter retirement and the aftermath. Those that do it right are happy, well-adjusted and have fun. Those without a proper plan age rapidly.

Your current pastime isn’t a plan. If you enjoy fishing or golfing or travel or reading… Fishing or golfing all day every day soon turns a pastime into a replacement for the drudgery of work. Tiger Woods has a job golfing. Unless your plan is to merely change jobs, you will need more.

Doing the same thing day in and day out becomes monotonous. Even the thrill of travel grows old for many. 

List all the thing you enjoy doing. Your list needs to be long so you have plenty of opportunity for variety. 

“Retire to Something” is in the center of your early retirement map because everything else revolves around it. Where you live, your social life, spending and daily life activities need a mixture. Of course, some activities will dominate. If travel is your passion you will naturally do more of that. Fishermen will wet a line frequently. Golfers will hit the links as often as the schedule permits.

The worst thing you can do is retire from a job. You may hate your job, but if the only goal is to leave said job, your plan is completed almost instantly. Now what do you do?

Standing around wondering what you do after you retire is a bad plan. Instead, retire to the life that excites you. I can’t tell you what that is. Only you can list the things important to you. Take time. Weeks if necessary to clearly outline what you most want in life. This is the foundation of your plan.


Income Sources in Early Retirement

Retirement from traditional work does not mean an end to income. 

Your liquid net worth is how you will fund your early retirement. Dividends, interest, capital gains, the sale of investments and other sources of income determine the liquid net worth level needed to pull the trigger on retirement.

Funding your entire retirement in advance is unnecessary. The 4% rule says you can draw 4% every year from your nest egg without running out. If your spending (see budgeting, variable spending and contingencies below) is $40,000 you need at least $1 million liquid net worth to retire. You actually need a lot less according to this article. 

Because you are planning an early retirement you likely will have more than just passive income. Perhaps you have rental income from investment property. You may find part-time work to fill part of your day. And side hustles are always an option. In fact, you may plan your early retirement around fulfilling a business goal, such as opening a restaurant or consulting business.

The higher your income in retirement, the less liquid net worth you will need to retire.


Budgeting Your Life

Some expenses go down, other up, when you retire early. Job related costs will decline. Hobbies, travel and activities you now have time to enjoy are new expenses that need to be accounted for.

Most people don’t want to spend a lot of time on a budget. Neither do I. To build a reasonable budget in under an hour add up normal monthly expenses: utilities, rent, taxes, mortgage, food… Once the key areas are covered, add another 15% or so for unbudgeted expenses. 

Add to your bare-bones budget line items for new activities that cost money: travel, books, entertainment, golf fees, fishing equipment… 

Entering early retirement without debt is preferable. If you have a mortgage or other debt, account for the expenditure in your budget. Debt is the one thing you can’t reduce unless you pay off the loan. The sooner you are debt-free the better.

If your budget shows a shortfall, consider these frugal tips to cut costs. Modest frugality can bring retirement home sooner and make managing your financial life in retirement easier.



My American readers know this is the most difficult issue when considering early retirement. Once you reach 65 Medicare kicks in. Until then you need to plan your medical insurance costs and medical expenses.

The news isn’t all bad. The Premium Tax Credit can pay for most or all of your health insurance costs. You will likely have a lower taxable income once you retire. That means you may qualify for the Premium Tax Credit.

Healthcare costs are lower in other countries. If you live abroad healthcare costs may become a minor issue. With more time available in retirement, you can plan medical checkups and procedures around travel plans. Medical tourism can cut your medical cost up to 90%.

There is also an alternative to traditional medical insurance. Health sharing is a growing field as more people look for reasonable options. You can read more here if this is something of interest to you.


Variable Spending

There are three phases to your early retirement spending. 

  1. Before Social Security and pension income
  2. With Social Security and pension income
  3. Required distributions from traditional retirement plans

Your savings will carry a heavier load until Social Security benefits begin. Keep in mind some expenses, like medical insurance, get more expensive as you age. Plan for higher insurance and medical costs by age.

Social Security covers many of your expenses, reducing the demands on your savings, once it benefits begin. 

Once you reach 72 the IRS requires you start taking money from your traditional retirement accounts.

Taxes also play a role. Property taxes generally go up over time. Renters also face rent increases. The good news is that taxes go down with a modest amount of planning. This blog is filled with ways to reduce your tax bill; don’t be afraid to use this blog as a resource. Take advantage of the 0% tax rate on long-term capital gains under the threshold. Only profit from asset sales is added to income so it easier to qualify for the Premium Tax Credit. 

Your plan needs to include a heavier draw from personal resources prior to Social Security. It is okay to draw down funds faster than the 4% rule early on as Social Security will cover a portion of expenses later. 


Bucket List

Now that we have the money issues out of the way we can focus on the fun stuff we want to do once we ring the bell on traditional labor.

A bucket list is vital. A good bucket list takes time to develop and evolves over time. List all the thing you want to do, the places you want to see. 

Now prioritize your list. What is a must-do, must-see item? Mark all those with a “1” or “*”. 

Remove items that sounded good when creating the list, but really don’t excite you. (Yeah, it would be great to skydive, but on further thought, I’m not dying to do it. (Pun intended.)) The opportunity may arise where you get to zipline or skydive or whatever is on your list but not marked as urgent. The goal is to have a ready list of priority items you want to do.

Edit your list as necessary. You are allowed to change your mind as often as you want.

Arenal Volcano, Costa Rica. Surprisingly, I slept well the night we spent at the foot of the active volcano.


Rent or Own

Renting or owning your living arrangements will reflect heavily on your budget. Owning requires more time and possibly more expense. Renting is usually cheaper because you rent a smaller space than you buy.

Do you like tending your yard? Household maintenance? If not, a condo or renting may be the better choice. 

Owning a home also brings mortgage considerations into play. 

Budgeting for rent is a simple one line entry. Home ownership requires a sinking fund or adequate resources for roof repair, property taxes, furnace, AC, etc.

There is no right choice. You can even change your mind later. Just consider the responsibilities with owning or renting.


Domestic or Abroad

Where you live makes a difference in your cost of living. The cost of living within the United States varies widely. The coasts and parts of Colorado will put a heavy demand on your financial resources. Interior parts of the nation have a lower cost of living. 

Living abroad can offer an even lower cost of living. It has to be something you want to do and the location makes a difference. Paris might not be the best low-cost choice.  Costa Rica might make the list.

Research each location you are considering. Due diligence is required. Review the cost of living, laws, culture. With rare exception, renting is better than owning when living abroad. If you do plan on owning property in another country, be sure to consult with a legal professional competent in the laws in the location you are considering. An extended vacation in the location in question is also a good way to get a feel for what life will be like living there. Internet, food and security will be different than you are accustomed to.

Making new friends is the best part of early retirement.

Making new friends is the best part of early retirement.

Social Life

Early retirement has some disadvantages. Most of your friends and acquaintances will still be working. They will have less time than you to explore exciting activities.

Traveling allows you to meet new people. You may also miss people back home. 

Considerations: Will you make new friends for new activities? Is volunteering something you enjoy?  Who do you want to spend time with?

Your social life will be radically different from when you worked a traditional job. What was an activity you looked forward to to unwind is now just another part of the day. Keep you mind focused. Build a schedule. The comradery found in a work environment can be replaced with new relationships.  

People tend to build friendships with people near their age and with a similar background. Early retirement allows you to break through this border and create friendships with people of different backgrounds and age. Done with an open mind, this one benefit or early retirement can provide massive amounts of learning and pleasure. Old people can be a lot of fun when you get to know them.


Contingency Planning

Our final point in planning for early retirement is a warning. Life will happen. How will you handle unlimited time with family and friends? 

The kids still need an education and a chance to grow up and live their lives. If children are involved there are additional considerations. How will they complete their schooling? Are medical services for children available? What about your children’s friends? Are your children on board with the lifestyle change? 

Illness or the death of a significant other is a possibility. Serious illness will lay a heavy burden on the non-ill partner. Prepare a plan for potential issues. Current medical condition plays a role. In the case of death, the deceased needs to come home. That is an unplanned expense. Illness and death need addressing prior to travel or living abroad. Involve family and friends back home. 

Give consideration for financial loss. Theft or a market decline can shift the dynamics of your early retirement plan. Build a cushion into your plan. Don’t put all your eggs in one basket. A theft of a financial account should not be your entire financial resources. 

Your contingency planning will grow and evolve with time. Your personal situation is unique to you. You may need certain medication. That requires additional planning. Bills can be set on auto-pay. Insurance can play a vital role in protecting you at home and on the road. 

Plan for the best, prepare for the worst.


Every road map needs flexibility. Road construction requires a change of course. An early retirement map needs just as much flexibility. I can give you the skeleton to build on, but you need to fill out the flesh and blood.

I can’t, and shouldn’t, tell you what to do. Your plan needs to be you. All I can do is provide a framework and ideas. 

And always change your plans as your situation and interests dictate. You are not wedded to your first plan. There is a reason why quality work has a pile of editing under the hood. With a flexible plan early retirement is more than a dream; it is your reality.


More Wealth Building Resources

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

Blockfi pays high interest. (Currently 8%)

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

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

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

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

Form 3115: Applying a Cost Segregation Study on a Tax Return

  • In this article we will discuss how to apply a cost segregation study on a tax return.
  • We will show the step-by-step process of applying a cost segregation study in the year a property is purchased. 
  • We will show the detail on applying a cost segregation study on property owned and placed in service prior to the current tax year.
  • Example filled-in Form 3115 and other tax return forms provided for reference. 
  • Depreciation adjustments and catch-up calculations discussed with examples provided.

This blog post is designed as an example on how to apply a cost segregation study on a tax return. It is recommended you bookmark this page for future reference if you prepare tax returns with a cost segregation study. Filled-in forms with examples are used as a reference to help you prepare an accurate return when a cost segregation study is involved.

All images enlarge in a second window by clicking on them. You may print out the images as a helpful tool in preparing your tax return. You can make calculations right on the printouts. This post will be updated when the rules change for cost segregation studies; refer back to this page anytime you deal with cost segregation. 2020 tax forms and the latest release of Form 3115 were used in the examples in this post. The tax forms will not be updated unless the reporting rules change.

If you want to learn more about how a cost segregation study works and how much it can save you in taxes you can review this post  and here if you want a very short review on how to apply a cost segregation study on a a tax return.


The Cost Segregation Study

A cost segregation study can run 30 pages or more. For tax preparation purposes, the pages you are interested in are the Cost Detail and Cost Summary pages. Depending on the property, there can be multiple pages in the cost segregation study that apply to these different area of the property. Example: there might be a Cost Summary and Cost Detail page for the apartments on the property and a summary and detail for a detached garage area. 

The example used here has just one Cost Detail and Cost Summary page. If multiple pages exist you just need to go through the process in this post for each detail/summary.

This is what a cost summary will look like in a cost segregation study. The summary will only show the depreciable assets; land is not depreciable and is therefore usually excluded.


The Cost Summary page in the cost segregation study is straight forward. It lists the total building cost with an allocation between class lives. 

This is enough information to complete an accurate tax return. However, the Cost Detail also plays an important role.


The Cost Detail breaks each class life down to each component. This is important information you will need if any component is taken out of service or replaced.


Some tax professionals like to use the depreciation adjustments used in this post on every item of each class life. This is helpful when a component is taken out of service or replaced.

Example: If a roof or flooring are replaced before the asset is fully depreciated the remaining basis is deducted at that time. If you entered each component separately the process will be easy. If not entered separately you will need to keep a note in your files, along with the Cost Detail, to handle the calculations of replacement when they occur. 

Many times replacing a roof or flooring is a repair expense instead of an improvement. This allows for a deduction for the current expense, plus the additional deduction for the remaining basis of the property replaced. This is another benefit of a cost segregation study.


Filled-in Form 3115

The biggest question I get from readers involves Form 3115. Few tax professionals have seen a cost segregation study or only a few over their career. Filling out Form 3115 to deal with the change in accounting method can be daunting. 

Form 3115 is 8 pages. The good news is that you only need to fill out four of them. 

Form 3115 is sent along with your tax return and the depreciation adjustments from the cost segregation study; the change of accounting method is automatic. The IRS will not respond when Form 3115 is filed unless there is an issue. You must attach a copy of the cost segregation study with the tax return. 


Form 3115, Page 1 filled in.


Page one of Form 3115 asks for basic taxpayer information at the top. My example involves an individual, but the same application applies to entities. Be sure to indicate if you are an individual, partnership, corporation or one of the other designations. On the right check the “Depreciation and Amortization” box.

Part I and II have questions you need to answer. You only need one DCN if the only issue is a cost segregation study — code 8 — because you are going from a permissible method to another permissible method.


Form 3115, Page 2 filled in.


Page 2 of Form 3115 contains more questions. My answers are the most common. Some questions do not apply. Adjust your answers to your personal situation as needed.


Form 3115, Page 3 filled in.

Page 3 of Form 3115 is also questions. As my example shows, only two questions need answering. Part III does not apply to cost segregation studies. 


Form 3115, Page 8 filled in.


Pages 4-7 are left blank on Form 3115 when a cost segregation is the only issue. 

The top of page 8 also does not need to be filled in for cost segregations. Schedule E on Form 3115 does need questions answered. I listed the most common answers. Pay attention to Question 4b. If you lived in the property before renting it you need to indicate so.

Question 4a requires a statement. My software generates this statement automatically. Attaching the cost segregation study probably is enough, but I always include the statement shown below.


Form 3115 filled in, statement.


Depreciation Adjustments When Applying Cost Segregation

I encourage you to print out the images in this section. They provide everything you need to complete an accurate tax return with adjustments reflecting a cost segregation study. It might also be helpful to print out the Cost Summary and Cost Detail presented at the beginning of this post. 

These are the facts used in our example.


We start with basic information. The property was purchased and placed in service at the beginning of 2014 and the cost segregation study will apply to tax year 2020. 

The tax return will look like this without the cost segregation study:


Schedule E without the cost segregation study applied.


And the depreciation schedule:


Depreciation schedule without the cost segregation applied.


Now we need to make adjustments to reflect the cost segregation study. Prior to the study the entire building was depreciated over 27.5 years, straight line. The cost segregation study allows us to depreciate $85,600 over 5-years and $6,893 over 15-years. These amounts reduce the amount of 27.5-year class life property to $266,816.


Adjusting the amounts depreciated in each class life.


This information is provided by the cost segregation study. See the Cost Summary and Cost Detail above.


Adjusting the original depreciation between class lives.


We need to know how much depreciation should have been used in each class life if cost segregation was applied from day one. Setting our example with a property purchased January 1st simplifies our example. You will need to adjust for depreciation based on months rather than our simplistic 6-years of ownership before the cost segregation study if any other date of purchase is involved.

Our accumulated depreciation would be as follows if cost segregation were applied from the beginning:

27.5-year Class Life:

$262,816 / 27.5 = $9,557

$9,557 x 6 years = $57,342

15-year Class Life:

$6,893 / 27.5 = $250.65

$250.65  x  6 = $2,502

Because I rounded numbers there is a small error that I account for in this class life. The difference is $2 and reconciles with the actual previous depreciation claimed.

5-year Class Life

$85,600 / 27.5 = $3,113 x 6 = $18,638


The new depreciation schedule will look like this:


The final depreciation schedule after cost segregation is applied.


We need these numbers to determine how much prior depreciation to apply to each class life and calculate our catch-up depreciation for the current year. 


The final adjustments to depreciation from a cost segregation study.


Our last step is determining how much additional depreciation to claim the year the cost segregation study is applied when cost segregation wasn’t applied in prior years.

The easiest part is the 5-year property since all the 5-year property should have been depreciated by this time. The remaining basis is a deduction:

$85,600 – $18,678 = $66,922

The $18,678 comes from our calculation above where we allocate depreciation from the 27.5 class life to the 5-year class life.

The $66,922 is added to the current year’s depreciation.

The 15-year property is only partially through its depreciation schedule.


Depreciation table for 3-, 5-, 7-, 10-, 15- and 20-year class lives.


As you can see, only 48.81% of the 15-year property should be depreciated out at this point, including the current year depreciation.  Note that we claim the current year of depreciation as well since we will use this number to override the depreciation calculated by the tax software The math is as follows:

$6,893 x 48.81% = $3,3433

$3,3433 – $1,502 = $1,931

The $1,931 includes the current year’s depreciation.

Your tax software will handle the depreciation for the 27.5-year class life. The depreciation schedule above listing cost segregation shows the current year’s depreciation deduction. 


Schedule E after the cost segregation catch-up depreciation is applied.


The tax savings can be substantial as the before and after Schedule E show. 

That is all there is to it. Follow this guide to simplify the application of cost segregation to a tax return.


If there is anything I can do to clarify the process, let me know. A comprehensive guide has been needed for a long time online. My goal is to have this page as the go-to resource when dealing with cost segregation on a tax return.





More Wealth Building Resources

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

Blockfi pays high interest. (Currently 8%)

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

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

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

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

Good Insurance vs Bad Insurance

All insurance is a waste of money until it comes time to file a claim. The trick is in determining which insurance is good, protecting you from serious financial harm, and the bad.

When I talk about good and bad insurance I’m not talking about fraud or an insurance company acting in bad faith. What I mean when defining the quality of insurance is the value it brings in protecting against loss.

In most cases, people want the least amount of insurance possible without putting themselves at risk of a financial loss that would destroy them. Auto insurance has a minimum requirement in every state. However, some states allow you to opt out. For example, Arizona allows you to provide a bond, certificate of deposit or deposit cash with the DMV for the minimum coverage levels in lieu of actual insurance. Another example is Virginia where you can opt to register as an uninsured motorist for an annual fee as long as you have a clean driving record.

Lenders require insurance on assets they have as security. There is no insurance requirement for any real estate you own unless the property is mortgaged. 

Then we get to life insurance. There are strong feeling when life insurance is discussed, except it isn’t that simple. There are times life insurance products are powerful tools in wealth preservation. All too often life insurance is used incorrectly. We will explore where value exists with life insurance.

Most insurance is neither all-good nor all-bad, though there is more all-bad insurance than you might expect. Most falls somewhere in the middle. To gain the greatest value with the least expense requires a modest understanding of what each type of insurance covers and a modest amount of simple math. That is how you keep your insurance costs low and protection high.

You want good auto insurance should the need arise to file a claim. But too much or the wrong insurance is wasted money, or worse, lack of coverage when needed.


Good and Bad Auto Insurance

We will start with auto insurance since it is practically a requirement if you drive. 

State laws require a minimum level of insurance. Auto insurance is highly regulated in each state to protect lenders making auto loans and to protect those injured in an accident. 

The issue of good and bad insurance with auto coverage involves the various facets of the policy.

Collision: No state requires collision or comprehensive coverage, but lenders do. If you don’t have a loan on a vehicle you can eliminate this insurance expense.

Should you? There is a very small amount of math required in determining if insurance coverage is worth it. 


Value of vehicle: $20,000

Premium per deductible:

$5000: $500 per year

$1,000: $1,250 per year

$500: 2,500 per year

(Keep in mind insurance premiums vary widely between geographic locations, the age of the insured driver and driving record. The above example numbers are not meant to be indicative, but rather instructive.)

First, the most you can lose if you total your vehicle is $20,000. Second, the larger the deductible the lower the premium paid. 

Your financial standing plays a role in how much collision coverage you should buy. If you have a seven figure net worth you may choose to forgo collision coverage all together regardless the value of the vehicle. You may have no real choice but to buy lower deductible coverage if you don’t have the resources to pay for a $5,000 deductible or if the lender requires a minimum amount of collision insurance.

I want to look at this from a purely financial viewpoint. A $500 premium for a $5,000 deductible means you will need to have a greater than $5,000 claim every 10 year to come out ahead. Insurance companies are not stupid. They sniff out risk better than a bloodhound. If you have frequent claims it is unlikely the premium would be so low.

A good rule of thumb (though not for everyone) is not to have collision on a vehicle worth less than $5,000. The accountant in the room hasn’t had collision coverage for decades. Since I haven’t had a claim in forever it has been a good deal.

Where the tire meets the pavement is between deductible levels. The premium is $750 per year more for a $1,000 deductible than a $5,000 deductible. When looked at correctly, this means you are paying $750 per year for an additional $4,000 of protection. 

See the issue? In just over 5 years the premium pays the entire $4,000 of additional coverage. You either have a lot of accidents or you are better off with the higher deductible.

It gets worse with the $500 deductible. Now you need to file a claim more than once a year for the insurance coverage to pay off.

My example is extreme, but it illustrates nicely how you should calculate the level of insurance you really need.

Comprehensive coverage, if listed separately, should be calculate the same way. 

I’m not here to tell you how much insurance you should or should not have. I want you to understand the math so you can make the best consumer choice for you. The simple example above helps you optimize your coverage while keeping premiums as low as possible.

Liability: There are two forms of liability insurance required by most states: bodily injury and property damage. Bodily injury cover someone else’s injuries if you cause the accident; property damage is damage to the other person’s property, such as their vehicle.

Here is where the math goes out the window and risk is the primary concern. Wrongful death gets expensive fast. Same with medical bills if someone is injured. If you cause an accident, even if unavoidable, your liability risk can destroy almost any lifetime of savings. Something as simple as a slick road due to black ice or fog can put you in jeopardy. 

The more you have to lose the more liability coverage you will need. Laws differ by state so it is important to have a serious discussion with your insurance agent. They get paid when you buy a policy. Be sure to discuss your situation fully with this person to verify you have adequate coverage and that you are covered for what you think you are. You may even wish to have an umbrella policy in addition to your regular auto insurance. 

Liability and collision are the expensive parts of an auto policy. The best way to save money is to have a clean record: no traffic violations or accidents.

Underinsured (UIM) and Uninsured (UM) Motorist: This is the area where price shopping can get people in trouble. Agents can shave a few dollars off the premium to beat the competition by quoting the minimum requirements for UIM and UM. This can be a huge mistake!

UIM and UM are generally pretty cheap. Jacking the coverage to the same level as your liability coverage can be as little as a few dollars per month. You don’t save a lot by skimping on UIM and UM, but you will be surprised what you risk

Why is UIM and UM important? First we need to review who is covered by each area of the policy. Liability coverage protects them. In other words, your liability coverage deals with injuries and damages to someone else. UIM and UM protects you when the other guy has inadequate insurance and is at fault!

What does this mean? The best way is to look at an example.

A highly intoxicated driver runs a stop light and hits your vehicle, killing the intoxicated driver and your significant other in your car. The intoxicated driver is uninsured. Your insurance liability coverage deals with the intoxicated driver’s death and vehicle damage. Like most drivers, you have ample liability coverage so you come out of any litigation with no financial damages since the insurance company paid the claim. The family of the intoxicated driver stands to gain well into the six figures in damages for wrongful death, depending on the state where the accident occurs.

You, however, are covered by your UM because the intoxicated driver in uninsured. Since you have minimal coverage ($25,000 in many states) you may get a claim payment barely enough to pay for the funeral. This is why I strongly feel UIM and UM coverage should be as much as the liability coverage. Anything less and you are putting a higher value on the life of a stranger over family and friends.


There are more types of auto coverage, like medical, to consider. You can dig deeper into the details here if interested. 

Homeowners insurance is for more than fires, natural disasters or burglars. Good homeowners insurance provides large amounts of liability protection for a variety of risks.


Good and Bad Homeowners Insurance

Here are a few tips when reviewing your insurance covering real estate owned. 

First, the liability issues above still apply here. No state requires you to have homeowners insurance; your mortgage lender will. 

Once again I remind you that liability coverage is only one part of the insurance protection. Underinsured and uninsured is still in play.

Most people think homeowners insurance covers you if your house burns down or hail destroys your roof. And that is part of what your policy should cover, depending on the coverage purchased. 

Deductibles come into play. Generally, a higher deductible is favorable since it has lower premiums. Homeowners insurance premiums usually have smaller discounts for higher deductibles. Going from a $1,000 deductible to a $10,000 deductible may save so little you may wish to purchase the lower deductible policy anyway. A single claim could cover the entire additional premium cost for many years.

There are several types of homeowners policies available. You can review what each offers here.

Here is why homeowners insurance is necessary in my opinion. A slip and fall on your property can expose you to serious liability risk. There are a thousand ways something can happen on your property that makes you liable. You might have plenty of money to rebuild your home, but an extended lawsuit can leave you exhausted and broke. Just having the insurance company take care of the legal costs and hiring attorneys to defend you can be worth the price of the policy.

Once again, your homeowners insurance agent is someone you need to talk with. The default for most people is an HO-3 policy. You might need to consider riders. Review the difference between deductibles. Some coverage may not be worth it. Example: additional roof coverage in southern states that experience frequent wind/storm/hurricane damage can be so expensive that you would need a total loss more often than ever 10 years. 

Your financial situation will help you determine what risks should be mitigated and which to assume yourself.


Good and Bad Life Insurance

Nothing gets the dander up faster than a discussion of life insurance on a personal finance discussion board. Some hate all life insurance and some think it has value. The truth is somewhere in the middle.

Term Life: Let’s start with term life. It is cheap when you are young and provides a fairly large benefit. The problem is that is gets very expensive when you get older. It is considered temporary insurance for a reason.

Who should have term life insurance? Young families come to mind. If a breadwinner in the family dies there can be serious financial issues for survivors. 

Single premium term insurance also plays a role in tax strategies such as in charitable remainder trusts

Business owners can use a buy-sell agreement to protect all the owners of an entity. Term life insurance is cheap enough to cover all parties involved and if one happens to die the funds are available for the remaining owners to buy out the deceased’s ownership. This avoids having to deal with beneficiaries of a business partner or a complete stranger if the ownership is sold to a third-party.

Who should not have life insurance? It is my opinion that single people without dependent children probably do not need term life insurance. If no one depends on your income stream who is the life insurance protecting? When this is the case it is better to save the premiums paid.

Cash Value: Cash-value life insurance gets most of the complaints in the personal finance discussion groups and for good reason. Fees are high and if you really do the math, cash value is usually a really bad idea for a savings or investment account. 

Business owners sometimes use cash value life insurance to protect their business. Key Person and Key Employee policies are powerful tools to protect a firm with indispensable persons, such as an owner or employee with specialized skills.

The baby should not go out with the bath water. Cash value life insurance is an appropriate tool in the right situation.

Annuities: Annuities also get a bad rap in the personal finance discussion groups. Fees are once again high. Annuities protect on downside risk, but cap the upside by a significant amount, depending on the policy purchased.

However, there are instances where annuities are the preferred tool.

A Medicare complaint annuity can shelter monies from the look back rules. Generally, monies can be sheltered if the Medicare compliant annuity is funded prior to entering a nursing home. The rules are complex and we don’t have the space to discuss all the details here so I will allow you to further your research here

Annuities can also be used in several tax strategies such as NIMCRUTs

Business owners can also utilize annuities in a tax advantaged manner, as discussed above under term life insurance. 

Annuities can be used for asset protection.

(As full disclosure, the author had a life insurance license in Wisconsin for over 20 years. I did not renew my license about 5 years ago since I did not sell much life insurance and did not want to be restricted in what I could say in this blog.)

Now that you are aware of my life insurance credentials, I want to share an instance where I think an annuity is appropriate. 

I had a client entering retirement many years ago. His health was good, but his family history wasn’t favorable. He wanted a certain level of income now with a higher income income later when his wife retired. He also wanted to guarantee a certain level of income for his wife should he die young.

The solution for guaranteed income was a series of annuities. We started with an immediate annuity (a low commission product so it at least had reasonable value) that paid out for five years before being exhausted. This provided the monthly income stream for the early years.

The remainder was placed into two additional deferred annuities. The first of these was triggered in five years when the first annuity was exhausted. It was a second to die policy so the income stream covered the client and his wife. An inflation rider was added so income is keeping up with inflation. The final deferred annuity was an emergency fund. If they ever needed a larger amount of cash or wanted a larger income stream they had options.

As you can see, some people have a situation where an annuity is a reasonable choice. My client was set on having an annuity. I spent considerable time with my client explaining how this strategy worked because once done there was no going back. So far it is working according to plan.

Life insurance is not designed to protect you. It is designed to protect them. Know when life insurance is a good choice.


Bad Insurance or Just Plain Junk

My head hurts when I think about some of the stupid insurance people buy.

Top of the list is the insurance to cover small purchases. If you buy a $100 item you do not need to pay $20 insurance to protect it. Many credit cards protect the item for free if the item is purchased using that credit card. And if you can’t fix or replace the $100 item without the insurance you can’t afford the product in the first place.

Since there is so much junk insurance out there (think of the extended car warranty scam phone calls everyone gets). Most of this stuff is completely junk with profits sometimes as high as 98%. Yes, some of these junk policies (assuming they are not a scam or fraud) pay out as little as 2% of premiums in claims.

A good rule of thumb is that small levels of insurance are not worth it. 

Another bad insurance is dental. Some dental insurance is good, but much of it is a disguised discount only. In other words, you pay less for a dental cleaning and so forth if you buy the insurance. If you have a large dental expense it may work periodically. However, these policies are designed to only work if you come back to the dentist often! And you still pay most of the bill; the insurance is really only a discount! Dental insurance can work in some instances, but usually is self-serving for the dental practice.

Any insurance that covers something you’re already covered for is bad insurance. Credit and debit cards come to mind. Most credit cards have a long list of benefits. Some replace an item if broken or stolen within a year or two. My credit card covers cell phones that are broke and good thing. A few years back I bought a new phone and an ice patch at the office had me fall square on my phone with all my weight, crushing it. The credit card company covered the whole thing at no cost to me.


Good Insurance

Disability insurance is expensive, but can save a family struggling financially.  If you don’t have the resources to live through an extended disability this type of coverage can protect your hard-earned nest egg.

Long-term care insurance is good for certain situations. If you are really poor it probably isn’t necessary (what can they take if you don’t have financial resources) unless you want the ability to choose a better long-term care facility. If you have a high net worth you can self insure.

It is those folks in the middle most at risk. A $300,000 net worth, for example, can be severely damaged if you end up in a nursing home. A few years of this and there is no nest egg. If you have a spouse or others counting on your legacy it is best to protect it.

Life insurance is a powerful tool in estate planning. The number of policies available is large. You need to work with a qualified tax and accounting professional along with a qualified estate planning attorney when estate planning. The issues are many and complex.

The cheapest and best insurance usually protects against rare occurrences, but when they happen are high ticket items, taking you out financially. The goal is to avoid the train wreck. A broken laptop should not be a major catastrophe requiring insurance coverage. A $100 toy certainly does not require insurance! But a $1 million lawsuit is a life changing event. You might want to protect against that.


Common Sense

When it comes to insurance common sense goes a long way. Junk insurance like the stuff you get offered at Amazon or Best Buy when purchasing a cat pillow is insane. And the premiums are frequently 20% or more of the product price. Are these things built to fail before the manufacturer’s warranty expires? 

Intelligent insurance purchases take a small amount of math as you saw at the open of this blog post. I help clients in my practice on a regular basis decide what insurance and deductible level that is most appropriate for them. One size does not fit all. It always comes down to some simple math.

Shock insurance, the stuff that gets offered to you at the spur of the moment where intelligent people would not even expect to be pitched, is the worst. I avoid insurance offers that come to me.

Always shop around. Get a few quotes from highly rated insurance companies. Get the best policy for your needs and no more. If you don’t want to overspend on insurance, avoid insurance you don’t need. 

As always, use common sense. Talk to the insurance agent when shopping for auto, life, long-term care, disability and homeowners insurance. They get paid to help you make a proper choice. If you don’t ask they will sell whatever you ask for and cash their commission check. Good agents want to talk with their clients. Don’t push them away. It is their job to help you.

And always do some independent research. This blog post is a good start. Check prices and what policies cover. Doing research when you need to make a claim is not research; it is reacting. That is the wrong way to do it.



More Wealth Building Resources

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

Blockfi is currently paying 7.5%.

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

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

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

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

Winning With Benjamin Franklin’s Virtues

$100 bill. Benjamin Franklin.

Benjamin Franklin might be the most important of the Founding Fathers. His steady hand and silence shouted more than hours of oratory. When younger minds became heated at the Constitutional Convention, Franklin sat quietly until it was obvious the attendees were at an impasse. Franklin, silent during most of the proceedings, suggested a break. Gently, he spoke with several delegates during the pause in the debate. Cooler minds returned and a nation was formed. It is fair to say the United States of America owes its existence to the virtues of a single man. 

Ben Franklin knew he was not perfect by any stretch of the imagination. As a young man he set out to make himself a better person. He learned and shared sage advice still relevant today. At the core he listed 13 virtues he felt were important to master. They provided the formula for happiness, wealth and success.

Long before the modern FIRE (financial independence/retire early) movement, there was Benjamin Franklin. I learned from Franklin that retirement is overrated if you find those things you love to do and keep a healthy level of curiosity in your life. Unhappiness breeds the desire for retirement.

Winning at life, in marriage, financially, in your health, spiritually and physically were covered by Franklin. It was simple to set up, yet difficult to follow. Franklin, fully aware of his shortcomings, listed the virtues he wanted to uphold. Then he held himself accountable each day; never beating himself up for failing, but gently encouraging improvement each and every day.


Ben Franklin’s 13 Virtues

The best place to start is by listing the 13 virtues Franklin considered so vital. After this I will share a worksheet you can print and use for your Virtues Journal. Then I will share some of Franklin’s wisdom before finishing by sharing a program that provides the framework needed to maximize your study of these virtues.

Temperance: Eat not to dullness; drink not to elevation.

Silence: Speak not but what may benefit others or yourself; avoid trifling conversation.

Order: Let all your things have their places; let each part of your business have its time. (Author’s note: I take this to mean to stay focused on the task at hand. I doubt Ben would have been a fan of constantly checking email or smartphone.)

Resolution: Resolve to perform what you ought; perform without fail what you resolve. 

Frugality: Make no expense but to do good to others or yourself; waste nothing. 

Industry: Lose no time; be always employed in something useful; cut off all unnecessary actions.

Sincerity: Use no hurtful deceit; think innocently and justly, and, if speaking, speak accordingly.

Justice: Wrong none by doing injuries, or omitting the benefits that are your duty.

Moderation: Avoid extremes; forbear resenting injuries so much as you think they deserve.

Cleanliness: Tolerate no uncleanliness in body, clothes, or habitation.

Tranquility: Be not disturbed by trifles, or at accidents common or unavoidable.

Chastity: Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another’s peace or reputation.

Humility: Imitate Jesus and Socrates.

Feel free to download or copy this Ben Franklin virtues poster.

It should be noted than Franklin fell short by his own admission most days. Temperance (drinking intoxicants) seemed to be a struggle. 

The goal is not perfection; the goal is to be aware of weaknesses and improve consistently over time.

Now to track our progress. 

Print out a page for each week. Place a dot in each location each time you go against the virtue. You can have multiple dots on a single day and virtue.

Print out a page each week for your virtues journal. Place a dot under the day of the week and the virtue when you fail to live up to the virtue.

Example: If you spent money foolishly on Monday, place a dot in the Monday column on the frugality row. You can accumulate more than one dot is a day under one virtue.

In a short time you can visualize where you are coming up short and where work needs to be done. Remember, this isn’t to belittle yourself! This exercise clarifies where you need improvement. Make a conscious efforts to improve in weak areas. Always be vigilant. Knowing where you tend to stray is a powerful tool in slowing down the negative behavior.


Wisdom From Ben Franklin

Franklin is an endless source of common sense and wisdom. His autobiography is must-read material for anyone serious about building wealth. Much of this wisdom was shared in his annual publication of Poor Richard’s Almanack. For 27 years Franklin built upon a solid foundation of wisdom, giving us arguably the greatest source of information on living a good and happy life, and on building financial wealth.

A good example of this powerful writing is the essay in the 1758 edition (the last year Franklin published the almanack), and included in his autobiography: The Way to Wealth. It is hard to fathom this was published 350 years before contemporary bloggers, podcasters and financial gurus. Ben Franklin put all us moderns, with our word processors and auto-correct, to shame centuries ago with a simple pad of paper and pencil. We can only aspire to such greatness.

I’ll share a few financial (frugal) quotes here. If you want more I highly recommend Franklin’s autobiography and biography by Walter Isaacson

Select quotes from The Way to Wealth:

Industry need not wish, and he who lives upon Hope will die fasting.

Keep thy Shop and thy Shop will keep thee; and again, If you would have your business done, go; if not, send.

If you would have a faithful Servant, and one that you like, serve yourself.

A little Neglect will breed great Mischief.

Buy what thou hast no Need of, and ere long thou shalt sell thy Necessities. 

Beware of little expenses; A small Leak will sink a great ship.

The second Vice is Lying; the first is running in Debt.

Lying rides upon Debt’s Back.

Of course there is much more. 

And when have you heard similar words in  modern English? From Warren Buffett? Charlie Munger? Dave Ramsey? the Wealthy Accountant!

Every nugget of financial wisdom is as old as the ages. This stuff has been known for millennia. We keep repeating it generation after generation because nothing is less common than common sense

That is why my work is never done. Every day another crowd of people struggle with financial issues and people like me try to spread the good word.


Benjamin Franklin Circles

It is easy to think Ben Franklin lived in a different time, a time alien to our modern world. In some ways this is true, but the differences are not as vast as you might think. 

Franklin understood the value of quality conversation, where ideas were exchanged and knowledge grown. Franklin frequented salons, where people gathered, socialized and built grand ideas, like creating a nation like none other in history. 

We can still meet in the same fashion. But, we also have the added advantage of virtual meetings. With Zoom we are no longer limited to those locally that can attend meetings.

There is a movement afoot that acts much like the salons of Europe and America in the early and mid eighteenth century. They are called Benjamin Franklin Circles. There are several ways to start your own circle. I’ll let you use the link to dig deeper into the topic. 

The Franklin Circle can be a local gathering or virtual event. The group is a year commitment. Once per month the group gathers to discuss another of Franklin’s virtues and how to best build that virtue in ourselves. 

The group can also enjoy the socializing and good conversation Franklin did in his day by extending the group into additional virtues and topics. 

You don’t have to reinvent the wheel. The link above is a beginning point if you are interested in starting a Circle.

There are also numerous guides to help with the process. (The guides are also useful as personal study materials.) Here are a few guides with links. All can be downloaded and printed out.

Ben Franklin Circle Toolkit

Meeting Guide for Franklin’s 13 virtues

Meeting Guide for an additional 12 virtues

Virtual Meeting Guide

Dinner Party guide

Use these guides to step back in time and into the future.


Final Words

It is impossible to give a proper review of Benjamin Franklin in a thousand words or so. Hyperlinks above expand the subject material greatly, and the two books mentioned and linked in the text do provide reasonable coverage of a remarkable man and his sage wisdom on health, living the good life and financial wealth.

I hope I whet your appetite enough to encourage a deeper drink from the well of knowledge Franklin brought us. You will find all successful people are, knowingly or not, using Franklin’s advice on some level as part of their success.

But more than that, these virtues can make us a better person. You don’t have to start a nation or build your financial empire as large as Charlie Munger’s to benefit from the time tested wisdom of Franklin. You do have to start taking accountability of yourself as Franklin did. 

A small amount of progress each day compounds to a massive amount of knowledge and wealth of all kinds. It is simple, yet requires the simple action of taking the next step. 

Begin today.


More Wealth Building Resources

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

Blockfi is currently paying 7.5%.

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

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

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

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