OK. There’s so much going on that it has been hard to know where to start. So, pardon me as I literally roll up my sleeves. I didn’t need to roll them up, but that act let me think a little more before the typing begins. The world has gone weird. Today has also been weird for my personal finances, not all good or bad, but weird. Weird taxes. Weird stocks. Weird technology. And like most people, the weird world is affecting personal finances. Have you seen the hurt people are feeling to fill their tank? That gets touched, too.
Today I got the yearly call from a professional that has to start with paragraphs of caveats, clarifications, and questions. The suspense isn’t calming, but my tax accountant called to make sure she got the numbers and forms right. She couldn’t tell me the final number until she understood all of the details of my 2021 finances. In the end, she gave me good and weird news.
You can feel sorry for her. When I was retired my taxes were simple. One or two stock trades a year, nothing fancy, and I could fill out my taxes myself. After a while I started selling photos and books, so I stepped up to TurboTax, just to make sure. After I became a real estate broker (required disclosure: I’m a broker at Dalton Realty, Inc. http://whidbeyrealtor.com/ ) my list of jobs, or as friends call it my “lines in the water” (Real Estate Broker, Consultant, Writer, Speaker, Teacher, Photographer, Engineer, Entrepreneur, etc.) got long enough that I gave up and called in a professional. Oh yeah, and there was a modified pension, early withdrawals from my IRA, Social Security, and an emergency Home Equity Line Of Credit (HELOC). Oh yeah, and the regular stuff like health insurance, subsidies. It’s a ridiculous list. It was even more ridiculous because of the pandemic with its impact on my business slightly balanced with some stimulus checks, and aargh!
My taxes are no longer simple, which is ironic because almost all of the work is proving that I didn’t make much money in any of the categories. I think there’s bait on those lines in the water; but sometimes think there’s no bait on the hooks, or maybe not even any hooks.
When I lived off stock trades my tax rate was almost zero because I could balance gains against losses, and spent so little because I was frugal by choice before I was frugal by necessity.
When I was re-retired my income rose to where it was almost paying all of my bills for that frugal lifestyle, and I was startled to see my entrepreneurial efforts kicked up my income tax. It wasn’t because I had too much income. My taxes were higher because I had to pay a self-employment tax. Working hard to make my way was making my taxes higher and more complex.
Skip ahead to 2021 with a mess of accounts and unexpected changes, and she calculated that I will be getting back a few thousand dollars. Huh? Wha? Evidently, various subsidies and personally conservative accounting practices meant that, even with essentially only paying state business taxes I will be getting back a bunch of money. Put that checkbook back into my pocket – after paying her a well-deserved fee. If I’d filled out my taxes and got a result like that I would’ve guessed I did something wrong.
Federal taxes may follow some version of cause and effect, but they do not correlate with work harder, pay your dues, and know that the more you make the more you pay. I’m not complaining, but if I shake my head too much I might have to pay for a massage treatment because of a sore neck. Of course, I will be able to afford that.
I’ll get back to that story, but first I have to tell you this one, too.
I buy stocks. For most of my readers that is not news, but there are always new readers. This blog is old enough to drive and vote, and is based on my book, Dream. Invest. Live. The fundamentals of my approach to frugal finance are in there. This blog is about the more daily details.
Driving is part of being a real estate broker. The price of gas is hard to ignore. The war (or whatever Orwellian propaganda phrase is being used) drove up the price of gas. Bummer (major understatement all around) but supply and demand and sentiment drive prices in familiar, though unpredictable ways. Ah, but those clever (and rich enough) folks who could afford an electric vehicle aren’t directly affected. Hence, one of my investments.
Recently I bought stock in an electric vehicle manufacturer, Elecrameccanica ($SOLO). It was only a small position. Start small. Learn more. Buy more if feasible. Monday I decided to squeeze a bit more out of my IRA and add to that position. Log in. Check the price. Check the cash balance. And watch the OCD part of me decide to wait until Tuesday because I was $11 shy of being able to buy just enough to make my holding a nice round number of shares. Tuesday the stock goes up, again. Grump. Tuesday night I decide to loosen up and buy the shares from money held in reserve for things like taxes. I probably had enough for taxes, but if not, there’s my Home Equity Line Of Credit. Wednesday morning buy the stock – which promptly goes down.
Just to keep the weirdness going, the electric vehicle (called the SOLO), is an enclosed three-wheeled – vehicle? that sits in that style desert between motorcycles and sedans. I think it is innovative and interesting. Others may think it is too weird. But, with gas prices setting records, weird might be just right; especially because the price is about half that of most cheap new cars. A new SOLO is cheaper than my used 2016 Jeep. I think they’d make an interesting pair but: 1) I don’t need a Jeep and a SOLO, 2) I need the Jeep for several reasons, but only want the SOLO, 3) whatever emissions I could save by buying an electric vehicle is probably offset by the extra materials needed to make another vehicle. Besides, my higher priority is replacing my old two-wheeled human-powered vehicle with a newer two-wheeled human-powered vehicle, and No, I am Not replacing the human.
So, I buy the stock; and watch the price come down. Grumble. Despite that I want to rebuild my portfolio, and instead of having to go into debt to pay a few thousand dollars in taxes, I will be getting a refund that will let me pay off some debts, reinvest the money, and maybe get that bicycle. (Don’t worry. I’m frugal enough that I’ll probably wait for a sale, and sales for items in short supply like bicycles won’t be common in this economy.)
Almost everyone is watching history, while millions are too intimately experiencing its reality. The pandemic inspired changes. Give people two years of chaos to consider their options and we create the #GreatResignation, et al. Now, as if the world wasn’t weird enough, a war that is ridiculous even for a war has possibly done more to undermine oligarchs, tax havens, and anachronistic institutions. A year from now will probably be how long it takes for us to recognize hints of the New Normal. I don’t know if it will be a world of three-wheeled electric vehicles, or projectors embedded in smartphones, or major financial and investment reforms; but I suspect that yet again I’ll box up a private world of weirdness and deliver it to a professional who actually thrives in the world of taxes; and I’ll wait for that suspenseful call with checkbook in hand, just in case.
What a weird world it is. Congratulations to all who manage to maneuver their way through it.