We Talkin’ About Practice

Opening Gate:  Wow! What a tax season. Proud to say the effort put in by our team last summer, fall and winter to prepare and get ready for the monumental changes imparted by the “Tax Cuts and Job Act” really paid off. Without a doubt, this was our smoothest and most successful tax season yet – which could not have been the case without the huge amounts of care and effort put in by our team, so my hat is off to them.
In keeping with our theme, within this post I’ll try and interject a little personal reflection – and not have it so technically dominant – but rather, hopefully, a human experience. My goal is to put one of these out the 15th of each month. The intent is to hit areas that are interesting to me, and thereby, my clients, friends, and community by association.

Buoy 1: Quote that pertains:  “When you fail to prepare, you’re preparing to fail” – while the origin remains anonymous (often credit to Benjamin Franklin, but not confirmed) – Coach John Wooden used the adage in a speech in 1977 at Texas Tech University. Coach Wooden would preach preparation and practice, which he reflected was his favorite part of the game. I’m prepared to watch what should be a terrific series between the Boston Celtics and top seeded Milwaukee Bucks. Will they be able to contain the “Greek Freak”?

Buoy 2: Since we are entering the “Spring Market” for real estate here on Cape Cod, I found it interesting when the Wall Street Journal reported that:  10.6% of homes sold in during the 4th Qtr of 2018 had been owned less than two years. That’s the highest level of “flips” since early 2006, the peak of the previous housing boom. “Flippers” made a median profit of 23% above increases in the housing market, nearly three times their gains in 2006.

Buoy 3: In another major economic sector, the Auto Industry is seeing slow downs. Bloomberg Businessweek reported that Global car and truck sales stood at 94.7 million in 2018, down 1 million from 2017. The U.S. contributed to 17.27 million of those sales in 2018, however, a sales slowdown is the concern in the U.S. for 2019 as reported by CNBC in their coverage of the New York Auto Show. Correlating data?… in 2016 only 26% of 16-year-olds earned a driver’s license, down from almost 50% in 1971.

Buoy 4: Staying within the auto industry – a record number of Americans are dangerously delinquent on their auto loan payments. As reported in the Washington Post, about 7 million people are three months behind on their car bills. That number, passed the peak  set after the recession in 2010. In 2008, preceding the worldwide economic crash, a mere 5.5 million Americans couldn’t pay their car note. With total  auto debt only coming to about $1 trillion (home mortgages are 9x as much) this probably isn’t enough to tip the scales and lead to economic collapse, but transportation is the second-largest expense for American households, behind housing, and the debt thereon is certainly one that gets paid before others because people need their cars and trucks to get to work, so this can be seen as an indicator of larger future economic problems.
More and more of transportation cost burden is being financed with debt instead of savings. Some 85% of new cars and half of used cars are being paid for with loans and 42% of auto loans now last 6 years or longer. Part of the growth in auto debt comes from the rise in vehicle prices – the average price of a new vehicle is now over $37,000 compared with under $28,000 just five years ago – according the auto research firm Edmunds. Further, with the average amount financed being more than $31,000, consumers are also subject to higher interest rates – a typical car loan in the first quarter of 2019 had an interest rate of over 6%, up from 5% just a year ago. Who doesn’t love easy and available credit luring us to overspend?!

Buoy 5: When asked why people like their accountants, often times their is a tongue and cheek response of “he/she keeps me out of jail”  that’s funny, hahaha. But seriously…could you go to jail? In February New York art dealer Mary Boone was sentenced to 30 months in prison for evading more than $3 million in taxes between 2009 and 2011. However, such prosecutions are uncommon. In 2017 – 584 people got prison sentences for tax evasion (69.4% were men).

Buoy 6: Now that you’ve finished your taxes what should you do – Don’t put away those financial records just yet! Now is the perfect time to plan for the future – whether that is short or long term budgeting for you business; tax, cash flow and retirement planning – having the documents readily available and the freshness of mind can be very helpful. The tax return gives a great starting point for financial planning.

Closing Gate:  I would love any feedback you have to offer – good, bad or ugly – use the comments, the contact form or simply shoot me an email. Hope everyone has a great month!