Today, I feature Keith, better known as The Wealthy Accountant. In today’s post, Keith regales you with the excellent tale of how we met. Don’t believe the part about me drinking all of the Spotted Cow though. That was Jim. And Keith. And me, but just a little bit.
Don’t ask me the year, but when I had cable for a short while I only watched educational programming (something in limited supply on paid TV) and the business channel: CNBC and to a seriously lesser extent, Fox Business. One evening I had the TV on with the sound muted as I was writing. CNBC didn’t have anything that interested me in the evening so I had Fox Business on. It was the first time I heard of Dave Ramsey.
I know, I know! Everybody has heard about Dave Ramsey and his debt snowball! Except me. I was living under a rock when they handed out said information. I guess Dave is on the radio a lot; I don’t listen to radio either. Sorry.
Dave caught my eye. He looked intelligent, so I decided to turn off the mute to listen for a while. In thirty seconds I was sold. How could I have not known about this Dave fella all these years?
What attracted me to Dave and his philosophy was the simple message of destroying debt. Plenty of clients crossed the threshold of my office with wheelbarrows filled with debt. I gave the best advice I could, but I had no program. Until Dave. Dave had an awesome, ready to go, program to refer my clients deep in hock to.
There was a reason for my interest in Dave and helping my clients: The more money my clients have the more they would pay for sound tax advice. We had a bit of quid pro quo going on here. Poor people make poor clients. It’s hard to collect a fee from someone who is broke. They tend to end up in the write-off column; not good for the profitability ratios.
Part of the Herd
I did a background on Dave and his company and discovered he had a referral program. I contacted The Lampo Group, Dave’s organization, and applied for the tax Endorsed Local Provider (ELP) program. After some serious vetting I was in.
Clients were referred at a steady pace. These weren’t the easy accounts. These people were in some serious debt. It was going to require the sleeves get rolled up to fix some of these problems. The work went beyond simple tax preparation and advising.
After a number of years as an ELP, Dave and I went our separate ways. The referrals he sent took more time than I had available to give and much of the work was done pro bono. I have a kind heart, but I also have a business to run. You can read more about my experience with Dave Ramsey here and here as these issues are not part of today’s story.
My Eyes are Opened
My personal experience at building wealth was an outlier in my mind. I knew I was lucky in many regards, but luck is more about consistency than chance. I came from a poor agricultural background and built a seven figure net worth by 32 and an eight figure net worth by 53. It all happened faster than I planned. Luck, I told myself, just plain dumb luck.
My clients sought my advice over the years on a variety of financial issues because they knew I was successful and managed my wealth without a penny of inheritance or lottery winnings. As an ELP I was working the debt elimination process more deeply than ever before. Gone were the days where I gave sound advice and moved on, allowing the client to navigate the minefield on their own.
As I worked with more and more clients from the ELP program I started to notice an interesting pattern: people were reaching debt freedom sooner than anticipated! My math was correct! The issue was how money worked. Investing has compounded returns. Well, reducing debt has compounded returns, only it all takes place below the zero line.
The baby steps were mapped out with precision. A game plan sure to eliminate debt was created and set in motion. And while the inevitable setback occurred—a furnace repair, car maintenance, medical expense, if I was able to keep the client on course, they would survive AND thrive. Life will throw curves, I would teach, and your options are to duck or knock it out of the park. My advice is to swing hard and true.
It didn’t take long before the original plan was not taking place in the real world. The best laid plans of mice and men often go awry. Only the deviation was to the client’s advantage. They were reducing debt faster than expected! How could this be?
Research showed the clients were viewing the program as a floor. Spending was reduced with excess funds used to retire debt. Only unannounced miscellaneous money showed up now and again and opportunities to reduce spending more than originally thought possible occurred. Extra income and excess cash from reduced spending kills the debt demon faster than anticipated. The faster high interest debt (the kind of debt these people had) is eliminated the faster the interest expense column declines. It’s a positive feedback loop.
It Works on the Other Side of Zero, Too
I prefer working with people building wealth. Fighting out of debt is such a defensive game. I prefer the offensive nature of wealth accumulation. Before I met the FIRE (financial independence/retire early) community up close and personal I worked with local clients building wealth. The same issue Dave Ramsey clients experienced existed with my wealth accumulators. They reached financial goals earlier than expected.
It was around this time while browsing personal finance blogs when I ran across 1500 Days to Freedom. As I recall I didn’t read far the first visit (sorry, Carl). In short order I summed up the gist of the blog. Here was a guy with some existing coin looking to leap to a million bucks cash in 1500 days. Sounded interesting.
I commented on 1500 Days to employees and a few clients. My remark each time 1500 Days came up was the same: The guy will get there early.
Prior experience told me the odds were high—80% plus—he would reach his goal early. Of course when my prediction came true, I get the litany of excuses: The stock market bailed him out; he got lucky at work with a raise; he received an inheritance. The stock market performed nicely, but none of the other complaints are true that I am aware of.
Mr. 1500 note: No inheritances or anything else; just a very healthy stock market tailwind.
It’s always something. Four out of five times you reach your financial goals faster than planned. Compounded returns have a way of messing with your math. Dividends reinvest while the underlying index fund also climbs. It’s hard to include every variable pushing your net worth higher.
Every so often I would return to see how things were going for good old Carl and family. Once again I didn’t read far; I just wanted confirmation of my prediction. (Sorry again, Carl.)
Lo and behold, before the expiration date of 1500 days Carl reached his destination. SALUTE! (Readers under 50 years of age should go to YouTube and search “Hee Haw”. Enjoy!)
I knew it would happen. If I wore suspenders I would’ve hooked my thumbs is them, puffed out my chest and raised my nose to the sky. I, my dear reader, am good. (Arrogant too, if you haven’t noticed.)
But then Carl changed the rules! CHANGED THE RULES! How dare he? Our good friend Carl decided on his very own without any input from us, readers, to adjust for the fact he had a mortgage. He noticed he had a pile of hundred dollar bills, but if he paid off the mortgage he would not have a million dollars! So he adjusted for the mortgage.
My response was immediate, “He’ll beat that goal, too.”
And he did.
Mr. 1500 note: I made my goal almost a year early in April of 2016.
Time counts and keeps counting. It is wise to be kind to everyone you meet online and in the real world. One day you just might meet them. And so it goes.
Earlier this year I’m sitting in a cottage on the shore of Lake Michigan in Oostburg, Wisconsin (yes, Oostburg, Wisconsin) with Jim Collins and our very good friend, Carl, Mister 1500 Days, himself. I was very pleased to make his acquaintance.
The world comes full circle in all we do. From a random discovery of 1500 Days to Freedom to sitting in the same room with the man a few years later is poetic. I made a prediction about a complete stranger I never met before and now was drinking Spotted Cow beer with the guy. (For the record, Carl drank an awful lot of the Spotted Cow I brought with me.)
Friends arrive in mysterious ways sometimes.
Mr 1500 note: When I first heard that I’d be meeting Keith, I was a little intimidated. I had see this picture on his blog:
So, I was expecting Keith to pull up on a Harley decked out in black leather and kick my ass. Just because. It turned out that Keith is a nice guy.
If you stumbled in the room to see this post before any other on this blog, know this is a guest post. Also know that the journey you are on to reduce debt and build toward financial independence is a journey you don’t have to walk alone. Many have gone before you. We have felt your pain, experienced your struggles.
Nothing you are going through is new. Someone in this community experienced a similar event. Lean on us. We are about the friendliest group of cusses you’ll ever meet. We come from every walk of life and every background. You might be surprised where some of us have come from. The common denominator is we all made it and we are happy to reach out and give you a hand to the next level.
There is a blog tailored for your current position on the ladder. Dave Ramsey is awesome when you struggle with debt; Pete (Mr. Money Mustache) is awesome in keeping spending low and happiness high; Jim Collins is awesome in his investment teachings (Stock Series); and your humble accountant author can seam it all together as you deal with issues surrounding having a lot of money.
Don’t let anyone BS you. The smartest people don’t do the best. The consistent and persistent will reach their goals of financial independence sooner than expected. We call it focus in the demographic.
Stay true to the program. Eliminate high interest debt, invest in index funds regularly and enjoy every day with family and friends. That’s it! There is no more. Regular investing in index funds will yield superior returns over nearly every other option with the least amount of risk.
There is no need to worry. You will get there before you arrive.
Now would someone pass me a beer before Carl drinks all the Spotted Cow!
Keith Schroeder writes over at The Wealthy Accountant where he enjoys helping his clients in his accounting practice of over 30 years. He lives in the backwoods of NE Wisconsin with his wife, Mrs. Accountant (how lucky can an accountant get than to find a life-mate with a last name of Accountant!), two daughters, a cat named Pinky and a herd of chickens. When he isn’t
punching buttons on his laptop he has his nose buried deep in a book.
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