10 Early Retirement Considerations

Before taking the plunge into retirement, early or traditional, you need to consider factors that will reflect the rest of your life. Handled correctly, early retirement can be a fulfilling blessing. Without proper planning you risk a return to employment you wanted to get away from.

Retirement means different things to different people. Some want to sit back and enjoy a life of leisure. Others wish to travel extensively. And there are some who consider retirement the grand opportunity to start the business of their dreams (maybe not technically retirement, yet still fulfilling), write a book or engage in charitable work.

The path you choose is up to you; there is no right or wrong answer as long as it suits your temperament. There are considerations with right and wrong answers. Get these wrong and retirement can be less than the blessing planned.

Money and taxes play a large role in when you retire and what activities you engage once in retirement. Meaningful activities and family are also serious considerations. 

To help you prepare for retirement, I will discuss 10 things of vital importance to smooth the transition. I provide a starting point. You need to prepare from the starting point I provide so retirement plans are retirement realities.

 

1.) Meaningful Activities

Money gets all the attention. What you do with all the extra time available to you is even more important.

The planning takes on heightened significance when a spouse, significant other or children enter the picture. Will you travel or be a homebody? Where will your travel plans take you? World or domestic travel? And what activities will travel involve? Hiking? Mountain climbing? Tourist areas or off the beaten path? Tours or on your own? These and other questions need to be addressed.

Travel duration also needs consideration. Some people are wired for long duration trips, with the itinerary stretching months to even years. Other folks start feeling anxiety after a week or so on the road.

Between travel you will have time to explore things you may have wanted to do in the past. Charitable work now becomes more than just a small donation periodically. You can put serious work in at the food bank or homeless shelter. Animal lovers might consider animal shelters.

When working on retirement issues I remind clients, “Retire to something, not from something.” Don’t turn retirement into an empty shell. Make it the most exciting time of your life. So exciting you wonder why you didn’t start retirement sooner. That requires moving to something better than you have right now.

 

2.) Dream Business

There is always that one thing you wanted to do, that business you wanted to open. Early retirement is the perfect opportunity. Not that you can’t start your dream business if you retire at an older age; you just have more years to explore and evolve your business if early retirement is on the menu.

The time to start planning your dream business is before you punch the clock the last time. Every business idea requires research, and the time to start that research is now. You might discover your dream business pays better than working for the man, which means you get to retire to the life you want as a business owner a lot sooner.

The business ideas that excites you will determine your course toward and in early retirement. Many businesses are full hands-on operations. Restaurants, for example, are not a side hustle, while forensic accounting can be.

 

3.) Share Your Knowledge

Retirement is not death. If you look up the definition of retire in the dictionary it isn’t something you want to aspire to. Who wants to be “used up”, “obsolete”? When you don’t plan your retirement it can end up that way. Not you! The most important part of your life is about to begin.

You have a story and you need to tell it. You have acquired skills and experience from years of work and living. Don’t let it go to waste.

A large part of life outside formal work, what we call retirement, is sharing. You never know when an opportunity to help someone arrives.

Retirement should offer a comfortable pace in living life. This means you have time to notice things and help as needed. 

You can also create the opportunities to make a difference. Consider mentoring a child or even an adult. 

Write a book. I mean it! It doesn’t have to be an 800 page doorstop. It doesn’t have to find a home with a traditional publisher either. It should be a long as it needs to be and not a word longer or shorter. Offer it for free as an e-book if your story doesn’t fit traditional book categories. Your personal experiences are a story you need to tell. Your experiences in your profession are another story. You may need to write several short books or maybe a long one will do. Regardless, get your story, knowledge and experiences on paper. Let your story continue on with all your readers. Let your readers grow from the base you built. I call it the pay-it-forward revolution. Join the greatest army ever envisioned.

 

4.) Where Will You Live?

As you consider your options in retirement be sure to think in three dimensions. Planning your finances are important. Planning life activities are important. Where you live is of vital importance.

Your favorite accountant lives in the backwoods of Nowhere, Wisconsin. I love it here and will spend my remaining days on this hallowed ground. You may feel the same about where you live. Or, maybe not.

Thinking in 3D means opening your mind to options. Living in a home bolted into the ground is traditional, but not required. I know many people who took to the road in an RV once they retired.

Challenging vacation destinations are still on the table since you probably still possess the vigor of youth. (Note: Never grow old. It’s a trap!)

Little pink houses might be the traditional course expected of you. Instead, living in the mountains might fill you with the juice of life. Then you should do it! Maybe you want to live in another country, enjoying a new culture, people and language. If that is you, then do it! 

And remember, you are not wedded to any choice you make. You might have an itch to RV for a few years before settling down. No problem. While on the road you can open your horizons and start planning where you will live as you enter the next phase of your life.

Planning your early retirement is planning your future. Who you travel with makes all the difference.

5.) Manage Assets

We started with the fun stuff to consider as you prepare for early retirement. Now we need to get serious and talk about money and {ugh!} taxes. 

First, debt in retirement is an unacceptable risk. Paying off the credit card in full each month is not considered debt in my book. Credit cards used this way are a money management tool. Some debt isn’t the kiss of death. Still, if you enter retirement, early or traditional, with debt, you need to have a firm action plan to reduce and eliminate that debt.

Your investments now need attention. The current economic environment will determine the stock/bond/cash mix. As I write, I do not consider bonds a viable option for most investors. Maybe a few bonds in the right situation, but when interest rates are low, bonds will not do the job. And long-term bonds have high risk if interest rates climb.

Having all your money in stocks (index funds preferred) isn’t a smart move either. Instead, you need the right mix of index funds and cash. How much you need in cash takes some explaining. Good thing I fleshed out the details in a previous post. I highly recommend you read, bookmark and re-read that post. It is vital information.

 

6.) Taxes: Overview

Like it or not, you need to spend time considering tax consequences in retirement. Taxes take a serious bite out of your wealth. Retirement does not change that.

We will spend a few minutes discussing the more important issues surrounding taxes in retirement. Nearly every consulting session I have in my office involves the issues I discuss below. 

Taxes are complex. Even the Tax Court disagrees with itself on what the tax code means in certain instances. You might think you understand tax law. You don’t. No one human can understand the entire U.S. tax code. That is why I strongly recommend you build a relationship with a competent tax professional. Pay them for consulting! My wealthiest clients demand 2-3 consultations per year on taxes alone. That is why they are the wealthiest. Read and study tax issues that apply to you. Then bounce it off a tax professional with the experience to show you the cause and effect over all tax years involved.

 

7.) Taxes: Converting Traditional Retirement Accounts to a Roth

A common issue I have in consulting sessions is the client’s focus on required minimum distributions (RMDs) from traditional retirement accounts. While it is a tax issue, it usually should be third or fourth on the list.

A primary concern as you plan for early retirement is using low tax brackets. Unless you have a high income from a side hustle, business or investments, converting traditional IRAs to a Roth is a primary concern. Over your working career you built a retirement account. The non-Roth retirement monies will be taxed at ordinary rates when they are distributed. Using your lower tax rate once you retire allows you to move money from traditional retirement accounts to a Roth with little to no tax pain. Under current tax law, the 0%, 10% and 12% tax brackets are where you want to play. Your facts and circumstances will determine your course. For most, utilizing low tax brackets is a powerful wealth retention tool.

I want to toss another tax planning tip into this section. Long-term capital gains (LTCGs) and qualified dividends are taxed at preferential rates. On a joint return in 2021, for example,  LTCGs and qualified dividends that fall under the $80,800 threshold are taxed at 0%. Knowing this, you now have an interesting interplay between converting traditional IRAs to a Roth and maximizing the LTCG 0% tax bracket. A tax professional can help you maximize the benefits of converting to a Roth while considering the LTCGs preferential tax treatment.

 

8.) Taxes: Social Security Benefits

Early retirement has benefits few consider, but should. Social Security benefits might be in the distant future. But time counts and before you know it you will actually be retirement age. (Good thing you were practicing all the while.) 

In Point #7 we discussed the interplay between tax rates for ordinary income and LTCGs. Here is why it is so important to use those lower tax brackets when you can.

Social Security benefits are sometimes tax-free. There are income levels where Social Security benefits start getting taxed. For example, on joint returns, combined income (see link for calculating combined income) over $32,000 can see up to half of benefits added to taxable income and 85% of benefits for combined income over $44,000. These numbers are low so it is getting harder each year to stay below these limits because they are not indexed to inflation. Early retirement changes that! You might save serious taxes currently and down the road with proper planning. Utilizing low tax brackets optimally can reduce taxes even more once you start collecting Social Security benefits.

 

9.) Taxes: Required Minimum Distributions

The Secure Act raised the age where you must take required minimum distributions (RMDs) from 70 ½ to 72. As I write, Congress is working on the Secure Act 2.0, where RMDs will gradually more to age 75. Both sides of the isle like the higher RMD age and passage is likely.

People worrying about RMDs at a young age might be focusing on the wrong issue, as a result. Yes, contributions into a traditional retirement account feels like taking out a loan sometimes, since you later have to pay tax back on all the distributions, your original money, plus gains. With RMDs getting pushed to higher ages, you have more years to maneuver your finances for lower taxes. 

As easy as the RMD concept is, it is really very complex. The interplay between LTCG rates and traditional IRA distributions taxed at ordinary rates, requires a seasoned hand in the planning process. This is where your tax professional comes in. Your facts and circumstances will determine your optimal tax and financial course. 

 

10.) Legacy Planning

 

Early retirement means you are still young. Thinking about your legacy doesn’t always cross the mind. It should.

As you review early retirement considerations, commit time to legacy planning. Are there charities you would like to support? How much do you wish to leave the kids (enough to help, but not too much to spoil)? Are there family members that could really use financial help? Friends?

Planning your legacy means seeing an attorney. You need a will and a durable medical power of attorney. Consider a living will. Your legal and tax professionals team can help you determine which tools are best for your situation. There are so many vehicles out there to accomplish your goals. Who know? You might end up with a NIMCRUT

 

11.) Bonus: Dealing with Medical Issues

I write for an American audience primarily. That doesn’t mean incredible people around the globe shun your favorite accountant. For my friends around the world, you can sit this first bonus tip out, since this is solely an American problem.

Early retirement has once serious flaw, health insurance. Prior to age 65, when Medicare kicks in, you need to have a budget that includes medical insurance and out-of-pocket medical expenses. I wish I had a magic bullet that serves all readers. Instead, I have a few options to consider. 

There is medical health sharing to consider. However, these are Christian based and not all readers are of the Christian faith. I published previously several choices when it comes to health care coverage. Having a side hustle or small business helps. If you are looking for health insurance options, be sure to read the linked post.

 

12.) Bonus: Loneliness

No matter what age you retire, time will keep counting. Friends will move on to different things. Family and friends may not retire when you do. Health issues may change your best-laid plans.

And worst of all, couples need to talk about the inevitable. The odds are one of you will leave this world first. The crushing pain can become unending loneliness.

Talk with your significant other, children and friends about life when one of you is gone. Build a network. 

The best time to start planning for loneliness issues is yesterday. You never know when the Good Lord will call. I have ample examples in my small tax practice of people dying at a young age. It will be a difficult time regardless the age the Reaper comes knocking. By planning ahead you give ample consideration to your options. There will still be times of loneliness, but they can be kept to a minimum.

As you discuss with your significant other about life where one of you is gone, topics to discuss include: travel plans, activities, support, living arrangements and friends. 

 

Coda

Retirement is a major lifestyle change. This accountant would like to manage his business forever, but reality suggests that is not the best plan. The earlier you retire the more financial resources you will need. Your health plays a powerful role. 

Early retirement isn’t a solo journey. Many will travel with you, if only for a short distance of the journey. Have a team. Family and friends, of course. But seasoned professionals, experienced in working with people on a life journey.

Remember, you only come this way once.

 

 

More Wealth Building Resources

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

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?

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.

 

10 Ways to Earn an Extra $10,000 This Year

There are so many reasons to ask, How can I make an extra $10,000 this year? Maybe you want to retire early and a small extra income will do the trick coupled with your savings and investments. The economy might be bad, your hours cut or are unemployed. Maybe you are retired and just want something to do that adds value to the lives of others while providing extra income for bills.

Regardless your reasons for wanting to earn extra money, what you need is a list of ideas for accomplishing the goal. Below is a list of 10 ways to earn an extra $10,000 this year (unless you are reading this New Year’s Eve, then you can start next year). Each of these opportunities are used to earn extra money by family members or clients in my office. If you read to the end I have two bonuses.

 

Home delivery is the biggest opportunity for side hustle money today.

 

Grocery Delivery

This growing trend has turned into a very good paying job you can work whenever you feel like it. You can work as many or as few hours as you want. Mrs. Accountant (my lovely bride) works with elderly and shut-in people. One of the most requested tasks is grocery shopping.

Finding clients is easy. Instacart and similar services are always looking for more people to deliver groceries. You can do an internet search for companies looking for delivery people in your area. The pay is good, the tips better. And best of all, you choose your hours and which orders you want to fill. Remember to keep good records. Miles are tax deductible so if you don’t drive a Ferrari you will probably have some income that isn’t taxed, too, since the mileage deduction might be larger than the expense of operating your vehicle.

 

Delivery Services

This is a broad category. Groceries are listed above, but that is only one type of delivery service. I have clients who deliver meals from local restaurants. If you respond to requests quickly the tips tend to be quite generous. 

Food is only the newest fast growing delivery service. If you have a truck (or a trailer) you can deliver large items from hardware stores and other retail outlets. One of my clients turned a small delivery business into a 7-figure business. He handles a large percentage of deliveries from several hardware stores. 

Almost anything a person or business buys needs delivery. The hours are flexible, coupled with a high income. You can start your own business, making a few calls to set up the service, or use online companies already in the delivery business. Either way, the delivery business is the biggest opportunity for above average income and flexible hours in our economy at this time.

 

Selling Tradelines

This idea has been around for a while. I published several times on the issue. You can start your research here. 

I don’t sell as many tradelines as I used to. I still earn around $4,000 per year for about 2-4 hours of work. The biggest drawback is it takes time to get your first payment (typically about 2 months). 

The reason I pulled back is time. Yes, the money selling tradelines is really good, but I also have a tax practice, this blog and more people than I can count who want consulting services. Selling tradelines is about the easiest way to make side money I ever saw, especially if you only want a couple thousand extra for fun money. Tradelines would not be a good option if your goal is $50,000 per year. However, when I worked it hard in the beginning I did approach $30,000 the first year. For a modest effort it is possible to earn $10,000 per year and more.

 

Consulting

Consulting needs clarification. Making money consulting is different than coaching (another possible idea I will not cover) and requires a narrow niche to do well. 

There are plenty of people selling coaching/consulting courses on social media that basically tell you to do what they are doing. That is not consulting! At least not a kind of consulting that adds value and is worth buying.

The trick to successful consulting is focusing on one issue. For example, I consult on tax issues. That makes sense. I run a tax office and stay up-to-date on the tax laws. Of course my consulting services expand beyond the original topic. People ask about investments, retirement planning, legal issues, starting a business and even personal problems. Many times I’m qualified and comfortable expanding the scope of the consulting agreement. Retirement planning and business issues rise to the top. Legal issues I defer to an attorney. Personal issues many times require a professional social worker or medical professional. When possible, I try to help the client find the appropriate professional. 

Consulting done right is very profitable. A 6-figure income is not unheard of. Focus if the key. As I write there are several new tax laws to stimulate the economy. Just that one topic will keep you busier than you want if you choose to focus on it. Businesses and individuals are in desperate need for quality consulting and accounting firms like mine can’t handle all the work. BTW, I turn away over 90% of consulting requests because there are not that many hours in a day. Consulting is a good business.

Remember, focus if you want a consulting side gig. You don’t want to and can’t be everything for everyone. 

 

Elder care services is a fast growing full-time or side hustle opportunity.

 

Elder Care

Demographics provide the direction jobs are going. An aging population is going to need more services for the elderly. As you will see below and in the first bonus, elder care is not about working in a nursing home. 

People want to stay living in their home. They want their independence. It is cheaper for families and communities to give as many people as possible the option of living at home. 

Elder care extends to the disabled. Mrs. Accountant works for a company very part-time helping an elderly couple and a disable man. She cleans their homes, cooks meals and runs errands for them. She works less than 15 hours per week. It’s something Mrs. Accountant wants to do and she enjoys it. Of course you can work more hours if you want.

Clients are found one of two ways. Most counties hire, along with private companies contracted through state or local agencies. You can also provide cleaning, cooking and shopping services outside government supported programs. 

It is easiest to work through a company handling all the back office work or government agencies. For part-time work you can add $10,000 or more to your income in a year without working long hours. You can also choose your own schedule.

 

Gardening

Do you like working outdoors? Growing a garden? Did you know you could get paid to garden?

This unique side gig is overfilled with benefits. You get to work outdoors during the summer months doing what you love most and get paid for it.

It is a seasonal job, however. Where you live determines the scope of your gardening side hustle. Northern areas have a shorter growing season. Southern areas might include planting fruit trees. It all depends where you live.

Here in NE Wisconsin I have three clients who help people who can’t handle all the gardening chores. There are farmers outside the Fox Cities with plots divided in a field people can rent to garden. One of my clients helps elderly people by driving them to the garden plots and helping them with the gardening chores.

Best of all is that most gardens provide more produce than the client can eat so you get a wonderful supply of fresh fruits and vegetables as they come into season.

 

Lawn Care

There is a theme forming in this list. Lawn care services for those folks who want to stay living in their home, but can’t handle pushing a lawn mower are ideal clients. 

Don’t forget businesses! Business owners and landlords are always looking for high quality lawn services at a reasonable price. My office pays to have the lawn cut.

Lawn care is more than clipping lawns, too. Dealing with weeds and fertilizing lawns is also part of the deal if you want. There are also plenty of opportunities for light gardening work here as well, though many times it involves working flower beds. rewarding work that also fills in for healthy exercise, too.

 

Tax Preparer

I have encouraged this side hustle for years. There are an army of people pulling $10,000 per year and more working part-time seasonally.

Once again there are two ways to address this opportunity. First, you can run it as your own small business. A 15-minute presentation at a local Optimist Club or apartment association and you will have more clients than you want unless you want a very full-time business. 

The second way to earn a hansom income in spring is to work for an established tax office. Tax offices are always looking for good seasonal employees. (God, don’t I know it!) Not every tax office is for you; choose which fits best. There are the low cost tax offices where basic returns are prepared. If you can run a computer you can handle the returns they prepare. As your skills grow you can work at more traditional tax offices and CPA firms. Starting wages generally are $10-$17 per hour, depending on the part of the country you are in. Office like mine and CPA firms frequently pay people with tax experience $20 per hour and up. Very experienced preparers can demand $50 or more per hour. Not bad for part-time seasonal work.

For readers in the northern climes this is perfect. When the snow melts and you feel like running around outside tax season is over. 

 

Dog Walking

Mrs. Accountant enters again. The same elderly couple who has Mrs. Accountant buy groceries for them also has her walk their dog. Coco the dog, I am told, goes wild when Mrs. Accountant arrives. He is so excited to go for a walk with his human.

Mrs. Accountant wears a lot of hats when performing elder care services. However, there is no reason you can’t focus on a narrow niche. Dog walking is getting to be big business. If you love animals I can’t think of a more rewarding side hustle.

And the pay can get very generous.

 

Pet sitting and dog walking are high paying side gigs you can do on your own schedule.

 

Pet Sitting

If you enjoy animals and walking outdoors, dog walking is for you. Married to that side gig is pet sitting. The demand for pet sitting services is massive and growing, at $440 million in 2017. 

There are several avenues to earning extra coin in this hustle.

First, you can pet sit at the pet owner’s home. Second, you can provide pet sitting in your own home. This option does require the space and the ability to have pets in your home or apartment. Third, you can work part-time at a pet sitting service or kennel. Generally the pay is low, but getting paid anything to pet cats and dogs and feed them is beyond awesome.

Finally, humane societies and shelters are always looking for help. Again, this is a low wage route. But if you love animals and there is no other option available, this can be the perfect option to earn some extra income on your schedule doing something you love.

 

Bonus #1: Friendship Service

In 2019,  36.48 million Americans lived in a one-person household. That is a lot of lonely people. Many are older and have lost a spouse or significant other. Many times they have no surviving family. Some suffer disabilities.

Loneliness is an extremely painful experience you can resolve by providing a friendship service. There are clients in my office who spend 10 or so hours a week visiting their client just to talk. Sometimes they need help finding someone to help with a household need, such as hiring a plumber, or for repairs to their home. 

Usually all they want is someone to talk to. Local social services sometimes cover the cost of friendship services, other times not. The work, obviously, is not hard, but it is important. Not only are you providing human contact to people alone, but are also visiting to assure they are safe and healthy. 

As our society ages and people have smaller families, friendship services will become more and more common. At this time demand far exceeds the supply of people willing to be a friend. I can’t think of a better way to earn some extra money than by providing a ray of sunshine to the life of a wonderful human being.

 

Bonus #2: Tutoring

I have a large number of clients (and my oldest daughter) earning a good income tutoring. There are several levels you need to consider with this hustle.

Tutoring can be a work-at-home business with all the tutoring done online. You can focus on local primary and secondary students or college kids. There are numerous online options for tutoring. I have a client who teaches at the local high school and also teaches (not technically tutoring) at several online schools. His income is well into the 6-figures. 

Companies that offer tutoring services are also a good place for a part-time side gig. It can turn into a full-time job if that is your desire, or it can remain small, falling within our discussion of earning $10,000 per year.

My daughter tutors online, but also meets with students at the local library. She works closely with the parents and the teachers so she can provide the best help. In these cases the parents pay the tutoring fee. Generally, the parent pays for a package of 10 tutoring sessions at a time. It doesn’t take many of these to start earning some generous side money.

Teaching English as a second language is in high demand. My oldest daughter traveled to China for a year to teach. She lived with a host family and was paid by them as well. It has been a highlight of her life. She is now working to teach/tutor not only in the US, but in countries around the world online. 

Group tutoring is also an option in all these situations. An important point to consider, if you want to be successful tutoring, is to focus on the kind of client you want to serve. My daughter has a few local clients she tutors, but her passion is to tutor children around the world. Being everything to everyone is usually a recipe for failure. Focus on the type of student you want to tutor and you will find tutoring a rewarding side hustle providing a nice income. You can always change your mind on the kind of student you wish to tutor.

 

Our 10 ideas turned into 12 way to earn an extra $10,000 or more this year. Extra money is always nice, filling the vacation or holiday fund. Or invest it for long-term income stream. No matter what the economy does there are always opportunities to earn extra money doing things you enjoy. 

Do you know side hustles I haven’t mentioned that pay $10,000 or more per year? Do you have experiences with the side hustles I mentioned? Please share them in the comments section below. Thank you. 

 

 

More Wealth Building Resources

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

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?

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.

Cashing in at Camp Accountant

Camp Accountant is officially in the books and there was money to be made and taxes to be cut.

There were lots of smiling faces and new friends made. It goes to prove you do not have to be a tax professional to enjoy this stuff. (Anything that keeps money in your pocket automatically generates interest.)

Randy Lappla and Chris Dudley were our guest speakers; I talked (and talked and talked and talked) all afternoon. Let’s break down some of the day’s events.

 

Outlining the best retirement plan for you.

Turning Real Estate into a Cash Cow

 

Randy started us out with a powerful program involving real estate. 

There are many ways to build passive income. Real estate can be one of the best when handled properly. Randy showed us how you can supercharge deductions with income property. 

I’ve published on cost segregation studies in the past. Most people’s eyes gloss over when the topic arises, but that is a huge mistake. That is why I invited Randy to speak with the group.

There are several ways cost segregation tax rules can cut your tax bill. First, you can get outsized deductions up front. If you have owned the property a few years you can catch up past deductions in the current year. Second, with a cost segregation study you can deduct more when you improve your property. We even had an example of how a $100,000 new roof can lead to $150,000 in deductions. Legally, I might add! And third, cost segregation sometimes allows for some tax arbitrage. 

The tax code has changed a lot when it comes to real estate. The advantages are becoming so great you might want to consider adding real estate to your investment portfolio. Real estate was always a powerful wealth creation tool. Now you keep more of your gains than ever.

Randy Leppla’s contact information:

randy@rjl-equitysolutions.com

608-852-6772

 

Sharing ideas at TWA world headquarters.

Taking Your Side Hustle to the Next Level

 

After a short break and snack we had a short presentation by Chris and me. What I wanted people to know is when they need to transform their side hustle into a tax savings tool. 

I talked about when you want to switch from a sole proprietorship to an S corporation and the taxes saved. That requires you get paid a wage instead of just drawing any and all earnings.

Chris is a payroll specialist from ADP and provided details on how ADP can help facilitate the options I suggested. If you think this may benefit you, I can help iron out the process. I’ll help you determine what you want to be paid to maximize tax benefits.

Chris Dudley’s contact information:

Christopher.Dudley@adp.com

414-502-9884

 

Nature walk at Camp Accountant.

Fun Stuff

 

After the morning sessions I broke out in song for the group. Or maybe not. (Had you thinking for a moment, didn’t I?)

All work and no play is really bad for the soul so we filled the middle of the day with a pleasant nature walk to The Wealthy Accountant’s tax office. You could not have asked for a better day to walk the Northwoods of Nowhere, Wisconsin. For the record, it has snowed twice in less than a week since Camp. Yes, that would make it a record snow total for the month of October in these parts.

We got bogged down at the office as people asked questions about how I live in my natural habitat. A photo op ensued. 

I shared future plans for the blog and courses soon to be announced. 

We took a shortcut back to Camp for nourishment..

After a long walk and tummies full it was my turn to speak while others slept. (Not a single soul nodded off.)

 

Choosing the Best Retirement Plan for Maximum Tax Benefits and Wealth Accumulation

 

The keynote address was a play on a recently published blog post where I said investing in a traditional retirement account is like taking out a loan. I felt the topic needed deeper discussion.

I started with a word and number play from the book Thinking, Fast and Slow (Amazon affiliate link) to prove how we frequently make poor financial decisions. Once we saw how psychology affected our thinking we were able to see the same mistake/s played out in our retirement plans.

The reason we make financial mistakes is because it seems so simple while it is really complicated.

Where should we put our money first? It was decided the pecking order for investing is as follows:

  • HSA
  • Roth 401(k)
  • Roth IRA
  • Traditional 401(k)
  • Traditional IRA
  • Non-qualified accounts

We gave deferred compensation plans a short hearing, too. 

Then I showed why the ordering is wrong, especially on the last three entries. 

The math proved out, which is always good if you are an accountant. Just as we saw at the beginning of class, we sometimes think “fast” and make the wrong choice. My hope is the room left with a better understanding of when retirement accounts are the right and wrong choice.

 

Wearing an awesome Wealthy Accountant t-shirt in the hot seat (while standing) for Q&A.

Q&A

We ended the day with a Q& A session where attendees could ask anything they wanted about yours truly. 

Tax and money questions soon turned to more personal issues. Folks wanted to know what happen with the Mr. Money Mustache thing. (There really wasn’t much more to add.) People wanted to know why I have distanced myself from the FIRE community. (There wasn’t much more to add to what I have already published.)

I shared several projects I am working on. Then we wrapped it up and called it a day.

I was exhausted. Whew!

 

Housecleaning

 

Many people wanted to attend but could not. All the sessions (and some open mic moments after some sessions) were recorded and placed in a private Facebook group. Attendees get free access. I will be adding several short videos over the next week or so to the Facebook group, providing a short synopsis of each session. (The internet was slow at the venue so video quality is poor. The new videos loaded in the next week or so should remedy that.)

It was decided that anyone could view the sessions, but that would be unfair to those who paid to attend. Therefore, I am granting access to the private Facebook group for $20 for non-attendees. Use the link below. Proceeds go to charity. 




Wealthy Accountant t-shirts.

Finally, I bought extra t-shirts (intentionally). I will use t-shirts as a promotional item in the future with courses offered. Every attendee received a t-shirt. If you can’t wait you can also get an awesome Wealthy Accountant t-shirt for $15 while supplies last. Tax and shipping are included. My total cost for the t-shirts is $9.44. If shipping and sales tax does not bring the cost to $15, the remainder will also go to charity. (The three charities I love to support are: Special Olympics, Bethesda and Doctors Without Borders.)

 


Size

 

I hope all had a good time and learned a lot. This was special for me too. You are all the greatest.

Here is a photo of our alumni.

 

 

Camp Accountant 2019

 

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.

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

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

Recovering from 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.

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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.

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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.