Getting Things Done Without Doing Any of the Work
Are you a “do it yourself” kind of person or are you able to delegate work to others? Until rather recently I’d always been in the do it yourself camp, why pay someone else good money to do something for me when I could figure it out on my own?
How Valuable is Your Time?
What I’ve learned is that although you do save money when you do everything yourself, you are instead spending another equally valuable resource, your time. I think back to when I was in my mid 20’s and seemed to have all the free time in the world. It made sense to do everything myself, I had an abundance of time and wasn’t exactly flush with money. However now that I’m running circles trying to keep up with a job, my family, business projects, and soon another baby; I’ve come to immensely appreciate the value of time.
A wise philosopher once observed that necessity is the mother of invention, and I agree with him. As my available time has eroded over the last two or three years my “invention” has been to find ways of getting other people to do the work that I used to do. I know it’s not a unique approach but “inventing” my own process of how to do this effectively has been key to any success that I’ve had.
Getting Things Done
The main problem with doing everything yourself is that you have to find time to do the work. When time is short, this often means that the work simply doesn’t get done, or gets done three months down the road.
It is easy to put things off but some tasks simply won’t wait on you forever. For example, doing your taxes. Or fixing a hole in your roof that leaks into your garage every time it rains. The implications of not doing things such as these can be pretty costly, in fact the cost tends to increase the longer it takes for you to get them done.
I know experts like David Allen and Stephen Covey have created systems that help us with “Getting Things Done” or being “Highly Effective People” but what I’ve found is that even with a good system in place, there’s a limit to how much one person can optimize their time. For me, there comes a point where I realize that in order to get certain things done, the best way is to hire someone else to do the work for me.
Getting Things Done Right
If you can hire the right person to do the job they can do the work much faster and much better than you ever could. The key is finding the right person; not that there is only one qualified person to prepare your taxes or fix your roof but there are a certain set of characteristics that you’ll be looking for when you hire someone for a job.
I think one of the reasons that people get bogged down with too many things to do and not enough time to accomplish them is that they don’t know how to find the right person to help them. I know that’s certainly been the case for me. There are many times I’ve wanted to hire help but wasn’t sure how to find a person that would do a good job or how much to pay them.
Overcoming Your Fears
It really sucks when you pay a professional to build or fix something and you end up having to go back and re-do the work or hire someone else to fix it. I think this is what many of us are afraid of; that we’ll end up spending money and not getting what we want or spending way more than we have budgeted.
Honestly, I think the only way to overcome these fears is to go through the process of hiring someone for a project and figuring out techniques to help you pick the right person and communicate to them exactly what you need. I’ve been going through that process in small chunks over the last year or so and I’ll share in the days ahead what I’ve learned, what’s worked for me and what’s flopped. Stay tuned.
Exclusive Interview – CEO Reveals Thoughts on Executive Bonuses
After my CEO’s are crooks post, I was contacted by one of the executives that had received a huge bonus while their company was in financial trouble. I won’t mention the name of the corporation so I don’t get sued but he was writing to defend his actions and the work that he does. I sent him a few questions to give him a chance to explain himself, I think you’ll be interested in his answers.
Help me understand, what is it you do that makes you worth a salary of millions of dollars a year?
I create synergistic solutions to help our company compete by integrating and leveraging our core competencies. Our employees don’t know how to make our company the best in the business, so I set the strategic vision and work with our CEO, Michael Scott, to make us the best of breed. It’s not just that I work 70 hours a week, it’s the important decisions I make and the burdens I bear that make me valuable to the company and worth a large salary.
Why aren’t you giving back your half million dollar bonus?
First off, I’m legally owed the bonus as part of my contract. Secondly, I’m no different than any other responsible person else who budgets out their expenses in advance. I had factored that money into our budget and without it I wouldn’t be able to pay our bills. Unlike some executives that have enormous mortgage payments we own one of the more modest homes in our neighborhood in Scranton. Most of the houses run around $3-4 million and we were able to find one we liked for just under $2 million. My bonus is committed to our house payment, paying off our condo in Miami, and our vacation home in Vail; so I can’t give it back.
What do you think of the government plan to heavily tax the bonuses?
I can’t say much about it other than we have really good tax attorneys.
What do you have to say to all the people that work at your company who have lost their job because of your actions?
I do feel badly, I try and put myself in their shoes. I know if I lost my job we’d have to make some major financial changes, such as taking our kids out of private school, selling our personal jet, and cutting way back on vacations. I know that would be rough so I feel for the unemployed people. Most people don’t know this but our parent company, Dunder Mifflin, is trying to find work in the paper industry for everyone that lost their jobs so hopefully that will help.
How do you plan to pay back all the federal bailout money your company has recieved?
Our Assistant to the Regional Manager, D. Schrute, has been working with our sales team to come up with a plan to pay back the money through increased sales. I can’t release the details of the plan yet because it’s not finalized but it will help us repay our debt. I will retire long before the debt is paid back but I’m confident our top sales people, led by the young and ambitious J. Halpert, will work hard to pay it off.
—End Interview—
I couldn’t believe the answers this guy gave, some of them were so insensitive that I almost didn’t publish it. He certainly comes across as a real jerk.
TradeKing Taxes and Trading Report
TradeKing has released the latest edition of their “Intelligence Report” series, this one is called “Taxes and Trading”. It caught my eye since just yesterday I just published our Investor’s Tax Guide.
TradeKing Taxes & Trading
Of course I was curious and downloaded the TradeKing report to see how it compared to the information in our investing tax guide. They cover some of the same terminology such as cost basis and capital gains and how you can carry over capital losses over from one year to the next.
One of the things that the TradeKing report talks about that we missed was wash sales. It goes into detail about what a wash sale is and gives specific wash sale examples. The report has a section on retirement accounts but doesn’t go into as much detail as we do about options for deferring taxes on investments.
Next time we revise our report, I’ll make sure it includes more details on wash sales. I’ve gotten several questions via email on wash sales, for now I’ll just refer people to the TradeKing report.
Downloading the Reports
As I expected, our investing tax guide and TradeKing’s report have some overlap, but each also offers details not found in the other. You have to submit your email address to download the Taxes and Trading report from TradeKing, which wasn’t a big deal for me since I’m already a customer.
You can get our Investor’s Tax Guide when you signup for the free newsletter, I guess the good news is that both reports are free!
Investor’s Tax Guide 2009
Tax season has probably never meant more to taxpayers than it does this year. As we prepare our 2008 tax returns the government is spending billions of dollars of our tax money in an effort to unfreeze credit markets and stimulate the economy.
Stock Market Losses
At the same time, many of us saw the value of our investments plummet significantly over the last year. So with both investments and taxes on many of our minds, I announced last week that we’d have a resource ready covering investing and taxes.
Well, it’s ready but before I go into detail I want to highlight the various tax posts we’ve had over the last few months.
- Alternative Minimum Tax & Federal Income Tax Withholding Changes
- Tax Deductions and Personal Exemptions for 2008
- First Time Home Buyer Tax Credit
- Tax Software & Tax Forms for Your Tax Return
- Tax Preparation Services – Should You Use One?
- 2008 Federal Tax Brackets Explained
- Common Tax Forms to Gather For Your Tax Return
- Free eFile – Freefile & Online Free Tax Prep Options
- Top Tax Credits For Your Federal Tax Return
- TurboTax Review – 2008 Tax Software Product Review
Investing and Taxes
As the market moves up and down and you wonder about buying or selling and the tax implications of a loss or capital gain, hopefully our investor’s tax guide will give you a good overview.
You can get access to the investor’s tax guide by signing up for our free newsletter below. If you want to know more, you can read more about the free newsletter.
What Taxes Do You Owe on Your Investments?
Tax day is quickly approaching and so is the IRA contribution deadline, April 15th. If you haven’t funded your IRA or Roth IRA for last year, time is growing short. Vanguard is always a good option with lots of funds to choose from and Etrade is offering 100 free trades if you open a new IRA account.
But why should you open an individual retirement account at all? How does it help with your investment taxes? To answer a lot of the investing tax questions that came up in our investing survey I’ve worked with a friend of mine who’s a tax attorney to put together an investor’s tax guide.
Investor’s Tax Guide
This is typically the busiest time of the year for tax attorneys so I want to thank my friend for taking time out of his busy schedule to work with me on this resource. I think it will be a useful overview for those of you with questions concerning investing and taxes.
The guide is broken up into three parts; the first takes a look at interest income, dividend income, & capital gains and how they are taxed. It covers short term vs long term gains, stock basis, investment losses, tax rates, and some tax forms.
The next section discusses how you can defer taxes on your investments with a variety of retirement plans and 529 plans.
Tracking and reporting on your investment returns is the final section. It takes a look at tracking your stock basis and reporting capital gains and dividend & interest income.
Downloading the Tax Guide
We’re putting the finishing touches on the investor’s tax guide right now; look for a post over the weekend or on Monday about how you can download it for free!
Update: Instructions on how to download the Investor’s Tax Guide
All CEO’s are Crooks
The failed bankers on Wall Street have been whining that if they have to cut bonuses and salaries dramatically, they’ll be unable to recruit great talent, and they need great talent to fix the situation.
And for years, boards have been claiming that they need to pay CEOs $50,000,000 salaries in order to recruit the very best for their companies.
Jamie Dimon at Chase said, “It’s possible someone’s going to walk in my office and say, Jamie, I have a family. I can’t afford to live that way.”
This, of course, is nonsense.
Seth Godin, author of “All Marketers are Liars”, wrote this week about the myth of big salaries for executives in corporate America. Seth makes the case that there’s a disconnect between what executives are paid and the value that they bring to the company. He thinks the reason they’re paid so much is that the market for CEO pay is artificially high because corporations and their boards are trying to attract and keep talented executives simply by offering more money than the competition offers. Seth argues there are ways to market these top jobs other than just throwing more money at them.
Are These CEO’s Crooks?
So are CEO’s that accept these enormous salaries stealing from the shareholders? No, I don’t think all CEO’s are crooks; my title’s just a play on Seth’s “All Marketers are Liars” book title. I think that the talent and time required to manage these huge businesses to profitability should be rewarded and I can’t blame the CEO’s; if companies are willing to pay that much I can’t fault them for accepting it.
I think it’s pretty standard that most salaries in many public companies are governed by a pretty strict process that entails researching the market and paying employees just enough to be competitive in the market.
What’s the Solution?
So even if the market for CEO pay is hugely over-inflated, what can company boards do to keep and attract talented leaders other than pay the price? I don’t know the answer to that but I do know that given the current economic meltdown shareholders are much less likely to be forgiving of watching their stock value plunge while CEOs continue to earn millions.
I don’t think government caps on CEO pay are a good idea but if companies don’t start making changes on their own the government may start taking matters into their own hands. I think it would be wise of corporate boards to reform corporate pay policies themselves so that politicians don’t try and force “one size fits all” regulations on them. What do you think?
Emergency Funds for Losing Your Job
Your emergency fund is your best friend if you lose your job in this bad economy. We’ve had an emergency fund in an online savings account ever since we joined the work force and last week was the first time I thought I might have to use it.
Losing my Job?
One afternoon last week a co-worker mentioned that the product I was hired to work on was being phased out. I stopped by my boss’s desk to find out whether I’d still have a job but he was gone for the day so I spent the evening thinking about being laid off and what it would mean for my family.
My initial reaction was a mild case of panic, we’re having a baby pretty soon, what would I do without a paycheck and health insurance! As I drove home I started walking through the details of how to prepare for a layoff financially in my head and the closer I got to home, the better I felt.
Emergency Fund
We have over six months of living expenses in online savings accounts, some with ING Direct and some with FNBO Direct. Our emergency fund is the single biggest reason I remained so calm when faced with the possibility of losing my job.
We actually have more than 6 months of worth of expenses saved up but Murphy’s Law makes me worry our expenses might actually increase for unforseen reasons if I was unemployed. So I figure I’d have about 6 months of no income before we ran out of money.
Health Insurance
I would qualify for COBRA (Consolidated Omnibus Budget Reconciliation Act), which would allow me to buy insurance coverage from my former company for 18 months if I was let go. Of course I’d have to pay the full premiums myself but with a baby on the way it would certainly be worth the money.
Job Market
I spent several months last fall networking and job searching so my paper and online resume are up to date. I’m fortunate to be in a good career for a recession, there always seems to be demand for computer programmers. Even if I couldn’t find full time work I could get a freelance job here and there to help us get by.
Job Security
I went into work the next morning after thinking about losing my job all night and had a meeting with my manager and his boss. It turns out everything should be okay, they are phasing out my product but they have a lot more work to do in other areas. It may actually end up being a good change, I’ll be learning a whole new programming language and set of technologies, which will make it easier for me to find a job in the future if I ever do get laid off.
Start an Emergency Fund
Even though everything turned out okay (for now), I’ve never been more glad to have an emergency fund than I was that night. With the security net of 6 months living expenses, the possibility of losing my job seemed a managable crisis. So, if you don’t have an emergency fund, I’d highly recommend starting one this week. You may not have much to contribute but start putting some money away now and over time it will add up.
You can open a separate emergency fund account online tonight, with a online bank like FNBO Direct. It’s easy to do, you can create and fund your account without having to leave your house. Then setup direct deposit and start putting away some money every pay period. You won’t regret it : )
March Madness Money Lessons
What can you learn about money from March Madness? You can take a lesson from most experiences in life if you sit back and observe long enough; the NCAA basketball tournament is no exception. I shared a few things I learned in my series on personal finance lessons for sports fans:
Ignore the Analyst’s Hype
Just like the analyst hype from CNBC the posturing on who to choose for your bracket reaches a fever pitch starting on selection Sunday. Everyone suddenly becomes an expert with advice on which teams to choose.
Truth is no one really knows who’s going to come out winners and who’s going to end up losers, just like the stock market. Take advice from the media and your neighbors with a grain of salt. Base your bracket picks and your stock picks on your own research and your own system of evaluating and choosing based on fundamentals and ignore the analyst hype.
One Game at a Time
Basketball teams win championships one game at a time; similarly, you can achieve financial success one goal at a time. Set big goals for yourself but focus on reaching one goal at a time, don’t get overwhelmed by the task of achieving it all at once.
Practice Makes Perfect
Greatness begins off the court. All great players and teams have to start from somewhere and practice, practice, practice to become great.
It’s no different with your personal finances. We all start with the same basic knowledge of money; you have to “practice” by learning about personal finance and putting in the time to research the concepts and strategies.
Pay Attention to the Details
Small things like diving on loose balls and boxing out can make a big difference in big games. It’s no different in personal finance, a lot of small changes can add up to a lot of money saved or earned, so pay attention to the details.
Diversify to Win
Teams that rely on one or two big stars have a really hard time outperforming and winning the tournament. It’s the same with your investment portfolio. If you have one great investment carrying your performance returns and has a bad month, year, or 5 years then your portfolio is shot.
On the other hand, if you have a balanced “team” of investments with strengths in different areas and a deep bench then you have a much better chance of achieving positive performance consistently. Diversify to win.
Alternative Minimum Tax and Federal Income Tax Withholding Changes
How are we supposed to keep up with all the tax code changes? That’s a question a reader emailed in after reading about the First Time Home Buyer Credit and other tax deduction changes we covered the last two days.
It’s certainly not an easy task, which is why a whole army of tax prep software, tax prep services, and tax attorneys exist to help us file our taxes each year. If you are using a program like Turbo Tax or some other tax software, you can install the latest updates when it prompts you to download them. If you’re in the middle of working on your tax return make sure you have your current return backed up before you update your software.
If you’re hiring someone else to prepare your taxes, include that as one of the questions you ask when screening for the right company or accountant to hire. Ask what training and tools they use to keep up to date on the latest tax code changes.
Here are a few more tax changes for 2008 and one change for 2009 regarding federal income tax withholding.
AMT Exemptions
For 2008, the exemptions on the alternative minimum tax (AMT) are $46,200 for single taxpayers and heads of households, $69,950 for married couples filing joint returns, and $34,975 for married couples filing separately. Unless Congress steps in, the exemption levels will drop to $45,000 for married filing jointly, $33,750 for singles and heads of household, and $22,500 for married couples filing separately.
Parking & Transit Passes
Employees won’t be taxed on up to $220 a month of employer-paid parking, up $5 per month from 2007. The cap on tax-free transit passes their employers can give workers rises to $115 a month, up $5 a month from 2007.
IRA Withdrawals & Donations
For 2009 only, you can choose not to take your Required Minimum Withdrawal from qualified plans or IRAs. This applies whether 2009 is your first year, or you have been withdrawing for a while. It does not apply if you postponed your 2008 First Required Minimum Distribution to the first quarter of 2009.
For 2008 and 2009, IRA investors age 70½ and older can donate up to $100,000 of their IRAs to charity without having to report the withdrawal as income.
Federal Income Tax Withholding
The American Recovery and Reinvestment Act of 2009 (the Stimulus Plan) passed last month includes a provision for the reduction of Federal Income Tax withholding for many employees during years 2009 and 2010. Called the “Making Work Pay,” tax credit, it includes a 6.2 percent reduction of Federal Income Tax withholding.
If you qualify for this credit you should see a reduction in your federal income withholding beginning this month or next. The IRS site cautions that:
“Individuals and couples with multiple jobs may want to submit revised Form W-4 forms to ensure enough withholding is held to cover the tax liability for the combined income. Publication 919 provides additional guidance for tax withholding.”
Taxpayers won’t have a check mailed to them from the IRS like last year’s economic stimulus check, instead the change should show up in your paycheck says IRS Commissioner Doug Shulman:
“Since employers and payroll companies will handle this change, people typically won’t need to take any additional action. The IRS will continue working to implement this and other provisions of the new law as quickly as possible.”
Personal Finance Software Winners – Mac vs PC
Surprise, surprise! Mac users are more passionate about their computers than PC owners. Not only did the Mac users leave more comments than PC users but the responses were longer and full of more detail. Thanks to everyone for participating.
iBank Mac Software Winner
Congratulations to Brian from The Mutex who was the random number winner of a copy of iBank personal finance software from IGG Software. Brian, I’ll pass your information along to IGG who will send you a download code for iBank.
H&R Block TaxCut Premium Winner
Thanks to Sara from Paying Off My Future, for her comments on the PC! She was the random number winner for the H&R Block TaxCut Premium software, featured in our best tax software post. The software will ship out to Sara once she sends me her shipping info. Tick tock, tick tock… tax day is approaching 🙂
Thanks to both IGG Software and H&R Block for sponsoring the contests with free copies of their software.
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I'm Ben Edwards and I've been addicted to personal finance since I was 12 years old.
That passion for money has paid off for my family - so in 2006 I founded Money Smart Life to help you afford the life that you want. Read My Story...
