“Real World” Personal Strategy Blog
Valentine’s Day follow-up
February 16, 2010 by Roger Menden
“Lots of people want to ride with you in the limo, but what you want is someone who will take the bus when the limo breaks down.”
- Oprah Winfrey
So, this is the big question of the week: how did Valentine’s go?
Some say it’s a “Hallmark Holiday”, but well–some spouses think otherwise, right? Well, if you blew it, I’ve heard that it’s NEVER too late. Make this week count, my friend.
Now this past weekend’s festivities aren’t the only experience I have with the language of love. You see, we meet with married couples almost every week in the course of preparing taxes and handling other such matters. It’s part of what we do–and, as we do so, we get sort of a crash course in marital communication.
Before you get worried–know that we don’t pass judgment on anybody’s marriage! Everyone has their own, unique relational dynamic. And every marriage works a little bit differently–it’s part of what makes it a wonderful institution.
That said, however, I’ve noticed that *finances* can be a major sticking point in a good marriage.
But there are simple steps you can take (five, by my count), which will ensure that you don’t ever fall into the trap of letting a good marriage be spoiled by money miscommunication.
Read on, and leave your comments! And, of course, if you need help with any of this, that’s exactly what I’m here for!
“Real World” Personal Strategy
Financial Communication In a Marriage
Money problems can ruin the love affair with your spouse. The work of blending two lives in harmony requires certain basic commitments. It’s a fact that many families today are financially troubled.
Most of these are in denial. The rest of them are looking for a quick fix. Even a financial planner can’t help unless the couple is willing to make five simple commitments. You can always choose to find something to fight about. But if you are serious about removing the financial obstacles in your love life, you should commit to the following money management rules.
1) First, take the time to provide open accounting to your spouse. Most financial arguments are not about how to spend your money–but about how the money was actually spent. Just like every publicly traded company is required to give a public accounting of its finances, couples should do the same. In the public sector, it’s considered a scandal when a corporation fails to provide its financial information in a timely fashion. The same rules should apply at home. Financial accountability, openness, and honesty are essential in marriage.
2) Next, make saving investment in yourselves your first priority. Pay yourself first. Couples should agree on a savings and an investment rate and should prioritize their savings above all other budget categories. Savings should be automated and protected from impulse spending habits.
I’ve come to believe that savings should even be prioritized above debt reduction. I’ve found that couples that are in debt cannot seem to get out of debt because they are using what should be going into savings to service their debt, rather than adjusting their lifestyle so that they are spending less than they make.
3) Set a limit on what you can spend without first getting the approval of your spouse. Each spouse must sign off on spending that might be a budget buster. If you are young or your finances are in trouble, the amount should be fairly low. As you get more experience and your finances are in harmony, you can raise the amount. Any purchases above that amount should require the agreement of both spouses.
In the same way, any purchases beyond what was budgeted should require the agreement of both spouses as to which budget category is going to be reduced in order to make up the difference. If your spouse asks you to wait before making the purchase, lean toward waiting graciously. Ask what you would do if you did not have the money at all. Then, do that instead. Delaying a large purchase even by a month can significantly increase your financial health.
4) Set rules for the acceptable use of credit. In my experience, the easy use of credit cards ruins much financial harmony. It is better when the use of credit cards is limited to only certain required budget items. Using a credit card for groceries or gasoline may be harmless. But when credit cards are used for clothes or eating out, optional spending is unnecessarily inflated.
There are several advantages to using credit cards. But each of these advantages becomes powerful disadvantages for a family struggling to make ends meet. Credit allows couples to avoid asking the tough question about what they would do if they did not have the money. Credit makes spending easy and simplifies check-writing. These advantages are as helpful as giving an alcoholic a place to sleep in the back of the bar.
Either spouse should be able to veto the use of credit cards entirely. Only if both parties agree to the use of credit cards, should they be allowed – and then only within certain guidelines.
Credit should only be used for specific required monthly categories, and then only by the spouse who is less apt to make extra purchases on impulse. If you are struggling with your finances, stop using credit cards entirely.
5) Lastly, agree together that ignorance is no excuse! Both parties must be willing to learn. Just like a good love life, finances cannot be handled well by just one party. Many problems stem as much from ignorance and abdication by one party than spending by the other. If you don’t have the time or the interest to be involved in the family’s finances, then you may be the problem. Ask for help and start learning.
Look, I’m not a marriage counselor. But I DO know good communication when I see it.
I hope this helps.
Who ‘dat preparing your taxes?
February 10, 2010 by Roger Menden
“Don’t wish it were easier, wish you were better. Don’t wish for fewer problems, wish for more skills. Don’t wish for less challenges, wish for more wisdom.”
- Earl Shoaf
Congratulations to the Saints–the Super Bowl was a lot of fun to watch (for a change!), and I think almost everyone is happy for New Orleans (except, perhaps, Indianapolis). Oh, and in case you’re wondering, “Who Dat” is the Saint’s rallying cry–I didn’t have a sudden grammar breakdown (because I KNOW I would hear from a few of you, if I didn’t make that clear!).
And, the ads didn’t completely disappoint either. My favorite was Betty White clamoring for the football in a huddle (Snickers)–which was yours?
So…moving in to your world a bit closer, I wanted to first ask you: Do you have any questions about getting your taxes prepared which I can answer? A big part of why I post these weekly blogs is to ensure that YOU have a “lifeline” when it comes to getting your taxes handled properly.
So please do feel free to drop me a note with any questions–and your thoughts on my blogs are welcome, as well.
You’ve probably figured out that I’m not your “normal” tax professional. “Normal” is a bit more like what most *other* families have to deal with, and I address it in this week’s Strategy Note…
“Real World” Personal Strategy
Mistakes Made During Tax Season (Part 4)
Choosing a Tax Professional Who Doesn’t Relate to YOU
Most people don’t realize this, but many tax professionals live in a whole different world.
It’s a world with its own language, and it can be mind-numbing for the normal tax professional. “Schedule C”, “Offer In Compromise”, “Comparable Contributions”…blah, blah, blah. And when you sit down to talk with these guys, that’s all that comes out of their mouth! Which is why I mostly try to avoid other tax professionals.
Many CPA’s have a ton of experience in complicated accounting practices, doing very complex audit work and usually doing a really great job helping some large business or very high net worth rich guy with diverse investments and tax havens. But, for most tax returns that are filed each year … nah.
Look, does this sound like your tax return? I didn’t think so. You are not alone. The majority of regular middle income folks don’t want to wade into the swamp of all the stuff that other CPA’s and tax professionals deal with. They just want it done right, get the most money back from Uncle Sam, and they want it done fast.
Am I saying all these guys don’t know what they’re doing? Absolutely not. There are some Certified Public Accountants who take the time to keep up with the latest tax laws and are still able to speak the language of the client. But, in most cases you are better off finding a tax preparer who is good at doing what *you* need done. And in this case, if the tax professional prepares a lot of middle income tax returns already, that’s even better.
Think of it this way: Would you use a sledge hammer to hang a picture frame? (I didn’t think so.)
Remember: Go with a tax professional with TAX preparing experience, not just auditing or accounting or something else that doesn’t relate to you!
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I hope all this helps. To your family’s financial and emotional peace…
Don’t forget the love
February 1, 2010 by Roger Menden
“Character is doing the right thing when nobody’s looking. There are too many people who think that the only thing that’s right is to get by, and the only thing that’s wrong is to get caught.”
- J.C. Watts
Well, I wanted to start off by giving you a little “nudge” to make sure you at least *remembered* that the big V-Day is coming. Look–you may call it a “Hallmark” holiday, but your spouse may think otherwise. So, just…don’t forget!
And further, before I get into this week’s Strategy Note, I did also want to say one last thing re: the Haiti earthquake:
Congress has just passed legislation letting you take a 2009 deduction for contributions of cash (but not property) on behalf of earthquake relief before March 1, 2010. That new law also eases recordkeeping requirements for “accelerated” deductions, especially for those you make by phone. If you give by text message, for example, your phone bill satisfies the new requirements if it shows the name of the organization, the date of the contribution, and the amount of the contribution.
So–if you need to get your tax bill down, that’s a nice way to accomplish two things.
Moving on to this week’s Note, many in our profession are leery about guaranteeing their work. We accountant-types can be a fussy bunch (which is probably appropriate, given our work). But I wanted to go out on a limb here, and give you some thoughts on what to make sure you’ve got from someone who’s handling something as sensitive as your tax info…
“Real World” Personal Strategy
Mistakes Made During Tax Season (Part 3)
Working Without A Net
Do you have an accountant that guarantees their work…in writing?
Sure, some guys might say: “We’ll make it right if we screw up”, but then the stuff hits the fan and they fight you every step of the way.
I’ve heard too many horror stories about taxpayers getting a letter from the IRS, then they take it to their accountant, and then the letter sits on a desk gathering dust.
Or stories about the CPA who makes some calls on your behalf, but then you get charged an arm and a leg in the process. Or sadly, a taxpayer doesn’t get any help from the person who prepared their taxes for them so they “go it alone”, call the IRS themselves and figure out what to do and not to do during this normally ugly IRS correspondence … THIS can be a nightmare!
Don’t let that happen to you. You need to have a written understanding with your tax professional that you won’t be left in the lurch. Oh, and also-does this guarantee actually do something you want it to?
I’ve seen some accountants guarantee they will file your taxes for you by April 15th or they will file an extension for you. Well…great! That sure makes you feel good in the morning, doesn’t it? Other weak guarantees I’ve seen in the tax industry are, “We guarantee we will begin preparing your tax return the same day we meet with you.”
That means nothing to me. I don’t care when you start preparing my taxes. I want to know how long it is going to take you to finish it and do so without leaving out silly errors you know you should have caught.
So remember: the guarantees should be in areas you care about, like:
Tax Return Accuracy … Speed of Service … Most Money Legally Yours … Ongoing IRS Protection For Years After Filing …
These are the things YOU care about! Make sure the tax professional you choose stands behind these critical areas of tax filing so you get the most out of your tax filing experience.
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I hope all this helps! To your family’s financial and emotional peace…
