Sunday, June 20, 2010

Why CPA? Why Not?

Why did you become a CPA?

I have been asked several times over the past few weeks why I became a CPA.

Now some would say that it must be my love of the Tax Code! That is so far from the truth.

When I went to college (by the way I was really, really good in math) I majored in pre-med. Pre-med to Accounting?

Oh my, what a difference. One day while hanging out on campus, I thought, “Do I really want to spend the next 8 to 10 years in school of some sort while I work to become a doctor?”

The answer came back, “NO!” But what could I do to help people?

I thought about finance but wasn’t attracted to it (or should I say to the students that were in that major?). So, accounting drew me in.

To say it’s not about taxes isn’t entirely true. I do enjoy that aspect, but really it is about helping people and businesses grow. Even in this economy there are ways to help, from maximizing tax savings to helping restructure business operations.

Restructuring makes them more profitable and puts them in a position to take advantage of the market when the economy does turn.

This week I explained to a client, who is self employed, that we could take advantage of a SEP for his business and not only save taxes, but also put money away for retirement. I was able to show him that by investing approx. $18,000 in a SEP (which, by the way, he has until he files his tax return to fund), that he would save approx. $7,000 in taxes, at 39% return on his investment. I don’t know about you but I don’t

know where else can somebody get a 39% return immediately an investment.
His reaction was total amazement. None of his other tax professionals had ever explained about saving on taxes while getting the return on investment. His next question was how can he do more this next year? The answer is by planning earlier in the year--like now!

The first thing he did was schedule a meeting next week to start year-end planning for 2010. This is why I help people to save money on taxes and for retirement.

I love the people side of the business as a CPA, and I’m not one of those greenshade, nerdy types that are always depicted on TV. I like to call it the way I see it and advise my clients accordingly.

My new motto is Cool People hang with Cool People

There you go! CPA it is!

Wednesday, June 9, 2010

Foreclosures and Credit Scores

I had a client in this week that is getting ready to retire and owns a home which is severely upside down and had no way of being able to afford the home once retirement sets in.

Through the process of working with them, we talked about strategic foreclosures and the impact on them and their credit. I suggested they check out the 60 Minutes piece a couple of weeks ago on strategic foreclosures.

As everyone knows by now, of course any type of foreclosure is going to have an impact on one’s credit, but maybe there are ways to reduce the hit.

I gave this person an example of one my clients, for which we were monitoring their credit scores, that had a rental property go into foreclosure. At the time of foreclosure, last August, their score dropped by approximately 80 points from the reporting of the foreclosure.

But by the end of the year their score had actually increased to a point that was greater than where they started just before the foreclosure. By analyzing this we were able to determine that the money they were saving on the house payments which had been redirected to credit card debt, they were actually able to reduce their debt faster thus causing their scores to increase.

So if this could happen to one client why couldn’t the same thing happen to other people?

As I talked about in a past blog my personal belief is that the FICO system is antiquated and needs to be redefined, if people are going to be able to buy on credit again.

But in the meantime if we can all work on our credit the way this other client did then the credit hit may not be so bad.

I’ve been monitoring my own credit on a monthly basis and I have adopted a dispute strategy.

If at I anytime something appears on my credit that I didn’t authorize I am on attack mode and disputing the item. This week along I found that one of my lenders, did an inquiry on my credit. Bullshit to that and I disputed the action.

I am also doing this on my credit card, last week I noticed for the past several months, during tax season, which I usually don’t take the time to watch my credit card very closely, I was being charged approx. $35 per month from 2 recurring transactions.

You know from those online sites where you buy something then they automatically charge your account. I immediately thru my on-line credit card account disputed the items. And low and behold within 48 hours all the charges were reversed. And being the good PFC that I am, I immediately transferred the savings to my Frap Fund. Found money right!

But if we don’t watch our stuff this is the type of thing that can happen.

So keep on top of your account and save!!

Wednesday, June 2, 2010

Like KFC except without the secret spices

This week one of my clients came up with a new name for me. And no, it’s not bad. #shocker

I’ve been working with several clients on personal finance issues, from loan modifications, to credit card restructuring, to developing savings plans.

The name was Personal Finance Coach.

I kind of like that, it’s certainly different than being a soccer coach for one of my kids teams, which I don’t do nor do I want to do.

This Personal Finance Coach (“PFC”) resonates with me.

Unlike financial planners I don’t sell products nor do I profess that I am a certified financial planner.

What I do is take a look at real life circumstances and apply sound logic. My goal is to get my clients to develop their strategies on their own, thereby making them accountable and feel like the plan they come up with is theirs and not an edict from above.

I’ve taken my skills from the corporate world and applied them to individuals.

For me being a PFC is take my client’s overall picture and apply tax savings strategies, savings ideas and credit card debt reduction techniques. And right now in this stressful economic period to work with people who are having a difficult time trying to decide what to do with their home.

I enjoy being there for my clients. It feels like people more than ever need someone with not just a financial background, but someone who can empathize as well. Someone who understands how deeply emotional personal finance truly is.

If you aren’t satisfied with your current accounting firm, please don’t hesitate to check out our website or if you live local to Palm Springs and the Coachella Valley, call our office at 760-969-6499.