Day 183 | $67,506 paid | $23,211 till freedom
I’m getting $1,872 back from the Fed! And the Federal E-file was free! And of course, Texas has no state income tax! So many wins, I don’t even know where to start.
I was budgeting to get about $1,300, so this is a big win. I actually owed about $600 based on my W2 alone, but I swung it in the positive direction by about $2,400 by adding in my donations, mortgage interest, property tax, and the $4,500 loss I realized when I cashed in my stocks at the beginning of this challenge to put a $20k+ dent in my debt. It would have been nice to claim my student loan interest, but I’m over the income ceiling.
Doing this year’s taxes was a considerably more complex process than it was last year when I just had a W2, mortgage, donations, and some interest and dividends from stocks. This year, I had Turbo Tax guide me through the steps for taxing the (nominal) income the landscaping business earned in 2011 and the not-so-nominal rental income from my roommates as well as the write-off from the realized losses on the sale of stock.
When all was said and done, I had Turbo Tax PDF my tax return plus key calculations and worksheets:
- Form 1040: Individual Tax Return
- Schedule C-EZ: Net Profit from Business (Taxpayer)
- Schedule D: Capital Gains and Losses
- Form 8949: Capital Gains and Losses
- Schedule E: Supplemental Income and Loss
- Form 8582: Passive Activity Loss Limitations
- Form 4562: Depreciation and Amortization
- Schedule D AMT: Capital Gains & Losses AMT
- Qualified Dividend and Capital Gain Tax
- Capital Loss Carry Forward Worksheet
- Tax Payments Worksheet
- Schedule E Worksheet (multiple)
- Carryover Worksheet
All told, the PDF came to 25 pages this year as compared to 12 pages last year!
I could have gotten closer to $2,600 if I hadn’t claimed my rental and side business income. And believe me, I was very, very tempted not to. After all, why in the world should the government benefit from my having to deal with roommates? How did they facilitate those transactions? What right do they have to that money? Of course, it’s the same reason they have the right to my salary, but I’ve become so ingrained to pay income tax on my salary that I’m used to it. In the case of my rental income, it’s just harder for me to justify it.
However, there’s no Walden Pond in sight and the law’s the law, so I begrudgingly entered the $3,400 or so of rental income and $428 of business income in 2012 and took a ~$750 hit.
I honestly don’t know the reason for being 100% honest on my tax return. It would have been simple to score some extra cash by just not telling the government about my rental and side biz income. The odds of getting audited are so, so small. However, this blog does expose me to slightly more risk than if I were just paying down this debt on the downlow and not making a public broadcast out of it. Did that scare me straight? Or was it my own moral code?
Or was it the MBA Oath, the creation of which was led by my sectionmate, Max Anderson, that I signed back in 2009, shortly after graduation?
The MBA Oath is similar to the Hippocratic Oath. Max, recognizing that business leaders, like doctors, have the potential to do real harm to people’s lives, figured business leaders should also have to make some sort of professional promise to do no harm. And thus, the MBA Oath was born. It’s basically an oath for business leaders to not be complete jackasses, and to view their business and the world at-large through a balanced set of lenses: profit, ethical, and legal.
For me, signing it was a no-brainer.
But am I living the MBA Oath? I bring a flask to bars on the weekends. Assuming that the flask holds five drinks (8 oz @ 1.5 oz/shot), and an average drink costs $5 in an Austin bar, then I’m “stealing” $25/weekend. I typically go out once a weekend on average. So far, I’m at week 26. So I’ve “stolen” $650 from bars. And I still have at least another 8 weeks to go, so let’s just call it an even $850.
I laughed off the flask practice when I started it by waving my hands and saying that the bars could afford some leakage after all the thousands of dollars I’ve paid them over the years: 52 weekends * 4 years * 5 drinks/weekend * $5/drink = $5,200. But is that fair? Can the government afford to experience some leakage if I don’t claim my roommates’ income? Does $850 over eight months make a difference to the likes of Dogwood and Ranch, who gross thousands in a single night? Probably not. Does my $3,400 in taxable rental income make a difference to the US government, which takes in a billions in taxes every year?
This logic is fine fine on a certain level, but if everybody does it? Anarchy.
And what about the Netflix account that I’m using? It’s definitely not mine. So, what is that, another $20/month, or at least $160 total?
I’ll have stolen a solid grand or more by the time is all said and done.
I wrote in the About section of this blog that I would “do everything in my power–short of lying, cheating, and stealing–to pay down this debt in the next ten months.” Well, I don’t believe I’ve lied or cheated, but I’ve clearly stolen. I’m not proud of myself. I’m not going to stop right now, but I definitely won’t be using my flask after my debt is paid down. And I’ll tip extra.
Speaking of Netflix
Never in my life have I watched three seasons of any hour-long show in as little time as I’ve watched the first three seasons of Breaking Bad. Oh, my goodness. Now that is some solid, solid viewing pleasure.
Once again, questions of self-awareness loom large here: I don’t know if I like the darn show because it’s action-packed and something mind-blowing happens in every episode, or if it’s because I identify–on a certain level–with the protagonist, Walt. For the uninitiated, Breaking Bad is about a chemistry teacher who has a wife and a kid and is diagnosed with cancer. Without savings of any sort to leave behind to support his family in his seemingly-inevitable death, he cooks meth–but not just any meth. No, he cooks the purest of the pure, so pure that it carries a premium in the otherwise commoditized trade.
While Walt’s moral compass is clearly lacking calibration, a part of him can be forgiven due to the selflessness of it all. A certain element of this permission we grant him, however, is pressure-tested when he starts cooking on an even grander scale after he goes into remission.
Harvard grad flasking it up in the bars and sharing a Netflix account to pay off his student loans early vs. otherwise-upstanding chemistry highschool teacher cooking meth for personal gain. Shoot, sounds like AMC needs to add a show to their network. Call it Crimson Criminal or something cool like that.
I should probably take my name off the MBA Oath. Max, strike me from the record. I better call Saul.
My birthday was fun–my friends and I went to Kasbah, Hangar, and Haven on Saturday night. Good friends, good times.
My 28th birthday was a bit more of an affair: bar-hopping with 15 of my closest friends in a black stretched Hummer limo with a decent bar inside.
Did I have any less fun during this year than last? Not really, it was just a little more low-key. I was still with friends, and I actually had a greater appreciation of the free drinks this year than last. I’ve always been a grateful person, so when my friends bought me drinks last year, I was still very thankful and appreciative. But this year, those feelings were definitely amplified.
That being said, I’m really looking forward to when I can give again. They say that giving is better than receiving, and I have to agree.
The Positive Attitude
It’s amazing how easy it is to have a negative attitude after having one for six months or so. A positive mindset is a muscle like frugality. I’ve gotten pretty good at flexing my frugality muscle and it’s gotten extremely strong, but the muscle for my positive outlook on life? Sadly atrophied. However, I’ve become acutely aware of the tone and level of optimism in my thoughts and words lately, and I’ve already substantially changed up my mindset. I already feel a lot better, and I can feel people react positively to my positivity. It makes a huge difference. As my friend told me shortly after I posted Affirmation, “It’s amazing how contagious a positive attitude can be–only done by the courageous.” So true.
And on that note, I’ll end with a section that hopefully does not become a staple of this blog. This section is and will always be titled “Challenges and Setbacks.” I will briefly list things that are bothering me in my challenge to pay off $90k in ten months or setbacks I’ve experienced that threaten to impact my ten-month timeline. In an attempt to maintain a positive attitude, I won’t elaborate or dwell on them. I’ll acknowledge them, share them with you, try to focus on the positive, and move on.
Challenges and Setbacks
I got a call from the lawyer I retained to handle a ticket I got back in February 2010. He finally talked to the prosecutor who said he’ll dismiss the first moving violation (unsafe lane change) for $255 and let me take Defensive Driving ($20) to dismiss the second moving violation (speeding).
I really shouldn’t have shown off in front of my Porsche-driving boss (and a cop I didn’t even see) when I was on my motorcycle heading north on Mopac, three days after the end of the three-month suspension of my license for getting four moving violations in six month.
The Bright Side: At least the lawyer’s fees were paid back in February when I hired him. And it appears I’ve finally gotten over my speeding addiction. I haven’t been pulled over once since getting that ticket–I went from getting pulled over six times (a couple were warnings) in six months to not being pulled over in twelve months.