Plenty has been written about income and wealth inequality over the last decade. There is another inequality gap expanding even faster than that of income and wealth. The gap between the top 1% and the rest is growing rapidly in this area and it had a direct effect on income and wealth.
I call it intelligentsia. These people are the most educated or learned (there is a difference) and therefore control their ability to grow income and wealth at will. These hyper intelligent people also have greater political influence.
The intelligentsia are the other 1%. Nobody is complaining about their growing gap of knowledge. The reason for this is clear. Anybody who wants to grow their level of knowledge can with few barriers. Because personal responsibility is involved we will never see a rally or protest claiming people are not allowed to learn.
Do not confuse this with formal education. Formal education is expensive which is a serious barrier many people cannot overcome. The intelligentsia know a formal education is only a small part of knowledge and the influence it brings. Most colleges teach nothing about sound investing. As the owner of a tax practice I can assure you colleges are not churning out highly qualified tax professionals. These and other forms of knowledge require a personal commitment to learning.
Time to Get Schooled
The newsfeeds are filled with the plight of getting a college education. Costs are rocketing higher and student loan debt is blasting further into record territory daily. But formal education isn’t the problem, you are.
Sorry to be so blunt, but there is no other way to put it. The whining and complaining about college costs are unacceptable and do nothing to improve the situation.
College is important. Learning is even more important. If you can’t motivate yourself to learn without the stick of a professor threatening, you will never be part of the intelligentsia. Ever.
What you learn in college or technical school is only a fraction of what you need. Formalized education is more about the experience, the contacts, than about learning. Learning comes from outside the institution.
I know this is hard to grasp, but can you imagine Newton going to school to learn the things he discovered? Who taught Einstein about relativity? Who taught the Wealthy Accountant about taxes? It was the same person in each case. We taught ourselves.
Newton and Einstein had to learn and then build new knowledge and understanding from the base they had. Your favorite accountant took one tax class before going full-time. Of course, I read massive amounts of material in addition to that single class.
I have a secret. When I started my business I took the H&R Block tax course. That was the one course. It was something like 10 or 15 weeks where we met one night a week (maybe it was twice a week; it was a long time ago) for a few hours. That’s it. From there I kept growing. I read IRS publications. I attended continuing education classes before I had my enrolled agent license and was required to. I read every tax book in the library and bought more.
I went from dumbest to the intelligentsia of the tax community in a handful of years due to my massive indoctrination.
What about Contacts
The biggest benefit of formal education is the contacts you make. The classroom learning is available outside the institution in most cases. In some disciplines the professor requires you step off the campus to experience real world activities. It’s kind of hard to experience an archeology dig at a desk.
The cost of college is the textbooks. Having a professor preach to you from the book she probably wrote herself and requires for her class to drive sales is a waste of time. The professor then tests you to see if you have been paying attention and reading the additional material. If you are part of the intelligentsia you don’t need a professor prodding you; you can learn faster and better on your own. The classroom is slowing you down.
Formal education has one huge benefit only available from a group.
The intelligentsia is a small group of people, the 1% of knowledge holders, who stick together. College brings people together allowing these unique souls the opportunity to identify each other and share ideas. Is it any wonder managers of the largest businesses and political leaders draw their teams from people they met in college?
Contacts are more important than knowledge. (It hurts to say that.) It’s true. Who you know is more important than what you know. If you know the right people you are better off than knowing everything there is to know.
Without a formal education, without the advantage of a college campus, how can a budding intelligentsia acquire the contacts she needs to excel? The answer is simple: conferences.
Once formal education is completed the intelligentsia needs a way to stay in touch. If they are not part of your team you need a way to contact these people when the need arises.
One of the most common questions I get in my office is: Do you know anyone who . . . ? In many cases I do. Why is that?
I meet many highly advanced performers during the course of my day. Some I met during my short tenure attending college. (I have no degrees.) Many I met personally at a conference.
Conferences are like mini college courses. The training is intense; the learning environment ripe. I learned more at conferences than college ever taught me. Things never taught in the classroom are discussed over a cold one as the evening wears on at a conference.
How to Be Part of the Intelligentsia
The intelligentsia is an unassuming group. Rarely do you find someone excluded. Admission is simple; be an intellectual or highly educated.
How do you get this way? By standing on the outside drinking in all the knowledge until you qualify. It doesn’t take long either. When knowledge is flowing fast and furious your learning curve is steep. Soon you have something to add to the discussion. It is at this point you are a member of the intelligentsia whether you know it or not.
The next question is: Where do I find these conferences?
Before I tell you that I remind you a college education starts before you attend your first conference. You can buy or rent textbooks from Amazon. Books are the dues paid to become a member of the intelligentsia. Rare is the intelligensa (yes, I know I made up a word; would you prefer intelligencer?) who has no personal library.
Read. Read every day. Read stuff that nourishes the mind. Novels are fine for entertainment, but you are an intelligentsia neophyte. Your mind is fertile ground waiting for the seeds. Never allow such a fertile field to lay fallow!
Once your mind has been planted with vast tracts of knowledge it is time to meet your people. You could read the textbooks and wander the local college campus discussing the issues with those you find. Some colleges allow this; other might ask you to leave. It is an idea.
As your level of knowledge increases you want focused increases of knowledge. This requires a venue specific to your needs; you need to start attending conferences.
Conferences cost money. This is where your real education takes place. Conferences have classroom training coupled with massive socializing. What you learn in the classroom is only the conversation starter.
What is taught in the classroom continues afterwards. The presenter is frequently part of the discussion. The same thing can happen in college, but getting the professor to be one of the guys is unusual. At a conference the people you meet are people you can contact when the need arises. When you need a team member you have a pool of intelligent and experienced people to draw from.
Conferences are everywhere! I have never met a conference I didn’t like. It’s hard in the beginning for the newbie. Don’t worry. Walk right up and join the group. You’ll be one of the cult members in about thirty seconds flat. Don’t be shy. Do NOT waste the opportunity. To this day I have never witnessed anyone getting shot because they joined the conversation. (A few should have been.)
It is impossible for me to list every conference in every genre so let me give you an example you can extrapolate from.
Let’s use my profession, taxes/accounting, as a discussion point. If you want to attend a tax conference/seminar there are thousands to choose from. The AICPA is a good place to start. An internet search of your state CPA organization will have additional offerings. The National Association of Tax Professionals (NATP) has many basic tax courses to pick from too.
Once you attend a conference or a few seminars you will end up on a list. Then the opportunities will come to you. The difficult part is choosing which conferences and seminars to attend with your limited time resources.
The internet has made finding conferences matching your interests easier than ever. By joining the intelligentsia you are joining an elite group. The intelligentsia earn more and have more. For some reason the 1% of income earners and 1% of wealthiest people in our society also happen to be in the other 1% too: the intelligentsia.
By focusing on income inequality you miss the point. Focus on learning and knowledge and you will be a card carrying member of the intelligentsia. Your income will go up automatically as a result.
Now, if you will excuse me. I have a book with my name on it.
There are two kinds of stories people like to read in the personal finance community: personal finance reports and “What am I doing” stories. Pete over at Mr. Money Mustache released his spending report for 2016 this past week and Jim at jlcollinsnh provided us with a report on life in the comfortable Wisconsin south woods.
Spending reports/progress reports toward financial independence interest me, too, even though my financial situation has been solid for a few decades. Spending reports motivate me, giving me ideas to cut consumption without sacrificing quality of life. Progress reports are always interesting. The writers of such reports usually express an emotion with where they are at on the scale of financial independence. From my viewpoint it seems so obvious they are in much better financial shape than they imagine. It is intoxicating watching these good people make their way to the Promised Land.
It’s been a while since I offered my own spending report. Sorry. Spending is so boring to me. God willing, I will get my 2016 report out before the end of 2017.
Kevin has started the redesign of this blog (I’ll pay him a soon as my new bonus credit card arrives).
Collins shared his life these past few weeks on his blog. I enjoyed his story and I was there part of the time! Such are the simple pleasures of life.
Your favorite accountant has a few interesting tidbits in his life you might find of value, too. Whereas, a lot of people in this community talk about their sedentary or retired life or world travels, I am busy acting like a mini Elon Musk. Call it a sickness.
Brain Storm and the Plaque on the Wall
I was invited to attend an online training class Saturday. A vendor paid my way. A large part of the course was tax related (there is so much to learn about cost segregation) with markets and finance rounding out the day. And I could do it all from my couch.
It was my whole day. The online class was 8 hours. Continuing education credits were offered for CPAs and attorneys, of which I am neither. As an enrolled agent I received no credit for participating in the course. So why did I spend a whole day of my life listening to deep tax issues?
First off, it never felt like a waste of time to me. It was a productive use of a day! I expanded my understanding of cost segregation and the Research & Development Credit, an area I am interested in helping clients with.
Learning is never a waste of time. I have a cute piece of paper on the wall that says I am Smarticus when it comes to taxes. You can wipe your ass with it. It’s just a piece of paper. The only time that piece of paper means anything is when I represent you before the IRS. That’s it! No more.
What clients are interested in is if I can help them. They do not care if I have a fancy piece of paper hanging on the wall. They want to know if I can help. Most people don’t even know what an EA is. (BTW, a CPA is an accounting professional who may or may not focus on tax issues; an attorney is a legal professional who may or may not focus on tax issues; an enrolled agent is a tax professional who may or may not engage in light accounting or bookkeeping issues.)
Learning is the most powerful thing any human being can engage in. Much learning is gained from reading; more from experience. Conferences are places where people can apprentice for a day or three with people with massive experience they are willing to share.
Not all gain is geared toward helping others. Learning helps me in all cases. Sometimes I can share that knowledge in my practice or with readers here; sometimes it is for personal consumption only.
Tuesday I am at it again, except this time it is all for me, me, me. I like me! Google has a one-hour online seminar focusing on improving results and traffic on this blog. No credits offered. The focus is on Google Analytics. In an hour or so Google will help me understand my traffic better so I can get more. Since traffic is a major stroke to my ego it is worth an hour of my life. It also educates me; worth much more than an hour of life.
Well, when somebody wants to help me grow and succeed I am all ears. I’ll find time to attend. It’s that important.
All this learning is neither selfish nor altruistic. Learning is about improving self, but also about sharing skills and experiences. Clients need my experience and skills to serve them. (And yes, serving can be fun. It’s not servitude or slavery. I serve of my own free will. There is a difference.)
After spending Saturday and part of Tuesday in formalized education, I hop on a plane Wednesday for Seattle, where I will share stories at Camp Mustache IV. My newfound knowledge, decades of experience, and finely honed skills will come into play as I serve the attendees of the Camp. It all goes round.
A Valuable Life
Why do so many people who reach financial independence early have a burning desire to write a blog on the subject? The answer is simple. Learning something is worthless until it is shared.
People like to give Mr. Money Mustache BS from time to time. The argument is he is not retired if he does a construction job on the side or writes a blog. The whiny pants don’t get it. Pete writes his blog to share his story and his experiences so others can join him. There is no value in creating a world where you are then locked in solitary confinement because you refuse to share information and experience so others of like mind can join you. None!
Most bloggers make peanuts. If you are doing it for the money I have a surprise for you. Don’t get me wrong, some make large amounts of money. Most do not earn enough to cover their costs, none the less compensation for their time. I wouldn’t be here if it was only money. I expect to do well (don’t we all), but money is not the motivator. Sharing is.
GoCurryCracker has one of the best—if not the best—personal finance/early retirement/financial independence blogs on the net. Here he shares his tax return for 2016. He’s not doing it for the money! And he is at the top of the pile. Sure, MMM earns more, but plenty earn less.
You can trust me when I say this. (Nothing good happens when somebody tells you those words.) I am one of the few tax guys in the genre writing like a Wildman. As a result I get to see (and prepare) a lot of tax returns for said bloggers. I know what they make! And it ain’t pretty. If you don’t love writing, blogging is not a place to earn some easy money.
Life is only worth something when you share it. Dick Proenneke lived alone in the wilderness of Alaska for 30 years. Yet his life only had value when he shared his story by recording his life for Public Television. Millions of people have heard Proenneke’s story and gained powerful insights on how to live life better all because he shared his story. This accountant’s life has been improved immeasurably by his story and life.
What a Waste
Learning can improve your life; teaching improves your life more. The teacher always gets more than the student. You owe it to your family, friends, community, the species, and yourself to learn every day. You are also required by an unwritten code to share this knowledge far and wide. It does not create competition; it creates a vibrant community.
Read widely every day. It is as important and eating, sleeping and breathing. Share. I write a lot on this blog. You are not required to go to such extremes.
You must share to increase your own learning! Never be selfish with your knowledge and experiences. Life is wasted by never engaging; you can also waste your life by learning everything and sharing none of it.
Smart people take every opportunity to learn. True leaders learn at every opportunity. If you want financial independence, if you want early retirement (any retirement at any age for that matter) you must focus your life around learning. And sharing.
Wednesday I get on a plane and head to Seattle and return the favor by teaching some of the most intelligent people walking the Earth. No credit; only lots of learning and fun. Sharing my story with friends new and old. I am Smarticus.
Many years ago a young man entered my office wanting to see me. He had a fan folder filled with documents and needed his tax return prepared. In a weak moment I allowed him a meeting without an appointment. As I always do with a new client, I started to ask questions. It is my firm belief that you must know your client before you can help him.
Opening a file for a new client requires their Social Security Number. He questioned my need for this information. I explained how I cannot even open a file for him without the SSN. He grudgingly provided the number. As I continued asking questions to understand my new client I was met by a wall of resistance. Finally, the young man had had enough of my questions. He informed me I was on a need to know basis, to which I replied, “You need to know you need to leave.”
The IRS sends agents to accounting offices periodically to test accountants, practices and procedures. After digesting the meeting with the young man I came to the conclusion he was an IRS plant there to test me. Accountants under pressure to build a client base may succumb to temptation. The IRS wants to know which tax professionals are willing to step over the line when pressured by a client.
For some reason I do not feel pressured to cheat on taxes. The tax code is filled with too many opportunities to reduce your tax load without cheating. Savers also have less incentive to cheat as they are treated preferentially by the tax code. I am only interested in the correct answer, not a certain result. If you owe money, you owe money. We can work on ideas to lower your tax bill going forward, but what is past, is past.
Attorneys, doctors, and accountants all need to know their client before prescribing.
Keith’s Rule # 14: Prescription before diagnosis is malpractice.
Knowing the client takes more time in the beginning than the actual preparation work. Some of the learning takes place by undertaking a deep review of the paperwork provided. Most details about a client, however, is gathered by questions. My files are filed with copious notes on clients. Before I prepare a tax return I review notes from past years.
Why is it so important to know your client? It may seem obvious for a doctor. Can’t a tax pro just plug the numbers and go? Sure, if you are a data processor. My clients want more from me and I provide it.
There is a more important question, however. If knowing my client is important, how much more important is it for you to know yourself? The questions I ask are vital in helping me prepare an accurate tax return and provide appropriate advice. You need to have an equally intense Q&A with yourself to understand what you really want in life. Without a full examination of your personal goals and values you will never get the results you want.
The questions I have when meeting with you will be different than the ones you will need answered by yourself. You need to ask and answer certain questions only you can answer. By answering these questions you will gain a deeper understanding of what is really important to you. Here are a few sample questions:
- When do I want to retire?
- How much do I need to retire?
- What will I do in retirement?
- What really makes me happy?
- How much stuff is enough?
- Family? How can I have an awesome family life?
- What interests me most?
The above questions are only a starter. The questions you ask will lead to other, different questions. Maybe you want to reunite with your children or spend more time with a significant other. Others will be focused on early retirement or travelling. For the same reason I ask my clients different sets of questions after I get the basics down, you will also have questions unique to you. Allow your mind to go where it wants. Don’t force it. By having a productive self-talk you will gain a better insight into your personal beliefs, interests, and passions.
Real Life Example
I have always been lucky. Things always seem to turn out right for me. A seeming disaster turns into a wealth of new knowledge I can use to better my life and gain more happiness. You can experience the same luck I have.
Growing up on a farm in rural Wisconsin is not a recipe for financial wealth, especially when the farm entered receivership the year I graduated from high school. Talk about plans going down the drain. It turned out to be a massive blessing. My life took a ninety degree turn the same time I entered adulthood. Without the family farm going under it is unlikely I would have ever entered the tax field. I would have missed all the great people I met along the way, including writing this blog.
Questions were very important to the young man I once was. A few years later I met Mrs. Accountant and married her at age 23. I asked serious questions of myself back then and also of my new bride. We discovered our values when it came to work, children, spending, and retirement.
By age 30 Mrs. Accountant fully retired. Our first child entered the world. It was important for mom to raise our daughter. It was through questions that we understood our values regarding children. Both my daughters spent the majority of their time with their parents rather than a daycare provider.
My values regarding my children were different from Mrs. Accountant. I enjoyed the kids much more when they got older. Eat, shit, and repeat never appealed to me. Cute never offset the reality. Still, I bonded with my girls. I held them, talked to them, and even changed the occasional diaper. Once the girls started walking I was all-in. Now we can play games and communicate! I kiss my girls, all three of them, every day and tell them I love them. My values differed from Mrs. Accountant, but were still of the same thought when it came to loving our children.
The same conversation early in our marriage revealed another value. Whereas, Mrs. Accountant is totally content at home with the girls, reading, playing in the garden, etcetera, I am not. For twenty years now I have promised I am going to retire, a real retirement where you sit around all day. I can’t stand it! I tried. I really did. It got so bad I started countdown clocks to help me prepare for the day I lost my work family. It did not work.
I gave up on countdown clocks. Questions allowed me to understand who I really am. I am a father, husband, and business owner. I am also the happiest person I know. Every breath is a pleasure. There are probably groups out there for sick people like me. I imagine the first meeting would go something like this:
I stand: “Hello, my name is Keith and I am a workaholic.”
The group in unison: “Hello, Keith.”
I continue: “Sitting around in this room jawboning is irritating. So, if any of you have a tax issue, or a business idea, or an investment question, I will stay as long as necessary to help you solve the issue.”
I sit. The room face palms while shaking their heads.
Was it something I said?