Author Topic: Need help to feel better after chat with spendy accountant  (Read 5856 times)

AliEli

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Need help to feel better after chat with spendy accountant
« on: April 09, 2016, 01:12:03 AM »
Hi fellow MMM peeps :)

I was hoping that I can have some voices of reason to help balance out the chat I had with my accountant (and friend) yesterday.  He is great at what he does, and found lots of additional deductions that I wouldn't have known to claim :)  HOWEVER... while doing my taxes (I know, very late to be doing them now) he told me in a very authoritarian voice that I need "AT LEAST AU$1.7 million in super" before I can even think about early retirement.  He also told me that I can't live off less than AU$1000 per week, but ideally I should be making at least AU$1400 per week.

But, in reality..

Due to a workplace injury, I'm only making AU$600 most weeks.  It's very dependent on how much pain I am in, it's been like this since returning to work last year after 9 months off, and it's not going to get better in the near future.  I'm paying off my mortgage, and have no CC debt, and I have saved a little since going back to work in March last year.  I feel like I have been doing very well considering the situation I ended up in, but now I'm feeling pretty deflated. 

Can I have some reassuring voices that it's ok to not have huge overheads and expectations?  I normally find it easy to brush this stuff off, but it's more difficult to do it when the person saying it is a "personal finance expert".

I should also add that my accountant has 2 premium-branded SUVs and another car in the driveway (all his).

dreams_and_discoveries

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Re: Need help to feel better after chat with spendy accountant
« Reply #1 on: April 09, 2016, 01:52:42 AM »
I'd change to an accountant more in line with your frugal mindset - or even better, do your taxes yourself.

I've never known an accountant to offer such unsolicited advice, especially on income- so I'd definitely reassure you it's fine to have lower expectations and cut your cloth accordingly. As long as you have food, clothes and a safe place to stay everything else is a want, not a need.

mwulff

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Re: Need help to feel better after chat with spendy accountant
« Reply #2 on: April 09, 2016, 02:22:55 AM »
Your weekly expenses are entirely up to you. If you feel comfortable living on $100 a week then that is just fine. There is no minimum spending required to be alive and well.

I've heard that COL in Australia and Denmark are roughly comparable and I think we got get by on $2-300 a week if we really wanted to. So more power to you for living efficiently.

BTW, never take financial advice from somebody who drives an SUV. ;)

Spiffsome

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Re: Need help to feel better after chat with spendy accountant
« Reply #3 on: April 09, 2016, 02:24:35 AM »
Hi from another Australian mustachian!

The man is objectively wrong. He says you can't live on less than $1000 / week; you are currently living on $600 / week and even getting ahead! What he means is that HE can't live on less than $1000 / week and therefore he can't imagine how you can either.

Since you're not pissing away money on three cars including two 4WDs, your budgeting skills are better than his. Accountants are trained to be experts in preparing financial documents and understanding the tax laws, not on 'personal finance'.

marty998

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Re: Need help to feel better after chat with spendy accountant
« Reply #4 on: April 09, 2016, 04:55:55 AM »
Hi from another Australian mustachian!

Hi from another Australian mustachian who happens to also be an accountant...

Your accountant has a view, but it doesn't mean that view applies to your situation.

Having $1.7 million locked away in super won't help you retire early either. No point having super when you want to retire before 60.

You're doing well and fine. Anyone paying off an Australian mortgage on $600 a week is likely to be someone who knows how to manage their own finances.

Adventine

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Re: Need help to feel better after chat with spendy accountant
« Reply #5 on: April 09, 2016, 08:17:47 AM »
You need to find a different accountant, who is NOT also a friend, and who therefore won't feel entitled to give you unsolicited condescending "advice."

Cpa Cat

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Re: Need help to feel better after chat with spendy accountant
« Reply #6 on: April 09, 2016, 08:42:40 AM »
I give my clients advice all the time that they don't listen to. Most of them keep coming back and keep ignoring my advice.

"Pay your taxes."
"Pay your payroll taxes."
"Stop spending all of your money and pay your taxes."
"You need a budget."
"You need to start saving for retirement."
'You need to enroll in health insurance."
"Review your tax return before signing."


This is all potentially condescending advice that my clients aren't interested in hearing. Your accountant is giving you the best advice he knows to give.  I expect his high number largely has to do with how many retirees he's seen struggle, financially. Your accountant isn't Mustachian and nor are 99% of his clients. His advice probably fits the rest of them.

Your accountant gave you something to think about. It concerned you enough that you came here to get second opinions. You decided to do more research on the issue. If he had been right, you'd have time to re-design your plans. If he's wrong, then you move on feeling more confident than ever in your financial plan.

BlueHouse

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Re: Need help to feel better after chat with spendy accountant
« Reply #7 on: April 09, 2016, 08:52:17 AM »
I agree that your accountant is telling you what he himself believes to be true.  In this situation, I think it's important for you to share the wisdom of MMM.  Let him know your financial philosophy and help open his eyes to this alternative method of living.  Don't try to convert him, but do give him the chance to understand that there are different strokes for different folks.   Once he has an understanding of it, he may be able to offer useful advice for your situation.  If he cannot get on board that this could work, then it will be time to find someone else. 

I was pleasantly surprised to find out that my accountant understands lifestyles from very spendy to very frugal, and only when I opened up and told him my real goals (not just accumulate, accumulate, accumulate), did he start providing some advice that fit my situation more closely. 

MrDelane

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Re: Need help to feel better after chat with spendy accountant
« Reply #8 on: April 09, 2016, 08:57:41 AM »
I would add that an accountant and a 'personal finance expert' are not necessarily one in the same.

One of my first jobs years ago I worked for a husband and wife who were accountants.  He was one of the hardest working people I've ever met - and I assumed, naively, that it was simply his motivation and work ethic that make him work so hard. 

I'll never forget the day he started venting to me about how they weren't bringing in enough money and admitted that debt payments were taking up the majority of their income.  I naively responded with "but you're both accountants.  I assumed you were keeping close track of all your money."

I'll never forget his response:  "Oh we know exactly where every single penny goes.  Just because we can account for it doesn't mean we're doing a good job with it."

Not surprisingly, I was let go a couple of months later because they could no longer afford to pay me.

Adventine

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Re: Need help to feel better after chat with spendy accountant
« Reply #9 on: April 09, 2016, 09:45:12 AM »
I give my clients advice all the time that they don't listen to. Most of them keep coming back and keep ignoring my advice.

"Pay your taxes."
"Pay your payroll taxes."
"Stop spending all of your money and pay your taxes."
"You need a budget."
"You need to start saving for retirement."
'You need to enroll in health insurance."
"Review your tax return before signing."


This is all potentially condescending advice that my clients aren't interested in hearing. Your accountant is giving you the best advice he knows to give.  I expect his high number largely has to do with how many retirees he's seen struggle, financially. Your accountant isn't Mustachian and nor are 99% of his clients. His advice probably fits the rest of them.

Your accountant gave you something to think about. It concerned you enough that you came here to get second opinions. You decided to do more research on the issue. If he had been right, you'd have time to re-design your plans. If he's wrong, then you move on feeling more confident than ever in your financial plan.

The kind of advice you give to your clients is sensible and Mustachian-oriented. The advice the OP's accountant is giving is the opposite.

zephyr911

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Re: Need help to feel better after chat with spendy accountant
« Reply #10 on: April 09, 2016, 09:45:50 AM »
Your accountant's vehicles alone may be costing him more than you spend in total. As has been said above, his own situation shapes his advice. Most of us here could retire in almost any city in the world on half the NW and income quoted, because we've tested ourselves and learned to be happy with fewer material things. Don't stress. Just accept the advice and the perspective, and keep following your goals.

undercover

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Re: Need help to feel better after chat with spendy accountant
« Reply #11 on: April 09, 2016, 09:52:41 AM »
When someone tells you that you should be doing "X" instead of "Y", do you always need outside validation to verify that "Y" is right for you?

FIRE47

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Re: Need help to feel better after chat with spendy accountant
« Reply #12 on: April 09, 2016, 01:30:55 PM »
Hi fellow MMM peeps :)

I was hoping that I can have some voices of reason to help balance out the chat I had with my accountant (and friend) yesterday.  He is great at what he does, and found lots of additional deductions that I wouldn't have known to claim :)  HOWEVER... while doing my taxes (I know, very late to be doing them now) he told me in a very authoritarian voice that I need "AT LEAST AU$1.7 million in super" before I can even think about early retirement.  He also told me that I can't live off less than AU$1000 per week, but ideally I should be making at least AU$1400 per week.

But, in reality..

Due to a workplace injury, I'm only making AU$600 most weeks.  It's very dependent on how much pain I am in, it's been like this since returning to work last year after 9 months off, and it's not going to get better in the near future.  I'm paying off my mortgage, and have no CC debt, and I have saved a little since going back to work in March last year.  I feel like I have been doing very well considering the situation I ended up in, but now I'm feeling pretty deflated. 

Can I have some reassuring voices that it's ok to not have huge overheads and expectations?  I normally find it easy to brush this stuff off, but it's more difficult to do it when the person saying it is a "personal finance expert".

I should also add that my accountant has 2 premium-branded SUVs and another car in the driveway (all his).

As a young accountant myself I have to point out that this does not make you an expert on personal finance. Most accountants do not even deal with personal finance or even personal tax at all. If you work in personal tax or with small owner managed business sure its crucial to have a working knowledge of personal finance to do your job properly and most accountants just by their nature have a personal interest and aptitude for personal finance but it is usually another person who handles the pure personal finance and investment aspect of our clients.

A lot of accountants who own their own practice or are at a partner level can be very spendy themselves although that might just have to do with the fact that their incomes are very high perhaps they still do save a lot. Maybe the 60-70k car is the mustachian choice on their salary from their perspective.

The other thing is we are used to dealing with clients who have a lot of money - usually doctors, dentists, small business owners who are often former blue collar types and now have a lot of money - these people all generally like to spend. The type of people who require an accountant generally have something going on that suggests they have a higher income. A lot of clients are people with multi-million dollar companies. These people all like to spend and Im sure your accountant like most of us has seen what happens when these people are not given a little conservative advice- usually not putting enough aside to pay their tax bill or for when the good times end and the business isnt pulling in the big money anymore.

« Last Edit: April 09, 2016, 01:33:52 PM by FIRE47 »

AliEli

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Re: Need help to feel better after chat with spendy accountant
« Reply #13 on: April 12, 2016, 01:34:01 AM »
Thanks for all the replies :)

I had big ideas and plans before the injury, and I'm still adjusting my mindset.  I'm feeling frustrated about my finances and not being able to increase my income at this point and this accountant hit a nerve.  I tried to explain the 4% rule, but gave up when he explained clearly that it wasn't possible.  I'm pretty certain that I'd be able to live happily on AU$20K or less - are there any Aussies doing that?

cakie

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Re: Need help to feel better after chat with spendy accountant
« Reply #14 on: April 12, 2016, 01:55:19 AM »
It's perfectly possible for one person to live on $20k comfortably. I spent about $16k the year I lived in a share house in Melbourne before I started sharing expenses with my partner. I had high medical bills, but ate a couple meals a week at my mum's, so I figure it evens out.

Now I live extravagantly with my SO on ~$36-40k (combined). Regional area = ridiculously cheap rent, but higher food costs.

Your accountant is trying to do the right thing - I see lots of people in their 60s who have no concept of how much they spend. Sure, they might have high six figure savings, but they will get into trouble if they keep spending at a high level when they retire!!

Sent from my Nexus 7 using Tapatalk


happy

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Re: Need help to feel better after chat with spendy accountant
« Reply #15 on: April 12, 2016, 07:35:52 AM »
Quote
I'm pretty certain that I'd be able to live happily on AU$20K or less - are there any Aussies doing that?

Yes, there are several singles here who do that..Nudelkopf, Marty998 come to mind immediately but there are probably others.  Just as a benchmark, the old age pension pays about 21k for a single person living in their own home: so thats what the gubmint thinks is a basic level.   I still live with my uni age kids, but  I estimated my baseline living expenses if I were on my own to be around that figure.  So yes, absolutely its possible.

1.7mill, would provide you with 68k a year to live off… a really non-mustachian amount. Face punch worthy for a single if you ask me.

You are doing really well to live within your means, pay off mortgage and save a little on $600pw…keep doing your best…and forget about 1.7mill.