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 .... ? 

3.  Make sure you take advantage of every opportunity provided by your employer to pay medical and dental expenses with before tax dollars.

A growing number of people pay more for medical and dental costs than for housing, taxes, food, transportation ... and that's saying something because all of those are HIGH!  Yet if you rely on yourself alone to get a tax deduction from it you have less than a 1% chance of succeeding.  The secret is to pay these expenses through a plan sponsored by your employer.  And if your employer doesn't have one, there's one more reason to seriously look at tip #4...

(I will come back to 1, 2, and 3 in due time but will start by emphasizing 4 because it is the most powerful of them all ...)

4.  Own your own business.  (If you are employed and love your job, I still urge you to own and operate a business part-time.)  You may have a hard time thinking of a business that makes sense for you.  I have several suggestions, for this blog post I will offer the one I like the best.  Think about what you really enjoy doing, but you don't because you don't have the time or money needed.  You can take almost anything you really enjoy doing and turn it into a good business.

Here's an example for your consideration.  Ellen Patton works full-time as one of the administrative assistants to the President of the Massachusetts Institute of Technology (known to many of us as MIT).  She also is president of a thriving volunteer service organization in her community.  I think she is a good example of someone with a stable long-term job, and who could easily say, I don't have time to have a business too. 

But Ellen LOVES photography, and through practice has become very good at it.  By choosing to make that love a business, it winds up paying for something she would want to do anyway.  It is always better to have an activity pay for itself, plus a profit (would you turn down even a small profit?), rather than to be a drain on your budget.  And it is great to be able to say yes to something you want to do instead of having to say no.

Here are a couple links so that you can learn more about Ellen's business and her passions.  One is to her blog, "Big Red EP" ( where her pictures have spoken a thousand words each on a daily basis for over four years.  The other is to her Etsy shop, where she sells various items from time to time.  The current feature is her 2011 calendar, filled with stunning images of her beloved New England.  I hope you enjoy her photos.  I also hope you get some ideas that you can use in a business built upon what you LOVE!  You might even decide you want one of her calendars for yourself. (My wife just got hers in the mail, and it's stunning!)

Now here comes the fun part.  This advice only works if you make a real business out of your passion.  How do you do that?  The answer is at once simple and complex ... listen and learn to a variety of other folks who have done it.  I will close for now with two requests: (1) I need and value your comments!  If you've ever owned and operated a business write a comment giving the single biggest thing you learned (good or bad) from it.  We can learn so much from each other!  (2) Check back here often, I'll be weighing in with some experiences too ...

Please!  Let me hear from you, now, in the comment box below.  Many thanks!

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