Tuesday, September 28, 2010

Stress, Clutter, and the Mail Box Indicator

Twenty-five years ago a real estate agent informed me that my importance to society was is large part gauged by how much mail I received daily, including junk mail. I never bought into this line of reasoning. With email and spam today we are all much more important than we aught to be compared to the the mail flow of the mid 1980's.

Most folks receive a significantly lower volume of snail mail today than in the past. Bills and bank statements are all available online. Access is instant and it saves money for all involved.

What got me thinking about this is that I went three days last week without any mail at all: no bills or junk mail. My utility bill comes via email and I have no credit card or car loans. As a result, advertisers must think I am not a good person to promote to. Or maybe I am not that important anymore.

I cut back on magazine subscriptions and opted for the library instead. It is more than a matter of cost; it is a matter of space and clutter. Over 99% of the magazines I read I read once. Of course, I keep them around just in case. I let the local library handle storage for me now should I ever really need to check out a back issue.

Without magazines or bills the mailbox is empty. Maybe I am unimportant. Maybe nobody cares about me anymore. Or not.

My email still comes in rapid fire. So, I am important after all. Too bad I use a mail service that scrapes (as opposed to skims) all the crap junk mail before it gets to me. Now I am back to unimportant again. And it is by design.

As my mail flow slowed, my clutter declined, and so did my stress. A full mailbox, snail or email, is stress inducing. Reduced clutter increases free time for other more important things you want to do.

You may wish to consider a goal of stress/clutter reduction by paying off debt, thus lowering the mail flow. Do the important things in life. Opening the bills does not rank on this list. Simplify your life and live better. Have fun.

Wednesday, September 22, 2010

Are the Rich Taxed Too Much?

The age old debate is hotter than ever: What is a fair level of taxes for the rich? The answer is simple. People making more than me should pay more. I should pay less.

No one likes to pay tax, even IRS auditors. But you cannot run a country without some sort of tax revenue. So the debate is all about who pays what. Recently there has been an argument against allowing tax cuts to expire for higher income folks. The massive federal budget deficit has Washington looking for tax revenue and allowing Bush tax cuts to expire would raise a lot of cash, about $800 billion in 10 years.

I am not arguing for a tax increase for anyone. I am just saying that if Washington is serious about balancing the books they (Congress and the President) need to reconsider taxes and spending. It is impossible to cut $1.5 trillion from spending so taxes must go up for someone. Taxes on the middle and lower levels of income will hurt the economy as they spend every dollar they make and higher taxes will lower their spending. Higher income folks do not spend every dollar they make so a tax increase will raise funds for Washington and slow the economy less.

Unfair as it is, folks with income over $200,000 must plan for higher taxes. They are coming, no way around it. Tax planning can lessen the burden. But tax planning takes time and money as well.

I wish the news were better. Most of my tax prep career taxes were falling. Now I need to shift gears and help clients deal with increasing tax rates. More than ever it is important for high-incomers to have a serious talk with their tax professional.

As a conclusion to this depressing post I leave you with some IRS data that will only encourage a tax increase for the $200K+ crowd:
  • Tax returns with $200,000 and higher adjusted gross income (AGI) paid 52% of total income taxes in 2008, the most recent year available. This is down from 54.6% in 2007.
  • AGI's of $100,000 and higher paid 74.5 % of federal income taxes, also down from 75.1%
  • AGI's of $50,000 and higher paid 92.4% of federal income taxes, up from 92.2%
The tax burden has decreased the more you make in 2008. This will only add fuel to the flame that certain people owe more.

Taxes are never fun and they are about to get a lot less fun. Start planning today and never stop. We are going back to the 1970's where tax rates were well over 50% for upper-middle class earners. The only way to keep a piece of your pie is to plan. Use the tax code to your advantage.

Wednesday, September 15, 2010

Zen and the Secrets of Wealth

This week I want to share a thought experiment with you. You need to read the entire blog post before beginning the experiment as it requires you to sit back and close your eyes. The Zen moment I outline will show you the pathway to the highest levels of wealth you can ever attain.

When you finish your Zen moment you will know what wealth really is to you. Most people jump to the conclusion that lots of money is wealth, but for most people this in untrue. Money allows you to experience your real wealth or at least buy it. Wealth is a lifestyle. If money is the only thing that determines wealth then a fist full of Confederate money would make you wealthy in your mind even though it has no buying power.

It is time. Sit back in your favorite easy chair and close your eyes. Clear your mind, relax, and steady your breathing. Think of your life as if you have no debt; you owe absolutely nothing: no mortgage, credit cards, or auto loans to pay each month. Your only bills are normal day to day living expenses: phone, electric/gas, food. Now look at yourself in this new light without debt. How do you act, feel?

You also have enough money invested in government bonds to handle any expense you will ever have. The amount is unimportant. You just need to know you have enough money to buy all necessities and extra for personal entertainment and enjoyment. How will you live now that money is no longer an issue? Feel the contentment.

You no longer need a job in this worldview. You can work if you want or undertake other endeavors. What will you do? This is the point of this entire experiment. If you had enough so you did not have to think about money all day long, earning it, paying bills, spending it: What would you do? How would you live? What really excites you?

Not easy, is it? It takes time and a thorough self-examination to find what really makes you tick. Your true interests take time to rise to the top. We spend so much time earning and spending money we forget what makes life worth living. Too many of us do nothing unrelated to money and the transfer thereof.

It took me several attempts to really find my answer. You may find it takes more than one session to find your true answer as well. Your answer, like mine, may change and evolve with time. That is natural. We are all growing and our deepest interests will modify with time, too.

Your discovery will be different than mine. I will not pollute your process by sharing my answers. What gives your life real meaning is personal. I can't tell you what you should want, be, or experience. All I know is that you need to undergo this exercise on a regular basis. Why? Because the final step in this process is to become what holds the deepest meaning for you. You need to focus on this goal of higher living and meaningful life.

After a session or two, when you find your true bliss, develop a plan to go there to that place of purpose. See it in your mind on a regular basis. Work to adjust your finances to meet your highest need. It will take time. But life is a journey, not an arrival. It is the journey that makes the effort all worth while. Become what you value most.

And remember: If life is worth living, it is worth living well.

Wednesday, September 8, 2010

Frugal Weight Loss

America is the most overweight society in the history of the human race. Even the military has a hard time finding enough personnel in good physical condition.  Americans also spend more on diets than anyone: diet programs and diet foods. Sugar and fat are removed from every item on the grocery store shelves and we are still fat.

Overpriced TV dinners hawked endlessly by washed up football players and other celebrities from the past are not the answer. For most people the answer is not in what we eat, but in how we live. The diet advice is endless.

This blog post is not a substitute for medical advice. Your doctor can help develop a safe and effective diet program. Your personal health must be considered when building a weight loss program and your doctor is the starting point.

First, get a skinny doctor. If your doctor does not believe in good health it is unlikely he can provide an effective and lasting weight loss program. Second, I think most people will be told by their doctor to exercise more. This is the hard part. Eating certain foods in certain quantities is hard, but exercise? Are you serious? You mean, like walking, running, and that kind of stuff?  Do not cuss out your doctor just because he says you need to move a little. I will show you how to get free exercise without any effort and there is no fee. Heard that one before, haven't you?

The real problem for most folks is daily physical activity. As a frugal accountant (friendly, too) I don't like the idea of coughing up a thousand dollar hairball every year for a gym membership. Without any cost you can get your walking and weight training in without a gym. The swimming and steam room might require a membership, but that is a different matter.

A brisk walk is about the most perfect exercise there is. Here is an easy way to get your brisk walk in: park as far away as possible when shopping. No more jockeying for the closest parking stall, you now park waaaay over there at the other end of the parking lot.

Now for some weight conditioning. Carry your purchases. No cart. If you buy too much stuff, take several trips. The more you buy the more exercise you get. With the extra grand in cash savings from the gym membership you can shop more. (The frugal accountant recommends you save the money.)

Look how easy it is to save money and lose weight. Life is more enjoyable when you can get around. Studies show that a proper diet and exercise lowers risk of several diseases like diabetes, heart disease, and stroke. Shedding excess pounds also reduces stress on your bones and joints.

Look for creative ways to walk and carry more. It all adds up. Calories burn off when you walk and muscles tone when worked.

Here is to the good life.