For thousands of years in the Western world the best way to be noticed was to have your book banned by the church. Intelligent modern authors would welcome such attention as it guarantees their work will be lifted from obscurity into the light.
Every year books are banned. Sadly, your favorite accountant has never made the list.
If I can help it.
Censorship doesn’t work well with me. If you tell me I can’t read something I’ll not only read it, I’ll buy it and keep it on my shelf. When a warning is issued to avoid knowledge my suspicion is raised as to the warning. The government and self righteous people are motivated by a personal agenda to hide the truth and it is a sure way to get people to look, including me.
Book banning isn’t something limited to the Dark Ages. Books are banned every year by various organizations for a variety of reasons. Personal bias may cause me to agree with the ban. For example, Twilight was banned back in 2010 by some groups. I think we can all agree the book was bad (play with me on this one) and should have been relegated to the dust heap of history. Instead, Stephenie Meyer enjoyed a bestseller as the hate erupted and grew.
Another book I should have saved my money on was The Satanic Verses. Salman Rushdie’s book was destined for the remainder bin until the Ayatollah, in his infinite wisdom, made sure the entire planet knew of the book with his banning and fatwa. The Satanic Verses went on to become a bestseller and Rushdie’s work is relevant because of name recognition. Rushdie’s work was likely headed into the abyss, known by only by the most dedicated of scholars until his work was banned. Rushdie now is a guest panelist on a variety of television programs such as Real Time with Bill Maher. Why couldn’t the Ayatollah keep his flap shut? Rushdie’s net worth is estimated at $15 million. I guess banning Rushdie’s book really showed him.
Oodles of years ago I was reading a news magazine when a small article listed a book used by man to murder was forcing the publisher to pull the book off the market. The book is called Hit Man by Rex Feral. The author used a pseudonym for obvious reasons. It was later learned the author is female.
I immediately purchased a copy of Hit Man before it was pulled. The book is a how-to guide on how to start a side gig killing people, aka, a hit man. Always keeping my mind open to all possibilities (one never knows when such information might be needed) I read the book. It’s not the worst thing I’ve read, but it is toward the bottom. The information is suspect but might provide a good resource when writing fiction.
I still have my copy of Hit Man. A few used copies still float around for anyone curious what all the ruckus was about. Used copies fetch $75. I’m still not selling mine.
Cory Doctorow is a science fiction writer who insists his work be available online for free. He makes it clear an author’s greatest risk to their work is not theft; it’s obscurity!
In the crowded field of fiction standing out from the crowd is near impossible and without sticking out from the crowd you are guaranteed a front row seat in the loser’s column of the obscure.
I would never have heard of Cory and his work if it weren’t for his digital policy with his work. As he expected, it lead to a certain someone, perhaps a certain accountant, who ended up separated from some of his cash for a hardcopy of the material.
What Doctorow did was tame compared to what one of my favorite authors did. Ryan Holiday is a bestselling author now, but he had to start somewhere.
Early on Holiday was an assistant to Robert Greene as he was writing The 48 Laws of Power. Holiday was indoctrinated in the Machiavellian methods employed by people serious about success. While not in agreement with every piece of advice offered by Greene, his points are solid and backed up with examples from history. You don’t have to like it as long as you are aware it does work!
Even this is child’s play compared to the work Holiday did for Tucker Max. Max’s work is vulgar, even by my standards. I have an extremely open mind when it comes to publishing. Attempts at censoring my work will not go well. That said Max really grosses me out. His work encourages (in my opinion) abusive behavior towards women. It’s one of the few things I couldn’t finish reading. I could only take a few pages before I backed down as I fought back the wretching.
Max’s first book was I Hope they Serve Beer in Hell. He later made the book into a movie. Max enlisted the services of Holiday. Holiday knew he had to pull out all the stops. Holiday orchestrated a reverse psychology campaign where he organized pickets against the movie and vandalized movie posters himself and then reported it to the media. What Holiday was trying to do was get the movie banned so everyone would have to see it to know what all the commosition was about.
The movie bombed at the box office, but don’t feel too bad for Tucker Max. The book sold over a million copies.
I was only banned (censored) once in my life. In the past I wrote flash fiction in the transgender genre. My youngest daughter’s medical issues introduced me to a demographic I never knew existed. Always wanting to conquer flash fiction, I rolled up my sleeves and started pounding the keyboard.
Flash fiction is stories of only a few hundred words. It’s harder than it sounds. Writing a story, a real story, in two hundred or so words is brutal. And each story had to have a transgender theme! Determined not to succumb to vulgar writing I made it a point to keep the stories uplifting. Many TG blogs sparked traffic with nudity. This wasn’t going to work for me. I had Google ads and Amazon on the two TG blogs I wrote so it had to be clean.
I was also motivated by something else. I laugh and joke about my TG flash fiction days and how every story had to end. But this was serious business to me. The cold hard facts are transgender people commit suicide in alarming numbers! Estimates range as high as 60% of transgender people attempt suicide and it’s the highest demographic of people who succeed in ending their own life.
This is not a world I wanted my daughter to grow up and live in! My stories were my way of making it normal for people to be different. My baby, my child, my girl was born intersex. She will be grouped in with the TG community because she MUST undergo the same medical procedures a transgender person does transitioning. The only difference is my daughter has no choice. She can’t “just live with it”. She either undergoes the medical procedures or she dies. What would you do?
Keeping material fresh when my average story was two hundred and some words grew more difficult each day. I wrote two TG blogs (double the blog, double the income) every day for about four years. That’s over 2,500 flash fiction TG stories! Even I find it hard to believe I produced so much material.
I covered every topic imaginable as I wrote the flash fiction. I, of course, wrote many stories to appeal to the erotic portion of the demographic. I also researched the genre looking for fresh material. And I found a whopper.
I discovered the sex change capital of the world is Iran! Yes, Iran! It seems homosexuality is a sin against Allah and sure to get you killed. But, if you get a sex change you are technically a woman and no longer an abomination to god. So Iran leads the world in sex change operations. Mostly due to the fact it’s chop it off or die. We can laugh, but for homosexual and transgender men reading this it’s no laughing matter.
Well, I used this information to write a very mild TG story based in Iran, Yes, I pushed 250 words together and caused a ruckus. TG flash fiction is generally captioned, meaning a picture is captioned with the flash fiction. I used a picture of a Muslim woman wearing a niqab. All you could see was her eyes and her feet.
I was immediately banned by Google! The offense? You could see the woman’s ankle and it would offend some countries around the world. I was not impressed. I removed Google ads and republished. Like I said, censorship doesn’t work well with me.
Ban This Blog!
I looked. There is no list I could find of banned blogs! That’s too bad. I really would have enjoyed making the list.
My marketing sickness has caused me to write some modestly controversial topics on this blog. Maybe I need to turn it up a notch. I once claimed I died and I begged readers to steal my stuff. It gave me great pleasure to write my obituary. (Maybe I am sick!)
As a masterful stroke of marketing genius I propose we use Holiday’s tactics to Tucker Max this blog. No misogyny or encouraging the abuse of women. I support anyone’s right to publish what they want; I reserve the right to not read or promote it. We don’t need to encourage the harm of others to get noticed.
If you haven’t found anything to feel righteous indignation about in who I am and what I write here you haven’t been paying close attention. No one is exempt. Everyone has something you can be offended with. Don’t waste a good opportunity. If you meet someone of impeccable character, make something up. The media and the government do all the time.
Traffic here has been growing nice the past year. But to get the numbers into the stratosphere we need people to start talking. And nothing spreads like juicy gossip! The more solicitous the better. To get banned by anyone or any group requires offending certain groups of people who will teach me a lesson by encouraging the media to call for my banning. These outraged folks will contact other bloggers to spread the rumors. They need to want to hurt me and I love it!
How can you start the rumor mill? How can you get the media to put this blog (and me) into crosshairs? How can you get the gossip flowing with a life of its own?
Well, I read naughty banned books listed above. I even own a how-to book on how to kill people for a side gig. Not good enough?
Tell them I’m a questionable person of questionable character! Ah heck, not good enough either. We elect people like that every year.
I know! Hit’em where it hurts. When with your Republican friends, tell them I think Sean Hannity is a weasel and Fox News is fake news. Tell your conservative friends I think Hillary Clinton would have made the best President in U.S. history. Heck, I even called Trump an idiot!
Still not enough? I agree! We still have close to half the population we need to offend. Gather your Democratic friends and tell them I think President Trump is the most productive President ever. Tell them I said Bernie Sanders is a light weight.
Now I understand some people have stepped off the political train long ago to retain their sanity. Well we can take care of them!
If you have an atheist friend, tell them I said atheism is a religion. Around your Christian friends say, I know this blogger who thinks you’re nuts.
Don’t worry none of it’s true. This is marketing! People will stick around if they like your stuff, but they come back more often if they hate you with a passion. They want to watch you fail. They want to slam your head (actually, my head) against a wall with every word I utter.
Nothing generates traffic like a zealot! And traffic means money. And since this blog is a business enterprise we like traffic for obvious reasons.
In honor of Buy Nothing Day (the day this post is published in 2017) you can spread the wild rumors. Contact other blogger and tell them to ban me. Get people talking behind my back and protesting I cease and desist! I demand it! It costs you NOTHING!
What? Wait, kind readers. I have a phone call coming in.
Uh-huh. A fatwa you say. Lynch mob? Really? Is it helping traffic? I see. Then I’ll be a martyr for a good cause. No?
Okay, I’m back. I’ve decided to take the day off and not publish since it’s the day after Thanksgiving (Black Friday).
But for the record, I did say that thing about the President.
This post idea was rolling around in the queue for a while. I started a few months back with the first two paragraphs. Later I fleshed the idea out a bit more and finally had enough material for a humorous post with serious implications. I double spaced between entries of this outline as I expanded it.
Readers may find my writing process entertaining. Bloggers and other writers may find it instructive. When my notes seem to add to the story I publish them below the corpus. Enjoy.
Bloggers hide a truth they may be wrong. It’s an occupational hazard.My tax advice includes limited situations. Facts and circumstances can change the outcome so additional thinking/research might be required.
And the post title is perfect for marketing. Tell someone not to read something and they will do it anyway.
Ryan Holiday marketing ploy of starting a boycott of his client to get attention. Cory Doctorow demanding his publishers allow him to post his stuff online for free (theft is not the issue, obscurity is), Hitman book when someone used it and it made the news (how I heard about it and bought it).
In honor of Buy Nothing Day I ask readers to find something around here to feel indignation about and spread the word. Demand a boycott. Don’t read this blog!!! Tell the news. Use Ryan Holiday tactics.
Then internalize the hatred, coming back often looking for any chance to jump down my throat.
Consider it your early Christmas present to me.
And it didn’t require you to spend a penny to give it!
Funny stuff: Talk about politics and religion a lot. People like that. When with Republicans tell them you heard I think Fox News sucks, Sean Hannity is a weasel and Hillary Clinton would have made the best President in U.S History. With Democrats tell them I think Hillary buys used pant suits, we are finally getting stuff done with Trump as President and liberal policies died with LBJ.
On religion, when with atheists, tell them I think anybody who doesn’t see the truth of God’s existence deserves to spend eternity in hell. Tell your atheist friends I think atheism is a religion. With your friends of faith expound my astounding logic on the lack of evidence for a god, any god. Tell’em I fish Sunday morning instead of going to church.
Don’t worry none of it’s true! This is marketing. People will stick around for a while if they like your stuff or hear good things about you. Get them to hate you and they’ll live on this blog waiting for any chance to jump down my throat. They’ll also glean every word I write looking for indications of misfortune in my life. Indignant people love to gloat. You get’em here and I’ll give’em a reason to stay. I’ll intersperse moments where I need to hammer the Jack as the biting liquid spills from my glass as I fall into a drunken stupor.
Remember awhile back when I said I was taking November off? It’s not going well.
My first day back from a conference and people were lined up for my attention. And, of course, everything’s a crisis. Do people think I’m a machine without a need for rest?
My intentions were never to completely bow out of life. I’m not the kind of person who takes a month and does nothing or travels or other such leisure. Curiosity was breed in me and I can’t help myself. I’m like the mischievous kid who is always in trouble. Curiosity killed the cat and unfortunately I’m limited to one life. (Who wants to live forever anyway?)
The list is growing, too. An old friend from the blogger community asked me to Skype and I missed the Monday tentative appointment. I need to rectify that. (Please, God, let Skype work for me this time.)
The most important issue is hiring more qualified help for the office. Over the last week I hired one new full-time employee and think another candidate will work out in the tax preparation arena. It’s hard finding good people who want to work. I changed tactics in my hiring process and finally saw some positive results. I might even open the gate enough to allow a few new clients in. We’ll see.
Hiring takes time and I should finish the process in the next week. A few projects needing my attention in the office are front and center, plus required continuing education is slated for the 29th and 30th of this month in Green Bay.
Don’t Cry for Me, Argentina*
Before you shed a tear for my misfortune, understand hiring additional team members will free more of my future time. By training a bunch of mini-mes should produce benefits in short order. Some of the process can be handled by team members while I focus on reviewing final product.
I see you’re still chocked up. Don’t be! Conferences are hard on me as I try to give every ounce of energy I have. (Actually, I overdo it.) The recovery time takes longer as I age and this time is no different. I’ve slept more those first few days of recovery than I have in a very long time.
My days are normally short by normal working standards. I visit the gym Monday, Wednesday and Friday each week for a workout and the steam room. Gym days mean I spend about five hours at the office.
Non-gym days I get to the office about 9 and frequently leave by 3 or 4. Tax season is a bit more, of course. (Okay, a lot more.)
Then comes the reading and writing. As you know I write here three days a week, too. I cut back other writing due to the pace I keep here and the constant office workload nonexistent in the past. There was a time summer and autumn were light work schedules. What the heck happened?
Frequently people accuse me of prolific writing. Though it is true I love writing and the writing process, my favorite love (outside Mrs. Accountant) is reading. My taste in literature is catholic (notice the little c). I’ve yet to find a topic I wasn’t interested in for at least a short period of time. Believe it or not, twenty or so years ago I read a romance novel by Danielle Steel (this is the novel that did me in (damn books in the checkout line)) and was blown away. It took 80, maybe 90 novels to burn that one out of my system. (Can you see your favorite accountant on the beach reading To Love Again? Yes, I read that book. It was the second novel of my illness years.)
Novels were a large part of my reading material back then. As the years went by novels lost their grip on me. I still read fiction, just not at the same levels. The books I read now can get, well, shall we say, bulky.
Novels can teach as well as entertain. Tom Wolfe wrote A Man in Full. The story has a strong Stoic message which is why I read it from the library.
Most of what I read now is nonfiction. Once again, my tastes run catholic. As you might imagine, I read plenty on finance, economics and business. If my nose isn’t glued inside a book I’m reading similar material and news online.
Currently I still have a fetish for environmental books, especially relating to human history, climate change and how societies collapse.
Old books hold a special interest for me. An Outline of History by H.G. Wells is on my to-do list. It’s a thousand pages of deep reading from a century ago, but still good stuff. I found a copy in very good condition on Amazon for $22.99.
My primary goal when reading is satiation of my curiosity. Learning is important, but I don’t think of it that way. For me learning is entertainment. If my body were not riddled with restless anxiety I would read non-stop every moment I’m awake.
Writing helps you focus a thought as you express it in clear terms. Reading allows you to digest condensed information more quickly than from any other media. Successful people read.
November is my month off and while business has consumed much of this time, I still manage an excess of hours for additional reading. In short, November has turned into a reading vacation. The best part is I will probably extend the vacation into mid-December to make up for my inappropriate behavior working during a vacation. My schedule to the end of the year will be light to make room for the many books I want to pour into my skull.
Reading makes you a better writer. Writing is the most important form of communication. Documentaries and seminars all teach. But reading is faster and incorporates into your mind better than all other forms of learning. Even teachers speaking in front of a room want you to read the material, preferably before class.
My road has never been easy or straight. Reading has given me the edge over the years to win against long odds. No one has an excuse to fail! No one! In the past I would tell clients I’d make an exception for people in prison and quadriplegics. However, need I remind you of Nelson Mandela, Christopher Reeves and Stephen Hawking? Like I said, no excuse.
The common thread among winners is their thirst for knowledge and hunger for learning. People will beat you down because they are jealous while basking in the rewards of your production. Steve Jobs was both loved and hated, but no one disputes his tremendous contribution to society. Even if you don’t use Apple products, you still benefit from the children born of Jobs’s mind.
And what about your mental children? Will they ever see the light of day? Have you even given yourself permission to dream such dreams? People will take every chance to cut you down. Get used to it. It is possible to do everything right and still lose. That is not a character flaw; it is life.
The best mentors I ever had are dead. Plato, Seneca, Will Durant and H.G. Wells have taught me how to live a joyful life. On my shelf is the Autobiography of Andrew Carnegie, perhaps the richest man to have ever lived, adjusting for inflation.
My favorite books are about successful people. Benjamin Franklin, Steve Jobs, and many Presidents of the United States have filled my time over the years. When I start to feel down or treated unfairly I read about people who rose above the turmoil. They provide lessons through the mists of time reminding me I’m not alone; it’s all happened before. Need I remind you Isaac Newton lived in turbulent times and wasn’t universally loved? He was known to carry a grudge to the grave. Regardless, everyone of these great minds have something to teach me in good times and bad.
How I Read
Most novel I read come from the library these days. I still buy five or so novels a year if I think they will make good reference material for future writing projects. I borrow another ten or so nonfiction titles from the library annually. However, the bulk of my reading is material I own.
Books are important to me. Tim Ferris says you should just buy the book. Ramit Sethi says if he sees a book and thinks there is only a slight chance he will benefit he buys the book. According to Sethi, twenty dollars is incredibly cheap for even one idea. I agree.
One of my favorite authors, Ryan Holiday, sends a monthly email with books he recommends. At the end of each email he encourages people to buy the book. Holiday says he will find a way to own a book he wants even if it means skipping a meal. Once again, I agree. (Holiday is thin, unlike a certain accountant we will not mention. This is living proof he walks the talk. )
I know, I know. It’s self serving for me to ask you to buy the book even when it is to your advantage. Libraries are important and borrowing books from the library is a good idea. Owning books is equally important. There is a certain satisfaction with owning a book and holding it in your hand.
Every book listed in this post I’ve read with the exception of those I mentioned I own and plan on reading over the next four to six weeks. The links to Amazon are affiliate links. I do get paid if you buy the book using the affiliate link. The new commission schedule Amazon brought out a few months ago assures I will not get rich off your purchase. Physical books pay a 4.5% commission and ebooks pay 4%.
You can always go to Amazon outside the links of this blog if you are opposed to commissions on religious grounds. Or, better yet, I’ll buy you a beer the next time our paths cross.
Trust me, the beer will cost more than the commission I earned.
You keep all the knowledge.
* Remember, I hide messages and references within posts.
Today we have a special guest post from Josh Wilson of Family Faith Finance. Josh’s idea for an article is one I would’ve written if I’d thought of it. I talk about using credit cards as a tool to better manage your finances and those juicy bonuses they offer, tax-free. But what if something goes wrong? Identity theft drips from the newsfeeds. Unauthorized charges happen.
There is a way to protect yourself. Most readers are aware of their credit card’s dispute process. But if the dispute goes wrong there are still options short of arbitration. Josh gives us the basic framework in disputing a credit card charge or issuing bank’s action before moving to a powerful tool to resolve the worst problems with lenders. I’ll let Josh tell the story.
How to Complain To Your Credit Card Company
While credit cards aren’t a prerequisite, they’re a great tool for emergencies, recurring payments, cash management, to build credit score and for bonuses. Usually having a credit card is no big deal, either, but then life interferes? Having a complaint against your credit card company is normal and if you do you’re definitely not alone. The most common complaints about credit card companies include: billing disputes, identity theft, and account closure.
When you have an issue with your credit card service it’s best to work directly with the issuing bank first before seeking arbitration or help from a third-party advocacy group. Contacting a credit card company to file a complaint can seem daunting, but most complaints can easily be handled with some research and a phone call. The process is similar for most credit card companies, but there are a few things to remember when filing a credit card complaint.
- First, it’s going to take some work. You are going to have to make phone calls, write letters, send in copies of bank statements and more to deal with a fraudulent charge on your credit card or other credit issues. Just be prepared and make sure you have everything organized.
- Second, you must document everything. It will make the process much easier. To keep good records, use email, record your phone calls and print two copies of all paperwork you send them.
Let’s review the process of filing a complaint with your credit card company:
Evaluate the charge or discrepancy. This is the first step if we’re looking at billing mistakes or potentially fraudulent charges. You want to make doubly sure that you didn’t simply forget about a charge you did make. You may have to look up the location or call various merchants when trying to figure out if you made a purchase there.
Contact the merchant or credit card company. Once you have your information together you should contact the merchant or credit card company. If it is for a fraudulent charge you should first contact the merchant to dispute it. If they can’t or refuse to remedy the error, contact the credit card company and alert them. [TWA Note: I would report a fraudulent charge using the bank’s online portal and let the bank deal with the issue. I wouldn’t call the merchant.]
Mail paperwork. More than likely you will be asked to send in some information to the credit card company. This is usually handled with a fax or scan, but may require a hard copy snail mailed. Most banks don’t require paper complaints, but if required, send in a copy, keeping the original documents for your records.
Play the waiting game and appeal if necessary. Once you’ve sent the information you need to wait while the company does their own research. Sometimes your dispute is denied. If that is the case you can appeal, asking for an explanation as to why the dispute was denied. However, most credit card companies will require you to appeal within 10-14 days of receiving your verdict on your initial complaint.
What happens when the credit card company is unwilling to resolve the issue? This occasionally happens and it’s not your fault. You can do everything right and the company may decide you are liable. Luckily there’s a government agency designed to handle this, namely the Consumer Finance Protection Bureau, which is designed to assure financial institutions follow the laws and treat you fairly. They have a process where you can file a complaint against a financial institution if you have a problem with your credit card, mortgage, student loan or any other issue involving a lender.
How do you file a CFPB complaint?
The CFPB has a unique process for filing a complaint. Once a complaint is filed they become a liaison between the consumer and financial institution.
- You file your complaint on their website. You can log in to check or update the status at any time.
- The CFPB reviews your complaint and all the documents you provided them.
- They contact the financial institution on your behalf to settle the dispute.
- The credit card company responds to you and the CFPB.
- Your complaint is updated when it’s resolved and the CFPB publically publishes the results.
Whether you file a complaint with your credit card company or with the CFPB, you shouldn’t be anxious about addressing an issue involving your credit card, student loans, mortgage, or any other loan.
During the 1980s and 90s I owned a lot of real estate. It started slow and exploded into a 176 building pain in the ass. To be fair, most of the investment properties we owned were either single family homes or duplexes. A few multi-family buildings, a boarding house and a storage facility rounded out the mix.
With so many properties running through my personal accounts and a partnership with dad and brother, I learned a few things along the way. One hundred seventy six buildings is a lot of buildings. Good thing I didn’t own all of them at the same time. Mistakes were sure to happen.
By the early 2000s the real estate empire was gone. I was burnt out and sick of working with tenants. Countless property managers helped us over the years, but it was not enough. Managing over a hundred units much of the time over a footprint covering most of NE Wisconsin took its toll. To complicate matters, I also ran my accounting practice with double the employees I have today (during tax season).
Starting slow was my greatest idea. It felt good to see the passive income filling the checkbook. Our teams of contractors allowed us to buy fixer-uppers and increase the property values significantly. Our best deal was the purchase of an upper-lower duplex in my hometown for $8,000. Hard not to make a profit on those.
The Pain of Gain
The first 10 properties were fun. I still remember the first one. (Isn’t that true for most things?) 833 E North Street in Appleton, Wisconsin. A beautiful front-back townhouse. Bought it from the bank for an even $50,000. The combined rent was $980 a month without a day of vacancy and the rents rose rapidly. Ah, those were the halcyon days. Two years later I sold it for an even $75,000.
The first 10 were easy so I managed them myself. But with profits like this, I decided to make hay when the sun was shining. Before North Street was even sold we were buying up to 10 new properties a month and selling 2-3 per month. The last business day of the month was almost always spent at the title company, where we handled all our closings.
More properties over a larger geographical area required property managers. And so we did. I went from managing properties myself to managing managers. That was fun at first, too.
Finding good property managers is just as hard as finding good tenants. They are out there. Back in the 1990s they were harder to find in my area. Most property mangers back then handled large apartment complexes only. The few who handled stuff like I had were not always connected with real estate firms (where I found most good managers to exist).
The weight of too many properties took me away from what I loved most: taxes. The fun was sucked out of the whole process. Now I spent the last day of the month at the title company selling more houses than we purchased, and soon we were only selling.
Today I do not consider myself in real estate, but still own close the seven figures in RE value with only $111,000 in mortgage on my farm. It is not fair to say I am a landlord. I rent my commercial property to my practice, which is an S corporation. I have one property sold on land contract where I hold the paper and the farm, 10 acres of respite in the backwoods of NE Wisconsin.
The Itch is Back
I have been out investment properties now for over 10 years. Part of the reason for selling way back when also included my realization rents were not keeping up with real estate values in my market. Sometimes it pays more to take a profit and go home. Coupled with burnout, it was a no-brainer.
Itch or no, I have to review mistakes I made decades ago and review how the investment property environment has changed over the decades before diving back into the investment property markets
Mistake #1: I managed too many properties on my own to increase margins. In hindsight, my profits would have been higher if I would have hired all the management work done and focused on the financials only. When they said—Jack of all trades, master of none—they were thinking of me. Now you know.
Mistake #2: I got addicted to owning real estate. Younger and with a larger ego, I enjoyed the stroking I received when people mentioned the amount of property I owned. Toward the end I was buying properties that did not have the potential of earlier investments. My goal no longer focused on quality properties, but volume. Dumb, dumb, dumb! With rents stagnant, margins came down. Too much work sucked the fun out of the whole project; lower profits killed any love I had for more real estate.
Mistake #3: I stayed close to home. I bought almost all properties within 100 miles of home base. No properties were purchased outside Wisconsin. The NE Wisconsin market was no longer a great place to invest. Only the rare prize would make an investment locally worth pursuing.
After all these years the itch is back. I want to add real estate into my investment mix. Next I am going to show you how I plan to make these investments. Having learned from my mistakes I may end up with investment properties the rest of my days. You can use my template as a guide. You have to decide how you will handle your investment properties. Learn from my mistakes and successes. Real estate is a great way to build a steady flow of passive income. A small amount of money invested in the right properties can allow you an early retirement. More to the point: $100,000 invested in five good properties ($20,000 down each) could be enough to retire in some areas. If you do it right.
You have to buy right for this to work. Never chase a property and never rush. My second mistake above was I started to rush the process and it showed.
There is a lot of advice on how to buy properties floating around. They are not my concern. My accountant mindset thinks differently. I don’t care about the 1% rule for rents or, fingers-crossed, potential appreciation of the property or tax advantages. These things are used by real estate agents so it is easier to sell the property. Just because rents are 1% of the purchase price does not make it a good buy. Future appreciation is hope and I have an adage about hope: Hold out both hands. Wish in one and shit in the other and see which fills up first. Sorry to be blunt, but you never consider any appreciation in the property value when buying an income property. (Okay, there might be a few instances. You are on your own in those cases. Leave me out of it.) And tax advantages are a stupid reason to buy a property. If you want to buy for tax deductions, I have a bridge I would like to sell you. Cheap!
Rule #1: When I calculate the profitability of a property, I do so as a no-money down deal even though I will put money down. Here is why. If I put enough money down any property will turn a profit. But what about your investment? My rule is simple: My investment must return at least as much as the cost of capital. If the bank has a 4% mortgage rate, then my investment sure as hell better do at least that good.
Therefore, I use a mortgage payment as if I financed the whole darn thing for my illustration.
Rule #2: Allowances must be made for vacancies and repairs. The market the property is in and the property’s condition will determine the vacancy and repair allowances.
Rule #3: The cost of a property manager must be included in your expenses. If you don’t you are valuing your time at zero. Stupid! As you will see below, I will never manage investment properties again. My time is too valuable for me to do something I really don’t like doing.
Example: Let’s run some numbers to see if we can add a certain property to our portfolio. I live in a part of the country where you can buy a small home in livable condition for under $50,000, so play with me.
You found a nice 4-plex (multiunit buildings usually have a lower cost per unit, making it easier to cash flow) for $120,000. A 15-year mortgage at 4% gives you an $888 per month mortgage payment. In Wisconsin we have high property taxes so we will say this property owes $3,600 per year in local taxes. Rent is $500 per unit.
Time to plug some numbers (per month):
Mortgage Payment: $888
Property Tax: $300
As you can see, the 1% rule would be a disaster in most Wisconsin markets for several reasons, property taxes being the most notable. $1,200 in rent would not cover the most basic cash flow needs.
Now we add other expenses. Some of them are non-cash most months, but significant when they show up. Vacancy rates, maintenance costs and property management fees are generally low in my area.
Repair Allowance: $200
Vacancy Allowance: $50
Property Management Fee: $50
Of course I picked a deal that would work. If my mental math is right, I’ll make $437 per month on a no-money down deal with a property manager doing the day-to-day work. Any down payment will increase the cash flow and the expected monthly profit. Certain expenses (repairs and vacancies) could be higher or lower.
This illustration is not to show you what to buy, but rather, the mechanics of the accounting I do prior to buying. Yeah, I know, most properties don’t make the cut.
Rule #4: Your local market is almost certainly not going to be the best place to invest! It sucks, I know. But on a brighter note, if you buy in a different market you will be more motivated to hire a manager.
For now I would stay within your own country to keep things simple. If you educate yourself, you may consider properties in world markets. The tax preparation surrounding most investment properties is generally small, even when you own in multiple states. The worst market in the U.S. is New York City for preparing taxes. Any rent controlled cities are also more problematic from a management perspective.
Dirty Little Secret the Wealthy Accountant Knows
As an accountant I see what works and what doesn’t. Of all the bankruptcies I see in my office, the most come from landlords. Landlords are also one of the wealthiest groups of people in my office. What gives?
Investment properties have risks many people ignore. They think it is all easy money. Seminars around the U.S. charge massive sums to teach people how to flip houses with no work and zillions in instant profits. It ain’t so. Good investment properties take time to find. Not every property fits the bill and flipping is a tough game. When you flip a house you make a quick profit, but an investor will hold the property for years, collect rent, watch the property increase in value and pay less in tax than the flipper. And don’t start with the like-kind exchange BS. If I buy a property for $100,000, collect $200,000 in rent over the next 10 or so years and sell the property for $220,000, I will make more than the pittance you made flipping.
Flipping is the mindset of losers! Not that I never flipped a house when the price was right, but short-term thinking is not the path to riches. In over 30 years as an accountant I never once had a client with a consistently high income flipping house. Many declared bankruptcy, however.
Now my landlord clients, they are a different story. Some of those guys went broke too, usually because they leveraged too much. I also have numerous success stories of clients hitting it out of the park that owned and managed investment properties. A steady stream of passive income beats a quick lump of cash any day. In the end my income stream beats the tar out of your flipping and while you are hunting for the next flip, I am reading a book at the beach (if I did that sort of thing).
Buying the property right is the only way to win the investment property game. But buying is only a small part of the process. Now that you own the property you need to manage it. The temptation is to save a few dollars and manage the thing yourself. With the many rules ever changing, I recommend against doing it yourself. You can remind me I am a hypocrite in the comments below. But my days of busting tail doing it all alone are over. I learned my lesson. The question now is: Will you learn from my mistakes or experience the same groin kicks I did?
Rule #1: Get a property manager. The rules are different is every community. A property manager does this stuff for a living and has all the forms in-house. They also have a steady stream of potential tenants. Besides, when you buy income properties, are you looking to create a job for yourself or an income stream? Good. Then hire the manager.
Property managers are everywhere. Good ones usually work in a Realtor’s office. Many states require property managers also be licensed real estate agents. Those ladies already work this stuff every day and know what they are doing. Let them do it! They are worth every penny you pay them. They also know the right rent to charge. Do you?
Property managers usually work this way:
They rent out the property, collect rents and the security deposit, pay the mortgage out of those funds, handle necessary maintenance, pay all other expenses out of funds received, subtract their fee and deposit the remainder in your bank account. Now you know how people retiring early can travel the world while owning investment properties. The biggest issues are buying right and management.
Note: If a major expense arises (roof, furnace replacement) you will need to provide funds to cover those costs as the monthly revenue will not be enough. Might I suggest paying these expenses with a credit card that has a large cash back bonus?
Property managers don’t want extra work, either. Good managers keep on top of maintenance issues so you can plan accordingly and they don’t have to field late night calls from tenants.
Real estate is like any other business today. Only the crazy people (anyone thinking perhaps of a crazy accountant from Wisconsin) handles every facet of the process themselves. You’re the investor! You buy the properties right. Let the management pros do their job. They are better at it.
Now you can start looking for the next awesome deal or maybe travel a bit.
(Final recommendation: I would consider keeping the repair and vacancy allowance in a money market account. Then you will never be short when the need arises. The more properties you own, the easier it is to spread costs around. If your finances can easily handle any repair expense then you can disregard this suggestion.)
More Wealth Building Resources
Credit Cards can be a powerful money management tool when used correctly. Use this link to find a listing of the best credit card offers. You can expand your search to maximize cash and travel rewards.
Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?
Side Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant. Call 888-844-8910, email Darren@TradelineSupply.com or read my review.
Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.
QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.
A cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.
Amazon is a good way to control costs by comparison shopping. The cost of a product includes travel to the store. When you start a shopping trip to Amazon here it also supports this blog. Thank you very much!
The following post is based on a presentation I gave at Camp Mustache SE in Gainesville, Florida on January 15, 2017.
There are several ways to convince someone to speak at your event. Stephen Baughier used the most sure-fire method ever. Stephen noticed I wrote a blog post back in August listing some people I would like to meet someday. He checked two people on the list and found JD Roth open to attending. He then called me and said, “Hey, Keith. I saw on your blog you wanted to meet JD Roth. Well, he is speaking at Camp Mustache SE in January. We would love to have you speak as well and you can meet a man you admire.” How could I say no?
Picking a topic of discussion is something I allow the event organizer to decide. If they have no preference I choose something currently exciting to me. In this instance Stephen thought something about organizing your stuff in preparation for meeting your accountant/tax guy would be a good choice.
I grimaced. My organizational skills are not legend. However, I do keep a tight fist on in financial organization.
Bookkeeping is not a topic which lends to filling an hour presentation. My first thought was to stand in front of the group and yell, “Shut up, and sit down!” while I stabbed my finger at them. “Enter your paperwork once a week and stop bitching about it.” Then I would grab a beer from the fridge and sit down. My first inclination had a slight flaw I thought might turn off the crowd and upset Stephen so I moved to plan B.
After considerable thought (somewhere in the neighborhood of three or four minutes while I was feeding the chickens one day) I decided to expand the idea from organizing your stuff for the accountant to organizing your life in a manner that reduces the workload, stress, and procrastination inducing part of record keeping to include maximizing net worth while reducing taxes. Who doesn’t like saving on taxes? I surmised. And who would argue with growing their net worth at the fastest clip possible? Since no one threw anything during or after the presentation I assume the audience was either kind or mildly receptive. My ego demands I tell you it was the later.
After a brief attempt as humor I discovered I was no George Carlin reincarnated so I moved on to the topic at hand. The best place to start is the ugly.
The worst thing you can do is drop a crate (happens more often than you think)/shoe box/envelope stuffed full of receipts on your accountant’s desk. From your viewpoint you watch a box disappear from your home/office and magically reappear as a neat tax return and a box of papers neatly stapled together in a few weeks. Here is what really happens.
We are so excited to have the extra work we take that box of papers and dump it on the conference table so the room is unavailable for normal use for a day or so. We bring a temp with a bad attitude to the room and, under threat, demand she take the mound of papers and separate it into piles: office expense, cost of goods sold, utilities, et cetera. When she is done she takes an adding machine and creates a z-tape of each pile. The z-tape is stapled to the top of the pile with an industrial strength stapler. The remaining pile of receipts she doesn’t know how to classify is neatly tucked on the bottom of the box and those deductions, if legitimate, are missed. The remaining piles stapled together are used to prepare the tax return.
I suspect most accounting firms around the world use a similar practice in such extreme instances. Time is tight and after a 687 hour workweek during tax season, we are in no mood for bullshit. If you want all your deductions, might I suggest bringing your books into my office in proper order? My job is not to guess what a receipt means; only you can answer that.
The Proper Way to Keep Records with Almost no Effort
The process of organizing your business and personal life should be simple and with modern technology it is fast, simple, effective and low cost.
Small business, a few income properties and personal life: When organizing only requires the documenting of a few items there is no need to go crazy buying software to manage the 17 items needing a place in the data fields. Old fashioned guys can use the old columnar pad or Excel. (Yes, I have a few clients with beautiful records brought in on a columnar pad.) Excel is an awesome tool for managing small amounts of data for personal finances, up to five or so income properties or a very small business without any employees. Fast and simple are the key words here.
The time required to keep your life in order is about one hour per month. In most cases once a month is enough to enter your data.
Medium sized company and more than five income properties: A medium sized company is defined as a business with bookkeeping requirements of between three and ten hours per month.
Once you have more than a token amount of data to manage it is time to open your wallet and invest in some form of accounting/recordkeeping software. QuickBooks is the largest. QB has a robust program with enough features to handle most businesses. The downside is that the payroll module is expensive and limited. (In a few weeks I will publish a post on how to get your payroll done fast and easy with low cost and no additional paperwork headaches for you.)
QB is not the only game in town. You might want to consider other software, including: Freshbooks, Xero, or Sage (the old Peachtree). Each program has its strengths and weaknesses. Space (and my time) requires I move on without reviewing each software package.
At this level you have some additional considerations. Doing your own recordkeeping is an unproductive expenditure of time. Hiring a bookkeeping/accounting firm is a low cost way of getting the rote process of bookkeeping done. Bookkeeping firms know how to optimize the process. What takes you a day takes the bookkeeper an hour or two. While the bookkeeper may charge $60 an hour, the time you take to get the same work done translates into your time valued at $20 or less per hour. And the bookkeeper will get it right.
Large businesses and large numbers of income properties: At this level hiring an accountant to handle your workflow no longer is efficient. You need an in-house bookkeeper/accountant to handle all the paperwork daily. Payroll can be handled internally if you have qualified staff or outsourced.
There is an animal in the tax world called the non-cash deduction. Things like mileage, per diems and depreciation fall into this category. Depreciation is a phantom non-cash deduction since it is related to actual expense. Mileage and per diems are either a hybrid or true non-cash deduction.
Mileage logs: If there is one area that drives accountants mad it is in the area of mileage logs for business owners and landlords. These people are notorious at keeping accurate records. The IRS requires a mileage log be contemporaneous, which means it needs to be recorded reasonably close to the time of the event. The day you get the IRS letter for an audit is not a contemporaneous record.
Contemporaneous records can be easy to keep if you follow my advice. Miles can add to a large deduction fast. The mileage rate for businesses and landlords is 53.5 cents per mile in 2017, down from 54 cents in 2016. Keeping an accurate record assures you take advantage of the entire deduction. You deduct the entire 53.5 cents per mile even if your actual cost is less! Using a low-cost vehicle is the perfect way to legally stick it to the IRS. I can see you are feeling better already.
The reason so many flub on the mileage log is the requirement you write it down. There are apps available to simplify the process. MilesIQ is a paid app which meets all the IRS requirements for your deduction. A free app from Google Play that provides the same service is TRIPLOG.
Let me clear up the requirement. Your records need to contain the beginning and ending odometer reading for each vehicle for the year. Each day you have business miles you need to record the business miles traveled, the date, where you went and the purpose of the trip. The above apps allow you to enter this data. The printout/record produced by the app is adequate substantiation for tax purposes. You simply enter the deduction into your accounting software and the tax return. No additional horsing around necessary.
Per diems: The per diem is an awesome tool in reducing taxes without a real world expense. Under the hi-low method the IRS allows you to deduct a per diem for meals and incidentals (M&IE) without any additional substantiation. You must record the number of overnights, the business purpose and the location only to qualify.
The hi-low method is easy to use. Most locations within the U.S. have a M&IE allowance of $52 for meals and $5 for incidentals. High-cost locals get $63 for the meal per diem. There is also a chart where you can pick the per diem rate per location instead of the hi-low rate. Rather than muddy this post with long charts you can use this link to determine the hi-low rate localities and the per location rates.
The hi-low rate is simplest and only a limited number of taxpayers will benefit enough to justify the additional time of breaking out all the travel locations separately. Only half the expense is allowed as a deduction and DOT (ie. truck drivers) get special rates and can include 80% as a deduction.
Let’s keep it super-simple. Keep track of how many overnights you have for business purposes and where you went and turn it in to your tax preparer. She will take care of the rest.
Note: business owners and landlords need actual expenses (receipts) for lodging.
New World Order
Modern technology has made it easier than ever to track your expenses/deductions. Your time is precious. So is your money!
Whether you do your own recordkeeping or hire it out, you can use apps to get the maximum deductions with almost no effort. These apps allow you to photograph your receipt and forget it. The receipt is automatically downloaded to your software and saved in the cloud should you need to review the expense later or for proof during an audit. No more lost receipts or sleepless nights over an audit. Your books are so clean it will bring a tear to the eye of your accountant. I’m getting misty just talking about it.
Apps in this category to consider are: Expensify, NeatReceipts and Wave.
Clean, accurate records have two significant advantages. First, accurate records allow for an accurate tax return bulletproof in an audit. Second, accurate records allow you to manage your investments and company by visualizing progress or area of concern. Bookkeeping isn’t a crazy idea thought up by geeks to create gainful employment. Records show where you were, where you are and help project where you are going. You can’t fix what you are unaware of. Keeping accurate records is like driving with your eyes open. Or you might take a chance on the alternative.
Yeah, I thought so.
A reader of The Wealthy Accountant recently offered me lunch. I have a weakness when it comes to food. Offer me a free meal and I am virtually a prostitute.
I accepted the offer of lunch for three reasons: 1. He is a local reader; 2. He asked nicely; 3. He wanted to discuss quitting his current job and starting a bookkeeping business as a side hustle. The last point is what got me. A local guy who wants to do bookkeeping is also a guy I might build a strategic alliance with to handle some of my bookkeeping work.
As we talked I shared stories like I do here. Eventually I got to a story I like to tell a lot, but failed to mention on this blog so far. I am not sure where to fit it in, but the story is so powerful it needs sharing. So I decided a story about making a list would be perfect for the Christmas holiday.
I Was Home
There is an old sitcom called Night Court. For those of you who don’t remember the show, it is about a night court presided over by Judge Harry Stone. Stone is an oddball, joking and playing around while using unusual methods to help defendants.
In the first episode members of the court complain about Stone’s first day on the job. Dan, the prosecuting attorney, asked how Stone ever got appointed to the bench. Judge Stone said it was a funny story how he got the job. You see, he said, it was Sunday and the mayor’s last day in office and they needed a judge. My name was on the bottom of a 1,000 name list of potential judges for the opening. They started calling the first name on the list, then the second, and so on. It was Sunday so no one was home. Finally they got to the bottom of the list and . . .
The court clerk, Lana, was incredulous. She muttered, You mean you were appointed judge because . . . She paused.
I was home, Judge Stone said with a smile.
The audience laughed. I thought it was profound and nobody got it. To make the point, Judge Stone later said to Lana when she was offended by how Stone got appointed: Think of me what you want. My name was the last on that list, but it was on that list.
That is the story of life. It doesn’t matter if your name is the last on the list as long as you are on that list. As a business owner I see people go through all the work and then never show up for a job interview. Every year a handful of people never pick up or file their tax return. The work is all done and in many cases a refund is due if they file. After three years the tax return is out of stat and the refund is lost. It blows my mind.
We are all on the list! Like me, most of us are somewhere near the bottom of that list. But so many people higher on the list are not home or refuse to answer the phone and fail by default.
That is where my reader buying me lunch comes in. He sent an email and expected nothing. He caught me at the right time so I said yes. He was on the list. The last name, no doubt. But he was still on the list. He knew my schedule was tight and getting me to have lunch was a long shot.
This blog exists because I was on a list. The Wealthy Accountant was rolling around in my head for years. I secured the url years ago, but never put it together. Getting traffic to a personal finance (PF) or tax blog is a tall order. There are a lot of them out there. PF bloggers make the same mistake restaurant owners make. Restaurant owners mistakenly think running a restaurant should be an easy way to make money. When they walk into my office with the idea they tell me everyone has to eat. I try to temper the excitement by replying: Everyone needs to eat, but they don’t need to eat at your restaurant. In truth, the restaurant business is brutal!
I wasn’t in the mood to make the same mistake. Sure, everyone loves money and could use solid tax and financial advice, but they don’t have to get it from me. There are a gazillion other resources to choose from.
I also did not make the mistake assuming prior writing and blogging success would automatically translate into success at The Wealthy Accountant. The workload on this blog would be higher by magnitudes of order than with previous blogs or writing projects. This blog requires me to expose my personal values and weaknesses. It isn’t easy exposing yourself to the world at large. (I could make a legal joke here, but modesty forbids.)
How I Was Home
This blog owes its existence to Mr. Money Mustache. Arguably the best PF blogger out there, he also has one of the largest, if not “the” largest, following of any PF blogger. Many accountants over the years tried to land Pete as a client. In case you missed it in the past, I’ll repeat how it happened here.
My goal was to build a partnership with Pete on a business idea. I attended a conference held in his honor in Seattle with the idea of meeting Pete and sharing the idea. Since I would be at the conference anyway I asked the facilitators if I could give a tax presentation. They agreed. Before I had a chance to introduce myself to Pete he attended my presentation. Fifteen minutes in, he interrupted me and stated I was his accountant. The rest is history.
Let me make something clear. I am not the smartest, best, or biggest tax guy on the planet. I am at the top of the list in tenacious, however. Smart people frequently outsmart themselves when trying to reach a goal or when building a relationship with clients. Pete had many accountants try what I succeeded at. There were subtle differences, I am sure, but at the end of the day I got the call and answered because I was home.
Life is a series of lists. Unlike Judge Stone, everyone is on these lists. Like Judge Stone, we are many times are at or near the bottom.
As we head into a new year, think about the lists you are on intentionally. Working toward early retirement or financial independence is really just a list you chose to be on. Every time you make a contribution to your retirement account you are answering the phone. You are home.
Plans of traveling the world are the same. You put yourself on a list and now are working toward the goal. Plans to start a business or work you do when in business are all lists.
It is the holiday season so I will keep this short. You don’t need more examples or stories on this. Just remember to answer the phone when it rings.
Credit cards were always a powerful cash management tool for business owners. Individuals can harness the same power, but frequently use credit cards wrong, piling on high interest debt, and suffering financially. In times past, credit cards allowed for easy payment and tracking of expenses. As banks grew more competitive, the opportunities also grew. Most people are familiar with cash-back and bonus offers when opening a new credit card, but there is so much more.
There is a whole additional universe of value available from credit cards missed because it is buried in fine print. In this post we will focus on one of those benefits: interest free loans. Tomorrow I will focus on the litany of advantages you can use to make your life simpler.
Interest free loans from credit cards are not for everyone. I will focus on three groups who should find value in the strategy I will soon outline. The three groups are: people digging out of debt, people interested in accelerating their investments in index funds, and individuals and business with seasonal revenue.
How it Works
If you have a credit card you are aware of those checks they send you for cash advances at a 0% interest rate. That is not what we are talking about here. Those cash advance checks are junk because they charge a 2%-4% fee upfront. When I say interest free, I also mean fee free.
Many banks offer credit cards with a 0% interest rate on purchases the first 12-20 months you have the card. This provides a limited opportunity to cut some spending on interest. The strategy is as follows: You get two credit cards per year and use them like this: The first card is used for six months and the second card (acquired six months later) the next six months. See where I am going with this?
Okay, if you put every possible purchase on your credit card to max out cash, bonus, and travel benefits, you can also reduce your interest expense should you still be working out of debt. The goal is to never pay credit card interest ever! You have 12-20 months to pay off the card in full. By paying the minimum the first six months and then paying the card off over the next six months you effectively keep around half your spending available for investment or debt reduction.
It looks something like this:
Since you should be paying your current spending in full each month, you are never spending more than you have available to pay off the credit card. I used 10 months as an example, but you can expand this to any duration, depending on the 0% grace period of the cards involved.
It sounds like a lot of horsing around to avoid interest if you are on your way to financial security. It is. For many years I worked as a Dave Ramsey endorsed local provider. If I felt the client was disciplined enough to handle this strategy, I would teach it. By utilizing two new credit cards per year we could accelerate high interest debt reduction. In the above example we could reduce debt by nearly ten grand before we started paying off the new card.
During the 0% grace period, all funds used to pay the new card would be funneled to high interest debt. Then payments would be turned back to the new card so the balance was retired before the 0% grace period ended.
There are serious issues surrounding this strategy. First, if you have lots of debt you might also have a bad credit score. Getting a new credit card every six months could be an issue. Second, and this is the big one, it takes discipline. People with loads of debt have not been good in the past with money. Their discipline is suspect before we start.
If you have the discipline you can reduce some of that high interest debt so you can start investing toward financial independence. Once you have reduced your debt burden the rotating credit card strategy can be used to funnel cash into investments, but the returns are diminishing.
It is important when you are adding debt interest free to the new card that all funds to pay for that spending is allocated to high interest debt payments. Ten thousand dollars of payments shifted to a credit card at 18% is a $1,800 in annual savings. This snowballs (using Dave Ramsey’s term) into faster and faster debt reduction.
Another problem is not considering alternatives. Refinancing debt at a lower rate might be an easier and better solution.
Moving six months of spending payments to high interest debt adds to serious interest savings. Discipline is the hardest part. Delaying high interest expenses six months to a year still leaves you in debt! Bad spending habits in the past got you here; financial discipline is the only way out. Rolling up your sleeves and slashing spending is required, applying the reduced spending to debt reduction. It isn’t easy. If it was you would not be in this position.
Remember, you are not spending more than you normally would. You only shift your spending to a new credit card for half the 0% grace period and then use a new card while paying off the first. You are still accelerating your other debt reduction at the same time.
I don’t like this idea, but I will share it for informational purposes only. When debt is eliminated you can keep using the same strategy to funnel six months of spending into index funds. I think it is a lot of extra work once you are building your net worth to invest a half year of spending a bit sooner. You make the call.
A Personal Story
The third group benefiting from this strategy is owners of seasonal businesses. We will use my tax office as a guinea pig. As a tax office I am flush with cash April 15th. Year-end spending challenges the business finances while revenue tends to be lower than any other time of the year.
Up front, I never carry a credit card balance, but use credit cards for every possible business and personal expense. The business does have a line of credit which rarely gets used except as a tax management tool. If I can allocate funds in a way that reduces taxes I will use the LOC for a short period of time.
Due to the seasonal nature of my business (it isn’t so seasonal lately) we can apply the above strategy to manage cash flow. As the guinea pig, I acquired a credit card with a cash-back bonus and travel rewards. I will put every possible expense on the card until tax season when I will pay it in full. I’ve never done this before.
I really don’t need the extra funding this year for any major projects or tax reduction strategies, but it is a kick in the pants to harvest a few more bonuses.
Seasonal businesses can use this credit card strategy to avoid interest expenses while maintaining the business between busy times. Once again discipline is required. It is too easy to build debt. If you have problems handling money, this isn’t for you.
A large number of readers here are well on their way to financial independence or are already retired. I get enough requests from people starting out to make this post a valuable addition to the herd. Use it as you see fit. Also consider modifying it to your needs. The most important point is to think differently. If you act like everyone else, you will have what everyone else has. Better yet, if you tend to follow the crowd, hook up with a frugal group. It makes it easier when people around you tend to spend less.
Tomorrow I will dig deeper into credit card advantages everyone can use.
Use this link to help you research credit cards. There are a lot of choices. I recommend a card with a bonus and ample cash back. I did not include any of these benefits in the illustration above, but they increase the value. Finally, if you order a credit card and receive approval when you use the banner below, I will receive compensation. I thank you if you do. If you prefer to avoid such arrangements you can go straight to www.cardratings.com. You get the same exact thing, but I do not receive compensation. No hard feeling either way.
Note: Check the TWA Recommends page for all the latest best credit card rewards programs.
The more traffic grows on The Wealthy Account the more questions I get from accountants wanting to know how to run their office more efficiently. The tips below can be tweaked to work in many business settings and can be applied to personal management of time with family and friends while allowing ample “me” time for reading, thinking, and relaxing.
The workflow process in my office evolved over time as the tax industry changed and my practice transformed from a tax office to an accounting/payroll/bookkeeping office to its current incarnation as a quasi-communications company focusing on tax issues. So you understand my thought process I will walk through how I handled workflow in the past and why I changed procedures when I did. By seeing each stage of my workflow history you can pull the pieces that fit your situation best and modify them for your needs.
In the Beginning. . .
Organization in a tax office is not optional. From day one workflow had to be recorded and tracked. In business and even in our personal lives it is important to write things down. We start each client with a line item on a legal sized piece of paper. Since there are so many steps we take with our clients we break down each task into its components. Accountants track their own work and the computer monitors progress. My front desk is used as a redundant system, preventing mistakes. An empty checkbox on the legal paper requires investigation.
Before workflow even enters the office, client flow must be managed. In your personal life you can’t visit 38 different friends in different locations at the same time. The same applies in business; you see one client at a time. The early years of my business grew fast. People would frequently drop in without an appointment. Then one year in early February there was a line out of my building and half way down the parking lot. Something had to be done.
We instituted a pre-appointment program. With well over 2,000 tax returns during tax season we needed to control how many people were at the office at one time. At the end of each year we sent an organizer to help clients gather their information. We included a pre-scheduled appointment for each client and reminded the client they could always call and change the appointment.
There was another feature we instituted and encouraged: the drop-off. I have no problem talking with clients. (I have no problem talking at all. Ask anyone who has met me.) The problem arises when people want to see one of the accountants before the return is prepared. We discovered if people dropped off their documents and we called them with questions while we worked on the return we did a better job. Then, when the client picks up the return we sit with them. By talking with a client after-the-fact we can review the completed return for accuracy and plan for the current year with maximum tax savings in mind.
We got rid of the pre-appointment program completely. We encourage clients to call if they need an appointment or to drop off/email/mail their documents. We see some clients before the return is prepared, but the money shot is the meeting when the return is picked up. This is where we save the client real money.
The type of client we serve has also changed. More businesses versus simpler individual returns allowed us to ease up on client flow procedures. My practice now prepares around 1,000 returns annually with most clients owning a business or investment properties. The size of the tax returns takes more work than the 2,000+ returns of a decade ago.
The demographic change to our client list means clients naturally want to drop off their paperwork and meet afterwards. Business owners prefer working normal business hours versus individuals always wanting evening and weekend appointments. I enjoyed that change.
The issues changed; we did too. I included some photos of our current system around this post. The open doors photo is where tax returns are categorized by where they are in the process. The open drawer is empty because it is after tax season, but normally is filled with tax returns categorized as an A, B, or C. More on this in a bit.
When tax work comes in it is put into a drawer until it is scanned. Every document in our office is scanned and backed up daily to a third party, off-site administrator. Some data is backed up every 15 minutes and some is backed up at night. Everything is backed up in 24 hours or less regardless.
We still use legal paper as a check-mark system to assure each step was handled properly on each tax return. If the tax return does not need a certain task a note is made. When a client picks up their tax return the line after their name should be filed almost to the end. When the tax return is e-filed and accepted the line for that client should be completed. We also include a checkbox for invoicing and payment. If we are not going to get paid we might wish to consider a different line of work.
Back to the open cupboard doors. If any slot (there are 6 if it is hard to see in the photo) overflows we have a filing cabinet to handle the short-term overflow issues. Starting at the top right the slots are labeled: pending, review, e-file, ACK rec’d, drop off, and print. The details for each slot are as follows:
- Pending: Files in this slot are for tax returns started, but we are waiting for more documentation from the client. As you can see we still have a few files there in late October. Some clients are slow.
- Review: Most tax returns are reviewed and I look at all but the simplest of tax returns before e-filing. Even my work is reviewed. I might be good, but I want a second set of eyes holding me accountable.
- E-file: This slot has the signed e-file forms. All signed e-file forms are filed before I leave at night, no exceptions.
- ACK rec’d: ACK is the indicator the IRS provides when a tax return is filed and acknowledged. Once a return get an “A” indicator for accepted, it is scanned into the electronic filing cabinet and the hard copy destroyed.
- Drop off: These are dropped off returns awaiting scanning.
- Print: This slot is for completed tax returns ready for printing. The client gets a hard copy; we keep a PDF copy.
The A, B, C drawer is where all tax returns go waiting for an accountant to take them in. Any accountant can prepare an “A” return and a review is unnecessary. Most tax returns are classified as “B”. Any preparer can enter the data, but the return must be reviewed. “C” returns must run through my desk. Only very experienced preparers can touch these returns and are always given a full review by me. If I handle the original preparation of a “C” return, I review the work again after a second preparer reviews my work. “C” returns always have special issues.
To Infinity and Beyond!
Of course, the world changed everything on me then. This blog and several Mr. Money Mustache mentions increased the volume of work and the number of “C” returns. I am only one guy and like my free time for creative thought, reading, and, oh yeah, family.
Half my clients no longer reside in Wisconsin. More work arrives via email and the web portal than ever before. Demand for my time has also exploded.
All these changes are forcing me to once again rethink workflow in the office. The ultimate goal is accuracy at the fastest pace, but it also now includes determining how it will affect my personal life (as if I had one before). Time is at a premium. It is hard finding tax professionals who burn as hot as I do. No bragging, experience gives me an edge. Most tax pros either retire by now, burnout (a real risk for me), or devolve into data processors.
Thirty years ago my practice was a tax office. Ten to fifteen years ago it evolved into an accounting office with CPAs offering tax, accounting, payroll, bookkeeping, and consulting. Today my practice is turning into a quasi-communications company with tax and consulting the focus.
It has been a hell of a ride. Many of the changes I never imagined until they dropped in my lap. Life (and business) are like that. You have to go with the flow and be ready for anything. Demand for my time is the highest it has ever been. In the past I would speak publicly maybe five times a year; I get that many requests a month now and the pace is quickening. I enjoy public speaking so no problems there. The real issue is determining what I give up to do the speaking.
And I am slowly learning to use the word “no” a lot more now. I hate it with a passion. But it time for me to grow up.