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Addressing financial headaches

Certain Financial Headaches Aren’t Worth Their Return

Personal finances are interesting because each aspect carries a different weight depending on the person involved and where they are in their financial journey. Financial headaches are easily created when we perseverate over every little expense, try to save way more than we need or scrutinize every single budget category.


Fighting For Taxes

Right after residency, I wanted to keep as much of my income as possible. I would fudge a little here and a little there on taxes. It didn’t pay off, the tax man would send letter audits which I was too afraid to argue with. And if I didn’t get the letter audits, I would always remain fearful.

After some financial literacy, I sort of welcomed the IRS letters. I played everything by the book. I didn’t care at all what would “flag” the IRS because I knew I could defend it. I would write off what I legally could write off and I had no problem defending it to anyone.


Fighting for investments

As a novice, I wanted the best returns possible through investing in penny stocks or individual stocks. I also wanted the lowest trading fees possible. I don’t recall caring much about risk – or maybe I didn’t understand what risk was.

After becoming financially savvy, I decided to minimize risk but still fought for every little investment expense I could. I would move investments between various accounts to get the lowest expense ratio while maintaining my ideal asset allocation.

I sacrificed a lot of time in order to create these ideal portfolios. I could have paid a financial adviser to do it for me but I was in uber-frugal mode and I wanted to learn everything I could about finances.


Fighting for prices

I was the guy that would call the electricity company every other month to find new ways to negotiate a lower bill. I would use them to send me free LED bulbs or have them put me on flex plans, etc. There was always some new gimmick they had which I could exploit.

I called my auto insurance company and saved a ton by putting them on the spot. I played 2 companies against each other and came out ahead. Even still, I would go online and mess around with the Geico insurance settings to lower my bill further.

I switched from Sprint to Ting, saving a ton every month on my cellular bill. I knew all the free WiFi hotspots in town and had all the right apps to minimize unnecessary data usage.

Later, I gave up my car altogether after planning to live in an ideal location that would allow me to be within walking/biking distance of my work, a grocery store, a library and public transportation.

I learned about buying things for life, spending a massive amount of time to research each purchase.

I worked on my own cars, fixed my own plumbing and electricity in the home. I mended my own clothes and switched to sports which had lower ongoing expenses.


Point of diminishing returns

I am suddenly finding myself no longer being the young gun ready to go toe to toe with the IRS. I don’t care to talk to a sleazy salesperson on the phone to lower my home internet bill – this was a recent experience that sparked this post.


It suddenly makes sense to fly under the radar. If I can make one less flaggable move on my taxes then it will give me more peace of mind.

Since the overall goal is to have less income in the long run, I should have to worry less and less about optimizing my deductions.

Maybe I even want to build a great relationship with a CPA who will take on my taxes. Someone who is as meticulous as I am but who knows how much to push the IRS.

I would look for a CPA who specializes in tax-planning. I’ll let them wrinkle their brain with the math and run various scenarios to come up with the most cost-effective option.

Maximizing take-home pay

I could come up with fancy (and legal) tax schemes, divert money to family members, build elaborate corporate structures with dividend flow-throughs, and play the IRA recharacterization game. I won’t file complicated documents in order to save on some self-employment taxes.

I certainly am not trying to make more money. I am trying to generate a steady source of passive income, but trying to milk the last bit out of every paycheck – it’s simply not worth my time any longer.


I definitely won’t go through the headache of a backdoor Roth conversion. Not having the ability to hold separate traditional IRA’s and keeping track of each conversion is no longer fun.

I won’t move investments from one company to another to save on the investment costs if it’s just a few basis points. Sometimes my 401k doesn’t offer anything good but it’s a big headache rolling the money over to my IRA account. Having the majority of my investments in one location gives me peace of mind.


Is it better to buy the bag of oranges for $5 or pay the $1.75/lb for the loose ones? Dunno, don’t care anymore. I prefer the loose ones because I don’t have to throw out packaging – decision made.

I won’t wait to buy my organic coffee beans from the farmer’s market at $12/bag instead of the $16 I pay at my local coffee shop.

If I’m out with friends, I don’t care who pays, I don’t even care that much if I decide to get an extra drink. Vegan appetizer? Sure.


What I would save

Sure, I could run the math and play out each scenario to figure out which is the most cost-effective method. However, I didn’t account for my time in the past. During my wealth accumulation phase, time was what I wanted to have more of in the future – for that, I was willing to spend as much of it as necessary in order to have that luxury.

Now, it’s the future. I have accumulated my wealth, fortunately. I have built my skills and I have the free time which I always wanted. It is no longer an efficient use of my resources to do the math to figure out how much I would save for every single transaction.


What resources do you value the most?

One person may want the highest amount possible in their net worth statement. I have quite a few acquaintances whose plan is exactly that. Nothing less than $15 million.

Only 1 person in my group wants to have more independent time. She wants to live off of her investments and do as she pleases with her free time. In order to achieve this, she wants to save and invest just enough to replace her incredibly low monthly expenses.

Maybe you want to spend more time with your family. Maybe it’s a hobby you’d like to devote more time to. Or perhaps it’s a business you believe in that you’d like to build. Or, you want to have $100k coming in month after month.



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