The biggest risk most people have when it come to building wealth is putting all their eggs in one basket. Having one full-time job supplying you with 100% of your income means you are either doing well or in a crisis.

Wealthy people and large corporations have multiple streams of income and continually work to develop more. Sometime the failures are huge. New Coke might be an example. In my practice I’ve had ideas cost serious money go down the toilet. I’ve also had spectacular successes.

Multiple streams of income are the only way to protect your wealth creation program. The same applies when you reach financial independence and decide to retire. All your eggs in one basket is a bad idea. Imagine busting your tail for a decade and having all your money in Enron.

Another problem revolves around active and passive income. Active income comes from work you do yourself. A job or small business is an example. There are only so many hours in a day to sell for income. You can work hard to increase your productivity earning more per hour, but you remain a slave to working for every nickel you earn.

Business owners have an advantage. Once the business begins operations employees become part of the mix. Part of what employees do end up in the owner’s pocket. If it didn’t, why would the own bother with the headache of hiring/having employees. Even though the IRS considers business income ordinary income, there is still a passive nature to the income stream.

Danger, Will Robinson! Danger!

The problem with working for every dollar is risk. If you become ill the income stops. Insurance can provide a backstop, but that is a limited solution you have only minor control over. A business owner can suffer catastrophic loss due to weather or other events. When the business suffers, profits evaporate. The worst case for a business owner is they are forced to choose between closing the business or feeding it to keep it alive.

The solution to these wealth building and preserving risks is diversification. More accurately, diversification into passive forms of income. Whereas, you have only so many hours in a day to trade for income, you have an unlimited ability to create and increase passive income. The best part about passive income is that most sources of such income reproduce automatically.

Mutual fund dividends and capital gains are easily reinvested. Rent can either be used to reduce leverage (mortgage debt) or to buy more properties. Interest breeds more interest.

Without a business your options are limited. Your main source of income is extremely top heavy with wage income. Even a business owner has risks. A handful of clients can make up a large portion of the profits. A large book of clients is a buffer between normalcy and disaster wage earners don’t have the luxury of. However, if you are in the retail music business things might be as bad as or worse than that of a wage earner. CDs and vinyl records don’t have the market they once had prior to digital music on the internet.

Passive Income Sources

There are a thousand sources of passive income. We will only focus on the big four today with an honorable mention to profits in a small business with employees running the place.

Dividends and capital gains are treated favorably by the Tax Code. Rent is considered derived from a passive activity and treated as ordinary income, but income property enjoys depreciation and other tax benefits. Interest is treated as ordinary income, but as we will soon see, a lot of interest is also treated favorably by the Tax Code.

According to Zillow, renters paid $535 billion in rent in 2015 in the United States. And the number is rising. There are about 125 million U.S. households and 43 million households rent. The U.S. also has about 250 million adults (adults, not the entire population).

Some simple math reveals an astounding amount of rent paid by renters/received by landlords. If the $535 billion in rent paid were paid evenly among all U.S. adults it would amount to $2,140! That’s right. Every U.S. adult would receive $2,140 of rent if it were divided evenly. If rent were evenly divided between all households it amounts to $4,280 each for 2015! Since renters probably don’t own income properties we can divide the gross rent paid by the approximately 82 million non-renting households and we get $6,524.

Most people don’t own income property, so the ones that do generate a very large amount of passive income. Of course, rent is not all profit. The mortgage requires servicing, maintenance is ongoing, and property managers need to be paid. Still, this is a staggering amount of passive income many people neglect. (Never mind my reality check on income property versus index funds.)

In the arena of passive income that takes effort is business income which we discussed above. Business income is “earned” for tax purposes. There are instances where it may be considered “unearned” and goes beyond the scope of this post. As mentioned above, a business can distribute massive amounts of money to owners. A manger running the day-to-day operations makes the income passive in reality, if not for tax purposes.

Work-Free Passive Income

When most people think of passive income they usually think of things you do once and then receive a long-term stream of income. Real estate can do just that if you have a good property manager. Real estate lacks diversification unless you invest in a security holding real estate. With a large amount of money you can invest in multiple properties around the nation to avoid regional economic risks. Or you can take on partners to spread risk, but partnerships have risks of their own.

True forms of passive income include dividends and interest. Before you roll your eyes, I want to share the incredible amount of dividends and interest paid out each year.

Before we continue, the statistics I’m using comes from the IRS, one of the most respected institutions of the United States. (Pardon me a moment while choke down that hairball.) There are other sources of information, but all are estimated using different methods of information gathering. The IRS data, while more accurate, is gathered based on reported income. Not all income is reported. However, reporting requirements (Forms 1099-DIV and 1099-INT) make the data reasonably reliable. Some dividends are so small they go unreported and older taxpayers may not have enough income to file. Interest is another animal. Form 1099-INT may be issued to most recipients of interest from banks and other large organizations, but land contracts and other similar devices may go unreported.

With the caveats in place, the IRS lists $254.7 billion in dividends for 2014. That works out to $2037.60 per household. It doesn’t sound like much, but two massive issues are missed here. One, most people have zero dividends, so those who do have a lot, and two, most dividends are paid to retirement funds or other corporations and aren’t included in these numbers.

Let me share a secret from the tax office. Most people have zero dividends to report. A few have a couple dollars to report and even fewer have up to $100 of reportable dividends. Then we get the people who receive real dividends. These folks report $87, 904 in dividends received from their non-qualified accounts alone. This number become more astounding when you realize the total market throws off about a 2% dividend yield. That means the value of their account is worth 50 times as much as the reported dividend!

These are normal people who invested and kept their fingers off it for a very, very long time! There is no big secret. Most never owned a business or inherited a substantial amount of money. They consistently invested with each paycheck and let it ride. Time did the rest.

It sounds like a lot, but a million dollars invested in a broad index fund should generate ~ $20,000 of dividends growing 5 – 7% per year. Starting is the hard part. Even harder is leaving your fingers off it. But for people just smart enough to invest consistently and refuse the temptation to play with their money, thinking they can outsmart the market, will do extremely well.

Interest in retirement accounts face the same issue dividends do. Much interest will not show up in IRS data. We’ll go with it anyway to see how much we can get ourselves.

The IRS reports taxpayers listed $93.9 billion of taxable interest and $62.5 billion of tax-exempt interest. This works out to $751.20 of interest income per household without consideration to interest earned inside retirement accounts and $500 of tax-exempt interest. Considering the low rates of interest today, this means the account values are at least 100 times larger, probably much larger!

Remember, this isn’t all the interest and dividends paid in a year. Corporations, banks and insurance companies earn tremendous amounts of income from these sources and are not included in the amounts. The numbers above are from individual returns only! The real total of passive dividends and interest paid is staggering.

Another difficult number to track is capital gains. The IRS says just over $705 billion in capital gains were reported in 2014. But how large is the amount of unrealized capital gains? It has to easily stretch into the trillion dollar arena!

Not only are you at greater risk when all your eggs are in the wage earning basket, but you get taxed hard.  Wages suffer income tax at ordinary rates, but FICA taxes as well. Rent, dividends, interest and capital gains receive varying degrees of preferential tax treatment when calculating your income tax, but they all avoid the FICA tax.

Remember the $535 billion in rent paid from above? Well, the IRS records show only $75.2 billion was taxed or a bit more than 14%. (Here’s my handkerchief. I know how much it hurts.)

Now I’ll add up the averages in non-qualified (non-retirement) accounts alone. Take the $4,280 of rent you should receive on average (only $1198 of which is taxed) and add $2037.60 in dividends and $751.20 of interest and $500 of tax exempt interest and the $5,640 of realized capital gains and we get $13,208.80.

Again, this seems like a small amount to the average reader of this blog. But these numbers don’t include earnings from retirement accounts. It also doesn’t include we can invest more and take a larger share from corporations, banks and insurance companies.

The real secret is in the value of the underlying accounts which reveals the staggering level of unrealized capital gains. In today’s low interest, low dividend environment, the average household holds north of half a million dollars! That means a lot of people are doing really well considering how many are doing so poorly.

And I never said a word about how much is stored in trust accounts!

Wealth is not a complex process. Consistency is the most important factor. Long-term investments in index funds have enjoyed superior performance historically. The amount of passive income to be had is large enough for everyone to do very well with only an average slice of the pie.

The question now is: Where are you on the scale? Average? Below average? 🙁 Above? 🙂

If you don’t like your level of passive income it might be time to do something about it now that you know where the money is.

Modern technology and automation is making our lives easier every day. Virtually every task humans do is also done faster, cheaper, better by some automatic process with a silicon chip inside it. These automation processes started showing up a few centuries ago and started changing human life in fundamental ways in the last 100 years. The pace started slow with a steepening incline of progress. Today, we face a challenge never faced by humans before: what to do.

Free time was always a part of human living. It took the Industrial Revolution to transform human stock into expendable machines. In hunter and gatherer days, man would spend large amounts of time idle, pursuing whatever created interest. We can still see a few remaining fragments of art at historical sites. Hunting parties might extend for days or even weeks. Once game was slaughtered and the meats cured, the pantry was full for an extended period of time. Weeks, even month were free to build monuments, create art, and tell stories around the fire.

Then the Agricultural Revolution arrived. Man had his first taste of what was yet to come. Humans were now slave to the ox and land. Working the land and domesticating animals kept man busier than hunter/gatherer days. Hunched over the plow all day brought the first lower back pain for the species. Humans worked more hours than ever. But once the crops were planted there was free time, followed by a flurry of activity harvesting the crops. Then, man settled in for a long winter season of leisure.

Modern World

The Cognitive Revolution in man occurred about 70,000 years ago, the Agricultural Revolution 12,000 years ago, the Industrial Revolution a few hundred years ago. Now we are entering the Information Revolution.

The pattern is clear. Each revolution in the human condition is shorter than the previous. The difference this time is the revolution may change humans to the very core forever. Humans as we know them now may very well cease to exist.

Or the species may finally, after 12,000 years, be returning to its roots with technology allowing us to live longer and happier lives with plenty of time to explore our mental pleasures.

Think how our world is on the cusp of a change like never before. Name one job that can’t be replaced by technology or automation. There is one and only one. I’ll share that in a bit.

Cars now drive themselves. It is only a matter of time before self-driving vehicles become the preferred mode of transportation. There go all the truck driving jobs, along with Uber drivers.

Tesla is nearing completion of the gigafactory in Nevada. People do not understand how many batteries this factory will produce. When fully operational, the Tesla battery factory will produce more batteries in one year than all batteries produced from the beginning of time by man. You have to stand in awe on what that means for the way we live.

And batteries are still in their infancy! Technology will make batteries more efficient a decade than they are now. Tesla’s plant is like the first Model T Ford facility. More and better is to come. If automobiles fundamentally changed our society, what will this single technology do? And what about all the other emerging technologies? Artificial intelligence hasn’t even begun yet. But it will soon. A lot of very intelligent people are working on the issues and history tells us we will get there faster and faster.

The cost of energy will drop over 90% in only a few decades. Batteries will allow a smooth energy production schedule. No more expensive and polluting peaking power plants when storage technology makes alternative energy even better. Roofing materials now can gather energy and store it in a Tesla Powerwall and in your vehicle. No longer do we talk about the technology coming online in a decade. It is here now!

Learning to Live in the New World Order

Life is changing fast. Guys like Mr. Money Mustache show us how to retire by age 30. Tim Ferriss goes one step further and says you can have a 4-hour workweek a 4-hour body, and be a 4-hour chef. I’m only a country accountant, but I can do simple math pretty darn fast. If you work 4 hours a week, exercise 4 hours, and cook for four hours, you have a lot of hours to do what you want. There are 168 hours to a week. Take out the Tim Ferriss hours and you have 156 hours left. We all know we should get 8 hours of sleep a day so there goes another 56 hours every week.

Holy shit! We have a full 100 hours to do what we want. I don’t know about you, but I am not that good at sitting still. Wars have started from people with less free time on their hands.

There is a solution. Machines can handle routine work and technology can simplify our lives. Machines can even think. But there is one thing computers will probably never be able to do: think cognitively.

Humans became modern humans when they began thinking cognitively 70,000 years ago. The process was slow and took millennia for the species to reach the next level of mental growth. We are returning to those fundamental roots of our ancestors.

Cognitive thinking is more than learning. Computers are doing that already and will improve rapidly. The kind of thinking I am referring to involves reasoning and understanding. A computer program can learn to anticipate an action the more data points it gathers. But solving a new problem is out of a computer’s reach. The program doesn’t even know the question to ask. People tell the computer the question and set the learning parameters.

All future jobs will involve cognitive thinking. Every job you see today will be replaced in whole or in part by technology. Even your favorite accountant sees the handwriting on the wall. Thirty years ago I started my practice with some new-fangled BS I think they called, ah, e-filing. Good thing I didn’t throw my hands in the air and say, “That’ll never catch on.”

In the last 34 years my accounting firm has morphed into a different firm four times. The first company was the old-styled paper and pencil tax firm. Then I stepped forward with e-filing before my competitors saw me coming. Then I merged traditional accounting services like payroll and bookkeeping into a small framework. Now the firm is changing again. The payroll department was sold into a partnership, bookkeeping is radically changing into a point and click system, and taxes are more scan than enter. So what remains for the new company? Consulting. The computer can prepare taxes just fine. What it can’t do is think ahead in an all-encompassing way. Technology will do all the things my company did before. All I will do is thinking cognitively. And there will be plenty of that to do.

In the Middle

So how does Pete (Mr. Money Mustache) and Tim Ferriss do it? Well, I don’t know so much about Tim, but I do know Pete. Pete recently finished a studio and gave an awesome write-up in his blog. He loves construction projects. A few years back I mentioned an interest in moving out to Colorado. One day Pete tells me he had some properties I might be interested in. I said I was waiting until my youngest finished high school. He sounded depressed as he said he agreed with my decision. I think he was excited about a remodeling project he could work with me. I didn’t have the heart to tell him I had a change of mind. A change of venue to a better climate is a fond idea, but NE Wisconsin is my home and where my heart will always be. Pete, if you read this: I am sorry.

Pete and Tim are true trail blazers. They are showing us the way to a future we cannot avoid. Tim spends his time coming up with new ideas on how to live, same as Pete. Tim’s style is different, for sure, but it all comes down to the same thing: cognitive thinking. No computer has come up with a novel idea without a human behind the controls feeding in the question. Tim says we can get stuff done faster and better with his methods. Sure, but that leaves us with even more free time to do . . .

You better get comfortable with thinking; not always a strong suit of the species. The added free time means you can spend time with those people who live with you. You know, the one you promised to spend the rest of your life with and the little short ones you helped bring into this world. There will be loving moments, but the bulk of your time will be spent exploring the mind. Exploring the world around you with your family will be a large part of the future. Not only do you get to marry your lover, you get to spend time with them. What a concept! And those mini humans, they are hungry for your attention. You have the time to share with them.

What about Money!

Oh, yes. Money. My guess is the workweek will need to shrink to 20 hours on average. More than Tim Ferriss thinks is necessary, but what Keith Schroeder *thinks* will be the endgame. And retirement will come sooner than you think whether you are ready or not. You will work less and wages will remain stagnant. But costs will collapse. If energy costs drop 90% you need less to live. If it costs less to shingle the roof, it lasts longer, and produces energy too, there is another expense going the way of the dodo. The only economic issue of significance involves government debt. How they will pay it off is beyond me. Good thing we all will have more time to think about it. Computers and technology will not find the solution, but they will probably complete the task when some smart humans come up with the idea.

Money will still be needed. With fewer jobs and hours available the issue of a living income arises. The first mention of a living wage I can find showed up in the 1930s* as the worldwide depression raged on. The idea work would never return due to mechanization was premature. This time is not different; we just finally reached the endgame people intuitively knew we would.

We all will live somewhere between Mr. Money Mustache and Tim Ferris whether we like it or not. Early retirement stories are hot news stories now. In the near future early retirement will not be a choice so plan accordingly. Or we can work more years, but fewer hours per week.

I think about my own work as a business owner. If you take all the dead time and talking with people, I really don’t work that many hours. And until I got crazy and opened my doors to a worldwide clientele, my life was very simple. I worked reasonable hours for 2 ½ months followed by virtually no organized work the remainder of the year. I spent my days playing on my farm, reading, thinking, and planning. Learning is what I do. It is what Warren Buffett does. It is what Pete and Tim do. It is what you will be doing. It isn’t a choice. It is the world we live in.

Your favorite job is obsolete. You will create your job in the future. Get used to it.

 

* I am reading It Can’t Happen Here by Sinclair Lewis, published in 1935, and there is a brief mention of a living income. Warren Buffett also likes the idea of expanding the Earned Income Credit to guarantee everyone receive $15 an hour through a tax credit if their skills do not garner $15 per hour. The new EIC would provide a much larger credit to those without children too. Interesting ideas we will have to face in the very near future.

img_20161109_031304

Pinky could care less who won the election. She is happy with a clean litter box, a bowl of fresh food , and a scratch behind the ears.

It is 3:30 in the morning and I just discovered who our next president will be. I had a nice nap earlier, but tend to sleep in fits and starts which is great for quiet writing time in the middle of the night. I’ll probably take another nap later this morning so I will be awake and alert. Back to the election.

The news reports say the Canadian immigration website collapsed from the deluge of visitors. Stock markets are down around the planet, but from what I read it is better than what it was earlier. One newsfeed had pictures of crying Hillary Clinton fans. It seems like the world is ending for people who worked so hard for their candidate.

There will be pain in the weeks and months ahead. There would be pain in the weeks and months ahead regardless who won the election. This is reality. America is undertaking a grand experiment. It isn’t the first time we walked the road less traveled. My political position is unimportant, but I will share my vote so you understand I am not writing this from the victor’s side. I voted for Hillary and had my reasons. None of that matters now. Trump will be the next President of the United States.

The Root of Panic

There is plenty to be concerned with. An untested politician jumps straight to the top. What could go wrong? Well, lots can go wrong. But a lot is always going wrong. We lived through a Civil War, two world wars, victories and defeats. And life kept chugging along. Now is not the time to panic. (There is never a good time to panic.)

Talk of leaving the country will solve nothing. Do you really think a major disaster within the U.S. would not affect every other nation on Earth? Running is not what we do around here (unless it is for exercise). And we damn sure don’t panic!

There is a primal fear of the unknown. America has waded deep into the waters of the unknown since its founding. There have been a few bloody noses and sure to be a few more. The unknown increases anxiety until we get comfortable with the new condition. There is no guarantee this will end in disaster. It could, but there is no guarantee it will.

A Story to Sooth the Soul

Back in the 90s every tax office was supposed to get into the securities business. It was a perfect fit for accounting offices and complemented the services we already provided our client. Your favorite accountant took the plunge.

I was a top 100 producer within six months of joining H.D. Vest Financial Services. Each year there were two major conferences organized by Vest. One year they had Nick Murray as a keynote speaker. He was a top producing mutual fund salesman in the 60s and early 70s when mutual funds were not the cool investment. Nick told us several stories. The one that stuck with me the most was a phrase he used when selling to clients. Murray said, “I can’t guarantee you the next 10% move in the market, up or down. I can’t tell you the direction of the next 20%, 30%, 50%, even 90% move in the market. But I can guarantee you the next 100% move in the stock market will be up, not down.” He was telling his clients the risk is being out of the market, not living through a temporary down market. Murray continued, “The stock market has always doubled and then doubled again. If it stops doubling, it means the world came to an end.”

There is another story I remember from my high school days about the Cuban Missile Crisis. Two stock brokers, an old seasoned broker and a young broker, watched as President Kennedy came on the air and informed the public the U.S. has target 50 Soviet cities with our nuclear weapons. The stock market collapsed. The young broker started yelling to sell. The old broker held him back and said, “Buy!” “Why?” the young broker asked. “We could be destroyed in a nuclear holocaust.” The old broker smiled and nodded. “If the crisis ends well,” the old broker said, “stocks will rally smartly. If the missiles are launched, our world comes to an end. The trades will never clear.”

The point is important for every reader: DO NOT PANIC! I know there is loads of fear. Never give in to fear. A decision made at the height of fear comes back to bite you in the ass with rare exception. Like Murray, I have no idea where the market is going. The only thing I can say with absolute confidence is that the next 100% move will be up, not down. If I am wrong there will be no civilized world around to hold me accountable.

winners-trophy-clip-artWho Really Wins?

No matter the economy there are always winners and losers. During the Great Depression some people managed to excel. During the boom of the 1990s a large number of people managed to build no net worth at all. Go figure!

Now is the time to take a deep breath and assess the situation. We are in a challenging economic environment, as always. Markets go up and down, as always. Yes, we are in new territory, but so was the country after the Federalists lost the Presidency after only two Presidents. I think history agrees with me when I say President Thomas Jefferson did okay as the third President.

Winning the game of financial independence or your goals toward early retirement (or any retirement, for that matter) has not changed. They will not change. What worked in the past is all that still works. Reduce (or better yet, eliminate) debt. Save like crazy. Saving half your income is more powerful now than ever. You build financial security and can buy lots of juicy index funds at a discount if the markets panic. (I love sales on Wall Street.)

Nothing has changed yet. For all we know this could be a great opportunity for America. If not, and all goes wrong, your frugal behavior has prepared you for the worst. By learning to live happily on less and with an ample nest egg, you can live as you always have without much problem. Heck, economic calamity just means a lot of stuff is sold cheap by people less frugal.

Control

Your fear comes from an anxiety about something that may never happen, from the desire to control something you have no control over. In the Stoic philosophy, Epictetus tells us some things are in our power and others not. From the Enchiridion: In our power are opinion, movement toward a thing, desire, aversion (turning from a thing); and in a word, whatever are our own acts: not in our power are the body, property, reputation, offices (magisterial power), and in a word, whatever are not our own acts.

Nearly 2,000 years ago Epictetus foresaw the recent election. He warned us “offices (magisterial powers)” are not in our power. We did what we could, what we had control over; we voted. For most readers there is nothing else to be done. Maybe someone in power will read this and engage their position to facilitate a positive outcome. You never know. I do what I can.

Epictetus continued: And the things in our power are by nature free, not subject to restraint nor hindrance: but the things not in our power are weak, slavish, subject to restraint, in the power of other. Epictetus went on to explain that confusing the things you can control with the things you can’t control causes you to blame others for your misfortune. Marcus Aurelius said it best when he said if you choose not to feel harmed, you haven’t been.

You need to relax if the election has caused you mental distress. Let it go. You can control how you live and spend. Your job could change tomorrow, but how you interpret the world around you is 100% in your control. The next 100% move in the stock market is up, not down, maybe. I could be wrong. Your life will be just as blessed by making the investment even if you never get a chance to use it later or if the world ends. By wanting less you find happiness in the moment. It matters not who is in a political office. It is only interesting background noise at best.

George Carlin said, “When you’re born, you get a ticket to the freak show; when you’re born in the U. S., you get a front row seat.” He was right. We are but actors on a stage, as the great Bard said. Most of our roles are small on the national or world stage, one fraction of a millionth percent. All pain begins with an elevated sense of self. You can control your opinion, therefore you control if you are offended or harmed by recent events. If you choose not to feel harmed, you haven’t been harmed.

Sometimes we think we are making such an awesome difference. Most of you know Pete from the Mr. Money Mustache blog. When I visited him the first time I thought he would be a well known character in his small town since his blog had so many readers. Of course many people did know Pete, but many more did not. It was a reality check. No matter how much good you do it will only scratch the surface. Most of our efforts will fall to dust over the years or eons. Understanding this allows us to put all events into perspective. All that matters is how we live, how we think, how we feel. It is our interactions with each other that give life value, meaning. I for one am glad you are with me. My life is brighter because our lives passed like two ships in the night. That is my worldview. For a brief moment we are able to communicate a message of hope. It is all any of us have.

Let go of trying to control things outside your power. Control you, control your mind. It is the only way to happiness; the only way to be free.

img_20161009_152000I am writing this as the tax extension deadline is a week away. Tax returns I delegated to my team are starting to boomerang back to my desk. Some issues are beyond the comprehension of everyone but me. This confuses me. How can I be so much smarter than everyone else? What makes me so special?

The first issue perplexing me is the Indispensable Man theory. It goes like this: I want to earn more money but I am unable to close the money accounts. As you can see it does not work. Avoiding the tough cases holds people back in their career. If the boss does the work you can’t claim credit for the project.

The second issue is that the Indispensable Man is only an illusion. There is no tiny bag of pixie dust hanging at my side I can use to fix any problem showing up. Okay, maybe I do. It’s called an absolute confidence I can figure anything out and get it done. I am not asked to perform brain surgery (and if I was I could do it given enough time to research the subject and consult with other professionals); I am asked to perform a task in my field of study. All the resources available to me are available to all tax professionals. Nothing special in my bag of tricks.

The Illusion

Once I started writing this blog the emails started pouring in. As you might expect, a large number were from people wanting personalized help, something I don’t have time for. Another common refrain comes from other tax professionals. They either want to know how to grow their practice or they work for a firm and want to strike out on their own, but are afraid to make the leap, worried they have no one to turn to with the tough cases.

It is true, when the tough cases come in and you are the boss, you are the final line of defense. It isn’t that bad! If a country boy, raised shoveling manure on a farm, can step into the captain’s chair and excel, so can you. There is no secret. Really! The only problem for the Go-To Guy is time. Handling all the tough cases with limited time is a problem.

51oxkptqfwl-_sx320_bo1204203200_Michael Jordan made basketball look easy. It looked easy because he was so good at it. Experts in all fields are the same. They make it look easy because they practice their trade every day, even during their free time. Jordan was once asked what he did after practice. He responded, “Shoot buckets.” What Jordan did to unwind after practice was practice some more! And he was the best and paid accordingly. He really was the Indispensable Man. When the money shot was needed the ball was tossed his way.

Creating the Illusion

Of the few emails I respond to, none have returned telling me they made the leap. None returned telling me they opened their own practice; none said they made the move for the premium paycheck. When I started my practice thirty years ago I have shelves of research materials. My business forked over thousands of dollars every year for the resource. It is so much easier today with the internet. I can research Tax Court cases for free with search algorithms better than I ever had when working through thousands of pages of folio leaf paper.

Michael Jordan and I have something in common. We both practice after practice. I read after I finish working and much of what I read is business or tax related. After a while it becomes second nature. It isn’t hard. The only issue is time. The clock sometimes runs out before the game-winning shot leaves the fingertips.

In the office a common question is: How did you do that? Simple. I opened Google. I read instructions and articles on the subject. When I finish I then research things that made me curious, expanding from the original issues.

It all looks easy from the outside. I ask the client questions and then plug the numbers. How did I know where the numbers go? Experience plays a large roll. Jordan did not start at the top; he worked at it. My experience gets me to the correct research material faster. Without experience I would still get there, only slower. I glance over the left shoulder at the clock when that happens. It keeps ticking.

What is the Indispensable Man Worth?

When I talk on the phone with accountants looking for inside knowledge I have on rising to the top I can hear their voice resign as I tell them the only path to get there. It’s disappointing. For some reason they think it is really hard. It isn’t. It does take time and effort. Thinking is involved.

Once the phone call is over I wonder how much the caller will lose over a lifetime with their defeatist attitude. You don’t have to run your own firm to be an Indispensable Man. Owning a business is hard work with plenty of worries. The problems never stop and all problems end on your desk. Running a business means you will do things unrelated to your field of work. Business management is a whole different set of skills required to learn.

Working for the man can be a pleasant experience. Some employers and managers are wing nuts. I get it. But if you rise to the level of Indispensable Man the rules change! For you. Employers/managers can talk smart and treat employees like shit when they are easily replaced. Finding good employees is hard, but a normal part of running a business. As hard as it is to find good employees, I still keep finding them.

Indispensables are irreplaceable. Once you rise into this category you make the rules. Your share of the honey pot of cash goes up because you bring in extraordinary revenue and profits for the company. You become a quasi partner without all the headaches of ownership.

The best part is you get to chose who you work with. Indispensable people inside a firm are limited by time. We already said that. The Indispensable Man decides who he serves within reason. They still have to be tough accounts. But they are not tough for you. You just need time to get the job done and for the research necessary.

img_20161009_141327Where Have All the Cowboys Gone?

We look for heroes to light the way. To reach the heights of indispensable the road gets narrow. There are no cowboys to ride in to the rescue; you are the cowboy. The feeling is like no other when you realize the buck does stop at your desk. The lead doctor in surgery is looked to by the rest of the team for direction. As the Indispensable Man they now look to you for guidance and direction.

The first step is scariest. I admit I had it easy. I was so stupid when I was younger I just jumped in with both feet and started my practice unaware of the consequences. Ignorance is a great way to avoid fear. My ignorance has waned over the years and fear is an emotion I have to keep under control.

It takes getting used to making decisions affecting the lives of others. The guy at the top must make the decision. Inaction is a decision, one you probably will not like.

The tax/accounting industry is in dire need of people willing to step into the Indispensable Man’s shoes. Few take the call, instead choosing the path of a data processor. You can’t complain if you get paid like a data processor if that is what you are. Lofty goals take work. Once you prove your worth the paycheck follows. The farmer who stands by his field and says, “Lord, give me a crop and then I’ll plant” will be sorely disappointed. The consequences will have a reverberating lifelong affect.

Building the Muscle

Overworking a muscle is prescription for several days of pain and soreness. I was fortunate to naturally know where I needed to go. The day I opened my practice I didn’t invite the biggest and worst cases. Instead, I take a handful of serious cases, with material new to me, each year.  I grow steadily. Oh, I bite off more than I can chew now and again. The muscles get sore. That isn’t always a bad thing.

Muscle mass is built by stressing the muscle, actually causing micro tears in the muscle fibers. The healing process grows the muscles bigger and stronger for the next workout. You increase protein intake as you work to build muscle mass. Building blocks coupled with stress equals growth.

The same applies to your profession. Research and study is your protein intake while the tough case one level above your pay grade is the stressor causing the muscle to grow. The more valuable you are the more people will want you. That is the moment you call the shots. You pick and choose who you work with. You have limited time and are experienced, and by past performance, the person to get the job done. The best of the best make the big money because they take the cases paying the big money.

If you are happy as a data processor, happy with a safety net of an Indispensable Man, then you have to accept your position. The Indispensable Man is not giving up his paycheck to a data processor when he is doing the heavy lifting.

Or, you can start on the road to excellence. You can start the journey to being one of the elite, one of the best. The one person everyone goes to the get the job done right.

img_20161006_070108Have you ever wondered what a typical day looks like for the Wealthy Accountant? Like most people, I have a routine that varies as personal matters dictate around a framework I prefer to follow. It is interesting to see how other people work. How they structure their day to get stuff done helps us decide how we want to compose our day.

Before we start I want to point out my typical day isn’t exactly what I do each day. The pattern I follow changes over time as I evolve. As I complete one project or start another, determines a large part of how I organize my time. Tax season is a different schedule than the remainder of the year. Even the seasons affect my work patterns. I tend to stay in bed later in the autumn than during the other seasons.

Many years ago I met an author who did his writing late at night. He would start writing at midnight for three or four hours before going to bed. In the morning his wife would proof read the prior evening’s work and add suggestions. It worked for him. I decided this must be an awesome way to get the creative juices flowing. The experiment lasted exactly one night. What worked for him did not work for me. That is the lesson before we start. Learn from example, but don’t copy. I have found what works for me. You will be different. Stephen King sits his ass in a chair each morning until 2,000 words of draft are out; it usually takes him until early afternoon. After writing, King goes for a long walk. The styles are endless. King’s style only works if it fits your schedule and personality.

It is fun taking a peek into a person’s life. It is natural to think what they do will work for us. It rarely does. Examples are just that, examples. My life is far from perfect; I venture most people would be shocked at my life if they stepped into my shoes for real. You can say the same. Over time we create rituals which are insane to the outside world. Our worldview, and life experiences, determines how we choreograph our life.

Typical Day

6:00 a.m. Sometimes I get out of bed at 4 in the morning, but normally it is between 5 and 6. During the autumn I stay in bed closer to 6, while 5 o’clock in more typical the rest of the year. In high school I milked cows before school so I got up every day at 3:30. Yeah, I still have nightmares.

The steers are gone, but a flock of chickens still grace the barn. I used to always take care of the animals. Now Mrs. Accountant decided to take over the job. I do the heavy work; she gathers the eggs and fills the water tanks and food trough.

Since barn work is not part of my morning ritual most days at this time, I start my day by either editing the previous night’s writing or continuing the previous night’s work. Today I am late so it will be afternoon before I publish.

Mrs. Accountant prepares my breakfast while I write. Most mornings are an egg dish in a wrap; other days are regular oatmeal and protein powder in a bottle. I’ll share the oatmeal story another day.

9:00 a.m. Since this blog started I check the stats and revenue before I head to the office. I am sitting at my desk by 9 or so.

Phone messages and emails occupy my morning. Prioritizing the emails is a must as over 300 show up each day in five different accounts. No more than an hour is allowed for emails.

If I did not get a chance at home, I open a book and read for 30 minutes. Many times I am reviewing Seneca or Marcus Aurelius, other times I read business books.

10:30 a.m. Mid-morning I work on client accounts and meet with clients. Depending on a client’s needs I make phone calls all day, sometimes into the evening and weekend.

Noon: I read while I take lunch. Monday, Wednesday, and Friday I go to the gym in the early afternoon for a workout. Tuesday and Thursday I go for a walk or jog. One day each weekend I don’t do a formal exercise to give my body a break. The other days I jog.

Afternoons: Once lunch and the gym or walk is finished, I spend the afternoon working with clients. Phone calls are a big part of the afternoon.

5:00 p.m. I go home most days before 5, except during tax season when I live at the office. If my schedule is tight I may go to the gym at this time if I didn’t earlier.

Mrs. Accountant has dinner waiting for me when I get home; I read while I eat. I spend time with family after dinner.

8:00 p.m. By 8 o’clock I start writing or reading and continue until 11 or midnight.

Weekends, Holidays, Days Working at Home, Days Off

My typical day at home is pretty simple. I get up a bit earlier when I stay home and take a short nap (20 minutes) after lunch. I spend more time writing and reading on these days. Working from home starts at 10:30 a.m. and extends later into the evening. Before 10:30 is either family or reading time.

At home, without road time I can focus on writing. Reading and writing are by far my favorite activities. The nice thing about working from home is I can call clients when they are available without filling in time at the office between calls. The best day is a productive day. Then there are days I do not want to talk about.

Only phone calls and emails from work come home with me. Unless I need to use a really old computer to prepare tax returns from the 1990s or before, I always do that work at the office where security is tight. Phone calls from home are on my cell which leads to problems. People think my cell is the office phone or a direct line. So when I call from home I use *67 now to keep my number private.

img_20161006_064320Crazy Things I Do

Work habits differ amongst professionals. I have a favorite spot to read and write in the living room. I wear noise cancelling headphones contractors wear as a way of closing the door when I work at home. The kids can watch TV or talk without a problem then. My favorite corner of the couch is always covered in books and research material.

Normal people sit in a chair and relax when they read or write. Not me. With rare exception, I sit on the floor with the laptop on the seat of the couch as I peck away at a blog post. If I am reading I sit the same way for a while and then I am up and walking while I read. Sometimes I end up outside walking around with a book. If I sit too long, like a normal person, I dose off.

Habits I Should Break

Starting a new blog is a sickness. Watching Google Analytics and the few monetizing resources on the blog is a time-sucking sickness. Previous blogs have taught me watching the numbers don’t change them. I’ll outgrow it. The time wasted watching numbers would be better spent reading other personal finance blogs and networking with those bloggers.

Bedtime

There is no such thing as normal. Normal is what works for you. My sleep patterns are all over the place. I might be up in the middle of the night reading and sleeping in the afternoon. My typical day is more a wish list than actual life for me.

As a business owner everything is work related. I live my business because it is what I want to do. I focus on family and family is a part of my business life. If it wasn’t, I wouldn’t have a family. Mrs. Accountant travels with me to most conferences and even local events. The junior accountants have daddy time every day. It’s important. I have two awesome daughters. They turned out well. Mrs. Accountant had to talk me into having kids because I always thought I would be a terrible daddy. Maybe I did okay. Mrs. Accountant did all the heavy lifting, however.

Now it is time to turn out the lights; morning comes fast in these parts. Tomorrow morning I will edit and then you can read.

And there is only one thing more pleasant than reading: writing.

l_camden_mentor_cops-2-1It breaks my heart when I hear reports of police shooting and killing an unarmed black man. This morning I read a report where a police officer in West Virginia was fired because he did NOT kill a man demanding to be shot, a so-called suicide-by-cop incident. Readers of this blog are aware I live in the county where the trial of Steven Avery took place; the topic of the Making a Murderer documentary on Netflix.

Black people are incensed by the killing of unarmed black men by police; they should be. White people are also killed by police, but there does seem to be a bias toward “shoot first, ask questions later” mentality when black men are involved. For a while it looked like retaliation killings of police officers at random would accelerate. It seems to have died down (or I miss the news reports).

Police have been the target of criminals for longer than the Black Lives Matter movement. I agree, black lives do matter and police need to act appropriately regardless the color of skin a suspect has. The moment police are targeted for harm, however, you have to stand up and just as loudly proclaim: Blue Lives Matter, too.

I have been critical of the police most of my life. I am critical of all government. With authority comes responsibility. Police are highly trained professionals asked to run into harm’s way when shit goes down. There is no doubt in my mind 99% of law enforcement officials are men and women of high moral character, values, and ethics. Unfortunately, the 99% of law enforcement officials who are honest are asked to make some very difficult decisions without all the facts, where lives are at stake, and given limited time to make the call. Some days you are damned no matter what you do. There have to be days it sucks to be a cop.

A World without Police

Imagine a world without men and women dedicated to keeping our communities safe. Now imagine waking each morning and going to work not knowing if this is the day a fucktard tries to put a bullet in your head because he wants to get away with stealing a package of Twinkies at the local mini-mart. Can you image working such an uncertain job where half the people like you for what you do and the other half think you are a “pig”? I wouldn’t do it.  Maybe an IRS auditor is loved less. Maybe.

Several years ago my office building was burglarized. The two geniuses who sodomized my building thought there was a soda machine inside and they were looking for some of that lucrative soda machine money to commandeer. When they discovered no soda machine they did the next best thing; they stole two computer monitors, a debit card, and forged a blank check from my business account.

The next morning the break-in was discovered and the police were called in. The police were assholes and elbows gathering information to catch the criminals and provide the district attorney’s office with charges. Before the day was out the police had a good idea who did the dirty deed and caught the guys a week later. Seems they were on a crime spree molesting soda machines all over town. Dumbasses.

The police were 100% professional the entire time. No doubt about it. The police were prompt, courteous, and respectful. I am certain the perps were not treated with the same dignity, but the situation is different when working with suspects. From what I gathered, the police still acted completely professional when arresting the two men.

Now think about this for a while. Imagine if there were no police. How often do you think my building would be vandalized, broken into, or damaged? Shit, some of these idiots look to the left, then to the right, see no cops and say, “Fuck it!” and break in anyway, or steal a car, or rape a passed out college girl. Once again, 99% of people in our society are good people; it is the 1% of idiots who fuck it up. It is this very small minority of people eager to do harm that makes me grateful the police are around and willing to drop everything and run to my rescue when the boom is dropping.

I am married to the beautiful and wonderful Mrs. Accountant, plus I have two awesome daughters. I have three more reasons to love the police and the work they do. How many reasons do you have?

Critical

Of course I am critical of police behavior. I wish the local police would acknowledge the errors made in the Steven Avery case. No matter the outcome of the appeals (Brendon Dassey’s conviction has been overturned by a federal judge and is being appealed by the state as I write) the people of our community have lost. If Avery did not commit the crime, the real criminal went free and my tax dollars were wasted, not to mention the damage to Avery’s life. If Avery is guilty, then the appearance of impropriety by the police could allow a murderer to go free. There is no way for justice to prevail in this case. As a community we were asked to reach for our ankles and smile as we reached. We must demand more professionalism from law enforcement.

Am I too vulgar as I discuss this? I hope not. I am passionate about the topic because it affects my clients, my business, my family, and my community. This is my home, too, you know. Earlier this year I was asked how I could live in such a corrupt community. The truth is, my community is no more corrupt than any other in the U.S. We are a small town with a big time crime and we did not have experience in these types of matters and it showed.

Support

All that said, I still support law enforcement 100%, even when they make mistakes. I know I never did anything wrong in my life, but for the rest of you so prone to indiscretions, need watching. Police work is not the most dangerous job in America, but it ranks up there. Police officers volunteered to take the job they do so I expect a level of professionalism even if part of the job description is getting shot at.

All police are highly trained. Most police officers are a credit to their uniform and profession. Pride causes police officers to defend an officer who crossed the line due to pride. It does not make them bad officers; it makes them human. It is easier to denigrate the accountants at Enron than for a police officer to chastise another officer in public. Public trust is the one thing that helps keep officers safe. Hence, the blue code of silence. You know as well as I we would both act the same way in the same circumstance.

Gunning for a Cop

Is there any legal job outside law enforcement where people actively try to kill you due to your profession? The military, sometimes. Drug dealers, sure, but that is not a legal job. There are people who want to kill cops just because they are cops! That is really messed up.

Minneapolis Police Squad CarThere is a logical reason for these people to want to kill law enforcement officers. They want to kill the defenders so the rest of us are more vulnerable. Think about that. When the manure hits the fan we all want the police to show up. We know police are our best chance at safety when things go wrong. When police are busy staying alive, we are at greater risk.

The recent news of so many killings of unarmed black men by white police officers has caused some to retaliate. A small number of bad white police officers who think black people are niggers and deserve to die stand out due to their devastating behavior. We can’t let the bastards win! I am white and so I enjoy white privilege. I like white privilege and refuse to give it up. Rather than me give up my privilege, how about we extend the same privileges to our black brothers. Just a thought. Maybe I am all fucked up in the head, but I personally think black people would be a lot happier with my privileges in life rather than bringing me down to their privilege level. Ah, must be my mental illness talking.

Let’s think about this a bit more. You read the news and learn another unarmed man has died at the hands of the police and it really looks bad. The cocksucker also looks like he is going to get away with it. Fucking police! So you get a gun and gun down a random police officer to send a message. But what did you really do? Remember, ninety-nine percent of police officers are courageous, dedicated, honorable, and professional men and women. The odds are you killed a good one. Did that really make your life better? What message did you really send killing an honest family man?

baltimore_police_officers_at_camden_yards

I’m not saying the Baltimore police did everything right. What I am asking is for you to think of the situation from their perspective. Then realize they are human. They look like a serious group of guys trying to keep a community safe under less than ideal conditions to me.

Environment

In America we have more guns per capita than anywhere in the world. I doubt war zones have as many weapons per person. Now with many states legalizing concealed carry and assault rifles legal, police are asked to walk into dangerous situations woefully outgunned. Ask yourself, Would you walk into a violent situation with that little pop gun most police carry at their side when the bad guys are sporting AK-47 assault rifles? I’d quit. And so would you.

Unless you are a police officer. They stay on the job, ask for some leeway, and keep showing up for work—and keep getting shot at! Now that I think of it, they are fucking insane. They must have medication for that by now. Must be one of those medications Martin Shkreli got his hands on and jacked the price 12,000%. Can’t afford that on an officer’s wage.

I have a suggestion when dealing with the police. Always show your hands so there is no question as to your intentions. Act professional even if the officer is not. Everybody has a bad day. If somebody shot one of my co-workers in another state I would be having a bad day too! I’d also be a bit trigger happy. Put yourself in the officer’s place and look at it from her viewpoint. What do you see then? I’m not tell you to answer any questions asked because that may be a bad idea. I would recommend following orders. The police have a job to do and once you start pushing they get nervous. How could they not? The officer does not know all the facts and does not have adequate time to figure it out. Taking you into custody is the one thing she can do to get more time to figure out what the heck is going on.

I also empathize with black people and other minorities. I wish I could say I understand, but no white person in America can truly understand what black people experience every day. All I want is for the police to stop killing—or even shooting or beating—unarmed black people. I want a safe neighborhood where the police are tough with suspects while maintaining professionalism just in case the suspect is innocent. I want police to get home safe to their families, too. The best day is a boring day at the office for them. Welcome to my world, officer, isn’t it great?

Black communities have suffered disproportionately. Regardless, I think 99% of black people respect and trust police, even if with guarded caution. Black communities want the same thing white communities want: safe, crime-free neighborhoods where their kids and family are safe.

What does this have to do With Money or Wealth?

Wealth creation and preservation is easier in a safe society with laws and rules. People forget how powerful a force police are in keeping our nation safe AND prosperous. My business exists because people don’t blow my building up or rob me daily. The police have something to do with that crime prevention. Even when the police are not around, people intent on harm know the police will be relentless once the crime is discovered. Without police Mrs. A and the girls would be at constant risk; even with police it is a concern. I can’t imagine the world my girls would live in without the threat of police action against those who harm women or children.

Without police I would probably be kidnapped and murdered when I refused to shut-up. (Who needs money when the shrill whine of this damn accountant never stops?) The next time you are critical of the police and their activities, also realize the vital role they play in our society and in our local communities. The men and women in blue are less than perfect, but they bust their asses every day to keep our world a safer and happier place. That allows me (and you) to run a business successfully, make a lot of money, preserve wealth, invest, create jobs, provide goods and services, and live a comfortable life.

I lift my glass to the men and women who dedicate their life to making mine better. Now I need to remember not to drive after lifting that glass or I’ll be sent to the slammer for drinking and driving. Damn cops.

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Nathan Haberman, the new district attorney of Calumet County. May he bring dignity, security, and compassion to our community.

This spring I attended Camp Mustache III in western Washington State. Between our leisurely learning sessions we hiked Mt. Si.  When our hike was over a group of us gathered at the base of the mountain as we started walking back to the Rainbow Lodge where we were staying. I was a guest speaker so people were interested in my personal life, including where I lived.

“Wisconsin,” I said.

“How close to that Steven Avery thing on Netflix are you?” a woman asked.

“I live six miles from the doorstep of the courtroom where it all happened.”

The woman looked at me with a twisted stare. “How can you live in such a corrupt community?”

I did my best to defend my hometown, but I was not making a sale that day. The conversation bothered me, but there was nothing I could do about it, so I accepted the facts like a good little Stoic.

Big Mouth Strikes Again

Ken Kratz was the special prosecutor in the Steven Avery case and the district attorney of Calumet County at the time. Ego got the best of Kratz as he was exposed in a sexting scandal a few years later. Governor Doyle filled the district attorney vacancy with Jerilyn Dietz. Nicolas Bolz beat Dietz in the next election in 2012. The district attorney’s office has struggled since the Kratz sexting scandal.

In May a client we will call Bryan wanted to speak with me privately. He wanted to support a local candidate, Nathan Haberman, for district attorney, but was afraid a past criminal record of violence would be used against Haberman if he provided any support, a man he felt was a strong defender of our community. Nicolas Bolz is the current district attorney of Calumet County. Every law enforcement agency in the county endorsed Haberman instead of the current DA.

Bryan’s criminal record stems from the 1990s. A lot of time has passed and he made changes to his life, starting a business, creating jobs, and making the community a better place. He wanted to make a difference, to exercise his civil rights. He is a strong supporter of community events and helps people in need. I like the guy; he has a good heart so I wanted to help.

Bolz, on the other hand, is a character. I did not think he would make an issue of someone contributing to a political campaign. (Small town should not mean stupid.) There was no doubt he would see the contribution, as it is a public record anyone can review. Candidates always want to know who is donating to the competition. The risk was small, but Bryan was understandably nervous.

Regular readers of this blog know I ran a hedge fund for many years. The fund bought charged-off receivables from banks (mostly credit cards) and then we scrubbed the massive files to determine who to file suit against and who to contact for payment plans. It has been a few years since I ran the fund. (There were actually two funds. When one reached its predetermined expiration date we started a second fund which had a close date of December 31, 2012. I never started a third.)

I still had all the software from the hedge fund in my server so I told Bryan we could set up a semi-scientific survey using the software. My office has multiple phone lines and a predictive dialer in place. The phone system is VoIP so the whole process would cost me nothing. Bryan and a few family members would run the phones when someone answered. It was discovered people would not care if his crime was revealed; it would not affect the election. The poll reached 223 likely voters with +/- 6.5% margin of error. Eighty-two percent of likely voters reached felt someone exercising their civil rights after committing a crime twenty years ago was a plus, not a negative. It was a violent crime so I was surprised the results were so favorable, but the overwhelming positive response gave Bryan comfort.

The Road is Long with Many a Winding Turn

Bryan made his political contribution and gave verbal support to Haberman. Bryan was still nervous and wanted to know if any polls were taken for local elections. There are not. So we went back to the software and conducted our own poll. We used a random number generator with all the phone prefixes in the county and let the predictive dialer go to work. This was the only scientific poll we took using live pollsters. We gathered data from 214 likely voters picked at random. The margin of error was +/- 6.5%. The results were clear: Haberman had an edge (4.2%), but it was inside the margin of error. It was up to Haberman to win the election. The poll was taken in mid-May and the election was August 9th.

Last week Bolz decided to spring his trap revealing Haberman’s contribution from Bryan. He called the local newspaper. They ran a small article listing Bryan’s name. Bryan’s business and the respect he has in the community meant the contribution did not hurt Haberman, it helped, as I expected. Bolz was leaving nothing to chance. He wanted an article printed in a larger newspaper; they refused. Bolz decided he would make his own news article and place it in the newspaper mailboxes around the county. Before sixty were out people were complaining to the newspaper. Now the newspaper ran the story. It read: CALUMET DA UNDER FIRE FOR LETTER. Bolz blamed his wife for the letters in the newspaper mailboxes. It was political suicide.

Bryan was in tears he might have ruined a good man’s chance of changing the county of “Making a Murderer” and Ken Kratz into a community people would be proud to call home. Last Thursday the newspaper article hit the stands. I started another poll, except this time it would all be automated, including the answers collected. We asked four questions:

  • Will you vote in Tuesday’s Republican primary? If they answered yes,
  • Will you vote for Haberman or Bolz for district attorney? Next,
  • Has any recent news affected your decision of who you will vote for in the district attorney contest? If, yes:
  • Who did you change your vote to due to the news report?

This is where it gets weird. The program worked the phones Friday through Sunday. The numbers kept changing as the weekend progressed. The margin of error was still +/- 6.5%, but now Haberman was winning by 14.2% and his polling numbers improved as the weekend progressed! People were changing their vote to Haberman as the poll was conducted. Voters were turned off by Bolz’s playground bullying behavior as it spread.

Here I am writing this Monday night. I am nervous about tomorrow’s election results. I told Bryan to go for it and he did because on my advice. My poll was scientific, but I never conducted a poll before. I expect about 10,000 people to vote tomorrow with 7,000 of those voters to vote the Republican ticket. In thirty hours I will know how smart I really am or what went wrong. You get to keep reading; I have to wait a day to finish this post.

Wednesday, August 10

Whew! I was going to publish this post even if it made me look like an idiot. Haberman won as the poll results indicated. There are some notable differences in the polling results that need review. Only 4,513 people voted the Republican ticket. Haberman won with 62.6% of the vote, winning by more than 25 points. My polling results accurately predicted the outcome, but was off by such a large margin it becomes meaningless.

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Nicholas Bolz, Calumet County’s departing DA. We wish him well in his future endeavors.

What Worked and What Didn’t

Bolz was sinking in the polls fast for his schoolyard bullying shenanigans. The poll could not predict within the margin of error because Bolz had committed political suicide at the last second with no time to make a come-back. I also noticed on Monday going to work a large number of Bolz signs were down and more Haberman signs were up; unscientific, but telling.

When it comes to my impromptu polling there were several issues involved:

  • It was my first attempt and my efforts may not have been entirely scientific due to my inexperience.
  • I used local phone prefixes, but did not consider cell phones. I worried about this from the beginning and did not know how to resolve the issue.
  • The pollsters were inexperienced.
  • In college I took a graduate class where we conducted a poll. I used this experience to conduct the current polls. College was a long time ago. There is a serious risk I was a bit rusty.
  • The final poll was all answered by touch phone; no pollsters were involved. It may have affected results.

Why did Bolz lose the election? Was there anything different he could have done to win? Yes!

  • Bolz’s own words and actions made it look like he planted the political contribution. It just looked bad, beating up on a guy who did something back in the 1990s. Really!
  • He blamed his wife. Ouch! A leader takes responsible! Blaming his wife made him look incompetent.
  • Bolz ran his campaign as if it were 1987. Newspapers don’t move elections the way they used to. He could have won the election if he:
  • Used social media. Facebook allows you to target your advertising dollars. For the amount he paid to mail flyers he could have had his ad front and center on all Facebook users in Calumet County. If he would have started dishing dirt sooner and repeated the lie often enough he might have gained some traction.

How Does This Apply to Personal Finance?

My little experiment teaches lessons applicable to money matters. First, I was too confident in my polling results the same way I can be too confident in an investment idea. Arrogance precedes a fall; “Ego is the Enemy”. Next, my opinion on Bryan helping the best man for the district attorney’s office without encouraging full disclosure to Haberman was an error on my part. I felt it was a remote possibility Bryan’s past would harm Haberman. It turned out okay, but it was no guarantee. It was not my decision to make; it was Haberman’s. I was wrong and I should know better. Bolz made plenty of rookie mistakes this election cycle; so did I. I’ll be a lot smarter next round.

Business needs government on its side. Businesses thrive in the communities they serve. Business owners should have a comfortable relationship with local officials, working toward a common goal of building a better community. Even non-business owners have local investment opportunities if they are aware of them. Getting involved in your community is of vital importance.

Finally, every event in our life is a learning experience. Bryan and I learned a lot this round. All the stories you read on the Wealthy Accountant are true with some literary license to protect the guilty and fit the story into one neat post. The goal is to teach lessons you can use to improve your life. You have civic rights; use them! Your community and your nation need you to get involved. Participatory government works! I don’t care what mistakes you made twenty years ago or yesterday, you have an obligation to facilitate improvements in your community. Then, maybe we can prevent the next Netflix documentary from ever being produced.

 

millennialsMillennials, loosely defined as young adults age 18 to 35 as I write this, are everywhere and messing up the machinery. Like a plague of locusts or alien invasion, Millennials are taking over the world with their opinions, ideology, work ethic, worldview, and their value systems. The old school is taking notice and whining about it plenty. Darn kids!

I disagree with my generation when it comes to bitching about Millennials. These young people do things different in some ways, but generally do a great job, even better than my generation in many instances. The slightly older (ahem) crowd needs to remember a few years back when we were the recipients of complaints from The Greatest Generation. We were asked why we were not so great. Pissed us off then, pisses us off now. So why do we pass the same BS to the Millennials?

The Millennial generation has the same issues previous generations had when cutting their teeth. Moving out and starting life is hard. Figuring out what to do when so many options are available is daunting. Times change, but people remain the same. More Millennials live at home with parent/s or rent than prior generations even if they earn enough to afford home ownership. It is too easy to paint Millennials as lacking commitment when seeing these statistics. Instead, look deeper. Our world is more decentralized than ever before. Mobile communications allow us to work and play almost anywhere on the planet without losing touch. Home ownership ties a person down who plans on traveling a lot. Working from home or on the road is easy and common in our modern world. Lucky us.

Millennials are not afraid to learn from older people. This is apparent in their massive following of Bernie Sanders. Young adults are not the problem. Their worldview is molded by technology. It is normal to respond as they have. Auto ownership, for example, is unnecessary in many communities as Uber and ride-sharing replace the need to own a car; it is cheaper too. Even desk top computers are making way for mobile devices. Millennials adopt modern technology, and the frequent changes in the technology, without angst; it is normal for them because it was that way all their life; they don’t know the old worldview because they never lived it. Yet they still follow an experienced old guy like Bernie and learn from him.

The rest of society can learn from Millennials, a valuable and diverse group of intelligent and talented young people. I offer this advice to my young friends:

  • Your Opinion Matters: You do not need 30 years of experience before taking a leadership role. Remember, past generations had young people lead into the future, too. Think Bill Gates and Steve Jobs. Old people get stuck in their ways. It takes a fresh set of eyes to lead boldly into the brave new world. Leadership is a skill partially learned, partially inbred. Young people can and should lead, even people older than they are. As an employer I have had plenty of older people under my command. You need to lead when the opportunity arises. If the old guy has a problem with the chain of command that is their problem, not yours.
  • Understand Complaints and Criticism are Part of the Process: Authority from the elderly feels more natural to many people. Authority is earned from experience. Older people do not always possess this experience. When it comes to my cell phone (or whatever we call the darn thing now) I defer to the younger generation. Since I have a tenuous relationship with my cell phone it is common for me to seek out a young person to help me when I am on the road. I would only ask an older person to help with my phone if no young people were around. Younger people, in my mind, have more experience and authority with newer technology. It might be untrue or unfair, but it is my worldview. The same applies to Millennials. Don’t take it personal when not credited for your work or face complaints. It is not about you; it is about them. Remember, it is difficult passing the reins to the next generation when they have been running the show for so long.
  • Abolish Fear: The future is built by people with vision. Your worldview will create tomorrow’s world you and your children will live in. What I think is awesome will seem a bit dated by most Millennials. Progress is required to handle the problems facing society; you are the solution. Previous generations can and will help in your goals. Your dreams and vision will be the world you live in. As older generations diminish by death, you will remain to live in what you created. Move boldly into your new world without fear.
  • Listen: You have so much to learn from the world around you and your elders. Let us tell our corny stories. The lessons we learned about life have served us well. Take what applies to you and entertain us with a laugh on the rest. Our experience is valuable. People do not change all that much. Relationships, work ethic, and beliefs are the only things changing; human nature is not. Who am I to condemn you for living together versus marriage? Who am I to spit angry retort over your work ethic when you have learned better balance in your personal life than my generation and accomplish more? Who am I to tell you which god to pray to or if you should pray at all? Listen to our bitching with an ear towards understanding what we really are saying, a tough act for sure. Allow us to help even when it seems counter-productive.
  • Teach: You have so much to offer. Take your knowledge, skills, and understanding to the generation behind you. Also know you will soon move to the front of the line as the new generation asserts itself. Do it gracefully. Complain, if you want. Teach your experience to the young and step back as they show how awesome they can be. Most of all, look back. Remember the Baby Boomers (I was born in the last year of this generation) and Generation X. We want to hear your stories, experience your joys and successes. We live for that stuff.

Life can take over. It is easy to forget where you are with so many demands starting a career, saving for retirement, and growing a family. Society has many unwritten demands for you to follow. Break the rules. Only follow the mores you choose. It is your life to live.

Society can act concerned as a new generation begins to make itself felt. I lack such concern. I have seen Millennials and am impressed. Never before in the history of mankind has such an intelligent group of people moved into the leadership positions. If The Greatest Generation built great things, Millennials will create the most awesome and futuristic world ever, where all people will be treated with dignity and respect. I am excited every day to watch this exciting world unfold.