Summary

  • 50% gains possible according to Buffett in arbitrage situations Altria potentially has.
  • Scott Gottlieb has a conflict of interest when it comes to Juul.
  • Altria has a large arbitrage situation currently overlooked by many investors.
  • A Peter Lynch style analysis reveals unrealized value in Altria.
  • Earnings should provide more clarity on how fast this unrealized value is reflected in the stock price.

Warren Buffett made one of those extraordinary claims that require extraordinary proof in a 1999 interview with BusinessWeek. He said investing large sums is a lot harder than investing, say, a million dollars, where he felt he could generate 50% annual returns. Then he corrected himself and said he guaranteed he could do it.

Fast forward to modern times where Buffett has passed at least one rein to younger people to help him invest the massive pile of cash at Berkshire Hathaway (BRK.A). He said he didn’t place any significant restrictions on their investments as long as they didn’t get him in trouble, like buying Microsoft (MSFT) or tobacco companies like Altria (MO). (Buffett is a personal friend of Bill Gates, founder of Microsoft, and could have a conflict of interest if he invested in Microsoft. Buffett worries an investment in a tobacco company would harm his reputation.)

Buffett’s wisdom is legendary. In an interview I once heard him say when asked about tobacco companies: The product costs a penny to make and it’s addictive; What’s not to like?

Indeed! I believe Buffett avoids Altria mostly for reputation reasons. Most readers here, however, are interested in maximizing wealth and are unconcerned with owning oil, automotive, chemical or tobacco companies, as long as they are conducting business in a legal manner.

 

50% Gains

So how would Buffett achieve 50% gains with wealth levels readers here actually possess? 

Buffett said he would look for arbitrage situations to capitalize on. This would mean scouring small companies with hidden value. Of course, this would be a full-time job. But hey, if you can pull a clean half mill a year it might be worth the effort.

If you are allergic to those levels of research there is an easier way if you are willing to earn an above market average, but probably less than 50% annually.

The market is at lofty levels as I write. Most listed companies are trading at nosebleed levels. Unless you are willing to consider the damaged (Boeing (BA) might be on your watch list) or the hated, you are stuck doing the research or accepting market returns, wherever that leads from this market level.

Altria has been a portfolio holding for me for a very long time and it has served me well. Before Buffett asked, What’s not to like? I already knew I liked the company, even if I never use the products. 

Holding Altria for such a long time means I have spent considerable time researching the company. I was there when the world was coming to an end for tobacco in the 1990s due to the massive settlement. 

It seems Altria (and tobacco in general) loves to go into a tizzy every so often. It makes for awesome buying opportunities where the stock price is lower and the dividend yield is higher. Rumors of tobacco’s death are greatly exaggerated. 

Altria is starting to exit one of these “end of the world” scenarios again. The Juul/vaping scare was worse than the damage done in the 1990s when there was a real existential risk.

Of course, there is plenty to worry about. Juul isn’t working as planned. (When does business go as planned?) And cigarette volumes are in a long-term decline. 

Altria does have something Buffett salivates about: pricing power. Altria is likely to increase prices faster than consumption declines. That means more dividends for patient investors.

Juul isn’t dead either! Yes, there are serious problems with getting the Juul transactions approved and Juul is dealing with litigation issues and a declining market share and increased regulations. The Juul approval is more a matter of time and what changes to the deal the government will require rather than a deal that will end up in court or unwound. 

Vaping isn’t dead either! Growth in vaping has slowed. But if you looked at the vaping growth rates a year ago it was obvious growth rates had to slow. Juul was on pace a year ago to be bigger than the entire U.S. tobacco industry in less than 7 years. Reference Stein’s Law: Anything that cannot go on forever, doesn’t.

Health issues surrounding vaping was not due to Juul products. Illegal street vaping pods, usually involving THC, were the chief culprit and maybe the entire culprit.

Juul’s market share has declined from over 80% to ~60%. However, vaping has continued to grow so Juul is getting a smaller piece of a larger market. Like it or not, vaping is the future of nicotine consumption.

 

Scott Gottlieb’s Conflict of Interest

Scott Gottlieb, the former commissioner of the FDA, has managed to get himself a cushy job at Pfizer (PFE). Gottlieb has made it his mission to bad mouth tobacco, but has a special hate for vaping and Juul, the leader in the industry. Now why is that?

Well, vaping has the real possibility of reducing tobacco use and is partly responsible to the increased rate of decline in cigarette use. Gottlieb should be happy with that, but seems to hate the good news. What gives? First, Gottlieb works for Pfizer now, which sells the leading smoking cessation product, Chantix. It becomes clear quickly why Gottlieb is more addicted tobacco than an 84-year-old chain smoker once you realize his income stream is at risk if smoking rates decline too much or too fast.

Second, Chantix is reported to be no better than nicotine patches. Nicotine patches are cheaper than Chantix with fewer side effects. Gottlieb doesn’t seem to want to address this issue during public interviews. 

Third, Pfizer has been busting tail to get a serious warning label removed from boxes of Chantix. Gottlieb took care of that problem promptly once he was working for Pfizer. I’m not saying Gottlieb did anything illegal or unethical. I’m just saying the circumstances does lead one to wonder.

Once you consider Gottlieb’s past with his comments, it becomes clear he likely has an agenda that might not jib with reduced cigarette smoking rates. When regulators and investors realize Gottlieb seems to be encouraging more tobacco use to benefit his employer’s bottom line, his crusade against vaping declines.

 

Hidden Treasure in Altria

I don’t know if Warren Buffett could actually deliver on his promise of 50% annual gains. I do know that arbitrage is an excellent way to spike your investment returns.

A Peter Lynch style review of Altria reveals massive unrealized value. It is easy to forget Altria is more than cigarettes. There is a dash of wine in the portfolio, non-combustible tobacco products, Juul, Anheuser Busch inbev NV (BUD), Cronos (CRON) and on! Nicotine Pouches in the product line as well. 

Let’s take an impossibly negative approach to Altria and see if the company survives or is loaded with large hidden treasures. 

For starters, let’s value Juul at zero. I know, I know. It is worth at least something, but we take no prisoners around here when we tally up a business’s valuation under a worst case scenario. 

Next we gut Cronos’s value and place it at zero, as well. In fact, let’s just value everything outside tobacco at zero, with the exception of BUD.

Altria owns 10.1% of BUD, with a valuation of ~$14 billion as I write. 

Altria has a market cap of ~$95 billion. If everything they own is worth nothing, except for the investment in BUD, which has no restriction on the holding starting in 2021, Altria has a core valuation of ~$81 billion. 

This valuation is for a company kicking out over $7 billion in cash flow without help from Juul! 

And let’s be honest, all that other stuff Altria owns has some value. How much is still to be determined. That is how it works with businesses. Value has to be created to be realized. (Remember the formula for value creation: Return on Invested Capital (ROIC) minus Cost of Capital (COC). A positive number is value creation.)

What we do know is Altria’s core business is kicking out loads of cash to pay down debt (on the 3rd quarter earnings call Chairman Howard A. Willard stated Altria paid down $1 billion of debt in the 3rd quarter and planned on paying down a similar amount in the 4th quarter of 2019), buy back stock, pay dividends and grow the business. 

 

Earnings Report

Altria’s upcoming 4th quarter 2019 earnings report will clarify some of these issues. I am interested to see how much debt was actually reduced. I also want to see how cigarette volumes are holding up and if we will have two or three price increases in 2020. 

Juul is the unknown. Will more write-down be in the cards? My gut tells me things are stabilizing at Juul, but gut is not an acceptable investment tool and has a poor track record. Cronos still has a lot of work to do to reach profitability.

A bright spot is the non-combustible tobacco products. Chew has been growing, but is still a relatively small part of the business.

What interests me more than any other product is iQOS — the heat, not burn product — licensed from Philip Morris International (PM). FDA conditional approval is a significant advantage Altria received in 2019. iQOS is rolling out in a measured fashion as you read.

The future of tobacco is in the non-combustible, reduced-risk products. Wouldn’t it be a kick if Altria found serious value in iQOS instead of Juul?

Either way, I think there is massive hidden value in Altria. With such a diverse mix of products, Altria is well situated to keep pumping out large, growing dividends for a long time to come. 

Unless you have a convincing argument people will quite smoking tobacco and using weed, chewing, vaping and drinking beer and wine, I think Altria has a bright future.

 

* Notes: As longtime readers of this blog know, I own shares in Altria and use it as an investing test model. Originally written for Seeking Alpha, this post provides an update on my reading of the tea leaves. I still own and plan on continuing to own shares in MO and PM. I own a small amount of BA and MSFT as part of my watch list. I do not own shares of other companies mentioned in this post at this time with no plans to open a position either.

 

More Wealth Building Resources

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.

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

In 1968 Nick Murray had to sell investments the hard way. He met most clients in their home. The tool of choice was the mutual fund. Most people he sat with were hard working people, but unsophisticated  investors. Fee-based advisors were rare in those days for the small accounts families had. Fees were high and people were risk adverse. To top it off, the market was having bouts of volatility, suffering a noticeable decline even to those who didn’t follow the market on a regular basis.

It was in this environment Nick Murray had to convince his clients and potential clients the best course of action for them. Investing in mutual funds came at a steep cost. Loads (aka sales fees) were as high as 8.75%. 91.25% of your money went to work right out of the gate trying to get back to the even water mark.

Nick Murray

Young families had to consider equities for at least a portion of their portfolio if they were ever to have enough money for a comfortable retirement, and Nick Murray knew it. The high fees were one issue; the market another. The question was always the same:

“Do you think the market will go up?”

An honest financial planner will never tell you the market will go up because no one has a crystal ball. Markets do go down at times, and significantly. In the long run stocks would provide the best return on investment if placed in a broad-based mutual fund. The gut-wrenching declines that show up now and again was the problem. Nick Murray had to provide comfort for the clients he served while encouraging the best financial behavior. He said:

“I do not know if the next move in the market will be up or down. The next 20% move could go either way and I have no way of knowing which way it will be. The same is true for the next 50% move. I just don’t know if the next such move is up or down. The same with the next 70%, 80% and even 90% move in the market. But I can guarantee you the next 100% move in the market is up, not down.”

How could Nick Murray make such a claim? Of course, the next non-100% move in the market is anyone’s guess. But to guarantee the next 100% move was up! 

Nick Murray spoke at a H.D. Vest Financial Services conference in Dallas in December of 1994 when he told this story. (I might be off a bit on the date as I’m pulling from memory only. It was December because H.D. Vest always had their December conference in Dallas. The year was 1992 to 1994, with my bet placed on 1994.) Murray explained why he made the statement to clients he did. He said:

“I could guarantee the next 100% move was up because the next 100% move has always up. And if I were ever to be wrong there would be nobody left to discuss it.”

Those words always stuck with me. Every bump in the night, ah, the market is not a cause for panic. Even if I bought at the height of the market in 1987 or 2008, it didn’t take long before another 100% gain was notched onto the market. Even the 1929 high eventually fell to substantial 100% gain after 100% gain.

Once again we face a market with a long up trend and worries abound. 

And now is a good time to ask if you need a financial planner.

 

What a Good Financial Planner Does

Financial planners come in so many flavors. Some are honest and good at what they do. Some are out for a quick buck. Others are incompetent, at best.

Earlier this week I met with a client in my office. This elderly couple had worked beyond the normal retirement age, but now were putting traditional labor in the past. They are simple people that prefer as little complication as possible. 

My husband/wife client have never used a computer. Normally I suggest a good index fund at Vanguard or Fidelity. That wasn’t the right advice in this instance. The 401(k) administrator (Transamerica) presented all the options. 98% of the page was annuity choices: single life, period certain, joint life. Way at the bottom was the lump-sum option.

My client was clear they did not need any of the money. They were aware of the required minimum distribution and that is all they would take from the funds.

So what does an honest financial planner tell a client in a situation like this? They didn’t need the money. They were not sophisticated investors. They were risk adverse. They had more than enough for anything they wanted.

After a half hour of discussion it was clear to me my client did not need an index fund or any other fancy sort of investment. I asked where they banked. It was a good local bank. I explained to them what laddered CDs were. They understood CDs and what I suggested. By the time you read this they will be working with their banker carrying  out what I feel is in their best interest. The interest earned will be small, but it is what serves this client best.

 

A good financial planner will be honest with her clients. No one size fits all. Usually when working with young families I have to spend serious time getting them to invest in equities. (Too often I must work my fingers to the bone convincing them to pay down debt and invest even a token amount.) 

I’m not a big fan of life insurance. (Don’t get me started on annuities.) However, there have been instances where the facts and circumstances indicated a client should have term life insurance. Business clients might best be served with key-man insurance or a policy for a buy-sell agreement. There have even been a few cases where the facts required I suggest annuities. With annuities I always go into a long-winded explanation of the high commissions so clients understand how much it pains me to make such a recommendation because I know commissions are ultimately paid by the client.

 

The most important task a financial planner has, in my opinion, is to prevent clients from panicking in a downturn and contain greed when the market is soaring.  Nothing else a financial planner does will do more to increase the value of a client’s account. 

As an accountant I see many clients. Over the years way too many have committed financial suicide because they got scared out of the market at a bottom. I’ve also seen too many invest on margin (borrowed money) when the market is hot. If I could have one wish, it would be to go back in time and convince more clients to walk away from a hot stock tip. A good financial advisor should encourage good long-term investments, like index funds. Sophisticated investors can invest in individual stocks because they know how to value a business. They use different financial planners from the proletariat. 

 

The duty of a good financial planner is simple: Stay in touch with clients to understand their financial plans and needs, helping them achieve those goals. In other words: Know Your Client!

It is easier than ever to walk the financial road without a financial planner. Mutual fund fees have collapsed to zero in some cases. (Does anyone pay a load anymore to buy a mutual fund?) ETFs are very low cost to buy. Automatic investing is easier than ever. 

The real questions is: Do you need a financial planner? There are only a few questions you need to ask yourself to get the answer:

  • Do you understand the investment choices available and the risks and consequences? Honestly!
  • Do you understand the tax implications? Or have a trusted tax professional to help you understand the tax issues?
  • Do you tend to want to “trade” the market?
  • Have you ever sold or panicked when the market was down? Be honest! How did you react, or not react, to the 2008 economic, housing and market meltdown?

 

Financial planners are different from the past. Many brokerage houses (E*Trade, Vanguard and Fidelity, for example) have in-house advisors available to help you make financial decisions.

Some advisors still pay house calls, but they are getting rare. And since commissions are totally different from a few decades ago when I was in securities, an alternative to a financial planner might be a better choice.

 

 

Alternative Financial Planners

While many consider stock brokers and insurance people financial planners, the truth is they are really salespeople for the firms they are appointed with. These traditional advisors still play a role in financial planning. However, their role is diminished compared to even recent times.

The stock broker wants to sell you stuff that generates a commission or fee-based product. So does the insurance guy. It’s how they keep the light on and I have no problem with that. Many financial planners are fee-based only today, charging 1% or something similar per year on the assets they manage for you. The fee seems small, but accumulates to a large amount over the years. And remember, the fees paid also no longer generate future returns for you.

 

There are two natural professions that can help you with your financial planning needs: attorneys and accountants. The accountant should not also sell products or fee-based services as well or you will find recommendations slanted toward what they sell.

Helping a client by telling them the truth — that they should use laddered CDs — is something an accountant can tell you. I don’t get paid a commission. I charge for my time and have no vested interest in the investment the client makes. 

As an accountant I can also help facilitate the process. If a client needs a Vanguard account I can walk through the set-up process with them or they can call Vanguard. All the client pays for is my time. 

Attorneys can play the same role. They might be more expense and have less time to work with you, but attorneys play a vital role in personal finances. Wills and estate issues will require an attorney anyway. The attorney and accountant can work together to help you deal with issues such a Medicare and future potential nursing home expenses. 

A good attorney and accountant can also keep you honest when the market is soaring or in free fall. These professionals have seen it all before in the market and in their client’s accounts and they don’t shake easy. Clients in my office know I wear cast iron underwear when it comes to taxes, investing and personal finance issues. I’m not moved by headlines! And I doubt your attorney is either.

 

Have an honest discussion with your accountant or tax professional. They might be the perfect choice for a financial planner. 

This makes even more sense if you handle your own finances. Having a disinterest third-party to bounce ideas off of in very valuable. When I’m not writing or preparing taxes, I am working with clients and readers of this blog, consulting on a variety of issues, including: index fund/equity investments, insurance, retirement planning, Social Security and Medicare planning, tax planning, business formation and session planning, and more. It amazes me the topics I discuss with clients. I get to enjoy some unique research at times which keeps me young.

 

Many people reading this blog are informed enough to actually be a financial planner themselves so you probably think you can handle it all on your own. I understand. The history of financial planners and advisors is not encouraging.

Consider an alternative to the traditional financial planner. At least in my office, I help clients make the right choice for them and send them to the most appropriate professionals to carry out the directives.  

Most important, always keep learning because everyone actually does need a financial planner. And the best one you can ever have is you. Because no matter how hard I try to know my client, you know you better than I ever will. My performance is best when my client also understands the rules.

 

This is an important topic. I hope we get a lively debate in the comments on how you, kind readers, interact with financial planners. My ideas are good, but as a team our knowledge will be more than the sum of the parts.

 

 

More Wealth Building Resources

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.

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

Short-term money held for later investments or emergency funds pay paltry returns. It might be expected since these investment vehicles are not long-term. However, money market and checking accounts can do better than a fraction of a percent in interest payments large banks are offering. 

Over the past year my most popular posts involved investing short-term funds. I paid lip service to High Interest Savings Accounts Few Use and Unique Savings Accounts Few Know About. In each case I was soundly trashed for focusing on wealthy people (which is a lie since all the accounts I listed can be used by people of any wealth level) and avoiding the one checking and savings account tailor-made for people in the backwoods of Wealthy Accountantville. 

Let me introduce you to Redneck Bank; a bank folks from the backwoods of Nowhere, Wisconsin and the back streets of New York City alike can enjoy. And if you stick around to the end I’ll show you a debit card paying up to 2.5% cash back. Mix these banking vehicles together for an acceptable return is something even backwoods folks, like me, find mighty tempting.

 

Mega Money Market Account

Y’all know I’m going to have a hard time not drifting into backwoods talk. I’ll do my best to be professional.

Interest rates are subject to change, of course, but as of this writing my brothers at Redneck Bank are paying a stiff 1.75% on their Mega Money Market Account on balances up to $50,000. 

Don’t get yer knickers in a bundle! Redneck Bank is fer normal folks, too. They pay that awesome interest rate on balances up to $50,000. There is no minimum balance and you only need 500 bucks to open a darn account. Even normal folks in the boondocks have that much laying around, probably in the sofa cushion.

If all you are looking for is interest you are leaving some of the best features of Redneck Bank on the ground. Backwoods folks are more frugal than that, if you didn’t already know. 

Mobile deposits make it easy to work with my Redneck buddies. Take a picture of checks received and they are automatically deposited into your account.

An underused feature is Online Bill Pay. Your Redneck money market account offers 10 free bill pay transactions per month. This saves time and postage. Smart rednecks automate their life whenever and wherever possible. That is just good money management. 

You can read all the sun-baked details here. (Note: Redneck Bank is not an affiliate or related to the author in any way.)

 

Redneck Rewards Checking Account

For smaller sums of money I think the Redneck Bank checking account is a better offer. Interest accumulates at 2.25% currently on up to (that is up to) $10,000. That is very competitive and comes with plenty of additional valuable features. 

Mobile deposits using a secure app make all Redneck products easy to use. Your Redneck Rewards Checking Account also comes with 10 free bill pay transactions. No minimum balance required, but ya need 500 bucks to open the account. Check the sofa.

For kind readers who enjoy traveling, up to $25 in foreign ATM fees are refunded each month. 

There is one small catch to the checking account, however. (What did you expect with a checking account paying 2.25% on up to 10 grand?) You need to make 10 or more debit card transactions (online or in the real world) using your Redneck checking account each month to qualify for the high interest rewards. If you make fewer debit card transactions you still earn .50% (almost like an account at a big bank). 

You can read all the details about the Redneck Rewards Checking Account here.

 

Facts and Circumstances

Redneck Bank might be the perfect bank for you. Their products offer excellent rates of interest for emergency and short-term funds. I recommend reading the two previous posts I published using the links above for more high interest options.

No one product fits everyone, however, and many people will find multiple investment vehicles best for them. (You are not limited to one account at one bank, if that needs saying.) The previous articles published, listed at the opening of this post, have offers for much larger amounts for readers dealing with larger sums. 

It is important to review your personal financial situation. Something as easy and fun as Redneck Bank might cover most or all your banking needs. Then again, as life evolves, it is possible new financial challenges will arise. This is when it is good to come armed with multiple tools to get the job done. It isn’t a crime to change banks when facts dictate such a move.

The interest rate paid is only part of the solution. Yes, earning reasonable interest is the most difficult problem to solve and why you are probably here. But is can be done, as this and previous articles published on this blog, indicate. The real value in these high-interest accounts extends to services too. Online banking is convenient, but free bill pay saves time and postage. Be sure to review many banking options. If you have more than 10 bills each month, it might make sense to have more than one bank. The fine print is your friend in this instance.

 

Awesome Deal I Promised

I promised an awesome deal if you read to the end and I meant it. I haven’t seen this one promoted much (or I just live in a secluded backwoods world) so most of you may not be aware of this offer.

Let me tease first. How many of you would like a credit card paying back 2.5% cash back with an up-front cash bonus? Oh, I see a lot of hands. Some credit cards offer more, but 2.5% cash back with a bonus is still pretty good. 

Now, how would you like a debit card that offered the same? With an up-front bonus? Thought so.

Debit cards are notorious for paying small or no cash-back. Dave Ramsey fans and those with an allergic reaction to debt don’t want to use credit cards so they miss out on the juicy rewards. These are cash and carry people that will only go as far as a debit card. I get it.

PayPal recently sent me an offer. To be fair, this might only apply to business accounts, but I see nothing that disallows you from opening a business versus a personal account. 

The landing page says PayPal pays 1% cash back, but PayPal gave me a $100 cash back reward for spending $1,000 in December and $25 for every $1,000 of spending. This means with a small amount of planning I can get close to 2.5% cash back on normal spending (no crazy spending for a reward, as if I have to mention this) on my debit card before the bonus reward.

The money comes from my checking account (PayPal automatically deducts the payment); I don’t keep any money on deposit at PayPal, thought that is allowed, as well. 

PayPal has other options than the $25 per thousand in spending, but I think that offer is the best. 

This is also a new product for PayPal (I think). I have had a PayPal account for years for my tax office. PayPal decided they were sending a debit card for the account regardless. (I opted out of the debit card feature in the past.) To sweeten the pot they offered cash. What can I say? The accountant in me couldn’t hold back.

The PayPal offer might be for a limited time. I still wanted to get this in your hands as soon as possible so you can take advantage of the offer if possible.

 

Common Sense

As always, kind readers, use common sense. There are numerous banking options out there. Mix and match those that serve you best. It used to be so easy. Just go to the local bank and open an account. Today there are more moving parts, but that works to your advantage if you are willing to invest a small amount of time. 

Also, as a reminder, you are not wedded to a bank. If the terms change, you can always change banks. Some offers are meant to get folks in the door with the hopes they are too lazy to leave (or notice) once the offer ends. Don’t be lazy! You work hard for your money. The banks are making money just fine. You take care of you!

Check out Redneck Bank. Maybe add it to your list of financial options. There is a bit of fun involved, too. And life should be filled with amusing moments.

Look into the PayPal offer, as well. It might be limited to current accounts or some other crazy thing. But it might be something of value to you. Getting north of 2% cash back using a debit card is the best this crazy accountant has seen to date.

Be sure to share high-interest accounts you use (or know of) in the comments section below. Worthy Financial (in the More Wealth Building Resources section below) pays 5%, but is an affiliate of this blog and is not a bank.

I hope this short post kept your interest. (Yes, one last bit of humor before leaving you today.)

 

 

More Wealth Building Resources

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.

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

Guest posts are always difficult. Too often the material that crosses my desk is of very low quality or thinly disguised ads, usually both. I pass faster than a speeding bullet. 

Then there are people I know that I would love to have write a guest post. They are articulate and care about the reader. Unfortunately, they are also busy. However!!! Through good fortune I was able to convince one of these people to to write down her wisdom for you, kind readers.

Debbie Todd has followed this blog for a long time and is a recommended tax pro on the Find a Local Tax Pro page of this blog. Seeing Debbie work with clients on social media has left no doubt in my mind of her level of knowledge, experience and willingness to serve her clients at the highest level possible. 

This post started over a discussion on Facebook. Debbie left a comment and I said I would love to hear all the details about it, preferably as a guest post. It was a lot of work, but she complied. As a result, you get to pull back the curtain and see how things run in a smooth operating tax office that serves clients like royalty and how you can get the same results with your tax pro. I wish I always lived up to those high levels.

Be sure to read to the end. I will copy Debbie’s contact information from the Finding a Local Tax pro page to the end of this post, along with a link to a worksheet you can download. You want that worksheet!

Thank you for the post, Debbie. It will help readers and me alike.

 

Guest post: Debbie Todd of iCompass Compliance Solutions, LLC

 

SECRET INSIDER Bean-Counter Chat Alert – Earlier this year, the Wealthy Accountant and I chatted online about what CPAs and Enrolled Agents like to talk about — innovative ways to serve, educate — and yes, sometimes even boot our clients in their business behind — while keeping our sanity and a semblance of family balance.

I promised to share a couple of strategic tips and a tool I developed that transformed not only my own business, but also generated amazing results for my firm’s clients. Then unexpectedly, LIFE got in the way of delivering on that promise — until now.

I lost two long-term step-parents within 3 months and then both my brothers had major cardiac events. Experiencing sudden and profound change, loss and grief sure puts things in perspective. Not an excuse — but I hope you can relate. Life throws unexpected curve balls which get in the way of best laid plans for your business, your personal life and even your legacy. Decisions matter! Adjust, breathe and take the next step. And the next…

Just as Summer gave way to Fall — and now as our lungs are filled with the brisk air of Winter — know that Spring 2020 is just around the corner. A new season, a new decade and untapped new opportunities await.

Read on to learn how…

 

David or Goliath – What Mattered Most?

The log in the fire is crackling, casting a rosy glow of warmth on the stockings, the twinkling tree and the ribbon-wrapped presents… 

As happens so often during the holiday season, I spend time reflecting on what worked well (and didn’t) with my beloved clients. I muse on the opportunities and challenges they faced in growing their business this year, adapting to new tax rules, employee issues, as well as several experiencing traumatic family events, which suddenly altered some of their best-laid plans.

What tips and tools could I share to allow them to be more successful in 2020 and beyond? I’m their CPA, their trusted financial coach and I take that privilege seriously. So do most of my amazing bean-counter friends.

Whether you are a large international company, a locally owned small business entrepreneur or a trendy global digital nomad, having rock-solid business goals and smart financial processes behind you is critical for your success. It’s not your size — it’s your heart, purpose and willingness to take action. Like David. . . 

Let’s face it, you’re toast without it… and often sooner rather than later.

 

Seizing a New Decade of Opportunities

As I gaze thoughtfully into the log’s dancing flames and scratch our aging Labrador’s graying ears, I realize that in just a matter of days, we will usher in a brand new decade…and brand new opportunities.

With last year’s tax law changes, a plethora of retirement planning opportunities (the SECURE Act, for example), combined with continuing economic growth, this reflection seems more weighty, more impactful and infinitely more exciting than prior years.

So, as a seasoned tax and financial strategy practitioner, I regularly share updates on these opportunities with my clients via email and during our quarterly meetings — but, how do we address (get to know) new businesses who want to join our cherished client family?

 

Communications and our Beloved NCO Triage

Like the log’s embers keep the fire going, providing both light and warmth, having a foundation of trust, clearly stated goals and objectives fueled by open communication, regular review and adjustments — translates to success on both sides of our client relationships.

Think about when you go to the doctor or the emergency room. You want the professionals taking care of you to listen and understand what is going on with you so you can get the correct diagnosis and treatment, right? Well the same holds true for your business or family financial health.

Over the last several years, I have developed what we call our NCO Triage, or New Client Onboarding Triage. It has blossomed to over 7 pages – and NO, this is NOT like your tax organizer. It’s a strategic financial life goals framework that helps me help you turn your dreams from vision into reality.

Yes, it asks questions about your business like what kind it is, what state(s) you operate in, your revenues, status of tax filings, who does what in the finance functions, etc, but also covers key details like a SWOT analysis (strengths, weaknesses, opportunities and threats).

Next, we learn about your life goals… not just for your business, but how your business fuels your life’s passions and dreams. 1, 3, 5, 10 and even 20 years. After all, that IS why you are working, right? Finally, we discuss your communication styles and preferences so we are both comfortable with how we will play together going forward. Ninety-five percent of preventable challenges stem from miscommunication.

So, WHY is this Important?

Keeping an eye on the fire is important. Left unattended, the fire eventually dies out and the cold will seep in. A few strategically placed money tips will keep your financial fireplace warm and toasty.

As stated earlier and without sounding too cheeky (okay maybe just a little) — your cash flows, financial foundations and habits are the lifeblood of your business. Your goals and vision sets the heartbeat and pace with which you operate. Slow and steady wins the race.

Wanna know something cool? Meeting with your CPA or EA can actually be FUN! Seriously…

I just wrapped up Q4-2019 meetings with many of my clients. Most calls start out something like this… ”Hey Deb, I’d like to meet with you for an hour this time. Let’s talk about our financials and the tax items for the first 30 minutes or so. Then I have a couple of ideas I want to run by you, so put on your counselor hat for the rest of the call, OK??” What an honor to help them explore possibilities that will improve their lives. After all, wouldn’t you rather be helping transform your client’s future with smart financial tips and tools as opposed to simply fixing and filing their historical transactions? Seriously, I get just as jazzed up as they do — and LOVE to see their dreams become reality.

 

Key Takeaways and Next Steps for Caring Pros and Smart Clients

Mylie, our Lab, is looking at me with that “Mom, it’s time for bed” look. I get up, turn the Christmas tree lights off and add an all-nighter log to the fire — so it will have energy to burn, keeping our house toasty warm while we sleep and dream.

Fellow Tax and Financial Pros — Key Thoughts AND A GIFT

  1. Proactive Planning with Forward Focus: Understand that your best value as a passionate and knowledgeable financial professional lies in proactively helping your clients achieve their dreams and life goals. Right, wrong or sideways, you can only fix and file past transactions. Instead, help your clients avoid those mistakes in the first place while providing tools to make their future dreams a reality. (Hint: Start on page 4 of the NCO!) Leverage this mindset into your practice’s core values and I believe you’ll both be happier as a result. 
  2. It’s NOT about the Money: This is a lesson I learned the hard way. Don’t compete strictly on price – EVER. Not everyone needs to be your client. Read that again. It took you YEARS of training, countless exams and ongoing research every single year to do what you do and do it well. It’s about VALUE: The amount of money I save clients each year far supersedes their invoice amount. Don’t sell yourself short – your knowledge is worth it.
  3. Equip Your Clients: Many clients are NOT money gurus – they are great artisans in their own field, but need your financial expertise so their business can thrive and grow. Offering monthly or quarterly meetings, a Q4 tuneup and emails of key tips are simple ways you can help your clients go to the next level. Plus, it provides a reasonable revenue stream outside of tax season!
  4. The GIFT: You can download a copy of my NCO and adapt it for your firm’s use. The fun part starts on page 4! Understand, I am NOT giving tax or legal advice and this document does not replace your well-crafted Engagement Letter or professional due diligence procedures. Use the following link:

2019 NCO – New Client Onboarding Triage Initial Questionnaire Template

Smart Clients Wanting to Up their Game (It’s OK if you read the Tax pros list above too)

  1. Identify Your Goals and Vision: As 2020 begins, what do you want to accomplish in the next year or the next decade? Seriously, a little dreaming and planning can make a HUGE difference! Feel free to download the last four pages of the NCO, dream and jot down your thoughts (crackling fire and aging Labrador optional, but highly recommended)!
  2. Plan With Your Tax/Money Pro: If you are not planning with your tax pro outside of annually filing your taxes, you are missing out on a golden opportunity to make small (or even large), consistent improvements to your financial bottom line throughout the entire year. Yes, you should pay them for these meetings too – unless they are already on retainer.
  3. Execute, Review, Adjust, Repeat: Dreams and vision are great, but it’s ACTION that wins the race…100% of the time. I’d rather see imperfect action (within legal bounds of course) than a perfectly procrastinated idea. As part of your meetings, you can set timelines, deliverables, checkpoints and get objective feedback and insights to adjust course, as needed. Then repeat!

I, for one, am truly excited about spending quality time with loved ones and enjoying Christmas – celebrating Jesus and all the wonders we have been blessed with – and those opportunities which await. [Editor’s note: Debbie delivered this to me December 23rd. Your lazy editor didn’t get to it until after the 1st of the year.]

Wishing each of you a joyous, happy and safe Christmas and New Year – AND a next decade that blesses your family and business beyond measure!

Debbie Todd

Your Friend in Financial Wellness, Debbie

 

 

 

 

 

 

 

Contact Information

iCompass Compliance Solutions, LLC, dba 1 Hour Impact Firm #5917

Locations we prefer to serve: SW WA or Portland, OR Area. WBE certified in both OR and WA

Contact: Easiest to reach me via email or https://www.facebook.com/TheSpunkyCPA/

Email: deborah.todd.cpa@gmail.com

Areas of practice: Federal and state personal and small biz taxes, Non-Profit – 990s, IRS compliance and remediation, divorce and estates, also small biz startup strategy. Niche expertise in small business interactions with State and Federal Government Contracting.

In person or fully digital capabilities.

Areas of practice you don’t handle: Ex-Pat, valuation disputes, M&A.

Bio: You can learn more here, including govt background- http://1hourimpact.com/about-us/

Interesting tidbit: Special passion for teaching smart early childhood financial literacy using engaging, interactive theater.

 

More Wealth Building Resources

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.

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

Reading is the foundation of every form of wealth: mental, spiritual and financial. There is even an argument to be made that reading good books is good for you physically, as you can learn to eat better and exercise more productively. 

Books are the cornerstone of knowledge. The more you immerse yourself in quality material, the better decisions you can make. 

Focusing on only recently published books is a mistake. Avoiding novels is also an error. A well rounded education comes from digesting material from all genres, even topics you normally don’t read. Even fiction can teach us plenty about the world around us and ourselves.

I read about a book per week. Some books are doorstops and require more dedication while there are times I polish off several shorter books in a week. The goal is never volume (pun intended). I never set out with a reading goal for a number of pages or books read in a certain time frame. The goal is to absorb as much knowledge as possible from the text. Some books read fast while others slow to a glacial crawl. If it takes longer, so be it. As long as I acquired the information and it sticks.

Without intention, my reading habits were unique this past year. I read some recently published material and plenty of older stuff. Novels played a bigger role than at any time in over two decades. Even a few self-published books made the cut.

I re-read a few books this year, too; some is part, some in entirety. Some of the Stoics come to mind. Re-reading a good book is something more people need to do. As with good movies, you pick up more with each reading. 

Before I share the 3 best books I read in the past year, let me point out this isn’t an exact time frame. I don’t mark a place on my bookshelf to delineate the changing of the calendar. Books I borrowed from the library are not included on my list because I can’t pull them up or easily quote from them. I have a bias toward my personal library.

Be aware the links in this post are affiliate in nature. That means I get paid a small fee if you use the link/s to buy the book.

 

Business and Investing Book of the Year

It might surprise you that I don’t spend all day reading investing and business books. Sure, I read plenty of business reports and financial statements; and most classics of the genre have been consumed and re-consumed. Only a few published each year are worthy of my time.

Many bloggers in the personal finance field have been self-publishing books. I’m unconvinced my time is well spent reading how a young person either dug themselves out of debt or retired at an early age. Without any personal debt there is nothing to resonate in the debt books. And since owning my own business is something I want to spend the rest of my life doing, retirement of any kind is a foreign concept to me. (I might slow down just a bit as age takes its toll.)

The best books of the genre tell personal and non-personal stories. This is where Business Adventures by John Brooks comes in and is our pick for this category. Brooks shares the tales of twelve intense situations on Wall Street. The stories are older, but the lessons are as valuable today as ever. Rather than a how-to book, Brooks allows us to learn from example.

While I may not “officially” read a personal finance book, I spend plenty of time reviewing personal finance books consumed in the past. The list would easily break 100 if I started dropping names. One book does stand out, however. My friend, Jim Collins, published The Simple Path to Wealth several years ago. As far as I’m concerned. this is the most modern classic of the genre. I page through the book for a short read constantly. You would do well to have a copy next to your reading chair. I keep a copy at home and the office. Yes, it is that good.

 

Novel of the Year

There was a time when I read over 100 novels per year. Science fiction topped the list, but anything was game. I’m a sucker for a good story.

SevenEves would have been the winner were it not for a strong showing by A Gentleman in MoscowSevenEves is a powerful science fiction novel mixing story with scientific facts. I enjoy science fiction stories that twist stories around realism. If it is possible, even if improbable, it makes for an engaging story.

But the nod goes to A Gentleman in Moscow. I finished this novel as year came to a close. The classic Russian novels have always intrigued me which is what attracted me to this novel. Gentleman is in the style of the Russian classics. 

A Gentleman in Moscow starts in 1922, at the dawn of the Communist Revolution, and ends in 1954. Count Alexander Ilyich Rostov is sentenced to house arrest in the Metropol Hotel for life for writing a poem years earlier, before the Revolution. We later learn he didn’t even write the poem.

Rostov befriends staff and guests at the Metropol as he settles into his life of house arrest. His vantage point is unique as he watches the horrors of the 20th Century unfold. And then he meets a 9-year-old girl that changes his life. 

Gentleman is a novel about living life on your own terms. The history is impeccable, adding to your reading pleasure. You will learn a lot about yourself reading this novel, just like the classic Russian novels. The bittersweet humor brings the story to life. It’s almost as if you are there, desiring a life encapsulated within the Metropol as the world unfolds around you.

Whether you read fiction or not, you need to read A Gentleman in Moscow. It’s that good. . .  and important.

 

General Non-Fiction Book of the Year

The list of good non-fiction is extensive, necessitating an Honorable Mentions List to follow. How do you choose between Factfulness by Hans Rosling, Enlightenment Now by Steven Pinker, Thinking, Fast and Slow by Daniel Kahneman and Empty Planet by Darrell Bricker and John Ibbitson? It comes down to personal bias.

Thinking, Fast and Slow is kind of like a business or investing book so it appealed to me most. The list in the prior paragraph are also must-read books, along with the selections in the Honorable Mentions List to follow.

Thinking is useful in every facet of life: business and personal. Learning how and why you think the way you do helps reduce error. Fast thinking is a reflex. It’s easy, but sometimes wrong. Slow thinking, the kind that requires energy to think things through, takes effort to engage due to the work involved. Knowing when our fast thinking is wrong and when to force ourselves to think slowly is vital to achieving goals.

At Camp Accountant this year I used examples from Thinking to illustrate errors we make when investing in retirement accounts. It isn’t always as intuitive as you would think. I also published two posts this year using the information from this book: here and here.

President Obama’s 2019 Reading List

Honorable Mentions

Why only “3” best books of the year? Everyone else uses a longer list. Ten is a common number with a few going much longer. President Obama listed 38 books for 2019. I suspect that is every, or nearly every, book he read last year. 

Long lists need to be honed down to a manageable size. Not every book read is worthy of recommendation. I read a few clunkers last year that will not be sharing here. Even a few good books that just didn’t fit in right for this post were edited out. 

There is a logical reason for a shorter list. When you give long lists people tend to skim the list and move on without reading a single book. A shorter list takes away most of the decision and the odds go up exponentially you will read one or more of the three books. If this post has any value, it must get you to take action. And for the avid readers, the Honorable Mentions gives you plenty additional to chew on.

Factfulness and Enlightenment Now remind us the world is better than it has ever been and getting better. Both authors provide proof. 

Empty Planet informs us the demographic bust is coming with plenty of evidence human population will fall later in the 21st Century. Climate change isn’t mentioned in Empty Planet, but with fewer people and increased technology, greenhouse gas emissions will be coming down regardless what governments do or Greta says

I love Ryan Holiday’s work. Stillness is the Key is must-read material.

Vaclav Smil’s Energy and Civilization is also required reading. The history of energy utilization and prime movers is a fascinating story, dispelling the myths surrounding energy, consumption and pollution.

The classic, Lord of the Flies, entertained, as it has for over 60 years. Still, I had to give the nod to A Gentleman in Moscow.

I end with an extra special Honorable Mention, Maps of Meaning: The Architecture of Belief, by Jordan B. Peterson. The difficulty level of this book made me step back. Maps of Meaning may be the most difficult book I ever read. And important! 

Maps of Meaning looks at how we develop our beliefs and how they shape us. Archetypal stories help us define the world around us, offer a framework to culture and a map to living a meaningful life. Reading this book took a lot of time. Sometimes a sentence or paragraph would force me to put the book down for an hour to think about what I just read. If you enjoy deep thinking, you want to invest in Maps of Meaning.

 

Now it’s your turn. Share books you found valuable or important this past year in the comment section below so readers, and a certain unnamed accountant, can enjoy those books, too.

Happy reading!

 

More Wealth Building Resources

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.

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

I was recently interviewed for a podcast where one of the interviewers asked why I used such difficult words in my blog. I was taken aback by the question because I don’t think I use 50¢ words unless it is to increase clarity. 

In this third and last installment of Christmas themed personal finance posts I am going to be guilty of the most egregious crime: I will use another 50¢ word to convey a message of importance.

It started with the popular current activity of paying for the person behind you in the checkout line or fast food drive-through. It certainly is  fine gesture of goodwill. I rarely eat at fast food restaurants, but started to wonder what I would do if my meal were paid for. Would I pay for the person behind me if there was someone behind me in line to keep the cycle going?

The more I thought about it the more it disturbed me. Why should my meal be comped when I have ample financial resources? Shouldn’t the money be applied where needed the most, with people suffering financial hardship?

The same thing happens at the grocery store. A kind fellow (or woman) pays for the groceries of someone next to them. I like this more because it is at least easier to determine if the person in question could use the financial help. But that isn’t a guarantee, however. I dress down often and look like a homeless man more often than not. You can ask my employees. I’ve been known to wander in wearing worn jogging pants and a t-shirt. Judging a book by its cover is a 50/50 proposition at best.

The act of kindness I find most beneficial is when someone pays the utility bills for several people who are struggling financially, as noted by their delinquent bill. 

Regardless the Christmas spirit, there is always a nagging voice warning me such behavior could be counter-productive or going to the wrong soul.

 

A Christmas Carol

I can’t imagine there is anyone reading this post that is unfamiliar with the short Charles Dickens holiday novel, A Christmas Carol. Most have seen one of the myriad adaptions of the book. Some renditions are really good and some are left lacking and untrue to the original story.

We all remember the ghosts visiting Scrooge: the ghost of Christmas past, present and future. It is the ghost of Christmas present that interests us most. 

As you recall, the ghost of Christmas present took Scrooge to see his nephew’s house and the laughter-filled party. It was a humble celebration for sure, but celebration no less.  But that was not all the ghost of Christmas present had to reveal. 

Upon leaving the Cratchits’, Scrooge was taken from the city of London to the “deserted moor” of a miners camp; then to a solitary lighthouse under the crash of waves; and finally to the desk of a ship far out at sea. In each instance the celebration was humble. Kind words, the humming of a Christmas tune were the extent of the Christmas celebrations. It was humility the spirit wanted Scrooge to see; humility while celebrating the greatest hope ever offered.

And then Scrooge heard laughter, the laughter of his nephew as he is ripped back to the scene of Christmas present closer to home. 

 

Propitiation

Now for our 50¢ word. You might remember this word from church if you are a person of faith. Propitiation is generally used in religion to mean “the paying of another’s debts”. A more accurate representation of propitiation is to “appease”. 

Today’s 50¢ word is required because the meaning is so much deeper and richer and the explanation spreads far further than mere appeasement. This is part of your life in the secular world as well.

To propitiate is to seek favor. That is opposite of my pay-it-forward philosophy. Paying for the person’s meal behind me creates a debt for that person. What if the person behind you is poorer than you and barely has the funds to pay for his own meal and the person behind him has a more expensive meal? You did no favors to that one person.

A child who breaks a vase might wash the dishes for mom before being asked as a peace offering; a form of propitiation. 

An act of propitiation must be conciliatory. You are sorry for some action or words spoken. Propitiation is more than saying, “Sorry.” It is an act meant to convey your deep-felt sorrow for having committed the act or saying the words. A single word is rarely adequate to propitiate. 

Why do we feel compelled to propitiate? And why is it so important? Because it really deals with trust. You show an act of kindness so the person knows they can trust you and the negative act or words were unintended. It is unlikely you would feel compelled to propitiate to a stranger. A simple “Sorry” suffices if you cut a stranger off. But a friend, someone you trust and want to trust you requires more if you value the relationship.

This is not to take away from the value to giving to others. This is the season of giving. But is it giving if you saddle yourself with debt? How will the people close to you, and that trust you, feel if you cause personal money problems because you gave too much?

I strongly feel the pull of charity. Life has been very good to me. However, I measure carefully the gifts I give. I do not want to enable bad behavior or make matters worse. Working through money problems is hard, but gives you the skills to survive the rest of your life without much outside help. There is something to be said about that. 

 

Christmas Present

While Scrooge learned to share with all after the visit from the Christmas ghosts, he focused his giving where it did most good. Scrooge understood propitiation. The fat turkey was sent to the Cratchits’ household; extra coal for heat was allowed at the office. 

The pages of my copy of A Christmas Carol are yellow with some pages torn. The book has been with me a very long time. I think I bought it when I was in junior high as part of a book drive at school. I thought it was a book of Christmas songs, if memory serves. I was unenlightened in my youth. Time has remedied the issue.

Periodically I pull the text from my shelves for a reminder on how to live life right. I look back in my life to gather a full assessment of where I have been. Everyone has things they would rather have forgotten. But in the dark brutal honestly is the only way. 

After reviewing your past, take an inventory of the present. Life, you will find, is probably a lot better than you allow yourself to enjoy.There are so many things to be grateful for: family, health (you are alive and reading this, right?), neighbors (they are better than you think), community and so forth.

Once you review your past and take an inventory of the present, you can create the future most desirable to you. Money problems can be addressed, love rekindled with your spouse or significant other, serving in your community where it benefits most. Remember, you cannot control what “they” do, but you have complete control over what “you” do and think.

 

Pay-It-Forward

If you want to pay for the meal of the person behind you, go for it!  It was not my intention to dissuade you from such behavior. There is something heart-warming about the activity. Even this weary-eyed blogger has paid for the groceries of an older lady at the grocery store when he saw the need.

The greatest gift of all.

Be sure to focus your gifts where they will produce the intended outcome. 

A final story: Years ago I was coming home from work in a snow storm. Tax season was getting long and I was tired. The car in front of me lost control, a snow drift throwing the car. He ended up in the ditch.

I stopped to make sure the young man was unharmed. People didn’t have cell phones in those days the way we do today, so I offered to drive him home. He accepted. 

As I dropped him off at his home he asked me what I wanted for the ride, indicating money. I waved my hand “no”.

He was a young gentleman and it was obvious he was not financially flush. I didn’t help him with the intention of earning a fee. The good feeling knowing he got home safe was enough.

I left the young man with these words: “The next time you see someone in need, you help them. That is all I ask.

 

That was a very long time ago. Sometimes I wonder if the young man ever carried out my directive. 

Please don’t think I am against giving. Gifts to friends, family or co-workers is a fine activity. Keep it reasonable so nobody suffers financially as a result.

Helping strangers is the ultimate charity. Homeless and abuse shelters are wonderful ways to give where it makes a large difference to those who really need help.

Some gifts are debts. You may hear of propitiation at church this Christmas season. You may wish to appease a family member or friend you treated poorly to regain trust. 

No matter your reasons, always be ready to pay-it-forward. Just never do more harm by the giving.

 

MERRY CHRISTMAS, kind readers. May the spirit of the season be with you and your family all year round. 

 

 

More Wealth Building Resources

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

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

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

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

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

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

The debate has been played out many times on social media. What is the best personal finance book of all time? What is the oldest really good book on money, personal finance and wealth? 

Many titles get a nod. The same names crop up again and again and for good reason. But one book is always missing from the list; a book brimming with massive advice on money and wealth. It amazes me people in the personal finance community always miss it.

Of course, I’m talking about the Bible, and what better time to discuss personal finances and the Bible than Christmas?

Before you click away, reconsider. I know some of you are not people of faith. I get it. I know some of you are devout. I get that too.  For both groups, and everyone in between, you might want to take a seat and digest the following information. You might be surprised at what you have been missing. There is at least several dozen Ben Franklin’s worth of money advice in the Bible. And you have a front row seat this evening as we engage a brief review.

 

A Proper Reading

There is a reason many people have lost faith and why people of faith have missed so much good stuff in The Good Book. They have been reading the Bible wrong. 

There are three ways to read the Bible: as a historical record, devotionally and as Living Literature.

People of faith dig in for the devotional inspiration and faith building. People like me want to pick apart the historical record and get lost sometimes on the difficulties between secular discoveries and Biblical teachings.

While a devotional and/or historical reading is appropriate, the Bible is best read as Living Literature.

So what is Living Literature? Living Literature is a way of reading a book where you search for significance applicable today. Archetypal stories are a perfect example. The story of Cain and Able and the first murder resonates with people throughout time.  Contemporaries understood the meaning. So did folks in the Dark Ages all the way to modern times. The same can be said for virtually every story in the Bible. If you read carefully you will see how it still applies as much today as it did to people at the time it was written down.

Lutheran Study Bible I use regularly for wisdom and financial advice.

Money tops the list! Stories about wealth and money are everywhere in the Bible, but piled high in the gospels of the New Testament and Proverbs in the Old Testament. 

All the books on money and wealth we claim are best on social media surveys all find their roots in the Bible.  

The book of Job is about having massive wealth—like being the richest man on the planet wealth—and losing it, dealing with the emotions and eventually winning it all back again and more. Not only did Job lose his wealth, he lost his health and family. He was one hurting dude and through it all he kept his head up and his wits about him as his friends chastised him. Unless you never faced a money challenge in your life, Job might be a good book to read. I recommend a Bible with plenty of notes so you understand what was meant by their actions as it pertained to them back in their day. Might I suggest the Lutheran Study Bible. It’s my favorite study Bible to better understand what I’m reading. Consider it a good investment.

 

Money Wisdom

Time for money advice that has stood the test of time. 

I will start with Proverbs. (Know that all I share here is a small example. Proverbs is brimming with financial advice for living a better and wealthier life. I only scratch the surface in this post.)

Wealth gained hastily will dwindle, but whoever gather little by little will increase it. Prov. 13:11*

Get-rich-quick schemes have been around since the beginning and this might be the earliest warning against such foolishness. And what do you know, dollar-cost-averaging made the list! Slow, but steady is the only way to accumulate wealth that lasts.

The rich rules over the poor, and the borrower is the slave to the lender. Prov. 22:7

Looks like Dave Ramsey didn’t say it first. I rail against debt often enough on these pages and for good reason. (Boy, I caught heck for publishing the post linked.) Almost all money problems start with overspending and debt. Debtors will do things to keep the lender happy normal people would never consider doing and Solomon knew it all those thousands of years ago.

Financial independence is a worthy goal; poverty does not bring the best out of us; debt is an acid that destroys the vessel which hold it. The wording in this passage is brutal: we are slaves to the lender. Now you know why the root of mortgage is death pledge.

Know the condition of your flocks, and give attention to your herds, for riches do not last forever; and does a crown endure generations? Prov. 27:23-24

This is why you need an annotated Bible. People without a farming background may not understand the significance of these words. “Know your flock” is like saying “Pay attention to your investments.” Wealth is fleeting. Many things destroy wealth and quickly. Wealth accumulates slowly through consistent effort, as we saw above.

The last part (does a crown endure generations?) is more about wealth than money; it’s about your legacy. Dynasties make the historical headlines and they all have one thing in common: they end. They usually end because later generation took their wealth for granted and therefore lost it.

Proverbs has a lot to say about leaving a legacy, as well. I’ll let you read Prov. 13:22 on your own.

 

One who lacks sense gives a pledge and puts up security in the presence of his neighbor. Prov 17:18

and

Be not one of those who give pledges, who put up security for debts. If you have nothing with which to pay, why should your bed be taken from under you? Prov. 22:26-27

Both these verses tell a similar story: don’t co-sign a loan except in the rarest of instances and only if you have the means to cover the entire debt yourself! 

Co-signing a loan IS a personal debt! As long as that debt is outstanding you are liable. My study Bible has this note for the first verse above:  While God’s people should be generous, especially in matters of forgiveness and love, we are to exercise wisdom and prudence in temporal affairs.

Isn’t this what virtually every book on those social media lists say? When you really think of it, it is exactly what personal finance bloggers (including this one) say continuously. The message hasn’t changed in 5,000 years! This stuff works and always has!

 

Modern Financial Advice

Now we get to move a bit closer to modern times, relatively speaking. Time to talk about all the money advice Jesus gave.

This may surprise the bejesus (a carefully selected word for this instance) out of you, but over half of all Jesus’ parables were about money and/or wealth. That’s right. Jesus spoke more about getting rich than about prayer or faith. The message is clear: God wants you to be rich right here on His green earth!

Once again I encourage you to grab a Bible to read all the stories because we only have space for a tiny fraction of the good stuff. If your library does not have a copy, a local church is sure to be excited to help you out. 

 

The kingdom of heaven is like treasure hidden in a field, which a man found and covered up. Then in his joy he goes and sells all that he has and buys the field. Matt. 13:44

Of course there are many layers of meaning to these words of Jesus. I’ll let you explore the additional, more spiritual meanings, on your own, as we focus on the earthly lesson involving wealth accumulation.

This parable, like so many, seems to encourage bad behavior. Did Jesus just tell people to use secret knowledge to our own benefit? In a way, yes!

Think of it this way. If you find a hidden treasure in a listed stock, would you buy it? Or would you tell the world first so they bought it up, leaving you with crumbs? 

If you discovered oil under a tract of land you might be tempted to sell everything you have to purchase said land. And there is nothing wrong with that! No more wrong than doing the same thing to gain everlasting life!

Notice Jesus did not tell you to steal the treasure. If you discover buried gold it is okay to buy the land to get the gold. Stealing is not allowed. 

The same applies to business. If I discover a new tax break the IRS did not recognize, I am free to exploit that to my benefit and that of my clients. If Elon Musk invents a new way to produce electric cars he is free to patent his invention to secure his discovery and make oodles of money off it. 

The Biblical terminology is different from today because the world when Christ walked the earth was different from today. Replacing farming terms (fields, animals) with technology and inventions brings clearer understanding. 

In other words, Jesus gave you solid advice to take steps to secure your wealth, including the accumulation of wealth. It is no different than the behavior you should have when you discover the blessing of Christ and his promise of heaven.

The best personal finance book ever written!

Now we turn to my favorite parable about money. It is a bit longer so I want to tell it in modern terms with comments interspersed. You can read Matthew 25:14-30 for the original.

This is a story about a business owner with three employees. The boss had to leave on an extended business trip so he decided to leave some of the company resources with his team. 

To the first employee he gave $50,000 to manage, the second he gave $20,000 and the third $10,000. He determined how much he would entrust with each employee by their level of experience and skillsets.

Now the employee given $50,000 started to invest the money. He put some in an index fund, but most was used to buy quality investments that were priced very reasonably, if you know what I mean. Through hard work, research and shrewd planning, the first employee knocked it out of the park and turned the $50,000 into $100,000.

Likewise, the second employee invested and traded, turning the $20,000 into $40,000.

The third employee took a different approach. He placed the $10,000 he was entrusted with into a napkin and buried it in the ground so he would not lose any of it.

Then the employer returned from his business trip.

He visited with the first employee. “Well, boss,” the employee began, “I took the money you left with me and put a bit into an index fund so we could at least track the broad market. The rest I used to buy assets that were worth more than the seller was asking. A few additional business investments, along with dividends, has turned the $50,000 you gave me into $100,000.”

The employer was delighted! He sang praises to the first employee, and said, “That is remarkable work, my friend. You have performed so well I want you as a permanent part of my business. I started a new division in my company while on the recent business trip. You are the perfect person to run that part of the business. The salary is quite large with plenty of benefits.” The employer patted the employee on the back with a huge smile. “Welcome to the team, son.”

Then the employer visited the second employee. “Well,” said the second employee, “thing were not easy. For a while I thought I might suffer a loss and somebody tried to hack our computer system and steal our assets. But, I kept at it, found good talent to help me get the problems solved and, can you believe it, I turned that $20,000 into $40,000!”

“Believe it!” said the employer. “I had no doubt in your abilities to rise above challenges. For your honest and faithful work I want you as a permanent member of this company. You will get the full package: stock options, pension, massive salary, the works, for this management position.”

Then the employer turned to the third employee. “Well, ah,” started the third employee. “I know you are a hard man, sir, working diligently for your money and would take no risk of losing money, so I buried your money in the ground for safekeeping.” He held out the dirt covered napkin with the $10,000 wrapped in it.

“You idiot!” screamed the employer. “If you know I am such a hard man you would know burying money in the ground is losing money due to lost opportunity cost.” The employer turned, yelling, “Security!”

When several members of security ran in the employer said, “Take the $10,000 from this man and give it to the first employee. Then throw this man out into the street to live with the vermin.

The parable ends with:

For to everyone who has will more be given, and he will have abundance. But from the one who has not, even what he has will be taken away. Matt. 25:29

I think this parable is a powerful statement on our world today as we deal with and complain about income inequality and fairness. I recommend you read and re-read this story again and again and how it neatly fits as much in our world today as that of 2,000 years ago.

Yes, I know I used small amounts of money to tell the story. That is the point! If you do not act diligently with even small amounts entrusted to you, how can you expect to be entrusted with much? 

If this story were not in the Bible and instead in the latest book from a guru in the FIRE community, all of us would be tripping over ourselves to sing the praises of such an enlightening and informative message. Those that have will be given more, and those who don’t even try will lose what little they have.

People want to gamble with their money (time the market) for a quick buck, but refuse to start and maintain an adequate retirement funding plan with accounts that offer tax incentives. Is it really that hard? Do you really want to be the third employee?

 

Final Words

Perhaps the most important financial advice in the Bible comes from 1 Timothy 6:10:

For the love of money is the root of all evil. (KJV)

Money is not bad; greed is. Working to have money is of vital importance and God places money and wealth front and center. I see so many people suffering financially because they believe “money” is the root of all evil, when that is the furthest thing from the truth. It is the “love” of money that is the problem. Avoid that and you are golden.

There is so much more financial advice than that just in the four gospels and Proverbs. Of course, if you are serious about wealth, you might want to read the entire Bible as Living Literature. The stories still resonate and for good reason. They are archetypal stories dripping with significance. Virtually every bestselling novel and movie can be traced back to some story in the Bible. You just didn’t know it.

Money and wealth are important. And yes, God wants you to be rich. Really rich! Not just in financial terms, but in physical, mental and spiritual terms as well. 

Be the first or second employee. Never succumb to the temptation of the third employee

 

MERRY CHRISTMAS, EVERYONE!

 

And God bless us, every one. 

 

* All quotes are from the English Standard Version, except where noted.

 

More Wealth Building Resources

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

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

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

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

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

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

The seven deadly sins, or cardinal sins, have been with us a very long time, outlining behavior we must avoid if we are to live a good life. 

The other side of the seven deadly sins are the seven virtues. For every destructive behavior there is a twin virtue. Achieve the virtues and you find the much sought after Holy Grail of wealth and happiness. 

There was also another, 8th, cardinal sin. In addition to Envy (at another’s success), Wrath, Lust, Greed, Gluttony, Sloth and Pride, we were also warned of something called acedia. Acedia is hard to translate from Greek to English exactly. It can mean despair or despondency. It is more than sloth or laziness. Acedia is giving up hope.

Acedia sounded slightly like what the monks were doing—giving up on life for a secluded life in a monastery. To solve the problem acedia was merged with sloth since there were similarities. 

Acedia  is a leading cause of financial problems for many people because acedia also includes an outlook of gloom and despair. Losing hope is the most destructive thing that can happen to you because is gets you to stop trying to do the right thing. The “what difference does it make” attitude ends all chances for better days. If these feelings of hopelessness become chronic you will suffer both physical and mental illness, profound sadness (emptiness and complete lack of joy) and destruction of wealth, if any yet remains.

Let’s take a look at the seven deadly sins and their polar opposite virtues before digging into fixing these attitudes before they do any more damage.

The Seven Deadly SinsThe Virtues
LustChastity
GluttonyTemperance
GreedCharity
SlothDiligence
WrathPatience
EnvyGratitude
PrideHumility

 

The Danger of Acedia

Acedia, or apathy and all that entails, leads to serious behavioral issues guaranteed to destroy all forms of wealth: mental, physical, spiritual, financial. 

The seven deadly sins are not a religious construct! Yes, we get the cardinal sins from the Catholic Church, but they are nowhere to be found in the Bible. These sins are not spiritual behaviors. When we see things like lust, greed and envy in others we are instantly turned off. 

The cardinal sins are not meant to convict. The seven deadly sins are the first step in outlining the proper behavior for a good life. When we see chastity, charity and diligence in others we are attracted to them. We trust them and for good reason. They have the virtues we all recognize as beneficial and helpful.

Once despair (or apathy or hopelessness or despondency) sets in it is a spiral down.

Think of it this way. Once you give up hope on your finances because the bills are too large and the debt a burden, bankruptcy is not far behind.

Not all bankruptcy is acedia. Medical bills can take over and a virtuous person will take proper steps to provide adequate medical care for her family members. If the cost is too significant the only choice is bankruptcy. (This is a United States issue mostly so readers from outside the U.S. will just have to take my word for it.)

 

Living the virtues is the only path to lifelong happiness.

 

The real danger of acedia (apathy) is refusing to take the proper steps to live a good life. Not funding your retirement account adequately means hardship in old age. Investing spontaneously in hot stocks instead of investing with index funds is also a form of acedia. Timing the market also falls within the purview of this vice. 

Living for today as if tomorrow will never come may seem like a happy life to the outside world, but it is really a form of despondency known as a cardinal sin for thousands of years. Eating a poor diet and not exercising to preserve and prolong your current health advantages is also a form of giving up encompassed by acedia.

It sounds so simple to just say “Despond” or “Despair”. The vice is much more pernicious! Like most vices, it creeps up slowly until it has you firmly in it’s grasp. 

Lifestyle creep is an excellent example. As your income increases it is easy to up your spending. You reconcile your spending as “deserving it” for working so hard. Instead of making money work for you; you now work for money as debt has a serious price: interest payments.

 

 

Building Virtues

“Thou shalt not’s” have a negative vibe. Tell someone not to do something and before you know they are up to their hips in it. 

Rather than preach against the cardinal sins and the 8th deadly sin of acedia, I will focus on encouraging the virtues.

Saying “Don’t lust” is easier said than done. Asking you to consider chastity is more likely to get positive results.

This is a financial blog. Telling you not to be greedy might go against what you interpret as success and financial independence. Instead, I encourage charity; the virtue opposite greed. Trying to not be greedy is practically impossible. But an attitude of charity and giving seems natural and something we want to do. Don’t confuse greed with merely having financial wealth either. Money is not a problem. Even large amounts of money are fine. The “love” of money is the problem and that is where greed resides.

Envy is a vice we all fall prey too. Envy is more than mere jealousy. Envy drives you to anger when someone else is successful. Hating someone because they won the race or retired earlier than you are good examples. You should never compete against someone “out there”. You are the only person you should compete against. The age you retire or reach financial independence is irrelevant. You may have had more medical issues or your friend may have had a push from an inheritance. 

You kill envy with gratitude. Regular readers know how strongly I feel about paying-it-forward, especially to those who will never be able to pay you back or even know it was you that provided the gift. 

It is impossible to feel envy while you are giving. Not all giving is financial either. The greatest gift doesn’t always require money to fix it. I once held the hand of a very old client (92 years old, if memory serves) over the Christmas season as she sat in a nursing home waiting to die. All her family was gone, dead from old age. I went to visit her because I knew she was nearing the end of her life. The next morning she was gone. Money does nothing in those situations. A soft smile and warm hand is worth more than all the money in the world and it was in my power to share, so I did.

To turn away is acedia. Paying-it-forward is the virtue. So is a smile and a kind hand. 

 

Practicing Virtues

What is your greatest weakness, your greatest vice? Is it pride? Then practice humility and serve without expectation of even a shred of recognition for your service. 

Perhaps you suffer from lust. The internet makes it easier than ever to satiate (maybe that isn’t the right word since lust feeds on itself) your desires. If so, you need to practice chastity in thought, word and deed. You may need professional help if the disease has taken root too deep.

A 2009 study indicated men confessed to lust more than any other deadly sin and women acknowledged pride as their greatest struggle.

This isn’t a universal statement, only the results of a single study by Fr. Roberto Busa, a Jesuit scholar. Each individual is different. If greed is your greatest vice, then this is where you need to focus attention. 

Greed is frugality gone too far. We see this with bloggers preaching the good news of early retirement by extreme poverty. It becomes a sickness which frequently leads to envy. Greed goes too far when there is no room for charity. Greed goes too far when it comes at the expense of you and your family’s well-being. 

We are all different. The virtue we most admire is the one that might need the greatest attention. A through examination of our-self might reveal one or more vices harming us and those around us. 

Benjamin Franklin worked on virtues every day of his adult life. He would check off each virtue he held true to that day. He failed often and admitted it.  Perfection was not the goal. Perfectionism is akin to pride. The goal was to improve each day and do so in an honest manner.

It is the attempt at growing the virtues in our life that matter.  Some of the vices are destroying your financial wealth. The old 8th deadly sin is far more pernicious than most of us suppose when it comes to wealth. 

If we can reduce greed, lust, apathy, pride and envy in our life we become better people. Our friends and family benefit since this is a form of paying-it forward and leading by example.

It is the Christmas season as I write this.  We have all received so many gifts. We can give so much of ourselves. This is more important than another trinket or cash.

It isn’t excessive frugality either. It is called gratitude. Gratitude for our family, neighbors, friends and community. A cheerful “Hello!” accompanied with a wide smile all year round is a true sign of a well adjusted individual committed to the virtuous life.

 

More Wealth Building Resources

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

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

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

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

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

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