When I dashed off my inital thoughts last Monday about the IRS scandal, I didn't realize that this story would have the "legs" it has proven to have.
There are too many sub-plots and twists for even the most plugged-in of watchers to keep track.
But ultimately, I agree with what the publisher of the highly-respected, non-profit (IRS-approved since 1970!) "Tax Notes", Christopher Bergin, said in his pre-publication commentary:
The IRS is the accounts receivable center of the United States. Yet, since 2010 we've cut its budget by about 8 percent, which means that we've drastically cut training for those "low-level" employees who apparently don't like tea parties. At the same time, we dumped a large chunk of the new healthcare system on the nation's tax collector to administer [...] No other government agency touches as many citizens as the IRS. If it implodes, we all pay. [His full commentary can be found here: http://taxprof.typepad.com/files/139tn0951.pdf ]
So, as we move towards a revenue-collection system in our country that seems to be getting much more work on its plate, with a smaller budget, and filled with very human people, it's even more essential that you have a sherpa at your side who can help you fight your IRS battles, and ensure that things go as smoothly as they should (as they sometimes do, believe it or not!).
Not sure if you can think of anyone for that role? Well here's a number for somebody who's pretty good at it: (347) 673-6360
Well, we go from the ridiculous to the sublime sometimes here in the Real World, and this week proves the case. As we head into the summer marriage season, I thought it appropriate to pen (or type, as it were) my thoughts related to how finances can impact a marriage.
After all, financial peace may be one of the best gifts I could give someone...
Tony Khait, CPA, PFS's
"Real World" Personal Strategy Note
Khait, CPA, PFS's Rules For a Financially-Happy Marriage (Part 1 of 2)
An overwhelming number of failed marriages cite financial troubles as a major factor in their breakup. As sad as this is, it really shouldn't be too much of a surprise, because the way we use our time and money reflects our values.
And, of course, without a strong set of shared values, marriages drift apart. But dealing with finances together can bring a couple closer. After working with married couples for so long, I thought I should share seven principles I've seen for how you can build wealth and your marriage. (1-4 this week, and 5-7 next.)
June is the most common month for weddings, and there's no better time to establish the rules of a relationship than at the beginning. And every seven years you delay starting a savings plan cuts in half your ultimate net worth in retirement. Chances are you know someone who's getting married this coming month, so forward them this email ... it may well be more valuable than the check you write.
Work as a team on the budget.
Shared activities help you build and integrate your values and keep your finances in sync with the rest of your life. Couples that share church activities or philanthropic causes typically do better financially, because their common vision allows them to work together, instead of pulling in different directions. They do well, while doing good.
The more opportunities to forge shared values, the better the marriage team. Even the simple process of creating and adjusting a family budget provides a forum for discussion of what is really important to the family.
A budget gives you more freedom, not less.
Couples without a budget can, and often do, fight about every dollar spent. Every purchase is an opportunity for values and priorities to clash. But couples who have worked together on a budget are already in agreement on the big picture. Once the difficult decisions are made about what will help further the family's values, the specific purchases in each category are much less critical.
Couples with a budget do not get concerned about spending until a category goes over the budgeted amount. Having decided how much money the family can afford to spend on clothes for him and for her, it doesn't matter as much if he prefers lots of inexpensive clothes and she prefers a few nice pieces, or vice versa. A budget allows discretion and freedom to prevail, with cooperation and teamwork.
Always pay yourself first.
The best way to achieve your financial goals is by moderating your spending and staying on track with your savings needs. Only after you have saved several times your annual salary does the rate of appreciation become more important than the rate of savings.
To pay yourself first, set up an automatic monthly transfer from your checking account to an investment account where your contribution is automatically invested in a diversified portfolio. Even a small amount makes a big difference. Just five hundred dollars a month (that's just $6,000 a year) at 11.5% annual interest would compound to a million dollars by the middle of the 26th year. Money makes money. And the money that money makes, makes even more money.
(To be continued next week ...)
I do hope that if one marriage is served and preserved because of these ideas, that they will be passed along.
Tony Khait, CPA, PFS