In April of 2011 a young Canadian man decided to share his philosophy on work, living life well and early retirement by publishing his first blog post. His message of fiscal responsibility and frugality landed with a thud at first.
Prior to starting his blog and before claiming the early retirement mantel, our young hero moved to the United States. The first year of blogging was brutal. He published a massive load of very useful information without the traffic or revenue matching his efforts.
And then it hit. The right message at the right place at the right time struck a chord and the Mr. Money Mustache blog was no longer an internet backwater blog, but on a destiny to change the world.
It is only proper at this point I provide full disclosure. I served as the tax preparer/consultant for the Mr. Money Mustache (MMM) blog and its owner, Pete Adeney, for a few years. It was in a conversation with Pete and his wife at the time that I learned the first year of blogging was not all roses for Pete.* The first post didn’t automatically attract traffic. That came later.
If you produce good material they will come, and so it was for our hero. Pete kept telling his story. It was real so it resonated. He retired at 30 by design. Of course, if you retire at 30 you do not necessarily spend the remainder of your life planted in a chair. And that caused the largest complaint Pete faced in his blogging career: that he really didn’t retire.
Once you reach a level of success there will always be a few who want to tinkle on your shoes. Pete was not exempt. Once retired, Pete entered into a partnership, starting a construction company with a friend. As so often happens with partnerships (ask any seasoned accountant), it went south. You can hear the story straight from the source. It wasn’t pretty. It also placed a real risk in Pete’s retirement plans.
Pete also bought a property to fix and rent. That went much better. Pete loves working with his hands and building stuff. Working on a property at a casual pace (to assure quality and avoid burnout), Pete manged to hone his carpentry skills. From a failed construction company, to a rental property to the MMM headquarters in Longmont, Colorado, Pete found the prefect path to engage his passion.
Then we come to the MMM blog. Pete once again filled his time with something constructive (pun intended). Retirement is not short-hand for death! Pete decided to share his accumulated wisdom. But some were not having it.
That is NOT Retirement!
It didn’t take long before it was pointed out Pete didn’t actually retire since he was running a business for a while, remodeling/renting out a property and kicking out a massive quantity of material on his blog. Some of his readers were calling BS.
A certain wayward accountant from the Northwoods of Wisconsin noticed our hero about this time. When the two met Pete instantly took to this wayward accountant for about 15 minutes. As good fortune would have it, the sickness passed.
I love Pete’s work and philosophy of living the good life, financial independence and frugality. But when it comes to retirement we are about as far apart as any two people can be. The 15 minutes we connected was limited to such a short time due to my attitudes about retirement.
The good news is that neither of us are right for the entire crowd. Some want a Pete style retirement and some, like me, start a business doing what they like and refuse to stop. (What am I supposed to do? Something I like less just so I can brag I retired?) I sometimes wonder how things would have turned out differently if the partnership Pete had with his friend had actually worked out.
My argument with Pete’s philosophy was not about living a productive, meaningful life. Rather, I always felt Pete’s encouraging others to retire just like him had a timing issue.
April 2011 was a really good time to retire. Pete actually retired a bit prior to that which made it an even better time to retire early.
You see, we had a financial crisis that smacked the economy and stock market around pretty bad in 2008-9. If you had enough money to retire at the market low I would be far more comfortable with you taking said retirement than with all the fine folks who followed in Pete’s footsteps who wanted to push the retirement envelope to the limit when the market and economy were on a sugar high. Retiring on the edge financially when the market is pulling 10 years of near straight-up gains is not the best idea.
The Best Time to Retire is Now
Right now, this very day, is the best time to retire since Pete took those same steps! If you have the resources to retire when things are down you have an excellent chance of staying retired.
True, the economy is still declining from the pandemic while the market has regained much of its losses. And the market is likely to get cranky when the reality of the economic damage done sets in. Still, it is during these trying financial times when you learn if you really are ready for retirement, early or otherwise.
Pete found the sweet spot in picking his early retirement date; he just happened to be 30 at the time. Many considered it a challenge to retire younger than Pete without remembering Pete still maintained financially gainful activities.
Retiring younger than 30 will take some luck. Skill is unlikely to get you there much faster.
Many claim they have retired in their 20s, hoping to strip Pete of his early retirement mantel. Deep down I think they hope they will be bailed out by publishing a profitable blog before anyone notices the emperor is not wearing his skivvies.
How would I know all this? Because people pay me a lot of money to talk to them about their personal situation. And the theme is recurring. I don’t think Pete has a full grasp of the effect he has on some people. They are not really listening to what he said. They pick what they want and forget the rest. It turns out as expected.
If you have thought of retirement, now is the time you can practice the process. The pandemic has left many forced to deal with a retirement lifestyle whether they like it or not. It takes talent to have a meaningful day when there are no pressing demands.
Pete retired after the bottom of the economic collapse of 2008-9. It was the perfect time to make the transition. If you can do it when all your assets are at or near lows, the chances of retirement going as planned increases dramatically.
Maybe today isn’t the ideal time to take the early retirement you planned. But the day is fast approaching. The pandemic will pass, economic activity will increase and the market will travel to new highs. Beginning retirement when the economy is at the beginning stages of a bull market allows for the longest period of growth before your budget is seriously challenged with declining asset prices.
Many clients have bent my ear the last few months as the financial pressures have increased. Discussions of taking early Social Security, and the consequences thereof, are common.
Another frequent discussion involves people who took retirement too early. Instead of following the Pete plan and building multiple sources of income, they retired as soon as they thought they could get away with it and took up traveling. That fantasy came to a screeching halt.
Retiring at 28 just to say you beat Pete to the finish line is insane! Some of these early retirees are now looking to reenter traditional employment and it isn’t by choice.
When planning early retirement with clients I use a formula for determining if you are ready to retire, assuming you are mentally prepared. In my formula I ask clients to consider a really bad economic decline where the stock market declines by 50% and real estate is hard to sell at any price. I also assume a decline in rent, interest and dividend income. If we can map out a serious economic disruption and it is nothing more than background noise in your financial plans you are probably ready financially for retirement.
This should not be confused with what I do, which is never retire. My plan is to work at my preferred tasks (taxes, accounting, business planning and consulting) until my body can no longer cash the check. Not everyone has that luxury. I’m lucky I found what I love doing at a young age and feel compelled to keep doing it.
Most people want a designated time in life where they don’t have the stress of a job or of running a business. Many want to travel or explore other avenues of living. Those goals are no less valid than mine.
What I am saying is that the two ends of the spectrum have Pete on one side and me on the other. There is a large amount of middle ground for you to consider.
There is no competition! There is no prize for retiring younger than Pete! And for crying out loud, don’t try to be like me. God knows the world has a hard time dealing with one of me.
Find your path. Pete and I have provided excellent templates for the extremes. Finding what fulfills your life is what is important. You only live once; don’t waste it.
If you have been planning, saving and investing for retirement — and getting close — now is the time for a serious look at taking that step. Today (the day I’m publishing this) might not be the exact perfect day to pull the trigger. But the sweet spot is coming soon; probably within a year to year and a half at most.
There will be no bragging rights if you planned wisely and are now ready to make the transition. If the numbers still work when the markets finally move on from the current economic issues, you should be ready for a smooth entry into retirement.
There will be no excitement, but that is what you are trying to get away from in the first place with traditional work.
* As an insider I cannot share everything I know as it is confidential. Friends of Pete will know I have left out parts, as I should. The important parts for this story are all publicly available so I mention them. The links to the MMM blog provide greater details if you want to know more. In some cases there are multiple blog posts, but I don’t link to all of them. I leave it to you, kind reader, to take a deep casual dive into the MMM blog if you already haven’t.
More Wealth Building Resources
A cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.
From a young age I knew exactly wanted to do. Then I changed my mind.
Such is youth. My dad had different plans for me. My childhood was spent on the family farm and it was an awesome life. My dad owned an agricultural repair business and the plan was in place for me to slide right into the company. There was only one problem: I hated the work.
My children are now adults. One is in China while the youngest just graduated high school. My fondest hope was that at least one of the two would be interested in tax and accounting work. No dice.
Forcing your children into a family business is always a bad idea. The kids might love the work and they should then be welcomed with open arms if they do. But most kids don’t want to follow in their parent’s footsteps. Their dreams are different. Most often they follow their parent’s path because they don’t know where else to turn.
Rural areas face the same issue. When few career opportunities exist young people must either leave the area or work in the coal mine. It’s the perfect recipe for unhappiness.
Heather, my oldest, is spending a month in China teaching a 5-year old girl English as a second language. The host family is treating Heather great.
Brooke, the youngest, prefers working in dirt. She works for my dad’s company landscaping. She also has a few side jobs working for people in town clean their yard and garden.
Both my girls are happy. I couldn’t ask for a better gift. I never forced either of my girls into living my life. The goal was to always help them follow their dream. The only constant from dad was the endless indoctrination of personal finance advice. As a result my girls are handling money better than 99%. I guess that means they’ll be the future 1%. Good for them.
Nothing to Lose
Steve Jobs said “you have nothing to lose” in his Stanford commencement address in 2005. Jordan Peterson has said the same thing in many of his videos. What both mean is that in the end we are all dead. Nothing we say or do will change that. Knowing someday you’ll be dead is a humbling attitude you can channel into productive projects. You have nothing to lose by following your dreams.
Failing is part of the process. As much as failure hurts, we know it will all be forgotten someday as the hands of times sweep all our actions into the depths of history. Nobody remembers the details of the numerous failures of Thomas Edison as he worked toward the light bulb. We just remember the one that worked.
Starting a business or side hustle is the ultimate leap of faith. Failure will be displayed to our embarrassment. Or will it? If I didn’t share my many business failures over the years none of you would know! I share the mishaps because that is where learning takes place. Success is a poor teacher so I show where things went wrong.
Go East, Young Girl. Far East
I tried to ingrain the “you have nothing to lose” attitude in my girls. I drilled the lessons into their heads daily without remorse. Early on I was worried they may not be getting the message. Then, as the years progressed, it became obvious they were listening after all.
Heather worked in my office for a short while and still fills in periodically. She worked in my office at first for the same reason many kids work in the family business: it’s an easy option. It didn’t take long to learn she wasn’t interested in the tax or accounting life. Personal finance was as far as she wanted to go in the accounting world. Dad took a deep breath and allowed his sweetie to cut her own path. It was the right thing to do.
From high school on Heather was interested in East Asia. She built plans to go to college in Thailand and South Korea. Later she learned she could teach English as a second language in countries around the world. Good grades and an unrelenting drive made it a reality. Fundraising and financial tricks learned from dad gave her the chance to see China as an insider rather than a tourist for practically no money!
Her host family is awesome! Heather is seeing China from the perspective of a Chinese family. She lives with her host family, tutoring their five year old daughter, Dora. Dora is such a sweetheart. WeChat allows us to communicate without cost. Dora speaks good English and is a bundle of energy. Heather will be heartbroken when she has to return home. She will always have memories (and friends) in a land far away. The modern world makes it easy to stay in touch.
In middle school you would never have guessed Heather would take the path she did. On a family trip to South Dakota Heather was so anxious we had to stop at every turn off for a bathroom break. We even created a few new rest stops along the way. It was bad. (Heather will probably read this while still in China. She’ll be embarrassed when she does. Consider it dad’s revenge for making him stop every quarter mile.)
Heather inherited the early travel anxiety from dad. I’m crazy when I have to travel. It always sounds like a good idea until the departure date approaches. Mrs. Accountant can tell you many stories of the strangle behaviors I’ve undertake when on the road. I travel for business with rare exception. I keep myself hyper busy so I can control the anxiety. If I’m not chatty, running my mouth a million miles an hour, I withdraw into my own fantasy world. The best non-business trip I ever took was to Costa Rica. My parents invited Mrs. Accountant and me. This allowed for some normalcy with more family around. Still, I didn’t say much during the trip as I mentally withdrew.
Heather outgrew her travel anxiety. Thank god for that. Heather is there, in China, learning their culture and teaching at the same time. The world is much smaller now.
I get to see the world through her eyes and from the perspective of her host family. They seem a lot like people here. They have strong family ties and enjoy time together. They are interested in the world around them. More people speak Mandarin as a native language than any other; English in number three behind Spanish. Still, Heather traveled to China to teach English, whereas Chinese people speak English when they come to the U.S. Strange how they are such an enlightened society as not to demand everyone conform to their culture and language.
The activities Heather enjoys with Dora make me smile. They do so many fun things together. She sends pictures every day. Dora is a well-adjusted young lady. When we video chat Dora keeps hopping in and out of the camera view. We are just normal people to her. Our smaller world reminds us we are all normal people, regardless of culture.
Imagine if I would have demanded Heather work in the family business? All this would have been lost. Heather would have felt a longing for a different life while I dealt with an employee unhappy with her job.
As much as I want to point my girls in a certain direction, I can’t. There was no way I could have guessed Heather would end up where she is. She is better for it too. She called yesterday (about 9:30 p.m. in Beijing) because her car overheated in standstill traffic. I talked her through it. She eventually contacted her host family. The dad stayed behind to handle the auto repairs while mom brought Dora and Heather home. I am so proud of how Heather handled the situation. She really has grown up. She grew up because I allowed her to fly.
The Ground is the Same over Here
Brooke took a path I didn’t expect either. She never even tried to work in my office. She did stuff tax organizers into envelopes over the holidays each year. But her heart was never in the office—any office.
Brooke is interested in computers, but schooling is something she wants to put off for a bit. She has a few coins saved so she has time to decide the path she wishes to travel. In the mean time she likes working in the ground. Heather is traveling land in China while Brooke turns dirt in the backwoods of Wisconsin. It’s a living. And she enjoys it!
Brooke left the door open for college a year or so down the road when she is more certain she wants to learn more about computers. Landscaping and nurseries are acceptable ways to fill a day and gain an income in the mean time.
Again, if I would have forced the issue, requiring Brooke to take a path I thought appropriate for her, she would have been miserable. There is no way a parent can know what will appeal to their children.
There is a way we can help, but is takes a lot of fortitude.
The Guiding Hand of Parents
You can teach your children how to follow their dreams. Engage them. Require them to think about the things they want to do in life. Pay attention to their interests and encourage them to pursue their dreams.
That doesn’t mean the kids get a blank check to do what they want. Quite the contrary. My girls had to earn whatever path they choose to walk. I didn’t pay Heather’s way to China.
College wasn’t a free ride either. Heather struggled with getting to college. I didn’t support her attempts at several higher education ideas financially. She had to earn her way before I stepped in and helped. Once she buckled down and got serious about full-time college she was able to raise the funds necessary to attend school without selling investments to get there. She got so close before she couldn’t do it anymore. I immediately stepped in and provided the rest. For the record, my contribution was very small, a few thousand dollars. Think about that. Heather will leave college with a degree, no student loans, no debt and dad will still be solvent having invested less than $5,000. And Heather got to travel to China (Netherlands next year). She also has a job tutoring people in China from home (online) while she finishes school. She has a bright future!
While Heather is starting to create a path she is likely to travel most or all of her life, Brooke is just starting out. She is 18 and experimenting with her choices. I can’t say as much about her because her story is only beginning. I see the same pattern in Brooke that I saw in Heather. The only difference will be the ultimate path taken.
Parents worry about their kids. It’s only natural. Here is what I did:
- Provide a supporting hand.
- Be consistent.
- Freely offer advice and guidance without doing it for them.
- Let them explore the available options.
- Don’t force them into the family business.
- Let them fail. Failure is the only way to learn.
- Let them fly. All the way to China, if you must. Your heart will eventually begin beating again.
- Love them regardless their choice.
- Share your stories, your wisdom.
- Use humor.
- Hug them. It matters.
Most of all, always welcome them home. It’s hard letting go. It is for the best. It is so much sweeter when they return.
Wealth Building Resources
I don’t know who first came up with the idea of a universal basic income. My earliest exposure to the concept was from Sinclair Lewis’ 1935 novel It can’t Happen Here. There is no doubt the idea was around much longer.
It’s an age old story. Mechanization and technology will destroy all the jobs. Computers and machines will do everything so people will be left with nothing to do but wander around the cities and countryside with dazed stares.
The solution is to provide a basic income to everyone so income inequality is reduced. The cause is noble; the solution fraught with problems. If you have freedom, you have inequality; if you have equality, you have no freedom. The real question is: how much inequality will society tolerate?
In the United States we have a modest solution in our tax code called the Earned Income Credit. People with a low income qualify for a refundable credit to compensate for their poverty level earning. It also happens to be the area of the tax return with the most fraud.
Around the world experiments with a universal basic income are in the planning stages, ready for implementation on an experimental scale or recently concluded, as we saw in Finland.
What is certain is that more people than ever are ready to try a universal basic income. The Finland experiment was concluded early without plans for a wider roll-out. I take this to mean the results were less than hoped for. If anything, it probably exacerbated inequality problems as it encouraged more people to work less.
This isn’t a debate about the merits of a universal income. The video below is one of many discussions on the issues. I don’t agree with all the comments in the video, but they do provide ample starter fuel for an argument discussion. We will focus our attention on something more important today: creating your own personal basic income.
Back to Basics
At times I will sound like a rabid liberal when discussing universal basic income and an unrepentant conservative at other times. I am neither. Rather, the issues are complex and it is nearly impossible to stand firmly on one side of the aisle at all times.
The FIRE (financial independence, early retirement) community is a perfect example. These people (most people if we are honest) look forward to the day when they can either retire or live a semi-retired lifestyle. There is nothing wrong with such an attitude. I even argue it’s a healthy one. A universal basic income will only make it easier for people to achieve their magical goal. An extra thousand dollars a month can do wonders for those determined to build a nest egg large enough to retire early.
Unfortunately, it also encourages disengagement. If a basic income doesn’t work as planned in a place like Finland (where many feel it was a failed experiment) then it is unlikely to work anywhere at all. Higher taxes to pay people not to work will not bring the best out of a society. Social safety nets are necessary for a moral society, but there is a difference between feeding hungry people and providing unemployment benefits and giving everyone a handout.
All that said I still love the idea of a basic income. Notice I didn’t say “universal”. Don’t take this to mean I think people should be left out. Quite the contrary. Anyone who really “wants” a basic income should be allowed to have one! And I’m going to show you exactly how you can get your very own basic income.
In its broadest terms a universal basic income provides everyone in the community with a minimal amount of money every month just for being above ground. The cost is prohibitive, but if machines do all the work due to increases in technology and automation, there is nothing left for people to do to earn the money needed to buy the stuff automation is producing. The idea is to tax the crap out of the automation processes and spread it around.
Since this story has been around in one form or another since mankind decided to move from manpower to draft animals, we have plenty of reference points to learn from. The most import thing learned is that people over blow the consequences. In 2008 the world was coming to an end and now we are at full employment and then some. The next economic slowdown will bring the basic income idea front and center again. Don’t fall for it.
But if you are anything like me you wouldn’t mind a juicy check showing up every month like clockwork as a base line to the household budget. The universal basic income is always some modest payment sure to bankrupt the government while providing modest improvements (if any) to families. What I propose is far more draconian. Rather than few hundred or a thousand dollar per month, I suggest something a bit north of there.
A universal basic income is small thinking. It doesn’t do enough to really solve the problem. But if $3,000 or more shows up each month early retirement is in the cards! So how do we get the government, anyone, to send us $3,000 or more each month?
A Multitude of Basic Incomes
The small thinking mindset requires the government to tax and redistribute massive amounts of money. Worst of all, the beneficiaries of the basic income are reliant on one source for their bonus. This is just plain stupid.
What you need is multiple sources of basic income flowing into your bank account on a regular basis. The source of your basic income should also be more secure than the next vote in Congress!
Here is the secret. The wealthier you are the more likely you are to be receiving the multiple payments of basic income. In fact, the total of all these streams of income aren’t so small. Now I, as a wealthy accountant, will share the secret to the crowds. If you read my body has been found in a ditch somewhere you’ll know the bourgeoisie got to me. Too bad the word will already be out.
By now I’m certain you figured out what I’m talking about. Multiple streams of income are the hallmark of wealthy people. There is nothing preventing you from engaging in the same activity regardless your economic status. A lower income means you start slower, but you can still start.
Sources of Basic Income
Sources of basic income are everywhere. Index funds provide an income stream in the form of dividends. A side hustle can line the household budget nicely.
Passive income is where it is really at. Dividends and interest are nice. Rental income can be much larger than dividend income with a smaller investment. Income property can provide a steady passive income stream without hardly any net worth! (I recommend you pay down the mortgages as fast as possible for a margin of safety.) The trick is buying the right properties.
I’ve provided plenty of ideas in this blog for generating additional income. A side hustle as a forensic accountant is a fun part-time job that pays like a full-time job. Selling tradelines on the side is another way to feather your personal basic income program. No tax increases required. Here is one last link to an article on a dozen high income part-time seasonal jobs.
The ways to produce passive income is nearly endless. You should always maximize retirement plans for maximum tax benefits. Even in a nonqualified index fund dividends and capital gains are taxed at a lower rate than ordinary income. Income properties generally have higher cash flow than reportable profits on a tax return.
The universal basic income is a grand idea whose time will never come. When machines and automation destroy jobs, new opportunities arise. People in the vinyl record business lost their job in the 1980s. More jobs were created than lost in the CD business. Digital is doing the same today. Yes, the horse industry died when the automobile showed up, but the automotive industry is the largest employer in the U.S. today. And it’s not just the manufacturers. Repair shops, gas stations and the oil industry have more than made up for the lost jobs raising, training and feeding horses.
Technology and automation increases efficiency which means we have a better quality of life and standard of living. This is a good thing and not to be feared! I know it seems scary out there, but remember all the Chicken Littles frantic the sky is falling. The sky is fine. And brighter than ever, I might add.
Social safety nets are the moral thing for a society to provide. A constant struggle for the “right” amount of safety net will drag on until the end of time. What you need to understand is a basic income is yours to have. You decide the amount.
Your personal basic income will start small with one rent check, one dividend payment, one tradeline sale. Reinvesting your great fortune only grows your basic income larger each month. Soon, you can have a basic income greater than your financial needs. Then you can step back and let the next person enjoy your old job while you live on the multiple streams of income. In the new basic income world, fewer people will need a traditional job. But you will still provide value to society without working yourself to death.
Wealth Building Resources
Running a business is similar to conducting a science experiment. Unsuccessful proprietors use trial and error hoping to find a winning strategy. Gamblers do something similar. Successful business owners do things a bit differently; examine where need exists and then search out a plausible solution.
Success is similar across all industries and business sizes. Whether you are managing a massive international corporation, a regional firm, a small local business or running a side gig to pay the bills while you enjoy all life has to offer, the rules of success are similar from top to bottom.
Today we will focus on the side hustle and small local businesses. The conversation will also focus on the tax preparation industry.
I own and run my own accounting practice which is centered on tax and have been doing so for over three decades. What worked in the 1980s and 1990s would bring you ridicule if you tried the same thing today. For example, I offered free electronic filing in my community before any other tax firm. Offer free electronic filing as you shtick today and you’d get a plethora or dead stares.
My tax office morphed into something different on a regular business since the beginning. Of interest to you, kind readers, is the current transformation.
There are a variety of tools underutilized by most tax offices that would increase productivity, reduce stress and increase profits.
Why these tools are so underutilized is a mystery to me. It shouldn’t be such a personal mystery since I had to be dragged into the room kicking and screaming. What forced the current transformation of my business was an unusual event a few years back.
A series of events led to this blog and a national footprint for my very small firm. All the technology I pooh-poohed in the past now was desperately needed. I was so unprepared the first year from the influx of work I almost lost my practice. It was a disaster.
I’m not the kind of guy who quits! It was time to open my mind and transform my practice once again. Now with several strategies implemented I want to share how I increased my business footprint, reduced headcount, reduced stress and sent profits higher than ever before.
Profit Power Plays
The old model of tax preparation required an army of tax professionals plugging numbers into the software. Since tax preparation is nothing more than glorified data entry (sorry peers) it was easy to automate virtually every aspect of the preparation process. (So a rabid mob of tax professionals don’t lynch me, the tax profession is more than data processing. Yes, tax preparation IS data entry. As long as you know where to plug the numbers you are golden. However, it is still rote, mind numbing work. Where a tax preparer turns professional is when she consults with clients helping them get different numbers before the fact to plug into said computer. Better?)
There are three things I implemented in the last year or two which made all the difference and a few things which didn’t work.
The three things which worked well are Gruntworx, outsourcing and cloud services. What didn’t work was outsourcing. Yes, some outsourcing worked like a charm and one attempt was a disaster. I’ll elaborate on each winning attempt and the one thing I wish I wouldn’t have wasted my time on.
Gruntworx was the best thing I added to my practice in the last decade. For a couple thousand dollars Gruntworx eliminated the need for several data entry staff. Most returns cost less than $10 to send to Gruntworx in my office.
The trick of turning Gruntworx into a profit engine requires some explanation. First, simple returns are virtually completed, requiring only your review. At first I resisted sending small returns with a few W-2s, interest income, dividends and mortgage interest. Then I realized Gruntwork practically finished the return for a buck seventy-five, or thereabouts. There is no way I can get the work done in-house for close to that cost. A quick review, adding any items Gruntworx doesn’t handle, and the return is ready to present to the client.
Larger returns still require an experienced tax professional. Gruntworx handles a variety of traditional tax reporting forms (W-2s, a variety of 1099s and other similar type forms), but can’t input most Schedule C, E and F expenses. Gruntworx will enter 1099-MISC income to Schedule C. But, since expenses are beyond the capabilities of Gruntworx my office quickly elected to handle those entries internally.
Brokerage statements are a snap with Gruntworx and probably the biggest time saver of all the forms except W-2s, and W-2s only take more time because there are so many of them on almost all returns.
There are a few caveats. Gruntworx is really fast, but is slower to get data entry back to you as the April due date approaches. My office had a response to most files sent within 24 hours, sometimes only a few hours. By mid-March to the finish line it became a few days.
Another caveat involves brokerage statements. Clients with massive trades will send the Gruntworx bill for that client quite high. One client had a thick stack of trades which would have wasted a day entering the data. Gruntworx charged $78.50. Still a deal, but my policy is to scan and attach pertinent pages of the brokerage statement and enter only the consolidated numbers in the software. This is fast AND cheap and you know how cheap this accountant is. (Some accountants disagree with my policy. I’m good with that. Just send it to Gruntworx and get the workload out of your office.)
One final caveat involving Gruntworx. Review is necessary! As every tax professional’s eyes will attest, tax documents can be hard to read at times. We found two errors this tax season from Gruntworx. The computer entered a smudged number wrong. There is still room for the tax professional in the Gruntworx world.
Gruntworx works with Drake Software, which I use in my office. It also works with some Intuit, Thomson and CCH software. If your tax software isn’t on the list still check with Gruntworx as it still might work. If not, similar products are available for all the larger commercial software packages.
You can estimate the cost of Gruntworx for your office here.
Gruntworx and Drake are used by my office, but are not affiliates. Regardless, I highly recommend both for large and small tax offices. These companies will supercharge your tax prep side gig run out of the home or store front firm. Gruntworx makes you look like a larger and more professional firm
Outsourcing is admitting you don’t have to do everything yourself. In the past we handled payroll, bookkeeping, tax, audit and consulting all under one roof. This is a lot for a small one-location firm.
There are different levels of outsourcing. The level which worked for me involved payroll. Payroll requires dedicated staff and I didn’t handle enough payrolls to keep payroll dedicated staff. Also, payroll is a commodity business with national firms sucking all the profit out of it for small and local firms.
Virtually all payrolls are now handled by someone else. You can read about it hear, including who I use. (Reminder: the payroll service I use is an affiliate.)
My firm earns more profit not preparing payroll than we did doing all the work. Outsourcing freed valuable resources for other important tasks.
Where payroll was a success story, tax preparation was not. I knew there were serious issues to manage if it was going to work, but in the end it was a complete failure.
I will keep business names out of it. My goal is not to defame, but to inform.
First, I asked several local clients if they’d be willing to allow me to outsource their tax return to a U.S. source. A small number agreed to help with my experiment.
A VPN was set up with security locked tight to protect data. To make a long story short, the outsourcing firm made so many mistakes it took more time to fix the returns they worked on than if we just did the whole thing ourselves. We did not run the outsourced returns through Gruntworx.
VPNs are slow and clunky which might have been a very small part of the problem. Unfortunately, the real problem was quality. The outsourcing company failed on many levels. Their preparers were very green. If we would have rolled out the program the cost per return would have been favorable, but not nearly as generous as Gruntworx.
Due to lower profitability, security issues, time constraints, quality of work and incessant errors, I do not recommend outsourcing tax returns at this time unless you consider cloud services, which we will cover next.
Cloud services come in a variety of flavors, just like outsourcing.
I’m a big fan of cloud computing. I can work anywhere I have an internet connection without logging into the office system with a VPN.
Cloud computing can get expensive, but compared to the cost of IT services and servers it is a steal.
My office is undergoing its largest cloud build-out ever. Drake Software allows us to host their software on the cloud. (Don’t quote me, but I think the cost is $600 per year for the first user and $300 for each additional user. I’ll update when I get to the office or discover a different price.)
There are several benefits to hosting Drake on their cloud. The biggest benefit is working from home is easier. No more driving to the office on weekends.
Another benefit with hosting the tax software in the cloud includes outsourcing again. Some outsourcing firms are outside the U.S and that opens a host of problems. My experience shows how U.S. based outsourcing firms can also fail big-time. But with the tax software hosted in the cloud I can hire qualified employees from anywhere and train and supervise them on my terms!
This blog brings in complex tax returns most tax offices only see periodically. Finding qualifies tax professionals has been my greatest challenge and it’s wearing me out. Cloud computing will open the frontier. I can hire awesome tax people from around the country. There is no reason to house the entire team under one roof!
I sound optimistic because I haven’t had my head slammed in the door yet with cloud. It is a work in progress with lots of opportunity. Best of all, no VPNs!
Finding team members who I can vet and train is a powerful advantage only cloud services allows me to do. Training my team is the only way to assure the best accountants serve my clients.
Business is always an on-going work in progress. What worked a decade ago doesn’t today. Successful business owners are constantly reinvesting their company.
The ideas I shared today are the ones I felt were the most important. I’ll publish more on this in the future as my firm evolves. If you are considering tax preparation as a seasonal side gig consider the information above. It makes a difference.
Tax services is a profitable industry, but has its risks. Current tax professionals can glean what they need from the proffered information. At minimum it can get you thinking about your business and the various ways you can increase the bottom line while keeping your sanity.
Wealth Building Resources
The accounting industry has been consolidating for decades. When I started my practice in the 1980s the local newspaper had several pages of business card sized ads hawking the wares of local tax offices and CPA firms. Today you would be hard pressed to find an ad (outside the massive DIY tax software) by any tax or accounting firm even in the depths of tax season.
There are several reasons why the corner mom and pop tax office is dying. The tax code has steadily increased in complexity. If I didn’t have a background of knowledge to build on I might not consider the tax field if I were starting today.
Finding qualified tax/accounting professionals is harder than it’s ever been. The number of graduates coming out of college with a desire to work in accounting has declined. Those who do choose the tax/accounting field are picked up by government agencies and larger firms, all who have deeper pockets to pay new talent.
Stress is probably the biggest factor in the decline of the field as a career choice. Recently I had lunch with two young ladies who started their tax/bookkeeping office two years prior. I accepted the dinner date with the intention on building a relationship to possibly share new clients. Before the meal was served I was informed the two young ladies were so busy they couldn’t take any new clients. In two year they were full-up. They contacted me because they wanted to see the guy in sunglasses writing the crazy accounting blog in the Fox Cities.
Looking for the Exit
Long, stressful hours call my sanity into question every tax season. It always starts nice, but then every client wants a piece of my time to chat. Then I get behind and more tired by the day. By March it physically hurts really, really bad. If you ever want to buy a tax office cheap, make the offer in late March or early April. Just a wise piece of advice.
I get my fair share of offers to sell. A year doesn’t pass where I don’t see three to five offers. The big franchise names always make at least one pass. H&R Block wants to slap their pukey green on the side of my building so bad it hurts. I toss the offer before reading it. The answer is no.
Serious offers I might consider also arrive. Sometimes attorneys show up with paperwork demanding I give them a hearing. My location and time on the job has created a modest amount of value in my neck of the woods, I guess. Some offers show up in the mail, others with a phone call. For some strange reason local tax/accounting offices think I want to sell in August or September. Are they kidding! Running my practice is a breeze in late summer. Why would I ever want to sell when I have full control of the volume of traffic?
A word of advice to anyone looking to buy an accounting office cheap: make the offer late in tax season. From personal emotions and attitudes, I actually would consider an offer at such a time. Anything to release me from the physical and mental agony of unrelenting demands on my time. I’m also more open to negotiating the sale price in late spring. Just sayin’.
I Hate My Job!
You can love any job! I grew up on a family farm (virtual forced child labor) shoveling manure. Believe it or not, cleaning the barn was one of my favorite jobs! I could see my progress with each pass of the tractor. There was something intoxicating about working in shit.
I hated milking cows, however, but look back fondly on the experience now. I learned to accept the long hours in the milking parlor listening to tunes and caring for my ladies, the cows.
Cleaning the barn meant more open space to enjoy the outdoors. Milking cows was managed from the concrete pit of a milking parlor. It was cold and damp. I milked cows for about eight hours a day when I was in high school. There wasn’t much time for a life in such circumstances. I quickly learned to hate milking cows and farming. The pay was microscopic, the work hard, the hours long and I had virtually no interaction with people. The milking parlor was a one man job. I kept twelve cows filling the bulk tank simultaneously for hour after hour. To this day I can still see the fan blowing fresh air into the parlor as I milked cows during a summer thunder storm. If only I could enjoy the rain outside.
I hated my job. It was also 1982, a very bad year for the economy in the Rust Belt. I was trapped and acted as any trapped animal does. Late that year the family farm finished a bankruptcy. I had mixed feelings. I didn’t want to go back into farming and sure as hell didn’t want to milk another cow!
Love What You Do
Accountants see strange things walk in their door. The most perplexing is a young individual who is only a few years out of school complaining how much they hate their job. They’ve been reading some blogs (sometimes even this one) and are invigorated to pursue early retirement. I can’t help but think, Why would anyone spend years in college pursuing a job they didn’t like? I sure hope to God it wasn’t only about money. That would be short-sighted and shallow.
Dream jobs still have their days! Difficulty causes stress, but shouldn’t diminish your love for the task at hand. After growing up working endless hours farming I moved to town for a few years, started my practice and then moved back to the country to a small farm! It was in my blood. Raising animals and the land had an irresistible pull on me. I don’t milk cows on my hobby farm, but there are still jobs I don’t care to do. It comes with the territory.
I was too young to know how good I had it! If I’d have grown up in the big city my early life might have been easier. Then again, maybe not. Kind readers from said big cities might beg to differ. Their life wasn’t all roses either.
My formative years made me who I am. For that I am grateful. The stories I share on this blog and my other writings are only possible because I milked those cows, cleaned those barns and fed those calves. The work became a part of me. A good part.
It took me a long time to grow up and realize anyone can love any type of work. If I worked in the sewers I could learn to enjoy the moment. Cleaning barns has similarities and I liked that job.
Finding work you love is easy. Don’t limit your mindset to preconceived notions of what a “good” job is. Working at a fast food restaurant might not pay a lot, but can easily provide massive amount of personal satisfaction.
My news feeds are filled with stories of people retiring young. How can so many people have chosen the wrong profession to want to quit so badly? Some even spent massive amounts of money and time in college to hone their craft. And still, within a few short years they want out so bad it hurts.
Regardless the age you retire, in my office I see people returning to some form of organized labor. Life is meaningless for many without the companionship of co-workers and clients. “Work” is about serving your fellow man (or woman). That’s the magic potion searched for throughput the ages! The meaning of life is to serve! When you Pay it Forward to help another it gives your own life massive amounts of added value too!
After a long day of work it feels good to be home. There is nothing wrong with that. Just because you love your work doesn’t mean there are days it hurts or doesn’t satisfy. It’s okay to feel like you need a break. (Might I suggest a break?)
Early retirement—retirement at any age—is not about checking out of life. No satisfaction is to be found there. A change in career, pursuit of other interests and a short sabbatical are great options you have every right to consider. Traditional retirement is a trap! Providing value is the true meaning of life.
Now we return to your favorite accountant and notice the time of year. Yes, we are approaching mid-March as I write this. S-corporation and partnership returns are due in just over a week. I filed over 40 extensions of these entity returns today alone. Many will be completed on time if clients bring in all their paperwork so some extensions are only filed just in case.
I’m also tired. I don’t feel good. Exhaustion is part of every waking moment. My back hurts from sitting too much. My eyes burn from staring at the computer screen all day. The price of my practice dropped 15-20% since early February. I want to sleep. I want to read a book. I want to go home.
Some smart cookie will read this post and realize now is the time to pounce. In August I laugh sales offers right out the door. Now that we are in the dog days of tax season an offer will not be laughed out the door. I’m too tired to laugh. Should such an offer arrive in the next few weeks I’ll stare for several seconds as I attempt to digest what is happening. I’ll get a visual of life without the work I love and usher you out the door, open or closed.
I love what I do. I love my work! This is who I am; what I want to do. I’ll quit the day they begin lowering my casket into the ground and not a day sooner.
I’ll even milk a cow if I have to.
Bloggers often miss many opportunities when organizing their taxes. Writing on a regular schedule occupies a large part of the creative artist’s time. Taxes frequently become an afterthought.
Over the last two year several bloggers have approached me to review their tax situation. Some ended up as clients; other I only consulted.
A pattern has emerged. There are certain elements bloggers tend to forget. Non-cash deductions are almost always missed. Bloggers also frequently use the wrong entity structure to maximize benefits.
The Tax Cut and Jobs Act signed into law late last year has added numerous new elements to consider when planning your taxes. Bloggers need to consider these additional options or risk overpaying their taxes.
This is a good time as we head into tax season to review the tax rules affecting bloggers. We will cover the more common issues and expand into finding the best vehicle (entity) to use for your blog with a discussion on how the new tax rules affect your decision-making process as you operate your blog.
Taxable income comes from several directions when running a blog. Google and similar advertising platforms provide a steady stream of income.
Amazon is a nice side niche getting worse every day as they reduce the fees paid on virtually every category.
Some bloggers have a specific advertiser lock in a location on their blog. All this income is reportable and subject to tax.
Serious money is earned from books and programs. Most bloggers understand these need to be reported on their return.
Other affiliate programs can turn a nice blog side gig into serious money. Good recordkeeping should assure you don’t miss any reportable income saving you angst should an audit letter arrive.
Before we leave income I want to point out one income source I bet everyone in the blogosphere is missing: awards swag. As a recent winner of the Plutus Awards for Best New Personal Finance Blog of 2017, I received some swag. There was some pretty cool stuff in there. The IRS also makes it very clear this is reportable income. It’s not my job to police you. My job is to inform. (Yeah, I know. Party pooper!)
Bloggers have more business expenses than they realize. Even blogger clients think they have virtually no expenses! I have my hands full educating them. I also stalk my blogger clients as they tend to write what they are doing in their blogging business which gives me a good idea of what expenses will show up in their financials. When the financials lack the expected deductions I inform my client of my stalking tendencies and chisel the deductions out of them. Sometimes their blog post IS the deduction substantiation!
have a designated area in the home used on a regular and exclusive basis for their blog have several deductions coming their way. A proration of all home expenses are allowed as a deduction, plus all expenses directly related to the work space (repairs and maintenance, for example). Depreciation is also allowed.
If recordkeeping for a small office in the home is too much work you can always use the safe harbor of $5 per square foot of office space. The maximum home office deduction allowed with the safe harbor is $1,500 per year. Property taxes and mortgage interest are then fully reportable on Schedule A should you itemize.
There is a small issue between actual expense and the safe harbor of the home office. Sometimes the blog might not be profitable or only has a small profit. The home office deduction cannot cause a loss on Schedule C (for sole proprietors). Unused home office deductions are carried to the next year when actual expenses are used whereas the safe harbor deductions are permanently lost if you are unable to use them currently.
Office supplies, promotional expenses, postage and blog maintenance fees are all deductible. Most out-of-pocket blog related expenses are written off in the year paid (assuming most bloggers are cash basis taxpayers).
Travel is common in the industry. I find most bloggers are unsure of what travel they can deduct so they don’t take any deductions at all except for conferences they attend. More is deductible than you might expect.
If you always wanted to see Australia or retired and travel the world while writing a blog to fill time the expense is NOT deductible! A pure pleasure trip down under is not business related. But there might be several opportunities to deduct some expenses.
A blogger in this genre wanted to know if he could deduct some travel expenses where personal was intermixed. He was in the Philippines and was invited by another blogger to visit him is Taiwan (I think). He made the trip so he could discuss some business plans for his blog. I argue the air flight and all related expenses to travel from the Philippines to Taiwan are deductible, including, hotel and the meals and incidentals per diem (more on the per diem later). If he flew back to the Philippines or home I would argue this is deductible. If he flew on to a personal destination the last leg of travel might not be allowed. However, as long as the business portion of the travel is still in effect it should be an allowed deduction.
There are several non-cash deductions related to travel. Business miles are deductible. You can also deduct a per diem for meals and incidentals (M&IE) for each day on the road (technically, every overnight outside the metropolitan area of your residence). Lodging expenses also have a per diem for employees, but not owners or employee-owners; owners must use actual lodging expenses.
There are two ways to calculate your M&IE deduction: the high-low method or based on the rate for each city you conducted business in (involving overnight travel) and actual expense. The high-low method is easier. You get a flat M&IE rate of $57 for most areas within the continental U.S. (CONUS) and $68 for a few high cost areas.
DOT workers have a special rate of $63 within CONUS and $68 outside CONUS (OCONUS).
There are rates for OCONUS as well for non-DOT workers.
You are allowed to switch methods during the year, BUT you must use the same method within a single business trip.
Meals and incidental expenses are 50% deductible for businesses; 80% for DOT workers (ie. truckers).
There is a modest amount of recordkeeping involved, but worth the effort. The per diems add up fast.
If your spouse travels with you and performs business related activities they may also qualify for a deduction of their travel expenses, including the M&IE per diem.
Business or Hobby
This question has taken on more meaning in 2018. For 2017 hobby expenses are still reported on Schedule A, subject to 2% (the first 2% of AGI of deductions in this category (safe deposit box, tax preparations fees, hobby expenses et cetera) reduce the actual deduction). In 2018 the “subject to 2%” part of Schedule A disappears. This means hobby expenses are never deductible in 2018 and after until they either change the Tax Code or the current provisions expire at the end of 2025.
I think most bloggers are a business even if they think they aren’t. Not making a profit doesn’t mean you are a hobby! If you have a profit motive and conduct your affairs in such a manner you are almost certainly a business.
If you make a profit more than 2 out of a five year period the IRS automatically assumes you are a business and not a hobby.
Business Structure and Entities
When you hang a shingle saying you are in business you are in business. You default to a sole proprietorship or partnership if there are two or more owners.
It’s a good idea to get some legal liability protection with an entity. Organizing as an LLC is the most common way to conduct business. You can also organize as a corporation and elect to be treated as an S corporation.
LLCs have a huge advantage; they can take on the flavor of any tax treatment available. An LLC can be a disregarded entity and reports their taxes as a sole proprietor (Schedule A of the individual tax return) or a partnership if there are two or more owners.
Organizing your business as an LLC means you can elect to be treated as a corporation and therefore, can elect to be treated as an S corporation (a pass-through entity).
The biggest advantage an LLC has is the ability to change flavors (how they are taxed) without reorganizing the entity. You can start as a disregard entity taxed as a sole proprietor and later elect to be treated as an S corporation. The first election can be made at any time without question by the IRS. Any subsequent change must be after five or more years since the last election changing how the entity is taxed. Example: An LLC is treated as a disregarded entity starting in 2015. The business grew so the owner elected to be treated as an S corporation in 2017. Since the first election is automatic at any time the election is allowed. The LLC cannot again change how it is taxed until tax year 2023, the five-year required waiting period.
Which Entity is Best
The sole proprietorship (or disregarded entity) is the easiest to account for. The business income and expenses all are reported on the personal tax return on Schedule C. The one drawback of the sole proprietorship is the self-employment tax.
Most clients don’t make a lot of noise when I show them their income tax, but they squeal like a stuck pig when I show them the SE tax added on top. The SE tax is 15.3% on top of income taxes. There are some limits to the SE tax we will not cover here.
Once you have any significant blog income you will want to be an S corporation or LLC treated as such. As your income rises the taxes assessed a sole proprietor become increasingly painful.
S corporations (we will discuss regular corporations (C corps) in the next section on recent tax changes) are pass-through entities. Profits flow to the personal tax return. These profits are assessed income tax only, no SE tax.
S corporations are required to pay owners reasonable compensation. This is a wide road to travel and offers plenty of opportunities with serious pitfalls for the overaggressive. The owner’s wages are subject to FICA taxes (the twin sister of SE taxes). The remaining profits are taxed for income only.
Decision Tree Using Recent Tax Law Changes
For decades the entity decision was fairly straight forward. Once profits hit $30,000 – $50,000 it was time to think about an S corporation. Some businesses require higher profits before considering an S corporation, but anything under $30,000 is hard to justify considering the additional payroll accounting costs for owners and additional tax return preparation fees for the S corporation tax return.
The Tax Cut and Jobs Act changed all that. Regular corporations are now a consideration. Tax rates have dropped significantly for C corporations, except for those with profits less than $50,000.
C corporations always had one serious flaw small businesses couldn’t overlook: the double taxation of dividends. Now that the corporate tax rate is a flat 21% and all other business owners face a tax rate as high as 29.6% after considering the new 20% business income deduction, regular corporations are back in play.
For the first time in my career I have to seriously consider the regular corporation as an option. The choices are no longer so simple.
Also, reasonable compensation has more than one purpose. Most business owners want to keep their wage as low as possible to minimize FICA taxes. Now, S corporation owners may need to reconsider a HIGHER wage and FICA taxes to meet the cap on the business income deduction ($315,000 for joint returns and $157,500 for all others). An S corporation with one owner filing jointly on her personal return and $450,000 in profits will not qualify for the business income deduction. If the owner takes reasonable compensation of say $150,000, the S corporation will only have a $300,000 profit and the owner WILL qualify for the deduction if she files a joint return.
(Note: Don’t be confused about the reasonable compensation and guaranteed payments to partners issues. Wages can bring down the income and qualify the owner for the deduction for the cap. Reasonable compensation and guaranteed payments to partners do NOT count when using the formula for business owners above the cap. The formula above the cap is 50% of wages excluding those we mentioned OR 25% of wages excluding those we mentioned, plus 2.5% of the value of qualified property at purchase, generally unadjusted. (Think real estate.))
Time is on Your Side
Sweat is running down your forehead by now, I’m sure. Not to worry.
Review your books and make sure you didn’t miss any deductions for 2017. Things haven’t changed much this year. However, bonus depreciation on assets with a class life of 20 years or less is 100% if placed is service on or after September 27, 2017. For most businesses opting out of bonus depreciation this year is a bad idea. A bigger deduction this year coupled with a bigger profit next year when 20% of profits are a deduction is a powerful planning point.
We have plenty of time to review your situation before deciding which entity structure is right for you. Your favorite accountant will be busy this summer.
My office will review all business clients after tax season to determine if changes are appropriate.
For you, kind bloggers and readers, you are welcome to contact my office to review your situation. Most reviews will be after tax season. We will have time to facilitate any recommended changes to take full advantage of the new tax law. Don’t be surprised if you missed several deductions. Bloggers do that a lot.
I may ask one favor if you do contact my office. I might ask you to give me a plug on your blog because I’m a bit of a traffic whore. All you’ll be asked to say in an Irish accent is:
“Oh, that Wealthy Accountant fella is one swell guy.”
Now that wouldn’t hurt too much, would it?
The world is crazier than it is sane. People complain about having no money and then get rid of what they have as fast as possible. How many people can’t make it until the following week without money issues? A short week and most people are already down to fumes. Thank God, payday is Thursday so you can stop at the bar on the way home. Anything to relieve the stress of money.
Chaos is all around us. Concerns over an overheating stock market and economy are always present in the background. If it isn’t the economy being too good, it’s the bad economy. There is no just right.
Before anyone forgets, there’s plenty of chaos from politics. Talk about a distraction! Best if we all stand alert in case Rex Tillerson, the current Secretary of State, calls us for advice. One never knows.
Talking about politics, it’s hard to get any useful work done when a fat guy from the backwoods of Korea (not necessarily close to the backwoods of Wisconsin where your favorite accountant resides if anyone’s concerned) is waving missiles and nuclear weapons around.
It’s easy to get distracted with the chaos all around us. Traffic, work, a screaming client, the wife and kids all add to the endless disruption of our natural flow of productive activity.
Complaining doesn’t help; it only encourages complaint! There is good news, however. Great men and women throughout time have all had the uncanny ability to focus on the important while the world burned around them. If you don’t believe me, ask any mother with an infant.
An American Hero
President Herbert Hoover is an unlikely hero to most Americans. Most people consider him a failure because all they remember is the Great Depression starting about the same time as his presidency and he was unable to solve the issue. It’s the wrong impression. The Great Depression would have started when it did regardless who was President. If Hoover weren’t President, he would have been the guy called in to fix the problem.
I had the same distorted disillusion of Hoover most of my life. My interest in Hoover was more about the market collapse than about the man. Then a recent issue of The Economist recommended a book by Kenneth Whyte titled Hoover: An Extraordinary Life in Extraordinary Times. I love books and knew this one had the promise of heavy use for years so I bought it.
Over the years I built a spotty sketch of Hoover and his life. There were plenty of gaps and misconceptions. Whyte set me straight. So much so I have a planned post comparing Hoover to Trump since we sometimes hear the two Presidents have much in common. No they don’t! I think it’ll be an enlightening read once I get the words spanked onto the digital page.
Today we will focus, ahem, on one facet of Hoover’s personality: his ability to focus under extreme conditions.
My favorite story of Hoover and his can-do attitude started in England.
On June 28, 1913, Archduke Franz Ferdinand of Austria was assassinated. It didn’t seem like a serious issue on the surface. Life went on as usual, but behind the scenes a diplomatic disaster was in the making. Then, a month later, the world exploded.
Americans were vacationing in Europe as usual on the eve of the Great War, as it was called until we decided to do it again even better twenty years later. It can be argued Europe was resting from November 12, 1918 until August 31, 1939; a sort of war halftime to regroup for the second half. (Yes, I know many consider WWII started when Japan made her move in China in 1931. We’ll stick to the European theatre for this installment.)
Hoover was in London with no warning of the impending armies gearing for war. When the fighting started a large number of Americans needed to be evacuated. A humanitarian disaster was certain if someone didn’t find a way to fix the problem.
Hoover never hesitated. He orchestrated the evacuation of Americans with unimaginable efficiency.
Once the continent was cleared of vacationing Americans, another even greater problem arose. Belgium was caught between the warring powers and the Belgium people were suffering. Food was scarce as the country was virtually quarantined.
People were dying! Civilians. Women and children. And neither side cared to help over concern it might bolster the opposing side.
Herbert Hoover never wavered. He worked relentlessly with the Germans, British and Americans to provide relief for Belgium.
Germany controlled Belgium. Germany requested the right to cross Belgium in her run for Paris at the start of the war and moved within days without waiting for an answer. Belgium was defenseless and at the mercy of the German military. The suffering in Belgium during the Great War was some of the greatest human suffering in history.
Amidst the chaos Hoover went to work. He traveled to Berlin to seek aid from the German government to no avail. Great Britain didn’t trust the Germans and Hoover wasn’t even British!
Hoover built a relief effort rapidly, saving millions from starvation. The U.S. government reluctantly, at Hoover’s incessant prodding, provided limited funding and permission to organize the American farmers into producing the food necessary for the relief effort. President Wilson, along with the British, feared the relief effort would help the Germans by diverting food to the German troops.
Enemies allowed Hoover free rein to travel across borders without restriction. He was the only man alive allowed to do so by both sides. His constant drive built the Commission for Relief in Belgium that helped American farmers produce more, raise private and public funding to deliver the goods to Great Britain and get the food to the Belgium people in desperate need.
Hoover visited Belgium several times during the war to see firsthand the devastation and suffering. His mind was always going, working on solutions to the intractable problems of feeding the Belgium people during the war.
At its peak the Commission had an $11 million a month budget with 78% provided by government grants. Over 10 million people were fed daily at the height of the effort.
Only when the U.S. entered the war did Hoover’s relief effort end. Germany would not allow an American behind German lines after that point.
Blocking Out the Noise
Hoover’s ability to focus when distractions were everywhere is legendary. Most people have a hard time reading a book unless there is silence! Hoover could concentrate in any environment.
The ability to focus during chaos will determine a large part of your success. If minor distractions, such as the stock market, can derail your financial plans you are in big trouble.
Marriage, or any relationship for that matter, will have distractions. Successful marriages don’t require all parties involved to never notice other people they find attractive. There will be attractive people! There will be kind, caring, attractive people willing to weasel into your relationship when you are under duress. Especially when you are at your weakest! The marriages that survive a lifetime find focus on the commitment to the relationship. It’s a team sport even when the night is darkest.
Business is the same. Do you really think owning a business is all fun with loads of money pouring in? Heck no! There are good days and bad days. Then a recession comes along and tests your grit. Fewer businesses survive than marriages. In my years as an accountant serving business owners I can attest most issues business owners face involve the lack of focus. Business owners want to do everything until they wear out and fail. Everybody thinks they can be Elon Musk, running 78 ½ different Fortune 500 companies. You’re not Elon Musk! And for the record, the jury is still out on Elon. The boy is amazing, but he has a full plate with no guarantees.
Happiness at the Focal Point
You and I don’t have to be Herbert Hoover. We can have Hoover’s focusing talent by following one simple rule:
- Define your goal in its simplest form.
Hoover’s goal was simple: Feed the Belgium people.
My 30 year marriage is based on a similar simple rule: Remain faithful to Mrs. Accountant. All too often we try to focus and several things at once and fail. In my marriage I always focused on Mrs. Accountant. I would always try to take the path that would cause her the least anguish. Of course I failed at times! Focus isn’t about never failing. But my failures were relatively minor. I never cheated and never felt tempted. I know where I have it good because I focused there. Stupid mistakes happened, but faithful to my relationship with Mrs. Accountant I always was.
You need a focal point. I hear people with the financial goal of financial independence (FI) all the time. Well, what exactly is that? FI is a simple enough goal, but it’s not a defining goal!
A simple goal presented correctly will cover all the “how’s” later. FI is not clear so it misses the focal point. Define FI. Does this mean freedom to travel, retire to the country or run your own business? Focus when you set your most basic of goals.
A better simple goal: To attain a liquid net worth large enough to live off investment income without worry so I can pursue my dream of (travel/running my dream business/pursuing philosophical studies).
The how-to automatically fills in as you focus on the goal. The 4% Rule comes into play without mentioning it in your goal. Saving and investing are automatic in your financial goal.
Focus is a learned trait. Herbert Hoover was in London for business when the world called his name. No other man alive was in the right place at the right time to do what he did. Once tragedy arose there was no time to practice; you’d better be prepared for the unexpected.
You may never face the challenges of Hoover during the Great War. Then again, Hoover never realized his number was about to be called the day before hostilities broke out.
Your eyes must be trained to the focal point at all times.
You never know when they’ll call your name.
Remember awhile back when I said I was taking November off? It’s not going well.
My first day back from a conference and people were lined up for my attention. And, of course, everything’s a crisis. Do people think I’m a machine without a need for rest?
My intentions were never to completely bow out of life. I’m not the kind of person who takes a month and does nothing or travels or other such leisure. Curiosity was breed in me and I can’t help myself. I’m like the mischievous kid who is always in trouble. Curiosity killed the cat and unfortunately I’m limited to one life. (Who wants to live forever anyway?)
The list is growing, too. An old friend from the blogger community asked me to Skype and I missed the Monday tentative appointment. I need to rectify that. (Please, God, let Skype work for me this time.)
The most important issue is hiring more qualified help for the office. Over the last week I hired one new full-time employee and think another candidate will work out in the tax preparation arena. It’s hard finding good people who want to work. I changed tactics in my hiring process and finally saw some positive results. I might even open the gate enough to allow a few new clients in. We’ll see.
Hiring takes time and I should finish the process in the next week. A few projects needing my attention in the office are front and center, plus required continuing education is slated for the 29th and 30th of this month in Green Bay.
Don’t Cry for Me, Argentina*
Before you shed a tear for my misfortune, understand hiring additional team members will free more of my future time. By training a bunch of mini-mes should produce benefits in short order. Some of the process can be handled by team members while I focus on reviewing final product.
I see you’re still chocked up. Don’t be! Conferences are hard on me as I try to give every ounce of energy I have. (Actually, I overdo it.) The recovery time takes longer as I age and this time is no different. I’ve slept more those first few days of recovery than I have in a very long time.
My days are normally short by normal working standards. I visit the gym Monday, Wednesday and Friday each week for a workout and the steam room. Gym days mean I spend about five hours at the office.
Non-gym days I get to the office about 9 and frequently leave by 3 or 4. Tax season is a bit more, of course. (Okay, a lot more.)
Then comes the reading and writing. As you know I write here three days a week, too. I cut back other writing due to the pace I keep here and the constant office workload nonexistent in the past. There was a time summer and autumn were light work schedules. What the heck happened?
Frequently people accuse me of prolific writing. Though it is true I love writing and the writing process, my favorite love (outside Mrs. Accountant) is reading. My taste in literature is catholic (notice the little c). I’ve yet to find a topic I wasn’t interested in for at least a short period of time. Believe it or not, twenty or so years ago I read a romance novel by Danielle Steel (this is the novel that did me in (damn books in the checkout line)) and was blown away. It took 80, maybe 90 novels to burn that one out of my system. (Can you see your favorite accountant on the beach reading To Love Again? Yes, I read that book. It was the second novel of my illness years.)
Novels were a large part of my reading material back then. As the years went by novels lost their grip on me. I still read fiction, just not at the same levels. The books I read now can get, well, shall we say, bulky.
Novels can teach as well as entertain. Tom Wolfe wrote A Man in Full. The story has a strong Stoic message which is why I read it from the library.
Most of what I read now is nonfiction. Once again, my tastes run catholic. As you might imagine, I read plenty on finance, economics and business. If my nose isn’t glued inside a book I’m reading similar material and news online.
Currently I still have a fetish for environmental books, especially relating to human history, climate change and how societies collapse.
Old books hold a special interest for me. An Outline of History by H.G. Wells is on my to-do list. It’s a thousand pages of deep reading from a century ago, but still good stuff. I found a copy in very good condition on Amazon for $22.99.
My primary goal when reading is satiation of my curiosity. Learning is important, but I don’t think of it that way. For me learning is entertainment. If my body were not riddled with restless anxiety I would read non-stop every moment I’m awake.
Writing helps you focus a thought as you express it in clear terms. Reading allows you to digest condensed information more quickly than from any other media. Successful people read.
November is my month off and while business has consumed much of this time, I still manage an excess of hours for additional reading. In short, November has turned into a reading vacation. The best part is I will probably extend the vacation into mid-December to make up for my inappropriate behavior working during a vacation. My schedule to the end of the year will be light to make room for the many books I want to pour into my skull.
Reading makes you a better writer. Writing is the most important form of communication. Documentaries and seminars all teach. But reading is faster and incorporates into your mind better than all other forms of learning. Even teachers speaking in front of a room want you to read the material, preferably before class.
My road has never been easy or straight. Reading has given me the edge over the years to win against long odds. No one has an excuse to fail! No one! In the past I would tell clients I’d make an exception for people in prison and quadriplegics. However, need I remind you of Nelson Mandela, Christopher Reeves and Stephen Hawking? Like I said, no excuse.
The common thread among winners is their thirst for knowledge and hunger for learning. People will beat you down because they are jealous while basking in the rewards of your production. Steve Jobs was both loved and hated, but no one disputes his tremendous contribution to society. Even if you don’t use Apple products, you still benefit from the children born of Jobs’s mind.
And what about your mental children? Will they ever see the light of day? Have you even given yourself permission to dream such dreams? People will take every chance to cut you down. Get used to it. It is possible to do everything right and still lose. That is not a character flaw; it is life.
The best mentors I ever had are dead. Plato, Seneca, Will Durant and H.G. Wells have taught me how to live a joyful life. On my shelf is the Autobiography of Andrew Carnegie, perhaps the richest man to have ever lived, adjusting for inflation.
My favorite books are about successful people. Benjamin Franklin, Steve Jobs, and many Presidents of the United States have filled my time over the years. When I start to feel down or treated unfairly I read about people who rose above the turmoil. They provide lessons through the mists of time reminding me I’m not alone; it’s all happened before. Need I remind you Isaac Newton lived in turbulent times and wasn’t universally loved? He was known to carry a grudge to the grave. Regardless, everyone of these great minds have something to teach me in good times and bad.
How I Read
Most novel I read come from the library these days. I still buy five or so novels a year if I think they will make good reference material for future writing projects. I borrow another ten or so nonfiction titles from the library annually. However, the bulk of my reading is material I own.
Books are important to me. Tim Ferris says you should just buy the book. Ramit Sethi says if he sees a book and thinks there is only a slight chance he will benefit he buys the book. According to Sethi, twenty dollars is incredibly cheap for even one idea. I agree.
One of my favorite authors, Ryan Holiday, sends a monthly email with books he recommends. At the end of each email he encourages people to buy the book. Holiday says he will find a way to own a book he wants even if it means skipping a meal. Once again, I agree. (Holiday is thin, unlike a certain accountant we will not mention. This is living proof he walks the talk. )
I know, I know. It’s self serving for me to ask you to buy the book even when it is to your advantage. Libraries are important and borrowing books from the library is a good idea. Owning books is equally important. There is a certain satisfaction with owning a book and holding it in your hand.
Every book listed in this post I’ve read with the exception of those I mentioned I own and plan on reading over the next four to six weeks. The links to Amazon are affiliate links. I do get paid if you buy the book using the affiliate link. The new commission schedule Amazon brought out a few months ago assures I will not get rich off your purchase. Physical books pay a 4.5% commission and ebooks pay 4%.
You can always go to Amazon outside the links of this blog if you are opposed to commissions on religious grounds. Or, better yet, I’ll buy you a beer the next time our paths cross.
Trust me, the beer will cost more than the commission I earned.
You keep all the knowledge.
* Remember, I hide messages and references within posts.