Posts Tagged ‘business’

Motivational Goals

Build goals that motivate you, allowing you to live your dreams. Dream big, but follow these steps to keep balance in life. #Life #work/lifebalance #success #goals #motivationWhen I was a child I wanted to be President of the United States and an astronaut. At the same time, if possible.

My uncle, Kev, wanted to be the first person to farm on the moon. 

Growing up poor in the backwoods of Wisconsin caused us to dream of a life like that on our old black and white console television. The world looked so much more exciting on the glass teat (a term from the days when the television screen was a protruding bulb) than in our settled rural lifestyle. 

Such are the dreams of youth when our imagination knew no limits.

Many children dream of growing up to be a doctor, policeman or fireman. The visible (and exciting) occupations all make the list.

Some keep the extraordinary dreams. Elon Musk, Bill Gates and Steve Jobs are modern examples of people who created a whole new world we all live in. 

A hundred years ago it was Henry Ford, Thomas Edison, George Westinghouse and Nicola Tesla creating the world people lived in. Amazing how a century can turn incredible technologies into mundane necessities of life we only acknowledge when the electricity goes out or the car refuses to start.

 

Big Dreams

Dreaming big is what made our modern world. It is hard to believe electric vehicles would be where they are currently without Elon Musk.

In the past few days Richard Branson is reported to be floating the idea of the first publicly traded space tourism company. 

A hundred years ago industrialists gave us the airplane, automobile and a host of household conveniences. In one century we went from horses and wood stoves to space travel and computers. Space launches are becoming so common few get excited anymore when a rocket lights up unless Elon Musk has something exciting for us.

But you, like me, probably don’t have dreams quite as big as Jeff Bezos (Blue Origin). And even if you did you probably don’t have the resources, or access to the resources, to have any chance of realizing the goal.

Branson, Musk and Bezos are in a unique position of possessing the resources to realize the space dream. 

For the rest of us with fewer resources, we find goals that large the equivalent to Don Quixote chasing windmills.

 

Appropriate Goals

Goals of space travel are good to have. The space cowboys in the private sector must have had these dreams long before they could reasonably undertake their projects. Their dream of space travel, and more to the point, people living in space and permanent colonies on the moon and Mars, evolved from dream to goal. And once a dream reaches goal status it takes on a life of its own.

Most of us understand large goals are a step-by-step process. In other words, smaller goals are needed to attain the significant. 

You might not get a star if you reach for one, but you sure will not come up with a fistful of dirt. Dream big! Create goals that motivate. Create goals that make your life better. Create goals you will use to better your life. #life #goals #stars #goalsettingStarting a business and planning for retirement are large goals. The business doesn’t have to be a S&P 500 company to be significant. A local company is just as important as the big guys. Communities are more vibrant if there are more local businesses. A one-company town lives only as long as the board of directors thousands of miles away don’t decide to downsize or outsource. Small business does provide stability.

Retirement planning is something we can all understand. If your ultimate goal is to build a $1 million nest egg you don’t start by investing $100,000 per week until it’s done 2 1/2 months later! No, you plan. Each paycheck half goes to the retirement account. This allows tax advantages over several years so you can save even more.

A decade of investing in low-cost index funds leads to serious sized retirement accounts. Each pay period is a goal. Increasing contributions annually is a goal. 

Big goals require consistent smaller goals. Early retirement is a process you start at an early age. If you decide to retire at 45 you better have taken steps before you turned 44. Unless you are already loaded or a trust baby, one year is not enough for that large a goal.

We see the same practices in massive firms attempting the near impossible. Elon Musk has a goal of putting humans on Mars. But first he needs a reliable rocket! Musk has pushed the envelope with interesting reusable rockets that land themselves. It is a sight to behold. Then he needs to figure out. . . 

Ultimate endgame goals often require more time than anticipated. Musk may not get humans to Mars as soon as he wants. (He has a hard time keeping to his delivery promises at Tesla.) He will get a lot closer if he focuses on the task (goal) at hand.

 

Shooting for the Stars

We used to call lofty goals “shooting for the stars”. Today we are actually shooting for the stars. For real!

The advantages to society will be even greater than those provided by the Apollo program. In the 1960s the government (NASA) ran the program for the U.S. The only competition was the Soviet Union. Today many private firms are vying for a piece of the space market. More enter every year.

One of these new space ventures will succeed. Probably more than one. More competition will keep coming assuring humans will call more than Earth home. 

If you share the space dream it can be disheartening. Most people reading this will not lead a company blazing a trail into space. Most will not even be lucky enough to work for such a company.

But there are lessons we can all learn from these modern pioneers. Life on earth has never been so grand. Steven Pinker has done the research. We live longer and better than at any time in history. There is even less war. Check the data. Fewer of us die of violence than ever in history! And by all accounts it looks to be getting even better!

Small goals can motivate for a short time. A goal to visit Spain next spring is a good goal. If you had to plan for 30 years for that one trip and everything else was sacrificed, you might not hold interest in said goal for long.

Large goals hold our imagination. Financial freedom and retirement occupies the majority of adult thinking. It never gets old dreaming of retirement, or planning accordingly once retired, so we can continue enjoying the life of luxury. 

 

Goals that Motivate

Like my uncle, Kev, you might have extreme goals like farming on the moon. These massive goals will change mankind forever (when achieved) and have the ability to motivate, especially if you can take steps (smaller goals) toward achieving the large goal today.

However, life is a series of smaller goals. We want to pay off the mortgage, building a plan (goal) to do so. Starting a business is a serious undertaking many want to explore. And retirement is always looming (time keeps counting). 

Yet, before we can pay off the mortgage we must save a down payment and buy the house! 

This illustrates today’s message. People waste time thinking about paying off the mortgage when they should be thinking about saving as large a down payment as possible. You need a mortgage (or will have one soon) before you can plan to pay it off. Or as we say on the farm: putting the cart before the horse.

Retirement is the same. Too many spend time thinking of all the awesome things they will do in retirement and forget to actually plan to have a retirement. (Saving and investing.)

As an accountant I have several examples of clients who died shortly after retiring. In the last year a business-owner client died three days after retiring. He wasn’t that much older than your dearly, not yet departed, friendly accountant. My staff has reminded me of this with my recent personal health scare (not yet resolved). 

Goals should help you live better. Yes, grand goals of jet-setting around the galaxy with Captain Kirk is fine as long as you don’t forget to live while still walking God’s green earth. 

Musk and all the others are working to make space quotidian. They are also making the world a better place now in our everyday life with electric cars and with new ways to buy and sell goods and services.

 

Goal is a Four-Letter Word

The word goal has taken on dreaded status. Over the decades I’ve attended several informational and motivational seminars. Whenever the topic of goals comes up, heads duck. It shouldn’t be that way.

I think people dread goals because they feel obligated once they are on paper. There is also some fear of stating your goals because they entail your deepest desires. 

Sometimes the best thing that can happen is for someone to throe sand into the gears. Learn how to properly set goals for business, financial independence and retirement. #retirement #goals #financial goalsThe thing is, goals should change. Not every goal deserves consideration. It would be nice to skydive. Sure it would. But after careful consideration other goals might interest you more. More family time might be the goal you wish to pursue instead and the rewards (in your mind) might be better than falling from 10,000 feet.

Goals can take on a life of their own, taking you where you don’t want to go. A wise person will notice the subtle course change and review their direction to ascertain they are heading where they want to go.

For a decade now I’ve worked hard on a course change for my tax practice. I dived head first into the DIY tax preparation opportunity. The first foray was a disaster costing me nearly $80,000 in loses. (Tax deductible, I should add.)

My second attempt was rebuffed and fundamentally changed the normal part of my practice. What was a quiet tax office turning a reasonable profit erupted into a madhouse ending with burnout and health issues. 

My goal took a different direction and I felt obligated to more people than I really was.  The goal turned into a four-letter word. And a goal should never be treated as such.

Goals are guidelines you set up so you stay focused. When the telescope is moved you need to reevaluate. 

Sometimes the best thing that can happen is for someone to throw sand in the gears. You can get comfortable (I got comfortable). Then things can go really wrong which causes bitterness and loss of direction.

Yeah, you might have fewer clients and less income, but you will have a more satisfying life; you might have to work one year longer before retirement , but you can slow to a reasonable pace instead of trying to beat the record earliest retirement among your friends. Always, quality over quantity.

When used properly, goals are the most powerful force on earth. They can take us to the moon and make electric cars mainstream. 

Goals should help you manage dreams and help you live a better life. Maybe all the way to the stars.

And sometimes a quality goal is to quietly read a good book (or blog). To slowly absorb the story.

Take the time to live, kind readers. We only get one go at this. May as well enjoy the journey.

Remember, I’m pulling for you. We’re all in this together. (Red Green)

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

The Wealthy Accountant World Headquarters and Camp Accountant

Today I want to think out loud within earshot of readers. The benefit to readers is they get a better understanding of how I think about business, investments and life/work balance. It also allows me to crowdsource my thoughts  where readers can provide advice I can use to make a better decision. And, of course, readers have skin in the game as will soon become apparent.

Before we begin we need to know how we got where we are before we can move forward. 

 

How We Got Here

This blog is very important to me and I want to continue growing and improving the venue. I also own a tax practice since 1982 part-time and from 1989 full-time. There is a lot of history and memories.

When this blog started a piece of my childhood was still with me. Growing up on a farm in the boondocks of Wisconsin is like no other childhood. While running my practice I enjoyed raising beef and chickens. . . until a few years ago. 

Saving your business when illness strikes. Build and grow your business in the toughest of times. Guarantee your business lives on long after you do. #business #illness My first writing started in high school, but it took until the early 1980s for anyone to bother publishing what I wrote. Publication was rare, yet enough to encourage me to keep honing my craft.

Before The Wealthy Accountant (TWA) I wrote in a variety on genres. The last gig was flash fiction. The contract required 4 flash fiction stories per day, seven days a week. It sounds like a lot, but flash fiction is a few hundred words at best so it wasn’t a heavy load. And no research was ever required.

Once this blog started it was time to phase out the flash fiction work.

TWA was more demanding than any prior writing. Much more response from readers kept the workload heavy. Things that I loved doing had to go to keep up. With heavy heart I bid my boys (the steers) goodbye. The price was heavy for this country boy.

Still, I wanted a successful writing career along with my tax practice. Writing in my preferred field was a huge bonus. Unfortunately, the demands are more than most of my kind readers understand. Reaching a decision to stop farming illustrates the seriousness of my commitment.

While TWA enjoys a modest readership, a massive percentage of those readers need more than a short post. They have unmet tax and financial needs. So I accepted more clients; too many, in fact. To help those I couldn’t take on as clients I consulted with. And still I was only serving a tiny fraction of those crying out for help.

Tax season no longer ends on April 15th for me. Extensions stretch well into summer with clients not always understanding the toll this was taking. In between I consulted and wrote more blog posts. The goal was always to elevate my work higher and higher so readers enjoyed the greatest value.

And then life stepped in.

 

Boy, Interrupted

As the weight started taking its toll I adjusted as best I could. First the other blogs were cancelled. Then my farm was sacrificed. The weight of my choices extracted a serious penalty.

I have always been healthy. I did have a heart operation in junior high, but outside that I’m like a machine. I enjoy life and take the largest bite I can chew. If life is worth living it is worth living to the max.

It was easy to brush off the first warning signs. Yes, I was working long hours, but I enjoyed the work so why not.

To compensate for fatigue I started devising ways to increase my productivity. Two years ago I started building daily goals, especially when I worked weekends and holidays, to complete a certain amount of work. 

Surviving tragedy in business. Survive flood, fire and natural disasters. Keep your business alive when things are darkest. #business #tragedy #disaster #flood #fire #health #medicalVisualizing my goal allowed me to increase my production a fair amount. But every action has a opposite, yet equal, reaction.

Last summer I never snapped back from the prior tax season. The growing workload even from current client’s expanding (blog clients do that a lot) real estate holdings, investments and businesses gave me no time to rest. 

Spin down had begun and there was nothing left to give up. 

When the last returns were filed last year I tried to take time to relax. It didn’t matter. My system couldn’t recover. And then another tax season arrived.

My entire office reached burnout trying to keep my pace and eventually left. I picked up the slack because I gave my word to my clients. I couldn’t let them down.

Even without accepting new clients (and a few clients leaving) the workload increased. Clients from the blog always had significant issues. I never anticipated that accepting a 4-hour tax return client might end up taking 40 or more hours, as sometimes happens. 

The new tax law (TCJA) added to the tax season workload. It was my goal to speak with every client so they knew how the changes affected them. I was exhausted, but motivated and excited to serve clients.

Then the inevitable happened. Around the middle of February a nasty cough returned and refused to relent. Within a few weeks I could barely speak. Working with clients expended more energy than ever due to my health.

By the end of tax season the well was dry. My voice completely collapsed. Employees were concerned I might die I looked so bad. Nothing seemed to help. There were no options left to force more out of this country boy.

I blamed it on the long and cold winter followed by a cold spring. When the weather improved so did my health. . . temporarily.

Many tax extensions are still on my desk and it seemed every return I touched I couldn’t finish it. It was mentally draining. Something always came up. Information was missing and/or extra work required. Without any reserves I struggled to have any productivity.

The 4th of July holiday was a chance to catch up some without interruption. It was the final straw. An all-nighter is not what my body would allow anymore. 

The cough which never really went away reinforced and worse than ever. My voice collapsed again and this time it really hurt (as if it didn’t the first time around). 

The extra hours were for naught. Monday I left the office at noon barely able to drive home. The level of burn out I was experiencing caused a high fever. Tuesday I left early and again today. 

After tax season I went to the doctor to see if there was anything for the cough. There was nothing physically wrong with me. 

I was pushing past burn out toward a nervous breakdown; the doctor made that clear and warned me I needed to slow down. I was working at an unsustainable level and had been doing so for so long there was a real risk of permanent damage. 

With a desk still piled with extension I am back in the pit. 

No matter what it takes I will finish the work I promised. But one thing is certain; I will never survive another tax season business as usual. Changes must be made or it will all crumble to dust.

And this is where you come in, kind readers.

 

New World Order

I know my body will not allow another year or tax season the way I’ve been doing things. At the same time this blog is something special, helping countless people.

Once again something has to go. The blog is more important because it helps more people than working one-on-one in the tax practice.

Transitioning your business. Take your business to the next level. You worked hard growing your business. Make sure it lives on after you leave. #business #transitioning #growth #sale #sellingBut I can’t let go of my baby. I have run my practice for so long it is like a body part. This is what I am. Letting go is as impossible as cutting off my right arm with a dull butter knife. It just can’t be done.

And if I push one more time I may not live long enough to see the long days of next summer. 

My options have narrowed. The current breakdown after the 4th of July weekend scared even me. My throat swelled so much from the cough I had a hard time breathing. I might be slow, but I eventually get the message.

This is an existential threat to the tax practice and employees would like for me to change while I still can.

The office started throwing around ideas to deal with my health. Everything was on the table. And I mean everything.

You, kind readers, need to help us with this. Consider it crowdsourcing TWA’s tax practice. You actually get to help decide the future of the practice and this blog.

My practice is unique in many ways due to this blog. Over half the clients have multiple state returns. Almost all returns are complex requiring research. This isn’t the easy way to run a firm, for sure.

Now I will run down the ideas we had in the office with the pros and cons. Please add new ideas we haven’t thought of in the comments and give your opinion on the ideas we did have.

Remember, everything is on the table.

 

Complete Sale

My first reaction was to just throw in the towel and quit. With over 30 years in the field and my 55th birthday only a few weeks history, it might be time to finally do what the FIRE community always recommends: retire. 

It is not something I want to do. To walk away completely is alien to me. Once I recover from the stress I know where I will want to return and it will be gone. So much has been sacrificed already. Not this, too.

Pros: The biggest benefit is it would be over. I could return to health reasonable fast if the damage isn’t permanent. 

Cons: Do you kill the patient to kill the disease? What about my clients? Employees? Community? These people count on me. People don’t hire a tax pro 3,000 miles away because there is an equal choice two blocks away. My work is not done! Walking away would be such a waste after all the progress made.

 

Partial Sale

I checked around my community and found it will be hard to sell my practice. My clients require special accountants and if they were available locally I would have hired them by now. I also placed an ad on Indeed with a starting wage for a tax preparer of $26 – $32 per hour, plus benefits. So far not a single candidate. (A few accountants working A/P or A/R applied, but they didn’t read the listing requiring letters after their name and at least 5 years tax experience. My clients are not for the faint of heart.)

There is the possibility another firm may want to buy or merge with mine. However, most tax offices are working long hours already and don’t need an influx of extraordinarily difficult tax returns.

That leaves the option of a partial sale where I either sell part of the practice, keeping maybe 125 clients for myself, or just letting all but 125 clients go if a partial sale isn’t possible.

Pros: This half measure brings the headcount low enough where I still can enjoy plenty of tax work, still write this blog and have a life. (Oh, and remain healthy.) I would also keep two write-up (bookkeeping and payroll) clients, too. Consulting and the blog added to these 125 returns and two write-up clients would give me a very good income. I am seriously considering this option.

Cons: The biggest drawback is the office will be a very lonely place. Most clients live far away so very few will walk through the door. Every day I’d work alone in silence. Summer will be eerie, indeed. I will miss the tax office I once had and might end up with more solitude than I’m able to bear.

And how do I let go of so many clients? It would break my heart.

 

Hire Remote Employees

This is an appealing idea to me. It works like this:

I would hire people from various Facebook accounting and tax groups I belong to. I’ve noticed many tax professionals willing to work remotely in these private groups. Most have experience and I can vet them by just watching how they ask and answer questions within the group. 

There will still be work finding qualified employees, of course, but the gene pool will be much larger and I’m casting were the fish are swimming. 

The best part is I can hire more tax professionals than I ever could locally. Some semi-retired, very experienced, tax pro might want to take on maybe 25 returns a year. Another might want to handle 80; another maybe 50. No one employee will do so many that if one gets sick or quits the house of cards collapses.

Pros: Hiring tax professionals from around the country allows me to send tax returns local to the remote employee. Office space in not an issue. Many can be hired so there are plenty of skilled tax people on the team. This is my favorite idea to date and will be pursued regardless just to understand how it will work. It is also the best solution allowing all my clients to stay and get better service going forward and even add new clients.

My office is set up for remote employees already. I work from home often and it’s just like sitting at my desk. New remote employees will work the same with full security, like having their own desk in my office.

Cons: Herding employees around the country (they must all live within the US) could be like herding cats. Only time will tell. Secure remote setup costs money. Adding 10 or 15 new remote users could get expensive. Not prohibitive, however.

Another risk is taking on too many client because I think I have people to handle the work. Future growth must be controlled to avoid a repeat of what I’m going through now.

 

Selling Chairs

One of my accountants came up with this idea. It would work similar to beauty salons where the owner leases out a workstation to people owning their own hair care business.

I have never seen this done in a tax office before. There will be some technical hurdles. Each room would need new doors with security locks as each tax professional is their own business. They could piggyback my EFIN with some updates and modification on my part with the IRS. 

The front desk could be a shared expense. I could keep my 125 clients as listed above under Partial Sale and shift remaining clients to employees now running their own practice. Clients will have the exact same environment they are used to with the same support structure. No client would be let go under this plan!

One current accountant and a CPA employed by me years ago might be interested if the terms can be worked out. (I will make the terms work out for them.) 

Pros: I like this idea as it cleans my desk and allows me the freedom to explore other business ideas while serving all my clients in a respectful manner. My income goes down, but it’s like selling my business and renting my office without selling my business. Each tax pro can work with others in the building, helping each other (at their regular rate) wherever needed.

I don’t want to do bookkeeping or payroll so I can keep some clients that require such services by hiring another tax business in my building to handle that facet. 

My current employees will earn more and own their own business so they should be happier.

Cons: The building will need some remodeling and updating. The parking lot is too small and will need to be expanded. Upgrade costs will top $50,000 easily. I have the benefit of the partial sale as listed above with a steady stream of rent income. However, income will be less than managing it all myself.

The same issues exist as with remote employees. The entire office can rent usage of my server and the software. Printers can be shared. Real effort will be needed to structure this properly and there may be regulatory issues.

 

TWA World Headquarters

The choices listed above are what I have. If you have a better idea I’m all ears. 

If I sell 100% of my practice I will keep the office building and use it as TWA World Headquarters. Classes, training and other activities will be offered to the community. 

If I decide on a partial sale the building will still be re-purposed as TWA world headquarters. 

There are advantages to focusing on the blog. Financially, focus should allow the blog to equal and exceed what the blog and practice combined produce now within a year or two. 

If the tax practice fills the whole building I may decide to restructure the businesses. The tax practice would not have a sign out front anymore as TWA takes a more public image. Local clients will understand the name change. 

The future is this blog. Still, I always want to spend time in the trenches so I continue growing experience in tax application as well as theory.

I will share with you, kind readers, as this evolves.

 

Camp Accountant

As you may have guessed, Camp Accountant is on hold until my health improves. Sorry.

 

Decision Time

Realistically I need to make a decision on my practice before the extension deadline (October 15th). I will explore each idea to see what might work as some ideas might not be what I expect. 

The unique nature of my firm makes it hard to sell or merge. Someone willing to manage my firm would allow me to expand (another option). Unfortunately, I can’t do it all. 

What my experience shows is that there is a massive need for good tax professionals around the country.

I don’t want it to end here. Before I do something I regret for the remainder of my life, I need to make good decisions for the future. 

In our brave new world we can crowdsource ideas like never before. I don’t have to solve every problem. One of you readers might actually have the solution to my problem.

Don’t be afraid to share your ideas in the comments. The future of this entire dreams depends on you.

 

Update: A lot of you are commenting. I am reading all the comments, but lack the energy to thank and answer each comment separately. Thank you, everyone. You have no idea how much you motivate me. You are the best.

 

More Wealth Building Resources

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

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

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

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

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

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

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

Recovering From Financial Mistakes Like the Wealthy

Financial losses are hard to take. This is how the wealthy deal with financial hardships and mistakes.Regardless how experienced or educated you are you will still make financial mistakes, some of them humdingers. Personal finance blogs and media outlets frequently share basic financial mistakes to avoid: spend less than you earn, invest in index funds, avoid debt and so forth. All this is good advice, but it goes a lot deeper than this.

There are financial mistakes that involve much larger sums of money that can cause permanent damage to your financial situation. To top it off we are in a much different economic environment than ever before. 

Side hustles are more common than ever and no matter what kind of activity you consider a side hustle it is still a business. And business can inflict as much, and even more, pain than student loans, credit card debt or job loss. 

Today we will move beyond the basic advice and delve deep into the financial mistakes that are harder to plan for and hence avoid; the financial mistakes that can not only surprise, but destroy a fortune of any size. 

To help you understand the seriousness of these mistakes I will use examples from my past. The good news is I recovered from each disaster much wiser, using the new-found experience and knowledge to push profits to greater heights.

Some of the issues we will touch on are foreign ideas compared to the “spend less” advice. For example, you will see how over-confidence and arrogance caused me plenty of pain throughout my life. What seemed like a great idea was anything but, and I walked into it eyes wide open because of that pair of rose-colored glasses I like to keep handy.

Worse, I should know better. As a tax accountant with a history as a financial adviser, I should have know better. The things that got me were not alien concepts. And if they can get me they can get you no matter how smart you think you are.

My goal is to give you the tools to avoid these errors in thinking that virtually guarantee financial disaster. I will also share how I recovered from each event and grew from it. Hopefully you recognize the patterns of my errors in your behavior and make corrections before you suffer the same results.

 

Young and Dumb

In my younger days I made a lot of solid financial decisions. I also got lucky. 

I avoided the over spending and debt issues that plague so many and I never put any of my education, formal or informal, on the credit card. That means I was able to invest in mutual funds (I used actively managed funds back then) and individual stocks. 

Growing up in the backwoods of Nowhere, Wisconsin had its advantages. I never made a lot of money, but had nowhere to spend it even if I did. I was on a sort or forced frugality diet so don’t think I was somehow smarter than you. I wasn’t! 

Those first years of adulthood were formative years. I grew up on a farm and knew of nothing else. Then the family farm went teats up (we were dairy farmers) just under six months after I graduated from high school. Now what was I going to do with my life?

Growing up rural and poor meant I dreamed of wealth. I wanted to be the richest man alive some day and go to the moon, too. To farm, of course. I was an even mixture of Elon Musk and Warren Buffett.

Things didn’t pan out as planned, but I did better than most, so no complaints. I was also on the cuff of my first of many significant financial mistakes.

The family farm was gone, but the dream lingered on. It must have been about 1984 when I decided I would move my investing horizons to something that could grow wealth faster than the red-hot stock market of the mid 1980s. 

I kept money in individual stocks and mutual funds, but I was ready to tackle commodities. Soybean futures to be exact. 

Well, I had a farming background! I knew (I thought I knew) more than those pinheads sitting in an office about farming and soybeans. So I started trading soybeans and (OMG!) soybean options. 

10 success lessons taught by the rich. Turn failure into success! Your response to failure determines your level of success. Recover from financial mistakes like the wealthy.As with most financial disasters, things started out promising. I had the golden touch and don’t think for a moment people weren’t noticing. 

I knew farming and I knew soybeans, though we never grew soybeans on our family farm. 

I turned a small investment of a few thousand dollars into nearly $40,000. And that is when this poor farm boy started to experience an inflated skull.

I had managed to accumulate other investments (mutual funds and stocks) of nearly $100,000. Not bad for a 20 year old that started out with maybe a thousand or so when he turned 18.

Now that I had another $40k to grace my net worth ledger I wanted to get serious about this soybeans thing. I sold only mutual funds at the time to fund my next big push. However, family noticed my talents, too, and dear old dad thought he would hitch a ride to the tune of $9,000.

Well, if I hadn’t made every possible move to hex my parade I don’t know what else I could have done to accomplish it. 

And wouldn’t you know it. Now that I was all in I started to believe in my infallibility. I made a risky (all commodity trades are risky by nature unless you are hedging: buying and selling commodities as a producer or consumer of said commodities) all or none trade. If it worked there would have been a six figure gain. If it failed I would lose most of my account value.

At the time I didn’t realize how much I was putting on the line. I was too arrogant to see it. In three days it was over. Soybeans locked limit (the maximum move a commodity can move in one trading day) and it wasn’t going my way. 

I was actually lucky! When a commodity locks limit against you it is impossible to close your position. The losses can mount fast and the leverage is massive. 

Dad did not get much of his $9,000 back and most of my $40,000 was gone. I will never forget that feeling. It took a long time to recover emotionally. Good thing dad accepted what happened. He doesn’t talk about it all these years later.

 

Lesson 1: Commodities are not an investment!

I know this is a hard concept for people to understand, but commodities, along with land and other such so-called investments, are not real investments. 

Land is not an investment unless you intend to improve said land, creating value, the basis of investing. Gold, corn, pork bellies (bacon) and soybeans are NOT investments; they are speculative tools unless you are hedging your production or consumption of the underlying commodity. And if you are hedging it is a business tool to control costs; still not an investment.

Lesson 2: Don’t get cocky!

Just because you are on a roll doesn’t mean you are right. I thought I was so smart as every trade went my way. Then I lost all those gains and more in one stupid trade thinking I was smarter than everyone else. (Remember those office pinheads this farm boy was smarter than?)

Whether it be in business or any other endeavor in life, always know it might be luck working your way temporarily. Luck is a fickle creature and only a fool relies on such a fickle beast. Caution is warranted at all times when investing and in business.

Lesson 3: Don’t borrow to invest!

While I didn’t borrow from the bank, I did take money from dad (actually an equity investment) to increase the size of my trade. Both choices (bank loans or an equity investment from dad) are incredibly bad.

Lesson 4: You can’t consistently trade profitably!

I know, I know. Everyone thinks they can do it. We hear about money-center banks earning gazzions every quarter trading. Except they are hedging more than speculating. And when they decide to speculate we remember their name as Lehman Brothers: 158 years of conservative investments pissed away in a breath. 

Back when I was young I didn’t have the experience I have today. Now, after all these years as a tax accountant, I can show you an endless list of clients who have traded their way poor. I’m trying to recall even a single client who traded his way to a fortune and coming up blank. I do have several in mind who lost a life of work “playing the market”. 

Lesson 5: You don’t “play” the market!

Enough said.

Lessons Learned

The all or none mindset died for me that day. I never again bet the farm on a flyer. 

The loss also instilled in me a deep desire to research investments before investing or adding to an investment. I have made investing mistakes over the years, but nothing like that fateful day in 1984 when soybeans were going to send Hillbilly Accountant to the promised land. 

When it sounds too good to be true it probably is. I missed plenty of deals due to my caution. I also missed a fair number of blood-lettings, too.

Over-confidence, cockiness and arrogance are hard to avoid when enjoying a temporary visit from Midas. Controlling emotions are more important than almost any other factor when investing. People want to buy a “hot” market and get scared out of a bear market. Buying high and selling low has never been a good strategy. I have trained myself to react emotionally the opposite of normal human nature. When a great company is on sale I buy (after adequate research). I only sell if it makes sense in my personal situation. The “market” has nothing to do with my decision process.

 

Changing the World

Now I will share a business disaster from the archive. 

When it comes to business, including side gigs or side hustles, mistakes will happen and there is always a cost. A well thought out plan has half a chance of creating a profit. Then there are those times when we are introduced to humility.

Sometimes an opportunity that looks incredibly good fails miserably. Usually rose-colored glasses were involved.

You can reach your financial and retirement goals. See what this child does that virtually assures he will be a success in life.In this situation I was going to change the world and challenge the Big Guys.

You might have noticed the 1040.com banners on this blog where you can prepare your own tax return. Well, back when that program was just beginning (it was in beta the first year offered to the public) I saw an opportunity to create a massive platform. 

My professional tax software provider created the 1040 environment. I wanted to capitalize on this as soon as possible as other clients of the software provider had the same chance I did. I had to move quick to lock up market share.

To do this I developed a large advertising campaign: television mostly. My ad schedule was aggressive, especially for such a test idea. But I wanted to get a jump on the competition.

Long story short, I spent $80,000 in advertising before I pulled the plug early in the tax season. The revenue: $3,000. 

Yes, I lost $77,000 is a few weeks. Thank God I didn’t get caught in the sunk-cost fallacy! It was also a good thing my tax practice was established. I still had a profitable year, just $77,000 smaller.

The story is short, but the lessons many. Since the program is still around and much improved (one of the best, if not the best, in my opinion) you might surmise there is a happy ending to the story. There is, kinda.

 

Lesson 6: Don’t trick yourself into rushing a project!

It is tempting to forgo proper testing before a full product launch. The 1040 project had plenty of potential, but the program was still in beta. There were issues that first year of operation. And I had no exclusive. Even a jump-start on the competition didn’t guarantee I’d keep the clients.

The competition never materialized. Yes, the Big Guys were there and still are. But the worry other accountants might want to capitalize on this, squeezing me out of the market, never happened. I rushed for no reason and dropped a cool 77 grand for nothing. Plus all the aggravation!

Lesson 7: Sunk cost!

Good fortune smiled on me. This project was new enough and the capital invested didn’t cause a sunk-cost mindset to manifest itself. If it had the damages would have been multiple times larger. 

Lesson 8: Arrogance again!

I was so cock-fire sure I was right on this I was willing to go all in with a pair of twos. Stupid!

Liking an idea is NOT good enough! I needed to do market research and test the product more fully before unleashing such a large investment. I put the cart before the horse and paid the price.

Never fall in love with an idea or project. it’s business and nothing more.

Lessons Learned

Some mistakes are merely a lesson. In this case I knew I had a good idea on my hands, I just executed wrong. As 1040 improved their product, clients from the first year came back (at least a few did). So I had a quasi annuity on my hands. In 3 or 4 thousand years I might break even.

I continued to love the DIY tax preparation idea. Every year since that fateful first year I continued to promote the program with free promotional ideas. I published articles mostly with links to the platform. Growth was slow, but noticeable.

Then I had this idea to hook up with a popular blogger and sought an audience with Mr. Money Mustache. MMM didn’t care to partner with me on the idea, but gave it a push, which helped tremendously. 

This blog has also provided steady pressure on the growth trend. To date I have recouped nearly $40,000 of the original $80,000. At current rates I will break even in about six years; if it continues to grow, a bit faster.

Lesson 9: Never give up!

If the business plan is solid never give up. But always evaluate before leaping! And always test before spending. There are plenty of free opportunities to share information on your product or service. If I hadn’t sunk $80,000 into this beast I would already be profitable!

Lesson 10: Think before leaping!

As I already said. But it was worth repeating since this is the cause of a great many errors.

 

Coda

Of course I made many, many more than these two financial mistakes in my life. Thankfully most were small and I was a fast learner (maybe that should be Lesson 11). 

The biggest mistake you can ever make is to get gun shy after a financial disaster. Once you are too afraid to take action you are in a death spiral. 

You will make mistakes! Lots of them. Show me someone who never made a mistake and I’ll show you someone who never tried. 

All is not lost if you learn from your mistakes. 

Sometimes you even try something knowing it is a mistake just to gain the knowledge and experience! Keep the investment small so the damage is light, but do try. It is the only way to learn.

 

This post is the result of a question on Facebook. In the Choose FI group the question was asked about what our biggest financial mistake was. I commented tongue-in-cheek that I would need a few million words and plenty of time to explain the errors of my ways. A reader of this blog commented to me this would be a good blog post idea. I agreed and here we are.

(Tax season is getting long and fatigue is setting in. I didn’t want to research another tax issue to publish while swamped with tax issues at the office.)

We learn far more from our failures than our successes. Success convinces us we are right, like my original soybean trades. Of course we sometimes discover we were not as right as we thought we were. 

Failure on the other hand leaves its mark. We remember pain a lot longer than the pleasure. 

You will make mistakes, lots of them. I’ll make many more as well as my tax practice evolves along with this blog and the courses I plan on publishing soon. If any of these things fail they will only cause minor pain. 

I learned my lessons.

 

 

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