Posts Tagged ‘side hustle’

Recovering from Burnout

End burnout. Review the symptoms and remedies to work related stress. #burnout #work #job #retirement #life #happinessIt can happen to anyone: burnout. 

Long hours conducting a repetitive task increases the risk. Not enjoying the work also increases the risk (though it could be more to do with drudgery than burnout). Not controlling your environment on any level is sure to increase stress and the likelihood of burnout.

Burnout is not about working a lot of hours. Rather, it involves stresses on the nervous system similar to PTSD. While a soldier in the field can suffer massive stresses to his nervous system, the same can happen to anyone who feels trapped in a dangerous (even perceived) situation. 

Elon Musk is a perfect example of a person who can handle significant stress without feeling burnout or worse, Musk loves his work and believes he is making a difference that will outlive him. He handles stress differently as a result.

However, when stress built in areas he could not control he showed classical signs of burnout. Shareholders demanded profits and more production or they would sell the stock, adding stress to an already full plate for Musk. 

Normally Musk is a pretty happy guy living his dream. But when market conditions outside his control pressured him hard he started to crack as everyone does when they struggle with a situation they are in. Tweets and other outbursts were counter-productive. Smoking weed on a podcast didn’t help either. (We may have assumed he smoked weed, but doing so publicly in his position put his business at risk.)

Musk survived in large part because he retained a massive amount of control. He made changes to Tesla and worked relentlessly until a resolution presented itself. 

Not everyone is as lucky as Musk. Stuck in a job you hate will sap the life out of you. If the job has high demands and stress it will start you down a path that doesn’t end pretty.

 

Symptoms of Burnout

Burnout is only one step on a road to hell. Left unchecked it can cause serious damage to your health. 

If you experience burnout and take no remedial actions you can start to exhibit symptoms of something much worse. 

The first step toward a nervous breakdown is burnout. Fatigue lowers your mental defenses. When the situation continues to pound, feelings of desperation can set in. Helplessness is a large factor of burnout.

When you really love what you are doing fatigue and stress are handled in a manageable way as long as you have some control over the situation. (You can take a break when needed.)

Exhaustion is natural when you work hard at a task. A short break, a nap, a good night’s sleep, are all rejuvenating. When time off doesn’t reinvigorate you something is wrong.

End stress and burnout. No more feelings of hopelessness and helplessness. Get your life back #stress #burnout #nervousbreakdown #problems #helpBusiness owners can experience burnout from long hours coupled with the demands of running a business. Even if you love the work you can feel trapped inside the demands you don’t care to handle inside your business. It is this trapped feeling that stresses the nervous system without a release.

In a world where financial independence is possible at a young age for many and dreams of early retirement coat the internet it is easy to think burnout should be a thing of the past.

But burnout can affect you in retirement, too! You might feel trapped living the dream of a significant other. A goal of world travel can turn into drudgery when travel doesn’t give you what you hoped. Eventually you can feel trapped and then the nervous system feels the accumulating stress.

It can even affect pleasant pass times. Golf might have been a great joy every weekend and holiday when you had a traditional job. You might have longed for vacation time so you could enjoy the links. 

Then you reach your financial goals and retired. Now you spend all day knocking the ball around the greens and it is no longer an escape. Golf was what you did to get away from a situation (work) you didn’t want to do at the same level as golf. Now golf drags on day after day after day after . . . 

Any task can stress the system. Work is a common stressor. Unemployment is too!

Burnout, since it is a close cousin to PTSD, doesn’t require an unpleasant task to experience it. A soldier gets trapped in a situation and his nervous system begins to struggle. The same can happen sitting alone in a room. If you don’t believe it, ask a prisoner locked in solitary confinement for an extended period how much stress he feels and see if it doesn’t sound a lot like burnout, a nervous breakdown or PTSD. He is feeling burnout from being locked in a small room without any control over his environment.

Burnout symptoms can make the situation worse. Depression and anxiety increase. Irritability can cause outbursts. Sleeplessness hastens the descent. Violence, as you struggle to gain some control of your environment, directed inward or outward, is likely to get an unwanted societal response. Rarely does situation improve without professional help.

There is also a tendency to self medicate. Drugs/alcohol  might seem like a solution while struggling with burnout. Unfortunately, it only makes it worse.

A common work tendency when burnout surfaces is procrastination. You want to avoid the stressor at all costs and all costs it could be.

Left unchecked, burnout can leave lasting wounds even after the stress is released.  Damage to those around you may never heal. You may never heal as burnout can progress to a nervous breakdown which can take years to recover from. Post traumatic stress is common at this point. Your nervous system eventually starts to rewire as a coping mechanism. And when the rewiring is no longer needed the nervous system is permanently damaged.

 

Recovering from Burnout

A soldier in the trenches easily can feel trapped with bullets flying and bombs exploding. There is very limited control over the situation which is why so many military personnel suffer from PTSD.

Thankfully most people reading this will ever experience such a situation. We might get trapped in a job we hate or find ourselves in an uncomfortable situation. In most cases the walls, feelings of being trapped, are more self-imposed than real.

Recovering from burnout requires removal from the stressor. A vacation (extended, if necessary) frequently does the trick. 

Burnout finds roots in helplessness which means it is loss of control over the situation you find yourself in causing the problems. The first step to recovery, therefore, requires you to gain some semblance on control over the outcome.

Bring joy back to your life. End stress and burnout; embrace happiness. Learn to do the things that make you strong. #stress #burnout #fatigue #helplessness #hope #happiness #joyBusiness owners can find business overwhelming. Reduced hours, fewer client or more staffing can bring life back into balance. Just knowing, acknowledging,  you have these controls over the situation can alleviate symptoms of burnout. 

A job is worse than owning your own business. In business you can adjust the size of the company and still put bread on the table. A job is an all-or-none financial situation. If you lose your job you take a serious income hit. This lack of control could be a leading reason people hate their jobs so much. It’s not that they hate the work or the people they are working with, but that their life can be turned inside out at the snap of the fingers and you may never see it coming.

The FIRE (financial independence, retire early) movement focuses on this very issue. The goal is to get out of the traditional work environment as soon as possible.

However, it isn’t about hedonism. The happiest people in the FIRE community continue doing meaningful activities. Some write blogs, others take up side hustles, others start a business. It wasn’t work that was the problem, it was “meaningful” work and control over your destiny that was the issue. 

Burnout has serious long-term consequences if left unchecked. You can change your job, pay down debt (another area where it is easy to feel loss of control), design the life you enjoy most. Refusing to acknowledge you can change your situation can cost you your health, family, happiness or worse.

Regain control. A side hustle can be started while working in a traditional employment environment. Traditional work can also be rewarding. Many enjoy the traditional framework. If you are one of these people and feel the stress, you want to be more, not less, involved. Your involvement is a level of control that helps you engage while lowering stress and the risks of burnout.

And if you are retired and feeling burnout you need to take a long, hard look. It is likely you are living some else’s dream of retirement. Don’t emulate a blogger just because it looks like they have a cool lifestyle. (It is for them, probably not for you.) Travel if you want; don’t is you don’t want.

Live your life on your terms. It is hard to experience burnout, regardless the workload, in these situations.

Diet and exercise play a large role in avoiding burnout. Take time to exercise and make good food a priority.

Once anxiety, depression or suicidal thoughts start it is time for professional intervention. Seeking help is not a weakness; it is a strength.

 

Dealing with Burnout

I had a different post planned for this week. However, I was feeling the pressure from tax returns on extension and blog traffic.

A tax return in my office was causing me no end of grief. Every time I made progress another problem arose. I was feeling the loss of control bad. Six interconnected tax returns were occupying my life for months and I couldn’t break through. I spent long hours at the office doing avoidance work. Procrastination was killing my productivity. 

Add to that the  normal summer traffic slowdown on this blog and burnout started running wild. Why bother writing if nobody is going to read it, I surmised. Except people are reading it and interacting. It was a pity party doing me no good. 

Finally I decided I had enough. I came in on weekends and evenings to find a way to break the problem. I was taking control! 

This post is slightly delayed because I just couldn’t get the energy to write Sunday night. The good news is I made massive progress on the problem tax return Saturday. Yes, another wall showed up, but this time I have a head of steam. I’m taking control. I should finish Monday. (Whew!)

No matter how dire the situation you have some level of control. And since loss of control is the first step to burnout and worse afflictions, control is where you need to focus.

The soldier in the field can focus on what he can control. Elon Musk took control like a boss and broke through the problems and ended many of his burnout symptoms. Musk never eased up a step on his workload. He loves what he does and made sure it stayed that way. 

You can also take control. There is always some aspect of your work or business situation you can manipulate to your advantage. (Don’t think of this as bad manipulation. Manipulation of a situation for the good of all is more than acceptable.) 

In the end you might choose early retirement or a different job or a side hustle. I’m here to tell you, it’s okay.

Keeping yourself locked in mental solitary confinement is not good for you, your family, friends or community. If you need professional help, seek it. Or, you might find you just need to acknowledge what you can control and then use that to move forward. 

Nothing is worse than the helplessness of burnout; the feeling of quitting and running away. You can do better than that.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

3 Steps I Took to Reach Financial Independence by Age 32

Do what this man did to become a millionaire by 32, starting from nothing. This man's story of growth is moving as we went from poverty in a rural area to massive wealth in a few short years. See what he did to accumulate his massive wealth and become a millionaire.The news feeds seem to be filled with story after story of people retiring at a very young age and how they did it. Most of the stories are very similar and goal always seems to be retirement and world travel. 

But what about the rest of us who want to continue making a difference in the world and refuse to bow to hedonism? 

Most people, I think, are unhappy doing nothing for long periods of time. Travel is fun until it becomes your full-time job. 

There are the hyper performers — the Steve Jobs’, Elon Musks’ and Warren Buffetts’ of the world — who never stop working and then there are the folks we see in the news feeds looking to check out at the earliest date. 

Most folks, however, are somewhere in the middle. They want financial independence for the freedom and security, but enjoy the social and productive nature of gainful employment. These people might work a traditional job, run their own business, consult or volunteer. 

That is what this story is about: How I reached Financial Independence (FI) by age 32, defined as net worth north of $1 million, and the steps I took to get there while retaining a happy and productive life.

The finish line will not include exotic travel. Instead, I focused on what I considered important: family and community. I still run the same business I did back then and I’m married to the same woman (31 years and counting and it just keeps getting better!). I’m most proud of my successful and happy marriage, though that doesn’t seem to sell considering the number of stories on long and happy marriages in the news feeds. 

So this is my story of how I accidentally discovered I was a millionaire.

 

Humble Beginnings

I never inherited a penny in my life and if I am so blessed in the future it will make no difference in my lifestyle. Born to a poor family in the backwoods of Nowhere, Wisconsin, I learned of family and hard work from little on. When Vince Lombardi said “Winning isn’t everything; it’s the only thing”, he gave my dad the adage, “Family isn’t everything; it’s the only thing.”

And good thing, too! When you live on a farm in the middle of nowhere there are not many folks to socialize with other than family.

We never had much money growing up is what I’m saying. We always had food on the table, but I remember when I was very young my dad put a piece of plywood across two sawhorses as our kitchen table. (Well, it seemed like luxury living to me!) We were happy because the outside world had not yet crept in to educate us to how backward we were.

Somewhere in this utopia I decided I wanted to be rich some day. It was probably the outside world sneaking in and corrupting a certain accountant in the room, but I had to be receptive to be tainted.

But there was trouble in paradise. The late 1970s were a difficult time for farmers. By 1982 when I graduated high school the writing was on the wall and I was oblivious. 

Less than six months out from graduation the farm was gone. I had no skills to sell in a world not hiring. In 1982 no employer was hiring in the county I lived in. It was so bad employers no longer kept up the illusion and didn’t waste paper giving you an application. The answer was NO!

I managed to save a bit in this environment. I turned 18 with a couple thousand to my name and no debt. 

 

Budding Entrepreneur

The money I had came from a variety of sources, a common theme in my rise to FI. In high school I got up every morning to milk cows at 4 a.m. After school I started milking cows again for 4 hours. I pulled a lot of teats, folks. You might laugh at that, but you would lose that grin if you were there.

For 56 hours per week I milked cows, plus other farm chores, and was paid $40 per month for the effort. I spent nothing! Not because I was smart, but because there was no place to go to spend the money. Town was a long walk and there weren’t many stores in the closest towns.

My freshman year of high school I joined the Future Farmers of America (FFA). To raise money members of FFA sold light bulbs. (Back then we only had the incandescent bulb which burned out a lot.)

I took to selling like a duck to water. I talked to everyone in town and every farmer within a day’s drive (I might be stretching the truth a bit). And when the light bulb drive was over I had sold more light bulbs than anyone in FFA history by a very large margin. 

I could sell. That is an important trait other articles on FI don’t mention. Working a job with good wages and benefits and living a frugal lifestyle has several glaring problems.

First, you might not have a high paying job. Minimum wage is not going to get you there by age 32.

Second, you might live in a high cost area of the country. 

Third, formal education and high IQ — and EQ — also make a difference

Forth, it assumes you are in good health.

Fifth, that you never lose that high-paying job while running for FI.

I certainly wasn’t connected and let me be honest here. I, ah, ahem, don’t have a college degree either. {cough} 

You heard me! I did take some college courses, but not enough credits or the right combination for even an Associates. And here I am with my enrolled agent license (the EA is a licence, not a degree) teaching other tax professionals and hiring highly educated people, some of whom have moved on and work for the IRS now.

Not being the smartest guy in the room or with the right education (or pedigree, I might add), I wasn’t on anyone’s radar as Most Likely to Succeed. So what did I do to reach FI so young?

 

3 Steps to Financial Freedom

From graduation day to my 22nd birthday I put those selling skills to work and managed to accumulate a $200,000 nest egg. And remember, this was back in 1986 when $200,000 was serious money. A $10 an hour job was good money in those days. (And I walked up hill to school (both ways) in snow all year around. Just sayin’.)

FFA decided to expand their light bulb fundraising to include garden seeds. There were no records to break as it was the first year offered. Needless to say, I sold a lot of seeds too. (Would you like some light bulbs with those seeds, sir?)

Ditch the job and start living. No more daily grind for the man. Instead, use these 3 steps you build your fortune. #retirement #job #finance #work #wealth I bowed out of selling for the school my junior year and started selling imported goods wholesale to retailers (and anyone else who would buy). I got my supply from a company called Specialty Merchandising Corporation (SMC). Oh yeah, those were the days. And, oh what a lesson I learned.

You see, people will buy over-priced cookies from young girls when it feeds corporate headquarters of a non-profit. But start selling stuff to line your own pocket and the number of “yeses” to “nos” changes radically!

So I improved my skill sets.

By the time I reached the age of majority I accumulated more experience than wealth. Sure, I had some money, but I wasn’t flush. The family farm was gone and that avenue of gainful employment with it.

I worked a short time in my dad’s agricultural repair business. It was tough sledding for dad back then, too. He’s doing well now, but in 1982 it wasn’t a pretty sight.

While working for dad earning a meager wage (money was preserved to pay other employees and to get the business profitable enough to feed a family of four) I worked 80 or more hours per week (record week on the job: 122 hours). I supplemented my income preparing taxes in the winter months. 

Before we knit our eyebrows in dad’s direction, understand it was survival back then. I worked long hours 7 to 9 months of the year (depending on the weather); January and February were light so I had time to prepare taxes. Late May got really busy and for the rest of summer and autumn. So I could earn more in a few months doing 50 or so tax returns than I could working day and night the rest of the year.

To be fair, dad paid me $40 per week, if memory serves, and later, $100 per week. (After I got a raise I quit. Ungrateful kid.)

Readers quick at math will realize this doesn’t add up to $200,000 in 4 years. And that is where we begin our journey of Steps to FI:

 

Step 1:

Unless you make a lot of money at your traditional job you will need multiple sources of income

Let’s count where all my money came from. 1.) Dad was paying me $160 a month, 2.) I was still selling SMC and profits were growing, 3.) I was preparing a small number of tax returns with virtually no expenses (gross margins approached 100%!) and, 4.) interest and dividends.

Interest rates were sky high in the early 1980s. Passbook savings accounts (remember those) paid a minimum of 5%, but most bank products yielded near or over 10%.

While bank interest was guaranteed and the rates mouth-watering, I decided I wanted to own a piece of America by owning stocks. I fondly remember one of my first purchases, a company called, ah, what was that now, oh, Phillip Morris (MO). And I owned a piece of Wrigley, too, until Warren Buffett screwed it up by funding the buyout of Wriggly by Mars, Incorporated for cash. 

I still own those shares of Big MO, now called Altria. The dividends were and are a growing part of my income and don’t think for a moment I didn’t realized the value of getting paid for not working; just for own a piece of a business.

I can’t stress enough how important it is to have more than one source of income. If all your income sources are in one basket and that basket withers you are screwed. You might put all your eggs in one basket with a business since each client is a separate income stream, but relying on one traditional job as your only financial resource is problematic. A simple layoff can destroy all your plans.

 

Step 2:

A few years later I got it in my head I would invest in real estate (RE) and go full-time as a tax professional. SMC died on the vine as I focused on building my practice and managing my RE investments.

Which leads to the second step I took toward FI: I owned income producing things (RE and the business) that I had a reasonable amount of control over. 

A job can disappear just like that through no fault of your own. The company can go belly up, the economy can slow, or your job gets outsourced.

Business and real estate have plenty of risk, but it was risk I could control. The Tax Code is never going away and when people try to stop paying less in tax I’m in trouble. Until then I’m golden. 

RE is also risky and comes with a mortgage to increase the incentive to get those units rented. Doing proper research before buying and joining your local apartment association (as I did) and applying some sweat equity increases your chances of success.

I used Step 1 above in RE as well. One vacant unit, if that is all you own, is a 100% vacancy rate. I bought several properties fairly quickly because I knew a few vacancies would only be a nuisance then rather than a catastrophe. 

I worked hard at my businesses. There was no free ride for this backwoods boy. Sometimes it hurt, a lot. There were times I didn’t know what to do. But I never stopped learning and never backed away from labor: manual or desk work.

In Step 2 I structured several income streams into something I had at least some control over.

 

Step 3:

You would think after my business was profitable and the rentals started throwing off reasonable income I could lean back and enjoy the ride. And if you think that you are wrong!

Retire early with these 3 steps used by a wealthy accountant to retire at 32. Early retirement can happen if you follow the simple steps this man used. #FIRE #financiallindependence #money #wealth #earlyretirement Before it was made popular by the tech industry, I always pushed my business into new territory. My goal was to create the company that would replace my business before competitors do.

I was the first in my community to offer free electronic filing. That might not seem like much now, but back then it caused my tax practice to grow explosively. When Wisconsin offered e-filing I was first on the list because the state knew I offered it for free and had no fraud cases. In other words, I could offer State of Wisconsin e-filing in my Wisconsin community for free before competitors could even offer the service. By the time e-filing was rolled out for all I had a commanding lead.

I also sold life insurance in the business for a while. I was never big on traditional life insurance, but key-man and for buy-sell agreements it made sense.

I was also a stock broker for a number of years before I realized I’m a tax guy first and hawking high-fee investments rubbed me wrong.

You can read this blog and see example after example of things I tried. Some ideas worked great; others I’d rather not mention (but share anyway so you benefit from my experience). 

And that is Step 3: Try an idea. If it doesn’t work, step back and reevaluate, then try again until it works. Never over-commit. Test small before jumping in with both feet. You don’t want to do something that destroys what you’ve built to-date. Once you determine you have a winner you can expand. Remember, most ideas don’t work! Trying a lot of ideas to see what works best before committing serious resources is a better way to reach FI at a young age.

 

Accidentally Get Rich

Of course, you need to avoid debt as much as possible and pay it down quickly when it arrives. You also must spend less than you earn if you are ever to build real wealth. You’ve heard it all before. It’s really simple. Spend less than your earn; invest in index funds; wait. If you want faster you better be good at sales or business; preferably both.

And this is where it gets interesting and how I discovered I blew past a $1 million net worth without even knowing it!

From age 22 to 32 a lot happened. My business grew and I got married. (Marriage brings in additional considerations.) Mrs. Accountant was open-minded, allowing me to funnel excess cash into investments rather than a higher lifestyle. I went from around $200,000 in cash to $1.2 million.

Remember the real estate investments I had? Well, eventually my dad, brother and I started a partnership with one-third ownership each. We bought a lot more properties. 

The bank that funded our RE holdings required we provide a personal financial statement every year or so even if we were not borrowing more money.

So I sat down to figure out what I was worth. I valued all RE holdings at what we paid for them rather than what I thought they were worth minus mortgages. I added retirement and non-qualified accounts. I valued my tax practice at zero and the practice had no debt (I only had real estate debt at the time).

As I added the values of all the accounts it started to dawn on me I might be a millionaire. I had a good idea what my share of the mortgages were and the assets were climbing too far above $1 million to drop below that level once mortgages were subtracted. 

When I struck the double lines below the bottom number it was clear I surpassed $1 million by a large enough margin to say I was a millionaire. 

Mrs. Accountant was in the dining room clipping coupons. I shared the good news. All she said was, “That’s nice,” and kept clipping coupons.

You see, I was more important to her than any amount of money. She lives frugally as I do and enjoys every day we are together. She saw, better than I, what was really important.

It was a let down in so many ways. Mrs. Accountant wasn’t excited about the money! I didn’t feel different either. I missed the big day when I crossed that magical seven-figure number. There was no bump or turbulence to indicate I crossed into another zone of existence. In reality nothing had changed; only my mindset.

Once I digested that it was only a number I decided to do what I always did. I tried lots more things, grew my business and expand my sources of income, much of it passive.

You see, I learned the most important step of all: It’s the journey that matters, not the destination. And I had the best mate in the world along for the ride.

It was that day when I was a 32 year old man that I learned to live life for the first time. Live, for Real. 

And I discovered I was always wealthy as long as I had my family.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

How to Use this Blog to Earn a Quick $1 Million

People prefer the familiar over honesty. That's not good for your wealth. If you want money you have to stop following the herd.By now you’ve probably realized this blog is a bit different from others in the personal finance arena. Sure, we talk plenty about taxes, investing, frugality, retirement and more, but how we go about it is different on a very subtle level.

The general media and popular bloggers of personal finance preach the same information without saying anything new. They spout “spend less than you earn”, “invest in index funds” and discourse endlessly about the 4% safe withdrawal rate from retirement accounts. 

Well, duh!

Yes, you might find often repeated advice motivational (I do), but you can go almost anywhere to hear it. Dave Ramsey is right. Get rid of debt! You do this by spending less than you earn. Baby steps help as you develop your financial skills. Then what?

However, once you get serious—I mean really serious—advice like “spend less than you earn” seems darn basic. Heck, grandpa told you that 30 years ago without referencing any blogs or media outlets. You need better information if you are going to climb to the next level.

In the early days of this blog I worked hard to find a place in the demographic. I always wanted to take the less traveled road. If everyone said you should retire early and travel the world, I pointed out the flaws in the logic. Conventional wisdom—much like the herd of lemmings racing for the cliff—is wrong!

If I was to add something to the heap of personal finance material already in existence, I would need to take drastic measures. And do it subtly!

You might notice the bloggers spouting the same gibberish get picked up by mass media outlets while your favorite blog (that had better be this one!) gets nary a mention. The reason for this is people prefer the familiar to an honest answer that could make a real difference.

 

Comfort Zone

Therein lies the risk to your wealth. The pantheon of bloggers telling you the same message risks you joining the herd. And as we all know, the herd gets slaughtered. (Grilling season is right around the corner.)

If it’s easy and fits in a witty soundbite (or click-bait title) it gets more attention. But this isn’t necessarily good for you financially. 

I made you, readers of this blog, a promise. Last autumn I promised to change the tempo of this blog, focusing on you, the reader. Prior to that I provided good information, but always with a jaundiced eye toward what would bring in more readers. That required me to sound like everyone else.

Put an extra $1 million into your investments easily. These proven methods are used by the wealthiest people today.But you can’t point out the flaws in over-simplistic information by sounding the same horn. If I was to give my readers a chance to put at minimum $1 million dollars in their pocket, I had to step up my game.

I did that before to some extent with a few notable exceptions when I sold out to the crowd. Time for consistency.

Things are different now. When was the last time a blogger dropped north of $16,000 to test outsourcing so his readers could benefit?

I’m not talking about building an addition to your home and making a blog post out of it. The blogger benefits regardless. I’m talking about dropping serious cash to explore an option with the benefit going to the reader whether it worked or not.

In the office they said I was nuts with my outsourcing idea. It turns out I was. Still, readers won! Other tax professionals (even those hiring a tax pro) received valuable information on a powerful trend affecting many industries.

That is what I mean by being different for the benefit of the readers of this blog.

 

Million Dollar Opportunities

So how can reading this blog add $1 million to your wallet?

You have probably read blog posts on side gigs that pay well. All those posts and articles in the popular media outlets spout pretty much the same thing. And the biggest complaint is that they don’t work as promised. 

The reason they don’t work as promised is because they require a special skill (maintenance man for landlords) or have low expectations (dog walker or Uber driver). Sure, you can make money house sitting and walking the neighbors dog, but the opportunities are limited and frequently less than satisfying ways to spend a day. Doing what nobody else wants to is not a side gig; it’s as torturous as working for the man!

This blog has offered several side gig ideas over the years as well:

Several additional idea have been interspersed throughout the text. 

The nice thing about my side gig recommendations is that they are rarely mentioned outside this blog. And you can do these all from home. Many small tax offices are run out of the owner’s home. It keeps costs low and allows you to stay small so it doesn’t overtake your life. 

Forensic accounting, for example, is a wide open field. Yes, you can work for someone else, but you can also start your own business specializing without any formal education, except what you learned reading The Wealthy Accountant. Nothing is more rewarding than helping people find financial stuff they thought lost forever.

I also warned about side gig risks and even offered a side gig tax guide

 

Flaws and Solutions

So how do you get your hands on the promised $1 million? 

Lists of side gigs have one inherent problem—they lack details. It’s wonderful to tell someone they need a dog walking job, but then forget to provide a play-by-play to do so. My post on 12 seasonal, high-paying side gigs has the same flaw. It takes the shotgun approach and fails as all other similar attempts do.

I did a better job outlining tax preparation and forensic accounting as a side gig. I recommend reviewing those posts if you are serious about a side hustle that is fun and very profitable.

Most opportunities are more subtle. Last week I published on when it’s a bad idea to add to your retirement account. The wire to my email box melted off after I published that. I think I had more people contact me asking for help on this than read the article. (That’s not as much of an exaggeration as you might think.}

The flaw with most blog posts and popular media articles is trying to serve everyone. The solution is to serve just one person: you, the reader. 

You can’t give 30 good ideas and expect people to use any! Research into retirement plans has made this clear. (Several research papers have found that the more options you give people the less action they take.) 

That is why I don’t tell you each week is yet another great side hustle idea. 

Take last week’s post, for example. I provided multiple examples of situations where adding to a retirement account would exacerbate future tax problems. Several solutions were provided while special note was made that facts and circumstances of the individual would prevail (we are all unique). 

I know many readers understand full-well what I was talking about. Focusing on this one special situation is a massive side hustle opportunity with plenty of income potential.

I charge $350 an hour for consulting on stuff like this and I’m booked out till Christmas. You can be just as booked with a few strategically placed speaking presentations at a local Optimist Club or Eagles. The average client will save well into the six figures in taxes and net worth. You will log an average of over 5 hours per client at your regular rate.

 

Show Me the Money

It’s all about focus. You can’t be everything to everyone. (God knows I tried.) 

Find your niche, get good at it and sell it to the world. 

Warren Buffett’s Berkshire Hathaway owns a lot of different companies. But Warren does only one thing: allocating capital. He is really good at one thing and let’s others do that they specialize in.

The same applies to you. Find that one niche that tickles you and exploit it. 

Don’t worry about not liking it down the road. I tried a lot of different things. That is why I have so much to share here. I’m always into something. 

It’s okay to get good at something, do it for a while and then move to something else. I did it my entire life (all under the umbrella of my tax practice, my true focus) to great success.

 

It’s About More Than Earning Money

So far I focused on earning more. Plenty of readers have reminded me it isn’t worth cutting taxes if you are earning minimum wage. Many have lamented not having money to invest so I started with earning more money.

You can pick almost any post on this blog and turn it into a profitable side hustle. I warn you to only focus on one project at a time if you want to keep your sanity. It’s also more profitable that way

The amount of wealth you have is in direct proportion to understanding the secrets of money. Wealthy people know how to focus on the right things for maximum wealth creation.But now that you are earning more money you need to know what to do with it. I’ve discussed that a lot too.

The conventional wisdom is to drop the whole shebang into an index fund and live with the results. It’s sound advice if you can live with the decision.

Instead, I encourage readers to put most of their liquid assets into index funds and also have a small mad money account for crazy ideas. 

But serious money doesn’t belong in a mad money account! That is why I recently revealed I’m dropping my mad money account. Money is too important to just throw away on crazy ideas! 

When it comes to investing, emotions are the most important element. I’ve witnessed so many clients over the years in my office lose money on investments they were stellar performers. The constant buying high, only to be scared out of the investment on a temporary pullback, is cancer to a portfolio.

Last December the stock market dropped around 20%. People in the demographic that read blogs like this one were starting to panic. And there was no real pain at that point! On Facebook people were screaming they were ready to pull the plug (sell into the down market). 

I was buying more. I actually bought my largest portfolio addition of the year on Christmas Eve, the market low of the pullback. I was able to buy when others panicked because I had no emotional attachment to my investments.

When it comes to investing I recommend reading the same thing again and again until it sinks in as long as what you are reading tells you to not trade based on the current direction of stock prices.

If you are good with numbers and have a small amount of business training (you read good business books) you can research potential investments outside an index fund.

I frequently share what I am buying (and every so often, selling) in a private Facebook group.  If you want to join just make a request. Since I run the group you have a good chance of becoming part of our tribe. Just mention this blog post and I promise quick approval.

 

Here’s Your Check

None of this should be surprising. Picking up a side gig where you don’t have to run the world (just focus on a narrow service) is the perfect solution to increasing your income. 

Learning to set aside emotions (something I publish about a lot when the market is down so readers don’t make a stupid mistake) takes practice. If you master that trait you will watch your net worth rise higher than Jack’s beanstalk. 

And it doesn’t take long either. I’ve seen more people build a million dollar income and/or net worth in a manner of a few years more times than I can count. It happens a lot more often than people realize.

Once you learn the secret (it’s not much of a secret anymore) all that is left is controlling emotions.

Set your focus on one post here and read it several times. Then follow the links, if provided. Read outside this blog, too. I don’t know everything and my worldview isn’t absolute. 

Where possible, run scenarios. (Example: If you plan on helping people optimize the right amount to invest in retirement accounts versus non-qualified accounts, run a few few tests to see how the numbers interplay with the tax code.) 

Then set a game plan to acquire clients. I’d tell you how to do this, but I already have (check the link).

Now that you have more money, sock half of it into an index fund. Leave a bit to the side for what I call pleasure investing. Research companies you are familiar with (maybe you use their product or work in the same field they serve). When you find an under-priced gem, buy. (Next week I’ll show you where I find under-valued stocks.)

It’s as simple as that. 

If you follow what I outlined in this post you should see no less than $1 million of income and net worth growth above what you already have. All you need to decide is how fast you want it.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

One Insane Way to Eliminate Your Debt Fast

The one insane way to eliminate debt fast! Cut your insurance premiums, rent and interest rates with one simple step.Debt can destroy any dreams you have of a financially independent future. That is why it is so important to reduce debt and maintain a relatively high credit score.

Debt is and of itself isn’t the entire problem. Excessive debt is a drag on wealth creation, but what debt does to the household budget is even more damaging than the original debt itself.

And debt can sneak up on anyone. Student loans, medical bills, job loss or a failed business venture can turn a bad situation into a nightmare even bankruptcy can’t deliver you from.

Once calamity strikes it is near impossible to shake the effects in every financial aspect of your life. A medical issue or mounting student loans can lower your FICO score which leads to higher costs in almost every other area of your life. Auto and homeowners insurance rates are higher for those with lower FICO scores. Many landlords refuse to rent to people with a FICO score below a certain level or charge a higher rent. And the interest rate you pay is higher.

Financing a home or car is an obvious way a poor credit rating affects you. But the damage doesn’t end there. Once a financial rough patch arises it is harder than ever to shake the damages and move forward. The scoring system doesn’t care about you; it is an algorithm developed to determine risk and it is a far from perfect system.

The worst part of a low FICO score involves the digging out process. Costs for everything are higher and many employers avoid potential employees with low scores. With costs higher and job prospects lower the downward spiral is hard to step off of.

The sobering fact is most people have at least one rough spot financially in their life. An economic downturn with accompanying job loss can set the spiral in motion. A medical emergency is all too common in our modern world. Physical and mental healing are only the beginning. Even before health is regained the financial pain starts to set in.

 

Rebuilding Your Financial Life

We will start by discussing the most powerful way to reduce your debt burden and increase your chances for a better job, lower rent and lower auto and homeowners insurance before we move to rebuilding your nest egg.

The largest component of debt is interest. A $165,000 30-year mortgage at 6% will create over $190,000 of interest if no prepayments are made. Credit card and other higher interest debt is even more damaging. 

Increase your credit score and lower your interest rate with this insiders secret. And generate a monthly income, too.Earning more money to pay down debt faster is a double-edged sword. The more you earn, the more income taxes you pay which begins to make you feel like Don Quixote chasing windmills.

Frugality plays an important role in reducing debt. Spending less than you earn is a requirement for reducing your debt burden. But some things are hard to apply frugality to. Those higher insurance bills and rent are hard to change until you are better off financially and your FICO score climbs. And excessive frugality is hard for many people to maintain. If you can’t stick to the plan you are lost.

It’s the old dilemma: you can be more frugal when you have more money!

It all boils down to your credit score. A lower score increases costs when you can least afford them.  

It is possible, however, to improve your credit score before your financial situation is completely fixed. The weight of medical bills takes time to work through and higher bills for everything else doesn’t help! If you can improve your risk appearance with a higher FICO score you can reclaim your life quicker.

 

It Helps to Have Friends

There is a simple (and legal) way to improve your FICO score with the help of friends or family. I discussed this at length a few years back, but will provide a short review for our discussion here.

On your own, only your reported financial information is used to calculate your credit score. Of course, a hardship may have destroyed that score that served you so well in the past.

You can rebuild your credit score before you turn the financial corner with some help. This is where tradelines come into play. 

A tradeline, in short, is a line of credit. If you are trying to dig out of debt then more tradelines seems like a crazy idea, but bear with me because this is a powerful tool to reclaim your life and then a potent source of easy income afterwards.

Improve your credit score and pay less interest with this insane insider's secret! End debt worries today with the financial secret the wealthy use.Your credit score is low because you have too much debt compared to how much credit limit you have and/or bad marks on your credit report. 

You can’t wipe bad marks away regardless what you’ve been told or read. Avoid the scams! The only cure for late payments and bankruptcy is time. The more time that passes since the bad marks on your report the less affect they have on your overall score.

However, you can increase the number of good marks on your credit report with tradelines. A tradeline can also increase the amount of credit you have compared to the outstanding balance (the utilization rate). The second point is one of the most powerful tools you have to increase your credit score in as short as a few months.

Having a friend or family member share a tradeline is the cheapest way to solve your problem. You add a tradeline to your credit report by having a tradeline from someone else included in your credit score. It works like this:

Say you are recovering from a job loss and finally are back working or recovering from medical bills. (For any of this to work the bleeding has to stop. If you are still digging the financial hole tradelines will do you no good.) You probably have some late payments and hold account balances close to the credit limit on your credit cards. This crushes your credit score.

The bank is unwilling to extend more credit with a higher credit line and the interest rate is killing you. A really good friend (or family member) could add you as an authorized user of their account. They will not actually give you access to the account! (They want to keep their good credit score.) 

When you are added as an authorized user of a personal account, their payment record (they should have no late payments nor a high utilization rate!!!) is added to yours. This means their clean payment record and credit limit with low utilization rate is used to calculate your credit score. 

Let me reiterate. You will have no access to their credit card or information! You are merely added as an authorized user. 

For this to work best you want the account your friend is using to help you with to have a few characteristics: an account open for at least several years (the longer the better), a high credit limit and only a small amount of usage.

Ideally the account you are added to should have at least one usage a month (so it reports to the credit bureaus) and is paid in full each month.

 

Real Life Example

I used my knowledge of tradelines to help an employee recently. She does good work and I wanted to keep her working for me. However, she was struggling with financial sins of the past. 

Student loans she acquired to start a new career were an anchor around her neck. This lead to high interest credit card debt and a high interest auto loan. She used her head to stop the bleeding and get her life back in order. (This also makes her a better employee.)

Her credit score was scraping the basement. She didn’t have many late payments (maybe two or three a few years back, but she always found a way to pay her bills no matter what).

Her credit card and auto loan interest rates were killing her. To rub salt in the wound she also paid higher insurance rates. 

Once I was comfortable she would stay the course I added her as an authorized user to one of my personal credit cards. (She has zero access to this card so there is no risk to me.) I had a small ($69.50) bill on auto-pay going on the card monthly and the credit card was also on auto-pay so I was never late paying the credit card bill. The utilization rate was low, the credit limit high, the account open for years and the payment record pristine. 

In less than two month my employee enjoyed a credit score approaching 100 points higher. She immediately shopped her auto insurance and cut her premiums nearly in half. Her other credit cards also lowered her interest rate when she asked.

The lower interest and insurance premiums allowed her to pay off her debt faster. She now also owns a home with a locked-in low interest rate mortgage and a bright future. She is paying off the debt she has faster and she is getting married in two months so she is a very happy young lady knowing she is going into her marriage with her finances under control.

Talk about a tax-free fringe benefit!

 

Looking for a Friend

Unfortunately, many people with financial/credit problems don’t have a friend or family member (or employer) who can help. There is a growing industry helping people with such a need.

You can actually buy tradelines to get the same benefits we talked about above and enjoy the experience my employee had. 

I researched a large segment of the industry a few years back and when I was satisfied with the policies and procedures of one company I decided to promote their work. As with anything, not all businesses are reputable. I ran across plenty of those, too.

The goal is to buy clean tradelines to turn your financial situation around. (I’ll share the name of the company in a bit.) The goal is to derive more benefit than the cost.

 

Example: Let’s assume you are paying an extra $400 per year in auto insurance, $50 more for rent and your interest rate on credit cards or auto loans hover at 10%. The extra interest you pay per year due to a poor credit score we will assume is $1,000. This totals $2,000 in extra expenses per year and you get nothing extra for the pain.

You could always dig your way out slowly. That could take years. Or, you could buy a few tradelines for a heck of a lot less than $2,000 and see your credit score improve in a month or two. Realistically you can see enough credit score improvement in a few months where you can get your insurance premiums reduced and interest rates lowered.

You can apply the same strategy when planning a purchase. If you are looking to buy a car or home you can increase your credit rating a few months in advance to qualify for a lower interest rate loan. The money saved with a lower interest rate will pay back the tradeline costs many times. Tradelines can make a very profitable investment!

 

The company I use to sell tradelines (you might actually get one of my tradelines if you use the company I recommend since I sell my tradelines there) is Tradeline Supply Company. They have great articles to help you decide which tradeline will work best for you. (Be sure to say “Hi” to the guys over there. I was part of their growing process a few years back and when I run across them at conferences we catch up. It’s good to hear success stories.)

 

Final Notes

Tradelines are a legal tool to regain your financial life. This is not credit repair! Prior sins are still prior sins. What you are showing is that you have turned the corner with your financial problems. You can’t keep digging the hole and expect tradelines to bail you out. Tradelines are a tool to improve your life when things go horribly wrong. Use your second chance wisely!

 

Turn Tradelines Into a Massive Income Stream

Now that you turned the corner with your finances you can pay it forward by selling tradelines with Tradeline Supply Company. You might pay a few dollars to jump-start your finances, but now that you are making progress you can sell tradelines even if your credit isn’t perfect yet.

The extra money you earn selling tradelines can help you pay off debt even faster and help you build a sizable nest egg. I published on selling tradelines for profit here. Many readers of this blog have tradelines paying their entire mortgage and more. Now you know how you can join them. Call Darren at Tradeline Supply Company at 888-844-8910 to get started earning up to $1,000 per month and more.

You can thank me later.

 

 

More Wealth Building Resources

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

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

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

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

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

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

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

Pricing Your Product in Your New Business or Side Hustle

Finding the right price to charge for your product or service will determine the success of your business. Learn how successful businesses find the price that maximizes profits.

Finding the right price to charge for your product or service will determine the success of your business. Learn how successful businesses find the price that maximizes profits.

“Start a side hustle or small business” is a common refrain when working to reduce debt or retirement planning is involved. It all sounds easy on paper until you realize most businesses fail within a year or so.

The problems with starting a business are myriad. Most businesses fail because they either have too little or too much business and the problems begin with the price or fee charged the customer.

Yes, some businesses fail over financing and other financial issues, but price frequently is the destroyer of small businesses. Charge too little and you end up with too much work and no profits to show for the effort; charge too much and nobody will even waste their time kicking the tires to see how good you really are.

The type of business also plays a role in pricing. A cheap attorney or doctor (or accountant!) is never a good idea. Even if it is a good deal you are unlikely to trust a cheap attorney. But what if you have a side hustle dog sitting? Is cheaper better then?

Then we get the loss leaders. Using our dog sitting example, do you offer a free trial to get clients in the door? It might work, but it costs the business owner money and time to promote in such a fashion. Research also indicates it is a poor way to promote your business.

Too Good a Deal

When I started my practice in the 1980s I subscribed to the “cheap is better” promotional school of thought. I was the first guy in town offering free e-filing for federal and was the only guy who could offer state e-filing the first year it was available because Wisconsin wanted to test their program with firms that offered the service for free and had no fraud cases. I fit the bill and the rest is history.

The free e-filing is a good example of giving something for free to grow your business. I still was paid for preparation services; only the e-filing was free. The benefit cost me nothing and saved time. My software provider only charged me a dollar and I saved that in toner and paper not printing copies to send to the government. This also saved time so I was a net winner. The best deal around town outside my office was $25 for e-filing. By the time other firms caught on it was too late. I was well established and well known for my progressive business ideas.

There was still one small problem. I prepared tax returns for a low fee. The goal was to grow the business fast and large. This is a massive problem when the service provided frequently required I personally work on or review most tax returns. I was providing value added service but not charging for it. That led to long hours and lower profits. Something had to change.

Quality or price, you can't have both. When you provide high quality service you deserve a higher price. See how professionals set price to maximize profits.

Quality or price, you can’t have both. When you provide high quality service you deserve a higher price. See how professionals set price to maximize profits.

By the time my practice reached 2,000 returns I was exhausted. Sure, anyone in the office can prepare a return. So can any other tax office. But not many can reduce a clients tax liability legally the way I can. That takes experience, skill, research, and most of all, time.

Around the year 2000 I was preparing about 1,600 individual returns  with another 400 business returns, amended returns and returns from prior tax years. Many clients walked in the door when I was giving my services away and I wasn’t bringing their fee to a reasonable level fast enough to regain my sanity. That, and attempts to increase prices brought loud complaints. It was exhausting. People wanted more and more without paying for it. Worse, clients didn’t take my advice seriously! What was it worth anyway? I gave the consulting away for fee and clients treated it as worth exactly that much.

The first year I decided to make a draconian cut. The tax software I use allows me to pull reports based on time spent preparing the return and the fee charged. I ran a report showing the least profitable to most profitable clients. To my surprise I had almost 400 clients that were money losing accounts! (I know, I know. I’m not proud of it either.) Those 400 clients were send a letter kindly asking them to leave.

That was the best tax season in years. Prices were not increased much, but the money losing accounts were out so I had time to breath and profits actually climbed because expenses dropped faster than revenue.

The next year I raised fees significantly. My real clients stayed. Fewer people left than I anticipated. Something else also started to happen. Clients, especially business clients, started saying it was about time I raised my fees so people would start respecting my work. Clients saw what I was blind to! People actually wanted to pay me more because they saw value and all the bottom feeders were sucking me dry, hurting the serious clients. In hindsight, I’m feel great gratitude these clients were willing to wait until I regained my sanity.

Perceptions of Value

How much do you value the endless supply of news online? Do you trust it? What if you pay for a newspaper? If you are like most people, paying for something causes you to value it more. It may have something to do with the sunk-cost fallacy businesses fall prey too. Regardless, we understand “free” does not bring out the best. A free report is valued lower than a report you pay for and for good reason. When a payment is made/received all parties expect a certain level of value to be provided.

But free works so well! But not really. In my line of work I see plenty of businesses. I know what does and does not work. The “free” thing has been done to death. The philosophy has destroyed more businesses than any other policy I know of. Free meals mean nothing to a restaurant if the food is no good. All free does is sink your boat faster.

Back to our dog sitting example. Giving away a free day when you have no way of creating more time is a rabbit hole you do not want to fall down. Instead, a free doggie treat might be a better way to promote the business. You still charge your regular fee, but you give something extra of value. The perception of value remains intact. The people who would turn their pet over to a free service are not the kinds of clients (and dogs) you want.

 

Finding the Right Price

Over the years I tried many methods of pricing my services. Checking the competition and pricing comparatively is the most common method of pricing I see and used it myself in the early days. It’s also the worst, except for the free or super cheap thing we talked about above.

Setting your prices/fees similar to or a nickle below competitors means you get paid nothing for any added value you provide. Here we are again at the trough of free stuff. If you charge what the other guys charge what is the incentive to use your product or service? If you provide greater value there is a reason to patronize your business, but you don’t get paid for the superior product if your only pricing method is to undercut competitors.

All these pricing issues lead to two problems: 1.) you are either too busy (or people don’t trust you’ll do a good job) due to your under-priced goods and services which leads to poorer quality as you are run raged, or 2.) your fee becomes over-priced compared to what competitors are selling due to market changes before you differentiate your product.

You can’t win if you do not differentiate your product or service. The differentiation is where the value is created and where clients are happy to pay your fee even if it is high.

There is a better way and I learned this trick from two men I highly admire: Seth Godin and Tim Ferriss. Seth Godin is well known from his numerous best-selling books; Tim Ferriss from his books and podcast.

Recently Tim invited Seth to join him on his podcast. It may have been the most important podcast I ever listened to.

Seth shared his method for setting prices for his speaking engagements. He said he only has two prices: free and full price. If Godin really wants to do the gig and if it is for a good cause he will sometimes do it for free. Otherwise his fee is full price, no discounts.

Wonderful! But how does Seth Godin find his price? Simple. He started by setting his price so a few people would hire him. Once someone—anyone—offered him more that was his new price. As simple as that.

However, this is simple theory, difficult in practice. Godin admits it’s tempting to take a gig when your calendar is empty. It takes time to learn the skill of saying “no” when you have lots of white space on your calendar. But if you don’t stick to your principles you dive head first down the aforementioned rabbit hole. And it is going to hurt really bad.

Higher is Better for Everyone

It may sound crazy, but a higher price is frequently better for the business and the customer! People will pay for quality and those who will not are not the kinds of people you want to serve. Remember, you’re a business, not a slave! You solve problems, fill a need. And do it well! You should get paid for that and paid well. If you don’t it is only a matter of time before you either quit or sacrifice your ethics and provide cut-rate products and services.

The fear business owners have when raising fees is the worry clients will leave. Well, I hope so!

Not everyone wants or needs the higher level of service and quality. Your choice is to produce crap and sell a manure spreader load full of it or to sell a respectable amount you can comfortably provide  at the highest quality money can buy. Either way is fine. But, crap gets old fast while quality instills pride and that carries you a lifetime and makes you feel proud of the work you do.*

Last year my small tax firm prepared around 550 tax returns in total. This is a long fall from the heady days of 2,000+ returns annually. It was the best tax season in years as I worked hard to adjust to my new worldview of a tax office with national exposure. This is easily the most difficult transition I ever went through. There were times I didn’t know if the firm would survive.

Here it is mid-January and I’m nervous. One of my preparers thinks I committed to around 650 returns for this tax season. (Was it that may?) If it’s true I have a real problem. I spent heavily on increased automation and productivity enhancements. However, the clients I serve now are of a different caliber than of the past. These are large returns with serious issues and I’m one guy. (Yes, my team does most of the heavy lifting, but I need to be in the final review process for virtually all returns so clients get maximum value.)

Finding the right price to charge is as important as the service you provide.

Finding the right price to charge is as important as the service you provide.

Fees have steadily climbed. As fees climbed some clients left. Revenue still climbs because fewer people leave than the fee increases. The higher fee allows me to add more value to each return. This means lower taxes for clients so my fee is really free after tax savings are included. But, Dawn, my ace tax preparer, and I will sit with every client this year. The last few years we allowed other team members to handle this. I hated it because I need to know my client better and the new system will allow for it as long as I don’t grow the business too large. (Clients living further away will have more phone time with us.)

The goal is to always provide a better experience for the client. Quality is important as long as the client feels respected. Doing the best work and ignoring the client is still bad form.

And don’t worry about losing all your clients. I’ve experienced that emotion all too often. Let me sooth your nerves with a story: This blog has produced an excessive flow of consulting clients. I love the work and with rare exception the client walks away from the consulting session with thousands or even tens of thousands in tax savings. There is a reason for the high demand.

I consult with new clients from June to December on Tuesdays and Thursdays. The max, I discovered, is two consulting sessions a day. Any more and the research and face time exhausts me too much. (Regular clients can have consulting sessions any time of year, even tax season.)

The past year I charged $275 an hour. When the new consulting season starts in June the fee is $350 per hour. Still a good value when thousands in taxes are saved.

You would think the fee increase would slow things down. It didn’t. June is already filling up six month in advance! Kind readers, please understand. People are hungry for top-quality service and products! They are sick and tired of junk. The more I raise my fee the more people know I’m focusing on increasing the value even more. And they want this even higher value product more!

Let me make one thing clear as we wrap this up. This is not about bilking the client. This is about serving the client at the highest level possible and pushing higher from there. You are good today; you’ll be even better tomorrow as you learn and accumulate more experience. People want that!

The increased consulting fee means I will work slightly fewer hours and, of course, will make more. But cutting the hours just a bit allows me to learn and grow more as I have the time to research ideas and strategies. This makes every hour of my time purchased worth significantly more.

Tax preparation fees are the same. Cheap is NOT better. Cheap means a shortcut was taken. You can’t do it profitably any other way. What you save in accounting fees is lost to your least favorite uncle in Washington. I’m not close to the cheapest. I played that game before. I’m embarrassed to say it because that means my clients were screwed by my lack of experience in those days. If I’d have raised priced I might have done a better job earlier in my career.

As for the dog sitting side hustle: People love their pets and want the best for them. Charge more and include a doggie massage and doggie treats. The dog and the human will thank you for such kind consideration.

As a bonus, you’ll have a profitable and successful business you enjoy running ever day. No retirement for you; you’re already living the dream.

 

* If you work at a job and hate it there is a good chance you work for a company peddling as much crap as they can flush out the door. People who work for companies that provide high quality products or services are almost always a pleasure to work for also.

 

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.

PeerSteet is an alternative way to invest in the real estate market without the hassle of management. Investing in mortgages has never been easier. 7-12% historical APRs. Here is my review of PeerStreet.

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

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

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

 

Micro Business and Side Gig Tax Guide

Enjoy all the tax benefits allowed for owning your own micro business or side gig.

The reason for starting a side business are legion. Maybe early retirement left you with more free time than you know what to do with. Maybe you took early retirement a bit early with the intentions of earning some side income. Or, personal or family issues limit the hours available for gainful activities.

Micro businesses are a great way to earn more money without a massive expenditure of time. You can enjoy the best of both worlds: reasonable income and freedom.

But there is one factor that causes more headaches than any other: taxes. Micro businesses/side gigs have special tax rules that can cause serious problems, or, if done correctly, virtually eliminate your tax bill.

I’ve published on this in the past, but new tax rules require I provide an entirely new guide. Several notable changes require your attention. A misstep will cost you hard-earned tax dollars; a well thought out plan allows you to keep most or all of your side gig income.

 

Highlights of the Changes

First we need to define what I mean by a micro business or side gig. For this discussion I consider a business micro if profits (not revenue!) are less than $30,000 annually and are expected to remain so in the future. This profit level is confined by economic and personal factors. You still have a micro business if you elect to remain small.

By eliminating businesses with over $30,000 of profits we also limit the choices when we plan for taxes. That allows for a detailed analysis of the issues without concerns for larger side gigs.

One of the large changes to the micro business environment involves hobbies. In the past (2017 and prior) hobby income was reported on the front page of Form 1040 with expenses deducted on Schedule A as an itemized deduction. Hobby expenses could not exceed reported income from Form 1040 and the expenses were combined with multiple other deductible items (job search expenses, safe deposit boxes, tax preparations fees, et cetera) and then 2% of adjusted gross income was subtracted.

Starting in 2018 hobby expenses are no longer deductible in any amount while income is still required to be reported. The revamped Form 1040 also means you need Schedule 1 to report hobby income (see inset).

Where to report hobby income on a tax return.

Where to report hobby income on a tax return.

 

The other big change for micro businesses comes from §199A, the Qualified Business Income Deduction. This new animal allows for a 20% deduction on certain business income (profits) without an out-of-pocket expense. We don’t have to worry about limitations since we are focused on businesses/side gigs with under $30,000 of annual profits.

 

While tax code changes didn’t affect LLCs, S corporations or regular corporations (the C corporation), there are considerations for micro businesses when it comes to entity formation.

 

The Hobby Decision Tree

Even without the possibility of deducting any hobby expenses, there are times being a hobby might be advantageous. Before we begin this part of the discussion you should review this article to refresh your memory of who can and cannot report income as a hobby.

Why would anyone want to report income as a hobby? First, you may actually have a hobby rather than a sole proprietorship (a small business for tax purposes). Second, there is still a possible tax advantage to hobby income over small business income.

Hobby income does NOT incur self-employment tax on the income. A hobby with few expenses will be taxed less as a hobby than over a sole proprietorship.

Enjoy all the tax benefits allowed for owning your own micro business or side gig.

Enjoy all the tax benefits allowed for owning your own micro business or side gig.

Example: Fred has a hobby building model ships. He sells a ship every 4 or 5 years without a profit motive; he just likes building model ships in his free time. He meets all the criteria of a hobby. If Fred sells a model ship for $5,000 and reports it as business income he will face income tax at ordinary rates (determined by his income level), plus a 15.3% self-employment tax. Reported as a hobby Fred would not pay around $750 in SE tax. He would still pay income taxes on the hobby income at ordinary rates.

Once the self-employment tax issue is understood (or experienced), smart taxpayers start pushing their tax professional to list income as hobby versus small business income. However, you are automatically considered a business by the IRS anytime you turn a profit in 3 of any 5 year period. 

There are ways around every problem. First, you don’t have to conduct the same hobby every year. If you report hobby income every year, but from significantly different hobbies you should be prepared to explain to Revenue your position. (I would actually explain it with an attachment to your tax return every year you report hobby income in 3 or more of any 5 years.)

Second, you can enjoy your hobby like Fred. Fred loved the process of fleshing out a detailed ship from times past. He would spend a year or more on each masterpiece. Fred doesn’t have to sell a ship every year. He can sell his growing cache once every 4 or 5 years. (His wife might require Fred to divest in his some of with hobby creations due to space limitations. She might get sick of cleaning the growing horde of ships decorating every corner of the house.)

Because Fred has few expenses (perhaps $500 or less per ship) most of his income from the sale is profit. However, since he is a hobby he avoids paying self-employment tax on top of income taxes.

How do new tax rules affect your hobby decision? While avoiding self-employment tax can be enviable, hobby expenses are no longer deductible, meaning your income tax will almost certainly be higher. Your other income determines your tax bracket. High earners might be better off as a business than a hobby once expenses are considered.

Finally, don’t succumb to temptation to cheat. The IRS watches hobby income and gets irritable when the line is crossed. Yes, if Fred had a model ship hobby where he completed and sold a ship every 5 or for more years for $80,000 he could avoid SE tax. But he better be prepared to explain why he isn’t really a business. Be sure to read the article from the link about to gather a better understanding of where the line is if you plan on reporting income from a hobby.

 

Business Deductions

Business deductions that are “ordinary and necessary” and that are reasonable are allowed. This is a very wide road to travel.

Your business structure doesn’t change what can be deducted. A sole proprietorship, regular corporation, S corporation and partnership can all deduct reasonable ordinary and necessary business expenses.

Let’s talk about common deductions first. Anything related to your business is usually deductible. Advertising, rent, utilities, office supplies and bank fees are just a start. A painting to decorate a wall at your business or home office is ordinary and necessary because it creates a better profit producing environment. (A Picasso would not be reasonable and would be disallowed for all but the largest of businesses and even then might be a problem. Remember the expense needs to be reasonable.) Desks, computers, chairs are also business expenses, though they may need to be depreciated over a number of years.

There is a sweet spot in business deductions, too! While cash going out is easy to record and deduct, non-cash deductions are easily forgotten. You may qualify for an office in the home. With the standard deduction much higher now the office in the home might be a way to benefit from some of your mortgage interest and property tax expenses.

Explore all the tax benefits of a side hustle with this Micro Business and Side Gig Tax Guide.

Explore all the tax benefits of a side hustle with this Micro Business and Side Gig Tax Guide.

Mileage is another expense without an easy correlation. The mileage deduction can exceed actual cost, creating an additional non-cash deduction.

Meals and entertainment offers a choice when traveling. You can use actual expense or a per diem. The per diem can exceed your actual outlay providing another non-cash deduction. The beauty of this method is that you can choose which method you use for each business trip. High meal expense trips can use actual expense and low meal expense business trips can use the per diem.

Bonus depreciation is 100% this year for most new assets. The de minimis election to deduct rather than capitalize tangible property with a class life of 20 years or less and with an initial cost of $2,500 or less also allows for faster expensing of most business assets purchased.

You can even estimate some expenses! If receipts are lost or destroyed you can use reasonable numbers for expenses, except for meals & entertainment, travel, auto expenses and listed property. Advertising, supplies and postage can be estimated if records are unavailable. Be sure to review the rules with the link at the beginning of this paragraph to avoid problems.

And here is a final deduction nugget frequently overlooked. If you have a customer appreciation event, Christmas party for the office or other business event at your home you can charge your business a reasonable fee (deductible) and not report it on your personal return (tax-free) if you rent out your home for 14 or fewer days per year. To determine “reasonable”, check around locally for the cost of renting a similar facility. As always, document ad nauseam.

 

Retirement Planning

Even the owner of a micro business can reduce or eliminate income taxes.

We turn now to deductions that amount to moving money from one hand to the other and receiving tax advantages as a result.

There are a host of retirement plans available to micro business owners unless the income is classified as hobby income.

SEP plans are probably not the best choice for a micro business due to contribution limitations based on income. (20% of a $20,000 profit is only $4,000).

401(k) plans, including solo plans, allow for larger deductions ($18,500 in 2018 and $19,000 in 2019) but can have higher fees than other options.

If other income doesn’t preclude an IRA contribution you then have a choice: Roth or traditional. The maximum contribution allowed for either is $5,500 in 2018 and $6,000 in 2019; folks 50 and older on the last day of the tax year can add an additional $1,000.

If the traditional or Roth IRA are not allowed or not enough for your needs you should consider a SIMPLE IRA. SIMPLE IRAs are just the way they sound: simple. They are simple to setup and maintain with low fees, if any. Investment houses like Vanguard and Fidelity will help you with the process if you have issues. The best part of SIMPLE IRAs is the higher contribution limits: $12,500 ($13,000 for 2019) with a $3,000 additional catch-up provision for those 50 and older on the last day of the tax year. Also, you can contribute 100% of your business profits up to the contribution limits! This means if your micro business earns $10,000 per year you can contribute the entire amount, avoiding income tax on your business income (SE tax is stilled owed on business profits regardless of retirement plan contributions).

 

§199A: The Qualified Business Income Deduction

This new and unique deduction is in the news a lot lately. The Code is vague on certain issues at it pertains to the §199A deduction. While vague may sound like a problem, tax professionals deal with vague tax issues all the time. It comes with the territory.

We can avoid many of the complicated issues because we limited our discussion to micro businesses of less than $30,000 of annual profits.

Owning a micro business/ side gig/ side hustle is rewarding and profitable. Use this guide to pay the least amount of taxes with your venture.

Owning a micro business/ side gig/ side hustle is rewarding and profitable. Use this guide to pay the least amount of taxes with your venture.

Real estate investors of income property can also benefit from the 199A deduction. (Generally an income property investor must meet the definition of a “trade or business” (undefined as of this writing) before taking the QBI deduction up to the level of profit or 2.5% of the original basis before adjustment, whichever is less.)

Regular corporations saw a massive reduction in their marginal tax rates, except for the lowest bracket which was increase from 15% to the flat rate for regular corporations of 21%. Unlike partnerships, S corporations and sole proprietorships, the §199A deduction does not apply to regular corporation.

Revenue issued some guidance on the QBI deduction. One thing is certain, the deduction is allowed for all business entities, except regular corporations. Partnerships that pay guaranteed payments to partners (the paycheck portion paid to owners of a partnership, in a manner of speaking) will reduce the QBI deduction.

Example: Sally and Mark form a 50/50 partnership to sell widgets. They have one part-time employee. The employee receives a weekly wage and a W-2 at year-end. Sally and Mark agree to pay themselves $100 per week. They do not get a W-2! Instead, their payments are considered guaranteed payments to partners. If profits are $20,000 after all expenses, including guaranteed payments to partners, they use $20,000 to calculate their QBI deduction of $4,000.

S corporations generally require more than $30,000 of annual profits to be a viable choice for tax reductions. If you have an S corporation you must pay reasonable compensation to owner/employees which reduces the QBI deduction.

Sole proprietors do not pay themselves a wage or receive a W-2. Instead, they take draws. QBI is generally the reported profit of the sole proprietorship without regard to self employment taxes. Once again, multiple by 20% and deduct.

The QBI deduction is not taken at the entity or business level. The deduction is claimed on page 2 of Form 1040, Line 9 (2018 tax forms).

Claiming the Qualified Business Income (QBI) deduction(Section 199A) on your tax return.

Claiming the Qualified Business Income (QBI) deduction(Section 199A) on your tax return.

Caution! My journals have some conflicting advice on reasonable compensation to S corporation owner/employees and guaranteed payments to partners. Before Revenue released guidance on August 8th some felt guaranteed payments to partners and reasonable compensation to S corporation owner/employees would be added back before calculating QBI. Sharp readers called me on this. The reason for the assumed (by some people) add-back before guidance was released is so high earners couldn’t play with reasonable compensation to qualify for the QBI deduction in certain service businesses. Guidance now indicates QBI is profit after reasonable compensation or guaranteed payments.

Planing tip! Because S corporations require reasonable compensation to owners/employees, micro businesses probably do better as a sole proprietor since there are no wages to the owner to reduce QBI.

 

Entity Selection

I preach LLCs treated as S corporations a lot. However, micro businesses rarely benefit taxwise from such a structure. In most cases S corporation treatment does not lower taxes enough to offset costs of organizing as an S corporation until profits consistently exceed $30,000. Even $30,000 is really low! I prefer to see $50,000 or more before deciding to switch to an S corporation and only if it appears profits will remain north of $50,000 in future years.

We are discussing micro businesses of under $30,000 of annual profits so organizing as an LLC is fine for legal purposes, but electing to be treated as an S corporation is a questionable move if taxes are the reason why.

Your S corporation may have started as something bigger and withered over the years as you downsized. Keeping the S corporation may be more convenient than moving to a sole proprietorship.  For these reasons we’ll touch on S corporations.

S corporations generally pass all their profits to the owners on Form K-1. The QBI deduction is not lost! Rather, as stated above, owner’s wages are added back with 20% of this higher total deducted on page 2 of Form 1040.

We already discussed partnerships above.

While I focus on tax considerations, entities serve a legal purpose as well. I encourage you to discuss the legal ramifications of entities with a competent legal professional.

While the sole proprietorship is easy to organize, it also pays the most tax of any form of conducting business. Sole proprietors also face a highest federal audit risk, around 4% per year. Corporations (regular and S) and partnerships are audited at well below 1% per year. For this reason  alone you may wish to organize even a micro business as an S corporation, regardless of the tax ramifications.

 

The Best Tax Choice

Here is a step-by-step guide to deciding how to manage your micro business:

  1. Are you a Hobby or business? It makes a difference. A hobby is by far the easiest way to report income. But no expenses are allowed while SE tax is avoided.
  2. Choose an entity structure. An LLC provides legal protections and takes on the tax flavor you want. A single member LLC defaults to a sole proprietorship and if there are two or more owners to the business, partnership is the default. These are called disregarded entities (disregarded for tax purposes only, not legal purposes.)
  3. Make sure you don’t miss any deduction.
  4. Take advantage of the QBI deduction.
  5. Consider retirement plans.
  6. Enjoy! It is a micro business for a reason. Your goal is a bit of extra money while engaging an enjoyable activity.

 

Note: Technical corrections were made to this article. The complexities of the Tax Cuts and Jobs Act have caused serious issues when tax planning. The IRS issued some guidance on August 8, 2018, but more issues remain. Tax professionals are encouraged to contact the author if they disagree with a statement here. I have attended several training programs this year on the new tax rules and there are areas of disagreement between programs. I’ll make additional technical corrections as they are discovered by readers (or me) or further guidance is provided by Revenue.

 

More Wealth Building Resources

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

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

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

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

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

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

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

If You Love Spending Money This Will Make You Rich

5 spending habits that can make you wealthy. How you spend your money determines how rich you will be. Right spending habits increase your wealth. #wealthyaccountant #spending #spendinghabits #investing #debt ##indexfunds #incomeproperties #rentalproperty #guilty #guiltyfeelings #buyersremorse“Should I feel guilty when spending money?” It’s a common question when I consult with clients. They are so tuned into frugality they sometimes start associating negative feelings with money. It’s a bad thing to start feeling.

Spending money is NOT an evil activity! In modern society we have it so easy that we tend to either overspend (the vast majority) or become hyper-frugal (a significant percentage of the demographic reading this blog). Both lifestyles are unhealthy. Overspending leads to serious problems when the bills come due and income might not keep up. Debt is a serious issue I ask clients (and readers) to consider purging. The opposite of overspending is the hyper-frugal drive. This can suck the pleasure out of life as fast as a heavy debt burden.

I tend toward the frugal side of the equation and get called out on it periodically, too. Sometimes I do things just because it’s the cheaper choice. If I were as smart as I think I am I would reconsider such decision-making. Frugal isn’t always the best answer.

Frugality for me is more about my hate for shopping. When I spend I know exactly what I want and side purchases are never a distraction.

Buying a good or service feels good even for a frugal accountant like me. I needed a longer breaker bar (torque bar) to get the lug nuts off a tractor tire so I can take it in for repair. The breaker bar I have is only 14 inches; the one I bought is 30. By the time you read this I might have that tire off with my new piece of equipment. Yes, I’ll save money on a service call by getting the tire to the shop, but it still feels kind of good knowing I have a shiny new tool in the garage.

But spending is a problem for many people. Frugality is a forced habit at best for the majority. Economically enforced austerity gives way to bad spending habits when normalcy returns. The cycle is familiar and we know it while we do it. If only we could stop.

Since most people enjoy spending money I thought I’d share 5 ways you should spend because this kind of spending makes you richer. In fact, if you don’t adopt these spending habits I outline below you will suffer serious personal finance issues. Those who have money will realize they were already spending this way. For the rest of you, please come along. I’m going to show how you will want to spend that money burning a hole in your pocket.

Maintenance

This may sound like common sense, but too many people defer spending to their detriment. Every so often you should change the oil in the car. It runs better and lasts longer when you do. When the roof needs replacement frugality is not your friend. The structural damage follows shortly after and gets very expensive. Then you get to spend a lot of money for no additional value. That is not a good spending habit.

5 ways spending can make you rich. Spending habits can lead to debt or wealth. Here are the secret spending habits of the wealthy.. #wealthyaccountant #secrets #wealthy #spending #spendinghabits #habits #debt #moneyDo-it-yourself (DIY) projects are a good opportunity to spend. One of the cables broke on my garage door recently. I bought new cables and discovered I didn’t have tools or the recommended bars to loosen and tighten the spring. I broke down a bought a pair (you need two) to finish the job. Now I need to keep them safe for a distant future event when I need to work on a garage door again. The cost was only $15, but it is spending. The spending saved me the cost of a service call which would have been significantly more. Some spending is good spending and increases your wealth.

The same situation occurred at the office this summer when I wanted to do some light landscaping. The place really needed it. Clients have a better opinion of an establishment with appealing décor. I acquired several quotes which all came in over $10,000. (And it wasn’t that big of a job!) I decided to do the job in-house. The cost of dirt and river rock and some seed money for some extra helping hands was under $2,000. I have several huge rolls of felt in the barn I used and unused treated fence posts from a previous farm project so that cost nothing extra. In the end I spent a couple thousand, assuaging my spending itch, and created over $10,000 in value; more if you count the added business an attractive building can bring in.

Maintenance and DIY projects are a perfect way to spend money in a way that creates value. If I would have written a check for $10,000 to landscape the office it wouldn’t have felt as good. I got the satisfaction of a job well done and the opportunity to order 10 yards of top soil and two orders of river rock. There were multiple spending opportunities for the same job. For people with an itch to spend, this might be a good way to kill two birds with one stone.

Pay Down Debt

I’ve preached this line often before. Loan payments are not completely new spending. The interest is, but it doesn’t feel like fun spending. You get nothing for the interest spending: no pretty baubles or service or vacation. Nothing. Your wealth just disappears.

The act of spending is addicting to many. Rather than spend on more stuff and putting it on the credit card at 18%, consider tricking your brain into spending the right way. Here is what I propose. Spending is about wanting something. Some people enjoy the shopping experience. Either way, turn these desires into a wealth creating machine. For the shopping addict, lay out all your debt and obsessively review your balances. Create an aggressive spending payoff habit. Set your payments up on automatic, but also send in extra whenever an extra nickel crosses your path. Turn it into a game! Have fun with this. Instead of building debt, turn debt elimination into an exciting adventure.

If shopping doesn’t trip your trigger then you probably spend just to have something new. I have something shiny and new you’re going to want: a debt free balance sheet! I mean it. Instead of a new boat, roll up your sleeves and butcher those bills. Remember, it is easier to enjoy a new toy when you don’t have to work to pay off the toy, plus interest.

Investing

Once you pay down debt you might be tempted to return to old habits which caused the financial problems. I say, “Nyet!”

The newfound habit you used to eliminate debt is a good behavior for proper future spending habits. Turn investing into an automatic wealth creating machine. Automating investing doesn’t always satisfy the itch to spend. There is a solution.

It may be hard to believe, but there was a time when I enjoyed spending a bit more than I tend to nowadays. Money was rolling in and times were good in the 1990s. I was smart enough to know good times don’t last forever so I devised a plan to satiate my spending desires with intelligent cash allocation.

These are the 5 things you need to spend on if you want to be rich. The 5 secret spending habits wealthy people use are available to anyone. Frugality isn't the entire game. The wealthy spend. They spend right. #wealthyaccountant #frugality #frugalliving #wealth #money #passiveincome #spending #spendinghabitsTax season was always a good time of year. My mutual funds were automated, but I needed a home for my excess cash so I wouldn’t be tempted to spend it. My solution: dividend re-investment plans (DRIPs). I wrote checks to all my DRIPs. It gave me great pleasure to finish my day with a spending splurge. I’d write a check to JNJ, Aflac, Phillip Morris, Wrigley (damn you, Warren) and more. As fast as it came in I sent it out. I don’t know what you spend your money on, but I have a nasty habit of buying as much stock as I can get my hands on. For the record, it’s a good habit to have.

DRIPs aren’t what they used to be. Brokerage accounts generally automate re-investment of dividends and many DRIPs now have fees. There is still a solution. Set a minimum amount you can easily invest every month. Automate the process. Then either write a check every time money comes in or log in and set up a transfer. Trust me, you’ll have so much fun spending on your index fund. The best part? Instead of paying interest on your purchase you’ll be paid dividends instead. Oh, the joy!

Turn investing into a game. Real wealth creation is built on the proper allocation of capital. The bank is fine for short-term and emergency funds. But your serious money needs to be working hard building a better world and the only way to do that is to own a piece of great businesses.

Another spending game to consider is investing funds you planned on spending foolishly. Excessive dining out or drinking in bars can be swapped out for an index fund investment. I’m not telling you to forgo a pleasurable life. God forbid! All I’m suggesting is that you switch some consumer spending for investment spending. And besides, you know as well as I you will enjoy those dividend checks more than interest payments.

Income Properties

If you have an itch to spend, income properties are for you. Many moons ago I owned a city of real estate in my portfolio. From personal experience I can attest you get plenty of spending opportunities when you own real estate.

Your primary residence is different from income property. Money you spend on your primary residence (or second home) comes from another source and can run dry. Income properties have—wait for it—their own income stream to fund expenses. If you have a serious spending itch, real estate done properly can scratch that itch raw.

You still need to buy properties right! Stupid income property purchases will force really bad spending even when you discover how bad the spending is and want to stop. Sometimes you can’t. But a small portfolio of investment property can give you plenty of opportunity to shop and buy. Researching the right property should be a priority. Once you own the property there are always things that need to be paid for: property taxes, utilities, insurance, repairs and maintenance. A property manager can do all this for you, but you can write the check yourself if you insist. Even still, you can review your monthly statement from the manger which will show all the spending. It should serve as a powerful ointment for your spending itch.

Small Business/Side Hustle

Okay, hustlers! Nothing beats spending opportunities than a small business or side gig. Even a frugal guy like me still manages many hundreds of thousands of dollars in annual spending just by owning a small accounting practice. Every two weeks payday comes around and I get ample reminders on how to spend my money.

These smart spending habits can put serious money in your pocket. Spending on the right things can increase your wealth rather than build debt. Spend your way to riches! #wealthyaccountant #smart #spending #happiness #dreams #frugality #frugalA side gig or business is an easy way to alleviate the desire to spend. Maybe too easy. While I can brag I spend $250,000 in my business, it needs to be brought into perspective. I’ve seen too many people over the years start a business, spending like mad to get it up and running. It soon becomes apparent my client isn’t ever going to make a sale. He’s going to keep spending until he’s broke without ever actually starting the business. Then he asks if it’s deductible. (Not if it was a hobby or you treated it as such.)

Still, business owners are spending daily. At home my wallet has moths. At the office money is moving constantly. Office supplies are replenished, utilities are paid, property taxes come due, employees get paid, IT needs money. The list goes on and on. A frugal habit goes a long way toward profitability in a business. It’s easy to spend; not so easy to bring it in.

Spending/shopping addiction is a serious problem with many consequences. Shopping is a waste of time compared to time spent with family and friends. Shopping has its place as long as it doesn’t rise to addiction. Business has a natural built-in need to allocate money. If you can run a “real” business or side hustle you have my blessing. Before long you will lose that desire to spend. Take it from a three decade business owner. Spending gets old real fast when it becomes a job. (You know; a job. That thing you want to take early retirement from.)

Coda

Spending in and of itself is not wrong! Overspending is a bad habit and even a sickness. Excessive frugality is a bit of a sickness too. Careful readers may have noticed that from a certain unnamed accountant over the past few years.

I’m not here to tell you to never spend. What I want for you, kind readers, is a healthy relationship with money and spending. Reducing debt to background noise is important. Investing for your future and that of your family is imperative.

Spending easily becomes a job! Money is a powerful tool to help you live a quality life. Too much or too little is a problem. Using the 5 ways to spend listed above will make you wealthier. That is what we are about around here: quality of life which is the true meaning of wealth.

Finally, can you do me a favor? If you think this is as important as I do, go back to the top of this post and use the buttons to share on social media. You can pin the placards to Pinterest, as well. Help me spread the word. Let’s make the world a better place where people control their spending and build powerful, nurturing money habits.

Thank you.

 

More Wealth Building Resources

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

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

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

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

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

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

Forensic Accounting: The High Paying Part-Time Business

Looking for a side hustle that is profitable and fun? Consider forensic accounting; a side gig where you help people find money they lost. Unclaimed money is big business if you know where to look. What was lost is now found. #sidegig #sidehustle #unclaimedmoney #lostandfoundFifteen years ago a client who has since passed away had a complaint. He explained his uncle had died and the family was having a difficult time finding his money. The family knew his uncle had money, but he hid it everywhere, kept no records and refused to reveal his secrets to anyone.

The family decided to hire a forensic accountant who took six months to find around $280,000. My client’s complaint was they knew the uncle had a lot more than $280,000, but had no idea where to start looking.

This was during the my early days as a hedge fund manager. The hedge fund didn’t buy stocks or businesses; we bought charge-off receivables and collected on the debt.

When banks have bad loans on the books they sell them for a fraction of the face value. (Banks never really lose. It blows the mind how they every have financial trouble. It takes a new level of stupid to fail as a bank.) Once we took possession of the accounts we sent our legal teams around the country to locate and collect, even in court if necessary. (I authorized over 22,000 suits over the years. Yeah, I was one of those a-holes. But I was good at it. Stick with me here. This is all going to work to your advantage this time.)

Running the type of hedge fund I did (I eventually was hired to run two) provided me with the resources, connections and experience in finding people and their hidden stash. Finding money is something I got really good at.

My client was awed when I started to explain how I would have handled the case versus the forensic account they hired. In 30 seconds I gave them one piece of advice and found over $300,000 more than the forensic account they hired did in six months. Before I was done we collected seven figures of cash from around the United States and even found an account with serious cash tucked away in Ireland.

The family promptly hired me.

 

Finding Money as a Side Gig

This is a story of finding stuff no one else can. Most side gigs people pick up in retirement earn a modest income. A forensic accountant can earn six figures part-time without breaking a sweat. With the story above in hand we will walk through the simple process of finding old or lost accounts for people.

The resources in this short post will be enough to find the vast majority of assets. To get the fine edge in your performance I will share some resources at the end.

A forensic accountant doesn’t need to be a CPA, enrolled agent or attorney to do the job. In fact, the best people at this are as far away from these professional designations as you can get. This is a job you can do on your laptop in your BVDs without any problem. (I recommend putting on your shorts when meeting with the client.)

The pay is excellent. $300 an hour and up is common in this field. Some forensic accounts change a percentage of what they find while others charge by the hour. People are reluctant to go the percentage route because they all think you’ll find a gazillion dollars and they don’t want to share. Fine! That’ll be $300 per hour, plus expenses. Oh, and I need a $5,000 retainer. Are we having fun yet?

Who Are the Clients?

Over the years I hunted down lost treasures for estates on a regular basis. However, some of my best clients (repeat clients even) are insurance companies looking for answers on an embezzlement claim. Business owners have hired me to do the same. Attorneys sometimes hire my forensic services also. I never had to testify in court on one of these cases, but it wouldn’t bother me if I had to.

The fun cases revolve around helping a family find the belongings of a deceased loved one. For them it is like finding an unknown insurance policy. (I have found a few unknown life insurance policies as well though the insurance companies are much better today than two decades ago at knowing when one of their policy holders is pushing up daises.)

The ugly cases—the ones that also pay very well—involve businesses. Money goes missing or the business owner can’t figure out why business is so good and she is still losing her tail. Hint: The most valued and trusted employee, close friend or family member is the embezzler the majority of the time. I could tell stories.

For several years a local insurance company called me in on any case over a certain value. I reviewed a lot of books back then and it kept the doors open over the summer when tax work was slow. I also liked the work. The down side is you are not a loved visitor when you stop by the business. They know your job is to hang someone. (And I always kept a new rope in the truck for just such an occasion.)

Finding the Goodies

Back to our story. My client knew there was more money. I casually mentioned pulling a transcript from the IRS. This will show any 1099-DIVs and 1099-INTs issued to the person in question. Banks are required to issues 1099s when the amount is $10 or greater. For some crazy reason the forensic accountant they hired never took this step. My client was instantly $300,000 richer and I was hired with a generous retainer.

I now need to introduce you to skip tracing. Skip tracing is a process of finding the whereabouts of an individual. An impure use of the word also includes searching for all the assets, including income sources like a job, of a person or business.

A treasure chest of wealth awaits you in the ultimate side hustle helping people find lost and unclaimed money. This high paying side gig is perfect for people enjoying early retirement. *earlyretirement #personalfinance #sidegig #sidehustle #unclaimed money #lostandfoundSkip tracers generally hunt for debtors or fugitives. We are interested in debtors. In our example we are not looking for debts. But if you have someone who owes you money you want to find their assets and income sources. This is highly beneficial talent if you are searching for a deceased person’s stuff.

The best skip tracers come from the wrong side of the track. Some are clean cut, but in my experience the ones who are really good at it have tattoos and are rough around the edges. These people know how to find a body no matter how deeply dug in. Perhaps from personal experience.

You can learn skip tracing yourself, but there is a short cut. Go to your local debt collection agency and hire their best skip tracer and let’em loose. It’s your way of spreading the side gig economy around. (You are only hiring the skip tracer for the job, not full-time employment.)

Most attorneys already have resources to do this also. But we are not technically looking for the person; we are looking for the goods. Our skip tracer has another skill we need.

If you are serious about a side gig as a forensic accountant you will need LexisNexis. LexisNexis is a powerhouse of personal information. Once you see this thing you will be scared. They know things about you and everyone else you didn’t think anyone knew. In your search for lost accounts they will bring a deluge of results.

LexisNexis is expensive. If you are friendly with a collection agency you can usually hire them to do the LexisNexis search for you. There is so much information it is good to have someone familiar with the platform help you acquire and interpret all the information you get. A deep drill down will uncover just about anything the mark ever did since the first computerized records began and even a fair amount of stuff from before the Computer Age.

An IRS transcript and a LexisNexis search will be 99% of your job. If you suspect the client has money in another country (my client did) you use the same procedures in that country. Western Europe is as straight forward as the U.S. and Canada. Just find a debt collector in the target country and expand from there.

It doesn’t take long to uncover virtually every asset. There are some costs so you need to remind your client of this upfront.

The Problems with Embezzlement

Finding malfeasance can be trickier. In these instances you are not always looking for assets or hidden account (though that frequently is part of your job description later), you are looking for accounting irregularities. We are usually not talking about an accountant cooking the books. The issue is either money stolen (which could be the accountant) or stolen merchandise.

The issues tend to be complex here and if you don’t have an accounting background you will need to at least have a fundamental understanding of the accounting process.

Finding unclaimed money is the best way to make friends. It's also a profitable and fun side gig. A side hustle should be fun. The lost and found just became a piggy bank to the small businessperson looking to grow profits for clients and self. #sidegig #sidehustle #unclaimedfunds #money #freemoneyMisappropriation of funds generally sticks out like a sore thumb in the accounting records. What you are looking for is a discrepancy between revenue and certain expenses. For example, a restaurant will have a cost of goods sold within a relatively narrow range depending on the type of restaurant compared to sales. Payroll also falls within a certain parameter or revenue, COGS and tips.

The issues become too complex for a short blog post. Here is the take-away. There is always a relationship between items in the financial statements. Deviation of these ratios (between sales and COGS or sales to wages as an example) is a telltale sign of something wrong.

The timing of the deviations frequently correlates with the hiring of the instigator. You will always review multiple years of records looking for inconsistencies, i.e. COGS changing significantly from one year to the next. Most of my work is done on an embezzlement case before I even get out of my chair and visit the establishment.

The easiest way to see this is with an example. This is a real client with a restaurant.

My office manger one day came to my office concerned about the client in question. She couldn’t understand why the client had growing sales but was going broke. A 30 second review of the financials and I knew an employee was embezzling. The cost of goods sold was waaaay out of whack for a restaurant of any kind and I could see the progression.

My first thought was a waitress was guilty. The client was brought in and I questioned her about the waitresses and how they handled money. It was quickly apparent a waitress wasn’t the culprit. Waitresses had few opportunities alone with the cash in this establishment.

I started to question the business owner about other employees. When we reached the cashier she said it couldn’t be her as it was her close friend of decades. The search was over. The friend did it.

It wasn’t a guarantee at this point, but I knew where this was headed. The business owner did not have cameras. I told her to inform the employees her accountant was concerned about embezzlement and demanded cameras be placed in the building. The cashier quit on the spot. Uh-huh.

We weren’t done. The ratios between COGS, sales, and waitress payroll and tips was still off even after accounting for the embezzled funds. I suspected more than few cases of steaks and seafood were wandering out the back door of the kitchen. Fed up, I had the client place cameras at the kitchen doorway leading to the parking lot without informing employees. A week later the entire kitchen staff was fired.

The sad end to this story is that the restaurant did not survive the assault. The damage was too great. We caught the malfeasance relatively early even though we weren’t hired to do that job. But the business owner stalled, certain her friends were innocent. The wound was too deep and the victim died. And all the jobs along with a great restaurant were gone. I still kick myself for not insisting more action be taken sooner.

Resources

In 2,000 words I actually gave you a good template for a basic forensic accounting side gig. You will find more than the average accountant for sure with these methods. If you want to hone your skills to a fine edge I recommend you continue your training. Your local technical college may have courses on the topic. There are also plenty of seminars and conferences, of course. Look for conferences specifically for collection agencies. They are the masters at finding The best side hustle ever! Helping people find money. Billions of unclaimed money are lost every year. A family member dies and the family doesn't know where the money was kept. Forensic accounting is a fun and profitable side gig. #fun #sidegig #sidehustle #unclaimedmoney #forensicaccountingassets. Or, you can start with some really good books on the subject. The books can get pricey, but these are the books used in colleges many times and the books are cheaper than college itself. One gig can pay for the whole thing and more.

Forensic Accounting for Dummies (This is the lowest cost basic education on the subject you can get and also a good place to start if you are new to the game.)

Below is a selection of high quality books on forensic accounting. These books are high quality and cost a bit more. They are worth it if you are serious about forensic accounting as a side gig and tax deductible if you are in the business.

Forensic Analytics: Methods and Techniques for Forensic Accounting Investigations

Forensic Accounting and Fraud Examination

Forensic Accounting and Fraud Investigations for Non-Experts

The Forensic Accounting Desktop: A Practical Guide to Financial Investigation and Analysis for Family Lawyers

Forensic Accounting and Fraud Examination (Irwin Accounting)

I hope this article and resources are an awesome opportunity for you to earn a nice income in a side gig or even as a career.

And remember, no matter where you are, no matter where you go, I will find you.

And you stuff, too. So pay your bill so you don’t end up a client of my hedge fund. (Hint: I sold out the two funds a few years back so you are probably safe. Probably.)

 

More Wealth Building Resources

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

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

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

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

A cost segregation study can save $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!