Wednesday, November 9, 2011

Top 9 Ways Herb Kelleher Can Help You Be The Perfect Entrepreneur

We have been discussing Stewart McGregor-Dennis's question, "What does the perfect entrepreneur look like?"  My answer is: the perfect entrepreneur imagines a new niche that needs to be in such detail that they literally breathe it to life.

Here are the top 9 ways that Herb Kelleher, founder and long-time CEO of Southwest Airlines, looks like the perfect entrepreneur...and how applying these 9 points can help you breathe your new business to life!

Wednesday, November 2, 2011

What Does The Perfect Entrepreneur Look Like?

The perfect entrepreneur imagines a new niche, that needs to be, in such detail that they literally breathe it to life. 

This was my answer to Stewart Macgregor-Dennis's October 27 Twitter question (!/macgregordennis).  When he was kind enough to retweet it, I got to thinking it would make a good follow-up to my last blogpost in which I suggest entrepreneuring as one of several worthwhile options when one is faced with long term unemployment or underemployment. 

If being an entrepreneur intrigues you, here are three key elements to keep in mind:

Wednesday, October 26, 2011

Unemployment. Over 14 Million People. For 3 Years. One Idea You Can Use To Do Something About It.

There are 14,000,000 people in the United States who are unemployed.  Stop for a moment to think about that number.  Then consider that unemployment has been consistently that high throughout 2009, 2010, and 2011.

For a time each of these 14,000,000 can collect unemployment benefits while they are trying to find a new job.  While the benefits are a help, they are rarely enough.  Too many people slowly sink financially until they find new work.  In these economic times, that often takes a very long time.

Bad as that is, underemployment is worse for millions more when it lasts for many years.  Underemployment occurs when you can only find work at jobs that do not utilize all of your education and training, like the scientist who can only find work as a taxi driver.  It also occurs when your working hours are reduced long-term and you can't find equivalent full-time work anywhere else.

We can blame the economy.  But many jobs were in industries that no longer exist, or have been replaced by machines.  We can also try blaming large corporations or governments that seem too large to care.

This might be you now.  If not, it is likely to happen to you at some point in the future.  Playing the blame game won't put food on your table or keep the electricity on.

So really ... what are you going to do about it?

Wednesday, October 19, 2011

Should My IRA Make Charitable Contributions?

An important benefit of an individual retirement account (IRA) is that you can accumulate earnings on your savings dollars without paying taxes on them until you start withdrawing from the account.  This can go on for many years, but at age 70 1/2 you are required to start taking yearly minimum distributions from the account.  The amount of these distributions depends on your life expectancy according to tables published by the IRS.  Gradually as you get older, your yearly minimum distributions will get larger as your life expectancy shortens.

You are fully taxed on these distributions.  In addition, your IRA distributions may cause more of the social security payments you receive to be taxed.

Some kind people choose to donate their IRA distribution to their favorite charity.  They want to benefit the charity, obviously, but they also hope to offset the IRA income with a charitable contribution deduction.  

In some recent years, and again in 2011, the law allows for people to instruct their IRA administrator to make a contribution from their IRA directly to the charity rather than to take the money personally and then donate it.

The question is:  Should I have my IRA make my charitable contributions for me?

Friday, February 25, 2011

Collecting Social Security While Continuing To Work - What Are The Rules?

"Isn't there an age that I don't have to worry about it anymore ... when I can work as much as I want without losing my social security?  In fact, I thought at age 65 I didn't have to pay tax on it anymore either!

I have been asked these questions enough times that I realize there are many misconceptions about them.  Please continue reading to get some of the answers ...

Wednesday, February 23, 2011

How To Increase Your Take-Home Pay By Asking Your Boss For A Pay Cut

If you work at a job where you have out of pocket expenses, this article is for you.  This could include driving your personal car to visit customers (or prospects, vendors, etc.), paying for your company uniform by payroll deduction, using some of your own tools or supplies on the job -- just to give a few examples.

Please read on to see how much both you and your employer could save on taxes by agreeing to work for less pay in exchange for having your employer pay for these items.

Monday, February 21, 2011

Don't Miss The Beautiful "Ugly Trailor"!

I'd like to share a blog post with you that I read and enjoyed from CraftoManiac about my friends at Ugly Trailor Antiques (click here to read it:  The Ugly Trailor is a very distinctive store owned and operated by Fred and Sue Thomas.  Their love of art and all things nostalgic is evident as you walk through their store.  It's located a few blocks up State Street from my office in Hurricane, Utah, which makes it very convenient for me when I want to find just the right unique gift -- which has already happened more than once!  If you're headed to Zion National Park it's convenient for you too, as you can't miss their trademark Ugly Trailor (pictured here) in the parking lot as you are driving there on Utah state highway 9.

If you take a moment to read on, I'll share some nice pictures of typical items you can find there and also what you can learn about business success from this store. 

Friday, February 18, 2011

Our Federal Budget: How It Impacts You (In Plain English)

You've heard that our President has submitted his budget proposal for the coming year.  $3,728,686,000,000.  That number is so big, who could comprehend it? Try this: Your share is $11,892. Get enough money out of one of your board games to represent your yearly gross income and put it on a table.  Then divide it into two stacks:  (1) Your share (or your family's -- multiply $11,892 by your family size) of federal government spending and (2) what's left.  Your job with each stack: 

Wednesday, February 16, 2011

You Wouldn't Leave Dollar Coins On The Ground ... Why Do It On Your Tax Return?

Chances are you do little things here and there for charitable causes that you forget about.  It's one of the few tax deductions that isn't limited by income or AMT.  Here's an easy way to make sure you don't forget some of what you're entitled to claim ...

Monday, February 14, 2011

Early Withdrawals From Your IRA/401k - Might As Well Gift Wrap It And Give it to IRS

Here's another huge tax misconception:  When you take money out of your IRA or 401(k) before age 59 1/2, you think the 20% they withhold from taxes right off the top hurts, but at least that's all it will cost.  Wrong!  Too often someone withdraws $40,000 so they will have $32,000 left after taxes to "save their house" only to find they owe another $8,000 when they file their tax return!  Why is that and what can you do about it?

Friday, February 11, 2011

No Child Tax Credit For 17 Year Olds? What's The Deal?

If you're confused because you thought you could claim your child as a dependent later than age 16, you're not alone.  This is definitely a common tax misconception.  You CAN still claim your child as a dependent after their 17th birthday ... but the child tax credit is something separate from the child dependency exemption.  In many cases you can qualify for both of these programs!

Wednesday, February 9, 2011

Gambling: Since I Lost More Than I Won, Why Is The IRS Dunning Me?

I believe the fastest way to get a "love letter" from the IRS is to ignore your gambling "winnings" when you file your tax return.  I know what you're thinking.  It's either "they already withheld taxes at the casino, so that took care of it" or "I lost more than I won, so that means I don't have to report it".  Wrong and wrong.

The saddest example of this that I've seen was a fellow who came in my office one day to see if he needed to file a tax return.  He was single, 72 years old, and living on a $800 monthly pension and his social security.  I asked him all the usual questions, and all I could get out of him was a statement from his bank showing he had earned $0.37 in interest on his savings account for the year.  He specifically said he had no gambling winnings.  So I told him his pension was below the limit for needing to file a tax return, and at his income level his social security wasn't taxable.

Several months passed before I saw him again, this time red faced, beyond angry, and clutching an IRS letter saying he owed them over $3,100 because he didn't file his tax return.  Of course, I was guilty until proven innocent.

Monday, February 7, 2011

Am I Better Off With A Big Tax Refund ... Or More Money In Each Paycheck?

No question about it - take the money in each paycheck!  I can't tell you how many people have told me they purposely have too much tax withheld from each paycheck, because it's the only way they can save.  So they pay banks $200-$400, or more, each year so they can save with Uncle Sam at zero interest.  These same people then either tell me they can't afford to pay down their credit card balances, or can't afford to save up for an emergency fund so they wouldn't need to use their credit cards so often.

This blog post continues to tell you how easy it is to put this extra $200-$400 (plus your tax refund itself) back in your pocket throughout the year!

Friday, February 4, 2011

Vehicle Expense - Should I Take Depreciation and Actual Costs ... or Mileage?

Answer ... it depends!  What are you using the vehicle for?  How many miles are you driving for a tax deductible purpose each year?  How much will your miles driven vary from one year to the next?  How many years do you plan to keep the vehicle? What is the time value of money to you ... specifically how much more valuable is a tax deduction today than a tax deduction 1, 2, or maybe more years in the future?

Your tax software will give you an answer for this year.  If that answer will also work best for you for the remaining years you use the car, you're in good shape.  Otherwise, you will want to visit with your tax pro... one that you have picked that will take the time to explore each of these options with you.  Be sure to remember that whether you choose to take claim depreciation and actual operating costs, or you choose to use the IRS mileage rate, you are required to continue using that choice for as long as you own and operate that vehicle.

Thursday, February 3, 2011

Higher Education Expenses and Your Taxes - Which Choice is Best for Me?

Exciting New Build by Caryl Sumner,
picturing Walsall College (U.K.)

If you, your spouse, or your qualifying child attend an eligible post-secondary school, you could be eligible for up to $2,500 per student in tax savings this year.  There are three main options, with complex questionnaires to determine what you qualify for.  Your tax software will guide you through these questions and generally will pick the best option -- but you need a human to see if state tax makes a difference.

The options for 2010 tax returns are the American Opportunity Tax Credit, the Lifetime Learning Credit, and the Tuition and Fees Deduction.  We'll discuss each of them, and also give an example of how state tax can change which choice will save you the most money.

Saturday, January 29, 2011

Should I Use Software To Do My Own Taxes Or Get Help From A Pro?

Most people use a computer to prepare their yearly income tax returns now.  The laws just get more and more complicated -- it's VERY difficult to do it any other way now.  The IRS has even stopped mailing the forms booklet now, if you do still want to figure your taxes out by hand, you'll probably have to use a computer anyway so you can go to  and download and print the blank forms you'll need.  (A few libraries and post offices still have a handful of the forms, and what is left is drying up quickly.)

So your choice has pretty much come down to -- are you going to get the software and do it yourself, or are you going to see a tax professional and have the help of their software? 

Friday, January 28, 2011

Buy or Rent Your Home? Details to Help You Decide

A few of you might remember the 1950s TV quiz show, The $64,000 Question.  In today's dollars, that's closer to the $464,000 question -- and you might be surprised that it's not just for a few select contestants on a television show, but for you and pretty much everyone you know.  So what is this vital question?

The median rent on a home in the United States today is $842 per month.  If inflation averages 3% per year, you will pay well over $1.1 million to rent that home over your lifetime! That's based on renting your first home at age 25 and living 50 more years.  If you live (and rent) longer than that, ... you do the math! 

Or you could buy the home.  If you could pay cash for it, its median price today is $168,800.  But you also have to pay property tax, insurance, repairs and maintenance ... not to mention mortgage interest and possibly private mortgage insurance if you don't happen to have that much cash handy to make the purchase. 

Should I rent my home or buy it?  That is one of the biggest life decisions you will ever make. It's especially hard to make that decision today.

Thursday, January 27, 2011

A Hidden Gem-The Savers Credit Could Be Worth $1,000 To You

Yahoo! Finance has a highlight out on an article "Save $1,000 on Your Tax Bill" by Consumerism Commentary, provided by US News and World Report on Wednesday, January 26, 2011:

I recommend this article as it does a great job of telling you about the value of this credit, which is designed to give low income taxpayers a powerful incentive to save.  (Low income meaning this credit is gone at an income of $27,750 for singles and $55,500 for married couples filing jointly, and begins to be phased out at lower income levels than those).

But this article points out that you should take a second, serious look at the savers credit.  I'd like to add an exclamation point to a couple of items they discuss.

Saturday, January 22, 2011

Top 10 Ways To Go Broke Trying To Build Wealth

10  Buy on impulse what feels good at the time and don't keep records of what you spent your money for.  After all, life is short, you might as well enjoy it!

My response:  You definitely should enjoy life, but are you settling for something good or simply momentarily pleasurable and giving up the better and best of life.  If you don't keep records, you likely will have a nagging feeling that "life is flying by and what do I have to show for it?"  But consider this.  If you do a quick $40 ATM withdrawal twice a week, that's over $4,000 in a year, and over $200,000 in a lifetime that you have no idea where it went.  If that's you, and you can't seem to get your $20,000 in total credit card balances to go down, paying on time 11 months a year but late "only once", then you're paying 29.99% interest -- $6,000 every year just for interest.  No wonder the balance doesn't go down, when it takes $500 every month just to tread water.  Over a lifetime, if you keep that $20,000 balance, you'll pay over $300,000 in interest on those cards.  Hard to build wealth when you do that.  Keep records.  Look at them.  Be surprised with how much you spend on things that are already consumed.  Decide which of those things you'd rather do without ... would you rather make yourself wealthy, or the bank?

Thursday, January 20, 2011

How To Get Wealth When You’re Broke And Over 50

Wealth is not everything.  Wealth with selfishness is loneliness. Wealth does happen to be the easiest path to personal freedom … the freedom to have the time and the means to live life the way you choose to do so.  And the best path to wealth, the one any determined person can do, is to become a passionately smiling tortoise:  Have a mentor and a plan, consistently follow your plan step by step, be alert to adapt to changing conditions as your plan unfolds, and keep smiling – enjoy the journey!  It really is that simple … and that complex.

If the Best Path to Wealth is Slow Cooking … Aren’t I Already Too Late?
You’ve probably seen and heard the facts and figures about accumulating wealth over a lifetime. Here’s a couple of examples:  If you save $2,000 from money earned in a summer job at age 16, then do it again at age 17, 18, and 19 … and then never add another dime, but let it slow cook at average long-term stock market returns until age 65, you’ll have over one million dollars!  If you’re too late for that one, you could save $100 per month every month without fail from your paycheck beginning at age 27, again let it slow cook at average long-term stock market returns, and retire at age 67 with over one million dollars. (These examples are both based on average returns of about 11.5% per year).
Here’s a Plan That Will Work in Just 9 Years

Saturday, January 15, 2011

The Mystery of Where Passion Drives You!

Passion is a powerful force.  We mostly think of it in terms of romance, art, and causes we are deeply interested in.

I would go farther.  Much farther!  I believe it is a requirement for success in anything we do.  Even our jobs.  Even our businesses.

I believe this enough that

Friday, January 14, 2011

The 4 Dimensional Success Story

Rob and Rudy were the best of friends.  Every afternoon the school bus would drop them off a couple blocks from their homes and they would start walking the rest of the way, talking about what they could do with all of their hours of freedom now that they were released from the chain link fence that enclosed the entire campus and the bumpy bus ride was complete.  The sun shone brightly, the wind was calm, life was good.

Soon enough, they arrived at Rob's house, where they quickly snarfed a snack of crackers and peanut butter, turned up some mood music, and went to work on their project.

Thursday, January 13, 2011

KISS and Doug's Top 4 Tax & Money Tips of All-Time!

Over the 30 years I have been a certified public accountant, I have been asked to speak to a wide variety of small groups on my top tax and money tips.  And of course, once you get me started I can easily get as wound up as a top, going, going, going!  But in the spirit of KISS (I prefer the keep it simple, sweetheart version)  I like to focus on the four recommendations I have consistently found to be most effective:

1.  Own your home.   

There are countless benefits to establishing roots, stability, and having a home you can call your own that go beyond the simple rules of finance.  But those simple money rules are so, so powerful!
2.  Become your own bank.

Think how much power banks have had over you in your life.  Ponder what could happen if you could have even a little of that power focused on YOU!  Is it really possible .... ?