“Real World” Personal Strategy Blog

Roger Menden’s 2017 Tax Planning Guide

September 22, 2017 by  

2017 tax planningThe third quarter of 2017 is officially behind us, and we are moving into the final portion of our year. The NFL is in full swing, school is back, and life begins to barrel at all of us in new ways. Believe it or not, the holidays are around the corner!

(In fact, there have even been Halloween decorations popping up around Shakopee, MN and in stores here and there — which, I must say, seems a little early — but it does demonstrate my point.)

So, before this season gets REALLY busy, it’s a great time for us to take a look at where things are for your taxes over this year.

I’ve put together a simple primer, similar to what I’ve posted in years past, on what you should be pulling together by the end of the year. But the BEST way to be prepared is to have a customized conversation now about installing a proactive strategy to minimize your specific tax burden. 

January through April may be “tax season”, but September through early-November is “tax planning season” — and to that end, I suggest you call us (952-445-8753) or send me an email and set up a time for a tax planning session.

And this is a great start…

Roger Menden’s 2017 Tax Planning Guide
“The measure of life, after all, is not its duration, but its donation.” -Peter Marshall

Believe it or not, now is the time to start making sure that you’ll be ready for a few months from now, when tax time is upon us.

Generally speaking, you should keep any and all documents that may have an impact on your federal tax return. Individual taxpayers should usually keep the following records and supporting items on their tax returns for at least three years:

• Bills, Credit card and other receipts
• Invoices, Mileage logs
• Canceled, imaged or substitute checks or any other proof of payment
• Any other records to support deductions or credits you claim on your return.

You should normally keep records relating to property until at least three years after you sell or otherwise dispose of the property. Examples include…

• A home purchase or improvement
• Stocks and other investments
• IRA transactions
• Rental property records

Health insurance verification
The IRS will be sending out “information returns” (form 1095) before the end of January (presumably) that should cover your documentation … but as with everything in dealing with the IRS, it’s a good idea to be armed with your own documentation as well, which would include insurance cards, EOB forms, statements from your insurer, etc.

If you are a small business owner, you must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later.

Examples of other important documents business owners should keep include:

• Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
• Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices
• Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
• Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks

Here’s the best part of all of this: 

By pulling together this information NOW, we can really work our “magic” and ensure that we aren’t simply playing catch-up for you after the fact. 

That’s what tax planning is all about, and we very well might be able to pro-actively affect your 2017 tax bill during this final quarter of the year.

So give us a call this week, and let’s plan out the rest of 2017 and beyond.

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,
Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

Hurricanes, Tax Deadlines in Shakopee, MN and Data Breaches

September 13, 2017 by  

Data BreachOur hearts and prayers continue with Houston, and with those in the path or wake of the western wildfires. And now, of course with the entire state of Florida. Fortunately, some of the most dire Irma scenarios did not play out, but we are still dealing with a storm that is the 7th-worst such storm ever to hit the mainland since we’ve been recording the data. And with millions without power, and countless numbers displaced … well, it’s no fall picnic, that’s for sure.

The IRS has set up a “catch all” page for those cleaning up from Harvey, Irma, and other such disasters, and it can be found right here: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations. And here’s a recent article that goes into deeper detail about financial and data recovery in the wake of disasters: https://www.accountingtoday.com/news/irs-offers-taxpayer-disaster-planning-and-recovery-advice-for-hurricane-irma

And of course, if you have been impacted by any of these disasters in any way, we are here for you (or for your friends)! Allow us to help you sort through the financial muck so you can better deal with all of the mess of cleaning up other aspects of your life.

To top it off, the news of the Equifax data breach snuck under the radar, but 140+ million people were affected. (More here: https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do) Keep an eye on your credit reports in the following months, and this is just another reason to be prepared to submit your tax returns as EARLY as possible (so scammers can’t do so with your data)! And go to the link above to see if you were affected, plus to enroll in some free credit monitoring.

Last bit of “housekeeping”: Third quarter estimated taxes are due on Friday, September 15th (as well as a few other tax deadlines). If you are in one of the designated “disaster areas”, this deadline has been waived, however (see the link above from IRS.gov for more info, if that might be you).

Phew! Lots of details today, which aren’t my favorite with which to open a post here, but I wanted to make sure you saw this information, on the chance you might have been affected by any of it.

In fact, there’s so much information in the above, that instead of my normal tips for managing your finances and Shakopee, MN household, I thought I’d leave you with a story. It’s one of those “old yarns”, and it’s a little cheesy … but I thought it fitting for this week.

Hurricanes, Tax Deadlines in Shakopee, MN and Data Breaches
“The measure of life, after all, is not its duration, but its donation.” -Peter Marshall

A ship was wrecked during a storm at sea, and only two sailors survived. They reached a small, deserted island.

The two sailors were good friends, but they agreed that they should separate to avoid fighting with each other over food and shelter. They split up and lived on opposite sides of the island.

The first sailor prayed to God for food. The next morning he discovered a tree bearing fruit on his side of the island. From a hill, he saw his friend still scrambling to find something to eat. “God must have heard my prayers, but not his,” he thought.

That night he prayed for fresh water, and the next day he found a spring. The other sailor had to ration his own water and wait for rain.

Lonely, the sailor prayed for a companion, and soon after a small dog came swimming up to the beach, the survivor of another shipwreck. But the second sailor was still alone.

And so it went. The first sailor got everything he prayed for, while the second one struggled to survive.

One night the sailor prayed for rescue. And the very next day a ship sailed into sight on his side of the island. He jumped and waved, and soon a boat was sent to shore. The sailor and his dog eagerly jumped in, and the rescuers started rowing back to the ship.

Then a voice came into his head. “What about your friend?” the voice asked.

Believing he was hearing God, the sailor said, “We both prayed, but only my prayers were answered. Why should I do anything for him?”

“You both prayed,” the voice agreed. “But while you prayed only for yourself, your friend asked that your prayers should be answered.”

Realizing the truth, the sailor immediately had the boat turn around to rescue his generous friend.

During this season, let’s remember: we’re not alone.

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

Should Shakopee, MN Parents Sacrifice Their Retirement for Their Children’s College Debt?

College DebtAs Houston continues to recover from the devastation of Harvey, if you’ve been paying attention, you also have gotten a bit of a refresher on the greatness of humanity when pushed against the wall.

Aside from the outpouring of financial assistance flying towards Houston, here is another short roundup of humans doing wonderful things:

An armada of private boats headed to Houston. (link goes to Facebook video)

“To h*** with profits!” (link goes to Facebook video)

Stranded bakers keep on baking.

Free pizzas delivered by kayak.

Stranded elderly couple jokingly orders a boat from Chick Fil-A, and then …

No doubt, there are more. If you have any of particular note, feel free to send them along. We’d love to see them — because in this season, and this cultural moment, it’s so good to be reminded that there is goodness around us, just waiting to be discovered.

Now, as we move into fall, and with Labor Day behind us, college is on the brain for parents around the country. And with costs continuing to rise, there is an increasing amount of pressure to liquidate retirement or take on debt in order to fund the education of our children.

I have some words about this.

Should Shakopee, MN Parents Sacrifice Their Retirement for Their Children’s College Debt?
“There will come a time when you believe everything is finished. That will be the beginning.”  -Louis L’Amour

Yes, today’s college students are more indebted than ever. But there is a worrying trend rising, with more of the college-financing burden shifting to parents–and it is something that is being encouraged by private lenders and colleges. As a result, now it isn’t just that Shakopee, MN young people are starting their careers under the weight of a heavy debt load — many parents are ending their careers under the same kind of weight, which might be even worse.

The dangers of PLUS loans
Over the last 25 years, an increasing portion of federally subsidized education loans has shifted to parents. Whereas parents made up just 4% of all federal education loan borrowers in the 1989-1990 academic year, they accounted for 20% in the 2011-2012 academic year (the most recent year for which data is available). That data is a few years old, but rest assured, the trend has only increased since.

The average balance for these so-called PLUS loans grew from $15,323 to $40,154 in that time. Perhaps not surprisingly, in 2013, 17% of PLUS loans held by borrowers age 65-74 were in default (again, this was four years ago — imagine how it is now). In that situation, the government has the power to garnish a portion of Social Security benefits to get paid.

The rise of private lenders
Private lenders are jumping on the loan-to-the-parents bandwagon. More than a few universities have partnered with private lenders, asking them to make education loans available to parents who were looking for more financing options.

Unlike federal loans to parents, private lenders do not charge an upfront fee (the government charges nearly 4.3% to cover the costs to originate and guarantee the loans), and for creditworthy borrowers, private loans may charge a lower interest rate.

Schools apparently like it when Shakopee, MN parents do the borrowing, in part, because such loans are not included in a scorecard in which the U.S. Education Department discloses universities’ median student debt at graduation, a statistic some families use as a gauge of a school’s affordability.

Indeed, paying for college has never been a more complicated puzzle, which is made all the more challenging because of parents’ desires to see their kids succeed. But a heavy debt load is not a good option for students or parents.

What to do instead? Well, here’s a good place to start: Make a commitment not to borrow for college. Start there, and then work on the details.

For example, and as difficult as this option may be to entertain, consider: Should your child even go to college, or right away?

Consider having your child take a gap year after high school to earn money for college debt while better discerning what to study. Just 19% of students at public universities graduate in four years (!). Many students simply don’t know what they want to study, so they change majors, lengthening the time they spend in school, and driving up the cost.

Consider having your child go to community college for two years while living at home, and then transfer to a four-year school that you’ve predetermined will accept the community college credits.

Choose a state school instead of a private school. In a study cited in the book Debt-Free U, students who qualified for a prestigious school but decided to go to an affordable state school instead typically ended up doing just as well in their career as the ones who went to more prestigious schools.

Another important option: Have your child work part-time while in school and full-time during the summer.

Parents of younger kids, start saving in an education fund as early as possible (a 529 college savings plan and/or Coverdell Education Savings Account are good options to explore).

If someone has to take out a loan, let it be your child. Then show him or her how much that will cost on a monthly basis upon graduation, and make sure they understand what the implications are (probably living with roommates, perhaps not having a car, etc.). A recent study showed most students do not understand what they’ve gotten themselves into with their school loans.

The bottom line? Do not sacrifice your later life’s financial security for the sake of your kids’ college education.

Though it is tempting, sure, you AND your children will be grateful you made the hard choices now, so you didn’t have even harder circumstances later.

And if you need a resource to think this through, we’re right here.

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

Preparing a Disaster Plan In Shakopee, MN

disaster planAll of our hearts are with Houston, and the areas surrounding that have been devastated in the past few days. It feels a bit like Katrina did, though the true measure of the disaster is still yet to be understood (as in New Orleans).

What *is* clear is that many lives, businesses, and families have been radically altered.

How have you been processing this one?

When faced with these kinds of events, I’m often struck by how different my daily existence is from the images of devastation. The same is true here … but I must confess to feeling (at least at first) some “disaster fatigue” setting in.

It seems that the world has spawned disaster after disaster over the past few years. Perhaps it’s that social media has made everything seem so “present”. Even as compared to Katrina, which was over a decade ago, the connectivity of our lives is so much stronger.

But that doesn’t mean we turn away. No, this is the time where we actually need to “press in” a little, and care.

Charity Navigator, which is a great place to vet charities on a variety of financial (and otherwise) areas, has compiled a list of places to donate money: https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=5239

So, rather than my normal tax or financial fare this week, I have something different. I’ve stopped apologizing for being such an obsessive planner … it sort of pays to be that way, in my profession, after all! This week, I wanted to remind you of what we almost never think about during “good” times: How to prepare your Shakopee, MN family for “grid-failure” emergencies.

This past weekend seemed like a really good time to bring it back to our minds. It often takes such events to kick us into gear to make a good plan.

Preparing a Disaster Plan In Shakopee, MN
“Prepare while others are daydreaming.”  -William Arthur Ward

With the images of devastation we’ve been seeing from Houston, in addition to being moved for those who are currently experiencing all this, I’ve been reminded how important having a plan really is.

This is true for finances (a tax plan, an estate plan, etc. — let us know if you need to set one of those up! 952-445-8753), and it’s equally true for a big natural disaster.

We can be so complacent about the security of our daily existence, that an event like this seems unrealistic. But, we’re getting continued reminders, every year, of how fragile our modern world truly can be.

But that doesn’t mean you have to panic.

No, with a few basic points of preparation, you and your family could be vastly more prepared than your neighbors, even giving you the opportunity to be ones who can support and assist your neighbors, rather than have to *ask* for support.

There are three primary areas where you need to be prepared:
Energy/Power/Heat
Water & Food
Family

1) Energy: However unlikely a massive grid failure might seem now, it’s important that you at least think through what you and your family would do about heating your home during the winter (wood stove? indoor propane heater? burning your furniture?), and/or cooling your home during the summer (which may not be quite as critical).

Additionally, consider what parts of your existence are dependent on power, and what it would be like to live without it. Write down your plan.

2) Food & Water: For water and food, it’s a very good idea to have food and water for at least 3 days on hand, and in permanent storage. Typically, you need about a gallon of water, per person, per day … and non-perishable food is now so readily-available, that you have your pick for how to stock up. You can save water in a leech-proof plastic jug and just switch it out every 5 years.

3) Family Plan:
* Identify meeting places where you and your family would come together, in the event of some sort of catastrophic grid failure or event, in which you aren’t able to stay at home.
* Put together a “Go Bag” for your family, which carries critical supplies and information for whatever circumstance you may run across. Here is what your bag should include …

  • A disaster plan including location of emergency centers, rallying points, possible evacuation routes, etc.
  • Positive Identification, such as driver’s license, state I.D. card, or social security card
  • Enough medicine to last an extended evacuation period
  • Cash and change, as electronic banking transactions may not be available during the initial period following an emergency or evacuation
  • A first aid kit
  • Fire starting tool (e.g., matches, ferrocerium rod, lighter, etc.)
  • Professional emergency literature explaining what to do in various types of disaster, studied and understood before the actual disaster but kept for reference
  • Maps and travel information
  • Standard camping equipment, including sanitation supplies
  • Weather-appropriate clothing (e.g., poncho, headwear, gloves, etc.)
  • Bedding items such as sleeping bags and blankets
  • Medical records
  • Pet, child, and elderly care needs
  • Battery- or crank-powered radio
  • Lighting (battery- or crank-powered flashlight, glow sticks)
  • Firearms and appropriate ammunition
  • Fixed-blade and folding knife
  • Duct Tape and rope/paracord
  • Plastic tarps for shelter and water collection
  • Slingshot, pellet gun, blowgun or other small game hunting equipment
  • Wire for binding and animal traps

This all might seem a bit excessive now … but so does every disaster plan — until disaster actually strikes.

So, perhaps make it a fun family activity to work through setting up these plans, and you’ll sleep much better knowing you’re prepared!

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

Summer Chaos, Total Eclipse and Menden’s Key Reminders

total eclipseHow was your TOTAL ECLIPSE experience? Did you get to see the totality? Did you travel for it? Would love to hear about your experience.

Well, the world is still standing, even after all of the chaos that we’ve been experiencing as a nation. Social media remains an extremely divided (and divisive) place right now and even the upcoming football season doesn’t seem to be immune from the relentless culture clashes we’re experiencing as a society.

Will the things that we’re going through as a nation settle into a calmer, more just and peaceful state? It remains to be seen.

But what does still seem clear is that what I wrote about last week still seems prescient, and perhaps even more appropriate. I’ll rehash it here, with some comments…

Menden’s Key Reminder #1: What you choose to “ingest” over these next few days will greatly impact your state-of-mind.

If you chose to ignore this advice, it’s likely your blood pressure felt the consequences. Truly — the “mass” media do better (financially) when there is chaos, so there is a very real, monetary at least, incentive for them to highlight turmoil. If you’re wise, you steer clear. I’m not suggesting that you stick your head in the sand, just … use a strong filter.

Menden’s Key Reminder #2: The only thing certain about the stock market is that it’s volatile.

This is NOT “investment advice”: but I will remind you that it’s almost always a good idea to hold fast — sure, the short-termers may have profited from recent gyrations, but what’s most important, for your family’s financial future, is that you keep the loooong view.

Which, of course, leads me to my last reminder…

Menden’s Key Reminder #3: The only thing you can truly control is yourself. 

With every passing week, I see the growing truth of this statement. The economy, your job situation, your retirement — it’s all out of your hands, in a very real sense.

That said, we met with families and clients last week in Shakopee, MN who were taking positive action. With our advice, just a few small tweaks can realize real, tangible savings over the course of years.

Which is why I’m giving you one more chance on what I suggested last week:

Call my office this week: 952-445-8753 (or reply to this note by sending us an email) and request one of our limited Tax Planning Saver Sessions. During this session, we will analyze your current situation and identify clear action steps for the last quarter of 2017 — designed to save your bottom line hundreds (or even thousands).

You CAN control your tax strategy… and we can help. Until then…

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

Menden’s Key Reminders for the Chaos in Charlottesville, Politics and Abroad

CharlottesvilleOpen (and evil) racial violence in Charlottesville.

Political turmoil all over Washington.

An ever-inflating stock market.

War drums from North Korea.

TOTAL SOLAR ECLIPSE.

Every summer, it seems we hit a point in which it feels like everything is fraying at the edges and we’re in danger of falling apart.

Not only do we seem to be more divided than ever (with a heaping slice of online bitterness thrown in), but each of us in Shakopee, MN carries our own private fears and struggles having to do with our own circumstances — be they financial, family, or otherwise.

So it seems right that I would take this time, as I have occasionally done in the past, to remind you of a few things:

Menden’s Key Reminder #1: What you choose to “ingest” over these next few days will greatly impact your state-of-mind. Garbage in, garbage out, as they say. And, of course, the opposite is true — when you surround yourself with excellence and clear-eyed determination, you find that your heart and mind carry much greater strength.

Temper your political media intake this week, as most outlets are (quite literally) merchants of fear.

From a financial standpoint, the stock market seems to be an emotional “port in the storm” right now, but this leads me to …

Menden’s Key Reminder #2: The only thing certain about the stock market is that it’s volatileSo for those of you with many assets resting there, don’t make moves out of panic or greed. Sit down to discuss a tax-advantaged strategy … not a knee-jerk emotional response.

Menden’s Key Reminder #3: The only thing you can truly control is yourself. You can’t control the market, you can’t control our domestic politics (unless, of course, anyone in the Trump administration is reading this — perhaps you people can!), and there’s a real sense in which you can’t even, really, control your salary and income.

So, with those key reminders in mind, here’s what I suggest:

Call my office this week: 952-445-8753 (or respond to this note by sending us an email) and request one of our limited Tax Planning Saver Sessions. During this session, we will analyze your current situation and identify clear action steps for the last quarter of 2017 — designed to save your bottom line hundreds (or even thousands).

You CAN control your tax strategy… and we can help. Until then…

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

Building a Better Personal Network In Shakopee, MN

Personal NetworkWe work a great deal with asset sheets and financial numbers for our Shakopee, MN clients. We’re always on the hunt for ways that we can minimize tax burdens and be strategic about every available resource on behalf of the Shakopee, MN families and people we serve.

But what is becoming increasingly clear in this 2017, always-online, world is this: our most powerful assets are those which can’t be measured on a spreadsheet.

I’m talking about the “soft” asset of our personal network. It’s the group of people you can turn to in a crisis, who might be willing to lend you money in a pinch, or come to your house to watch the kids.

And then there are the door-openers: those who, by virtue of their accomplishments or THEIR network, are able to introduce you (or your older child) to the kind of people who can shift the direction of your or your child’s life.

For some of us, building this network is effortless and easy. Either by virtue of how we’ve been raised, or because we went to a particular school or worked at a certain company, we are well-connected to these kinds of people.

For others of us, we have to work at it. And if that’s you, let me urge you: it is a task worth pursuing, and pursuing well.

And here are some things I’ve learned along the way (as *I’ve* had to work at this myself) that might help…

Building a Better Personal Network In Shakopee, MN
“It is not fair to ask of others what you are not willing to do yourself.” -Eleanor Roosevelt

If you want to succeed in your career (or in life in general), then meeting people from Shakopee, MN who’ve already succeeded before you is going to be a huge help. In fact, this could be the sole difference between success and failure. But how do you network effectively?

Learn from my mistakes… and from my many years of seeing how it is done by those much better at it than myself. Because this “mini crash course” I’ve put together will help you build relationships that will help boost your network AND your career, whatever it might be.

And, of course, these tips hold true in online networking, as well.

Make Friends First
In my experience, this business axiom holds very true: “All things being equal, people prefer to do business with people they like. All things not being equal, people still prefer to do business with people they like.”

If you want someone to share with you their techniques for building their business or getting to a particular point in their career, then the first step is to build an actual friendship with them. Get to know them as human beings and allow them to get to know you. Show a little vulnerability, as well as curiosity and an interest towards them.

Once you have a bit of a relationship, THEN talk business. Don’t enter into this venture on a purely mercenary level. Seek friendship.

Give First, Before You Take
Perhaps you’ve discovered a career or management strategy that’s been working really well for you — so don’t hoard it for yourself. There has to be some “give” as well as “take” in any kind of relationship. Share your knowledge and your insights freely, and others will do the same.

Take The Next Step: Join (or START) a “Mastermind” or Networking Group
Meeting with other like-minded people on a regular basis can really help drive you forward.

There are two important things that happen when you’re around other people like yourself (or better): First of all, you get to share ideas, techniques and stories that’ll help you figure out more ways to be successful.

The other thing that happens is that you start to build off of each other’s momentum. If one person is making more money than the others, everyone else can learn what is causing this increase. Everyone will start taking more action. The energy begets more energy.

If there isn’t a mastermind group near you, then start your own group. It’s not that hard to find like-minded people near you. Get these people together and ask them to bring people they know. Soon, you’ll have a great group of like-minded individuals.

Find a Mentor
If you’re bringing in $20,000 per month to your business, and want to be doing $50,000 a month, then find someone who’s making $100,000 a month. If you’re hitting a wall within your organization, and see someone who has already gotten to a different level (either within or outside your organization), be intentional about pursuing them.

This relationship can be a paid relationship, or a friendship, or it can come within a mastermind group relationship. Whatever you need to do, just make sure you have someone in your life who’s where you want to be financially or otherwise. This will have a magnetic effect on your finances or career life. You’ll slowly but surely start to operate out of a new kind of strength.

The bottom line is: WHO you spend time with has a great deal of influence on your success. The old adage is true: we are often the sum of the 5-10 people with whom we spend the most amount of time. So make sure you’re networking properly — that you’re spending your time with the right people.

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

Why You Should Create A Tax Planning Strategy With A Shakopee, MN Professional’s Help

tax planning strategySometimes the best stories are the old ones.

Variations of this yarn have floated around the culture for some years now, but in my opinion, that’s because the lesson from it is so instructive.

And I’ll admit from the jump, that it’s self-serving to some extent. Because in the age of AI, point-and-click software and ROBOTS, it’s tempting to think that tax and financial advice simply requires a more advanced machine.

Well, aside from the reality that no machine can sit in front of a person and discern the emotional streams that are most important to a Shakopee, MN family or individual, it is also true that unless the person *behind* the machine knows what they are doing, all you are doing is compounding errors.

So, read this, consider its lessons, and keep us in your corner…

Why You Should Create A Tax Planning Strategy With A Shakopee, MN Professional’s Help
“Simplicity is the ultimate sophistication.” -Leonardo da Vinci

Some years ago, one of the major manufacturing companies in this country was facing a crisis. The central conveyor belt of its automated assembly line quit running and brought the entire plant to a stop.

Although they tried everything they could think of, and even brought in several consultants, no one was able to get the conveyor belt running again, or even to identify what caused the breakdown in the first place. The company was really in a bind. With on-going overhead, and the loss of production, the company was losing money at the rate of $1,000,000.00 a day.

Finally, after a week of down time, the big brass told the plant manager to call Tom — the mechanical engineer who had retired the year before, after 25 years with the company. The conveyor belt had been Tom’s specialty and primary responsibility.

When Tom got the call, he caught the next flight from the city where he now lived and arrived at the plant the next day. He met with both the local vice president and the plant manager to get as much information as he could as to what had happened and what they had tried. He then walked slowly along the belt until he came to a particular point.

He put his ear against the machine and listened. He asked for a hammer and then gave the machine a swift and forceful blow.

“Give it a try now!” he called to the foreman. The conveyor belt started right up and ran like a dream.

Tom then left and went back home, but before he did, the company vice president told him to send them a bill for what he had accomplished. Two days later, the company received Tom’s invoice for one million dollars!

Thinking that was way too high for the little time Tom had spent to solve the problem, and how he did so with just a single blow from a hammer, the company wrote back and asked Tom to provide them with an itemization. This was Tom’s response:

One hammer blow: $2.00
Knowing where to hit it: $999,998.00 

With the receipt of that simple invoice, the company came to understand the reason for Tom’s fee and immediately issued a check to him for one million dollars!

Special knowledge is the key. Although the company’s leaders had to be reminded of that fact by receiving Tom’s invoice, as soon as they did, they knew he was right. They could have given hammers to every employee in the plant and even had the big brass banging on the machine from sunrise to sunset, but it would have done no good…because they didn’t have the knowledge; they didn’t know where to hit it.

This is an old story, told in different ways, with different names and amounts. But it’s powerful for a simple reason: labor is NOT about how much “time” is put into executing a particular solution to a problem — it’s knowing when and how to do it.

In the realm of tax planning strategy, and of preparing your tax return, I urge you… do NOT fall prey to the thinking that a software program or forms downloaded from the internet can suffice to enable you to preserve your resources, or properly leverage the multiplicity of credits, legal and ethical loopholes and deductions available.

Give yourself and your family the gift of financial peace of mind come tax time and well ahead of it — and do it with someone who knows how to do it right.

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

Training Your Heart For Good Financial Stewardship In Shakopee, MN

financial stewardshipWorking with my Shakopee, MN clients’ finances over the years has given me a bit of a crash course in human behavior. Often, I’m floored by the generosity I see displayed by many clients — even those without significant means.

Other times … well, I think that we all could use the reminder that our human flaws show up very clearly in our family’s finances. The fact is that we ALL lie to ourselves, from time to time, about what’s really happening in our wallets.

Really, this comes down to being a matter of the heart.

It’s so easy to pull the trigger on more expensive choices because we convince ourselves that “we deserve it”, or that rather than wanting this nice thing (whether it’s as simple and perhaps-trivial as a clothing item or a dinner at a fine restaurant) — that we *need* this new thing.

The too-recent financial crash of the late 2000’s wasn’t just a pure “Wall Street” phenomenon. The fact is that people who live in the real world of “Main Street” sometimes convinced themselves that the house with the jumbo mortgage (and on a 3/1 ARM) was absolutely necessary … when the more modest house could have been just as sufficient, and, even, enjoyable.

So, I’ve compiled a short list of ideas on how to address these matters of the heart, as it relates to our finances … and some simple ways to put guardrails in place.

Training Your Heart For Good Financial Stewardship In Shakopee, MN
“Everyone is trying to accomplish something big, not realizing that life is made up of little things.” -Frank Clark

The goal here is that we would train our hearts to more clearly align with good financial stewardship and wisdom, when sometimes we aren’t used to practicing it.

Here are some ideas that might stir your thinking…

Financial Stewardship Idea 1) Understand why you are purchasing what you are purchasing.
Sometimes the real reason we are buying something isn’t actually the reason we might think we are buying something.

Are you buying your child a new bike because they need a new bike? Or … are you feeling guilty because you don’t feel that you are devoting enough time to spending with that child? Is that piece of jewelry you are purchasing for your wife because you simply love her … or are you wanting to show her something about who YOU are.

These are hard questions, but they need to be asked. Which leads to the second idea…

Financial Stewardship Idea 2) Decide on (and actually operate from) a budget.
All the budgets in the world might align themselves into your family computer, but they are worth absolutely zero if you don’t actually use it. There are loads of great apps and utilities to choose from (like YNAB, or PowerWallet, among others), and they can make it much simpler to determine whether or not you actually should buy something.

Sure, it may be that Macy’s is running a killer sale … but if you go past your budget, you could be doing damage to not only your wallet, but your heart.

Financial Stewardship Idea 3) Ditch the bad (expensive) habits and add ones that work even better.
Too often, shopping is used to ameliorate and numb our feelings of distress or pain. Recognize this within yourself when you have the space to realize it (i.e., when you are NOT facing immediate distress or pain!), and look for ways to encourage your own heart and soul to re-program your response to pressure.

Instead of popping into the car over to Kohl’s on a rough day, go out for a jog or take a walk. Read a book to your children, or even pop over to the local coffee shop for a spell. Sure, those $4 lattes are expensive … but they’re cheaper than a new set of golf clubs or a new dress.

The point is to create new neural pathways for our brain when under pressure.

Financial Stewardship Idea 4) Give yourself a limit for each purchase.
It’s a great idea to establish parameters with your spouse for what you can term a “slush spending amount”; i.e., an amount of money that you agree you can spend without calling each other and checking in. Obviously, this doesn’t apply to things such as gas, groceries and other necessities, but it can provide exactly the kind of trigger and accountability to retrain your heart into healthier spending habits.

Financial Stewardship Idea 5) Practice the art of gratitude.
The ancient Greeks called this practice eucharisteo — and it can be a powerful remedy for the unhealthy practice of buying more “stuff” as a way to feel better about oneself. The fact remains that you have much to be grateful for, no matter your current life circumstances. It mostly requires a willingness to see.

Dealing with our hearts when it comes to our finances is a tricky proposition. But it’s a necessary first step to a healthy family financial picture.

And remember: we are here to help!

I’m grateful for your trust, and for your referrals. And don’t forget what’s below as something you can share with your friends.

Roger Menden’s Independence Month Special…
“FREEDOM!” (Well, free Tax Return Review, that is.)

Simply mention this blog article and bring your return filed by ANY other preparer (including yourself), and we will review it at no charge. You will ONLY be charged if we help you find “missing money” from the IRS, and we, in fact, file an amended return for you.
And don’t forget to 
share this with a friend that needs help.
EXPIRES JULY 31, 2017

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

A Basic Mid-Year Tax Planning Method for Shakopee, MN Taxpayers

mid-year tax planningWell, we are right in the thick of summer. It’s hot.

It’s also tempting to just sit back and hit the cruise control for the next 6 weeks or so, and do nothing different, make no changes, plan no plans.

Like many, you’re probably averting your eyes from the national political scene — because whichever “side” you favor, nobody seems to be covering themselves with glory these days — but one thing that I urge you to NOT avert your eyes from (however tempted you might be at times) is the state of your finances for 2017.

The last couple weeks I’ve given you some “big picture” strategy for how to move forward on reaching financial independence, but I didn’t write a great deal about how our own particular specialty plays into this: taxes.

So, in that spirit, I’ve put together a few things that WOULD behoove you to look at, in terms of your Shakopee, MN family situation — not just with your finances, but also your taxes — here, at around the midpoint of 2017.

A Basic Mid-Year Tax Planning Method for Shakopee, MN Taxpayers
“The secret of change is to focus all of your energy not on fighting the old, but on building the new.” -Dan Millman

The tax return preparation process is always an “historical” look at what happened during the year … whereas DURING the year, there are always things we can do to “write” history, so to speak.

What I will advise you on now is “quick and dirty” tax planning for wage earners. There’s usually much more that can be done, even if you don’t have complicated investments or Shakopee, MN business ownership. That’s worth a conversation (so call or email our office!). But here’s a good place to start…

To begin, all you have to do is take your cash flow for the first half of the year, and multiply by two. Add up your wages, dividends, interest, and any other income, and then — if this represents approximately what you’re expecting for the second half of the year — double the sum.

Once you have your estimated 2017 income, give us a call (or send me an email), and we’ll help you determine the appropriate tax rate and deductions to apply. Because once you’re armed with this info, we can help you determine the amount of taxes you might expect to owe for the 2017 tax year.

By then comparing this against your projected withholding, you can adjust the withholding on your paycheck in advance as needed, and ensure a happy visit to our office in the early winter.

This can also be a good time to organize your financial records or get started with some financial software. (YNABPowerWallet, etc.) Getting organized now can make gathering a report of all those deductions a breeze, come tax time.

And another thing: wealthier Americans, in particular, are facing higher tax rates on ordinary and investment income.

That makes it all the more important to review Uncle Sam’s highest-impact tax breaks, such as donations of appreciated assets, tax-free exchanges and capital-loss harvesting.

Unlike obvious moves, such as contributing to an individual retirement account or a 401(k) plan, these strategies require a higher degree of awareness and active planning.

But not all high-impact breaks are for the “wealthy”. Any homeowner can benefit from a provision allowing taxpayers to pocket tax-free income from renting a residence for as long as two weeks, and low-bracket taxpayers can pay zero tax on long-term capital gains.

Other important moves can help minimize estate, gift and inheritance taxes. Really, there are a variety of moves we can make to help you with your planning for the year … but you have to let us help you. It is, after all, why we are here.

And it starts with the snapshot of where you are right now.

So, shoot me an email, give us a call … we are right here.

I’m grateful for your trust, and for your referrals. And don’t forget what’s below as something you can share with your friends.

Roger Menden’s Independence Month Special…
“FREEDOM!” (Well, free Tax Return Review, that is.)

Simply mention this blog article and bring your return filed by ANY other preparer (including yourself), and we will review it at no charge. You will ONLY be charged if we help you find “missing money” from the IRS, and we, in fact, file an amended return for you.
And don’t forget to 
share this with a friend that needs help.
EXPIRES JULY 31, 2017

Warmly,

Roger Menden
952-445-8753

R. Menden Accounting & Tax Service

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