At 22, I was already a father of two and an economic consultant at the world’s largest tax firm. I had worked my butt off in school, finished an internship at an investment bank in New York City, and I was finally making the money I desperately needed as a single dad. In my mind, I had arrived.
Part I: The Good Life
After long nights and hours serving high-net-worth and Fortune-500 clients, I quickly realized how sophisticated these clients were about their accounting and about the world of tax. It was my kind of bag. I found I could add value modeling tax liability and drafting memos on potential tax-savings via international structures. I traveled the world visiting several tax havens along the way: Ireland, Netherlands, Singapore, and Malta. I didn’t even know Malta was a country.
And all the while building a network, a portfolio of clients, and expertise highly coveted in tax strategy.
And all while my clients strategized around their tax bill, it hit me that most of us — everyday people who truly need the money — just accepted it. But hey, life was good. I was jet-setting across the world, getting a paycheck, and had audiences with Controllers and VP’s of tax, treasury, and finance. Best of all, they liked me. They really liked me.
I was rolling with the finance, accounting, and tax muscle now. In a world where you owned numbers and projections. And I loved it. Since I was broke in college, working 2 jobs, I knew exactly how I would spend the $40 left in my bank. I knew how much I would have next week and what my costs were. I penny pinched because I had to. And in some ways, it was the same world with more zeroes and less penny-pinching. Money was spent as long as the margins were good.
It was clear to me and still is clear to me, that many of my peers — smart people I care about — lacked a solid understanding of how to track numbers. And worse yet, I was fully aware that even fewer people understand how to change their financial and/or tax reality.
But who can you blame anyone born in the post-war era? From the Boomers to Generations X, Y, and the millennials — these are generations who were taught skills for the workforce, not for life. I shrugged it off, ‘It is what it is.’
Did I care that so many people didn’t even know how to set up a budget, let alone strategize around their numbers? I didn’t, not really.
Part II: This Changes Everything
Things were going great. I had everything figured out. Home for dinner on Thursday, Friday was pizza night with the kids, soccer games on Saturday, and back to it on Monday.
But everything changed when my mom got breast cancer in 2014.
The doctor recommended a double mastectomy, a very invasive surgery with long recovery times for women her age. With her health on the line and medical bills skyrocketing, I had to shift my focus and consolidate the family.
At that time, getting her better was number one and finances took a distant second. Thankfully her operations went well, and she got better. It was a tough journey, but to this day, she is 100% cancer free.
But what didn’t go away was the financial burden that came with my mom getting sick. Not only did she have medical bills and regular expenses, but she had no savings. Except for the small amount I paid her monthly for helping with the kids when she was healthy and a small part-time job at her church, she had no other income.
I was reminded of Barack Obama’s adage that every American is just one medical emergency away from bankruptcy. Because it’s true.
Her finances were always a mess. Up until now, I was able to insulate myself from her financial problems because I told myself she had just enough to cover her daily expenses. But now the chickens had come home to roost. Her medical bills skyrocketed and the scales had tipped.
“There were no savings for a rainy day, and it was pouring”
There were no savings for a rainy day, and it was pouring.
But I had a plan. If there was anything I learned from being a teenage parent and now as a working, single dad, it was that incredible momentum can come from incredible lows.
These are the times where you are pressed to find answers, and you buckle down and find them. And that’s exactly what we did.
I got numbers-focused. In Excel sheet, I projected what my income and liquidated savings and equity accounts could cover and for how long. There were no “rosy projections” (the term used at my firm for optimistically and conveniently projecting above-average returns), this was the real deal.
I went across every expense for all of us, line by line, and cut everything I could. I sold my Nissan that I let my mom drive. I reluctantly cashed in on loser stocks I was hoping would turn around. And I changed our lifestyle.
The plan was that I, along with my kids, would move in with my mom and my kid sister, into a tiny 2-bedroom apartment. With five people in the house, I slept on the living room couch for two years. And I don’t mean a pull-out couch. I slept in a recliner sofa that didn’t even recline to flat.
I’d slept on first-class seats more comfortable. I drove a brand new Audi but didn’t have my own bed. The irony.
And as my Mom recovered, she helped me with the kids so I could work late. I use my bonuses to catch up on the bills and covered rent and utilities.
I kept as close to the budget as possible and worked late in the office so I could order overtime dinners to save even more. My Excel budget had now evolved into a more sophisticated model with long-term cash balance goals, trackers, and controls to catch variances from budget. I instituted automated savings with auto-debited savings to pay back my E-Trade account. We slashed expenses and lived lean. Financial discipline had arrived.
“But before things got better, they got worse.”
But before things got better, they got worse. As a part of our financial game plan, I did her taxes. We calculated a sizable refund, and Mom was counting the days for the payout. Big payday right?
Instead of a check, the IRS sent us a notice stating they would hold the return until she could show that she didn’t owe taxes during past five years because she hadn’t filed her taxes! Imagine that, no tax return filed going back five years. Better yet, the IRS assessed tax for every year based on the assumption that she had zero deductions in those years (no standard deduction, no exemptions) and therefore she owed a sizable amount in taxes. I was infuriated. But then again, it wasn’t the IRS’ fault. I had to file my mom’s past five year taxes and negotiate with the IRS on her behalf.
I ended up helping my mom file those years and got her additional refunds. The IRS pushed back, but ultimately, I learned enough about procedures and the regulations to handle her situation. I was after all, already dealing with the IRS at the highest level in my current job. It was a huge relief to get everything done.
Then, like the changing of seasons, things slowly got better. My mom got back to exercising and we were able to go on a family trip together. Financially, she had savings, retirement tax planning, health insurance, and even a registered small business for nannying. Best of all she had her health and we had her. And it was seeing her get better that inspired me to think about her future, and that of my own kids, and what this all means.
Part III: Reflections
First of all, she is going to live a long, long time. I truly believe that. The question, I was left with was the one I was toying with anytime I thought about personal finance.
After that tumultuous year, I found myself asking, ‘Do numbers even matter’? It was clear to me that while taxes and finance are NOT more important than livelihood, but they are important to livelihood. My family and I had gotten focused on our finances because of crisis, and maybe we were just lucky.
What would have happened if our finances really did fall apart?
What would happen to those you love and your happiness if your finances fall apart?
I personally don’t know, but I’m grateful for the financial literacy I was able to tap into and I credit the Fortune 500 approach I had honed for helping us reverse engineer survival.
Our entire family was put at risk when my mother got sick and we survived it.
But it’s not hard to believe that others were not so lucky. Today, most bankruptcies are related to medical debt and the United States is known for being a nation dependent on consumer spending, and by extension, personal debt. Two-thirds of GDP is driven by consumer spending (a trend that shocks global economies and markets anytime that trend is bucked). The world banks on us to be in debt. And it’s a trend that has driven insurmountable debt at personal and national levels.
But my point is not about debt. It’s about livelihood. It’s about a deeper consciousness that we need to tap into. And it’s about strategizing around the resources to get there. It’s about thinking beyond the next paycheck, and beyond just covering expenses. It’s about knowing how to realize tax benefits, increase cash flow, and minimize tax.
After seeing Fortune 500 companies and now very successful small businesses thrive, I can say that I still haven’t seen the silver bullet to financial solvency and strength. It’s like asking an Olympic Athlete to tell you how to do what they’re doing: put your goals on a whole other level and keep working at it. Work at it until you tell yourself to stop, then push beyond that point and tell yourself you’re only 10% there.
What I know now is that wealth and livelihood are about longevity. It’s not about living every day like it’s your last, it’s about living every day like you’re going to live it for the next 10 years. You can re-evaluate if you’re still going where you want to go along the way, and revise as necessary. The plan will change but the goal should not.
The point here: whether it’s health or wealth, you have to look forward and plan so that tomorrow brings you one step closer to a better and sustainable long-term goal.
Part IV: Going Long
If we want to win, we’ve got to play the long game, with an eye on who we want to be over the next 5, 10, 50+ years. Because you’re going to live that long. Just like my Mom.
The question is, ‘Who are you going to be along the way?’
And today, I would add to that question, ‘What numbers do you need to hit to get there?”
It is true that we are trained for work, and not for life. But that doesn’t mean that we can’t work toward the best life we can imagine. But to get there we have to know numbers. Our current numbers and our future numbers.
And that’s the why behind Tax Hack.
I started Tax Hack to join that discussion with people who don’t consider themselves “money strong.” To create numbers-focused visions, with the next generation of business leaders and entrepreneurs.
The boomers have had their day.
Our nation is plagued with debt.
Our families and loved ones are silently carrying financial burdens and living with chronic financial distress.
And if we leave those problems unaddressed, if we don’t set better number-focused goals as a country, as a family, as entrepreneurs and business leaders, our generation too, will miss the mark of financial and economic progress.
I truly believe that if we as people can change our approach to numbers, we can change how we live. If we can get numbers-focused, we can change how we do business, how we vote, and how we budget personally and as a nation.
There is change to be made. I hope that you help us make it.