Income taxes - Yuck!

Let’s take a break from our calculators, files, and receipts; aka IRS Form 1040; aka Income Tax Day; aka Yuck!  Next Monday is the deadline.  Are you ready?

Does it seem to you that no matter how we complete our income tax return; no matter how much expert advice we pay for; no matter what plans we put in place to lessen our tax impact for the next year, we still seem to be funding everything?  

On the one hand, I hate the immense level of government spending taking place at the federal, state, county, city and even homeowners’ master association level.  The media reminds us of the tremendous waste that seems to occur every day; every where.  And during an election year?  Well… talk about a “deduction”.  Yuck! 

On the other hand, when there is a natural disaster; a scientific breakthrough funded by a government grant; wider highways; or when we simply have a friend or family member in need and they receive support from a social services program, we are happy we live in America, true? 

Income tax time is one point during the year when we add it all up.  (Talk about “March Madness”. HaHa!)  Sometimes we like the results; other times?  Not so much.  It brings to mind that “new math”: 

The Income Tax has made more liars out of the American people than golf has. 

Will Rogers 

Question:  If I work from home and my dog barks when the FedEx driver arrives; does she qualify as my receptionist – and can I write-off the cost of her dog food?  No? 

All in all, last year was a very good year for me and mine. How about you and yours?  I suppose it depends on how we measure “good”.  Filing income taxes forces us to look at our W-2; 401k; bank statements; along with our mortgage interest; real estate taxes; and all of those numbers the IRS wants us to report.  That’s one way to measure “good” (or some years, not so good). 

When we look in the mirror, often much of our financial pains are self-inflicted: 

More and more these days I find myself pondering on how to reconcile my net income with my gross habits. 

John Kirk Nelson 

We heard growing up that money isn’t everything.  Do we have the same perspective as adults?  Hopefully so.  Our income, even when reduced by taxes, can still be more than enough for folks that are easily contented.  Unfortunately, the itch of discontent sometimes influences us to spend more than our means, yes? 

During these times of computations (and consumption), it’s not what we make that counts; it’s what’s left over.  Years ago we called it “net worth”.  Today, “line of credit” seems to have replaced the importance of net worth.  Like our federal government, line of credit means “debt”; and debt is not the same as net worth.  Are we worried?  Maybe we should think like rich people think: 

If you owe the bank $100, that's your problem.  If you owe the bank $100 Million, that's the bank's problem. 

John Paul Getty 

We are looking forward to this year – it will be our best year ever!  We can control how we define “best” by following the guidance of the renowned author and poet, Robert Lewis Stevenson: 

Don’t judge each day by the harvest you reap, but by the seeds you plant.                                 

Oh, and no – the seeds are not deductible. 

GAP 

When life gets tough we could get a helmet… or… we could leverage the peace and share the power of a positive perspective.

Cost vs. value…

What do Christmas trees, the memory of my Dad, and selling value vs. cost have in common?  (Really Gary?  Slow day?) 

Well, let’s pretend you’re the salesperson and I’m your prospect.  If you were selling me the value of your product/service, what value statements would you make?  Go ahead - take a moment - jot a few down.  We’ll come back to them. 

One of my favorite, childhood memories was my Dad taking me to “shop” for a Christmas tree.  His definition of “shopping” was to stop at Christmas tree vendors until he found one willing to give him one for free.  It would be a tree with broken limbs; cast aside; unsellable.  He’d also ask for miscellaneous branches laying about.  The vendors never asked why he wanted one for free.  Perhaps they were just happy to get rid of the scraps.  No value.  (My Mom would have been embarrassed!) 

Back home, using a drill and green string, my Dad would “rebuild” those broken, unsellable tree-parts into a work of beauty.  Ornaments and tinsel would hide the strings holding the whole thing together.  (My Mom was always uneasy when visitors got too close to our tree.) 

My Dad was a “Depression-Era Baby”; very cost-conscious.  No matter how hard the salesman tried to sell him the value of another, beautiful tree, my Dad would hold out.  The fact-of-the-matter was my Dad could afford a full-price tree.  His value lied elsewhere.   He searched by price because (A) he enjoyed the “hunt”; (B) he wanted to introduce me to business transactions; and (C) he took pride in the challenge of assembling a beautiful tree from various, discarded components. 

Fast-forward.  Today, I enjoy working with salespeople who face the selling challenge of cost vs value.  There are many reasons for this challenge.  Generally, I believe value is vague; varies by person; and very hard to quantify.  Consequently, prospects gravitate towards cost.  Cost is specific; objective; and doesn’t vary by person (without negotiating a big discount, of course). 

Salespeople inadvertently reinforce this gravitational pull.  Tools like “TCO” (Total Cost of Ownership) or “ROI” (Return on Investment) calculators make the situation worse.  Guess what these vendor-developed calculators draw the prospect’s attention to?  Two minutes from Victor Antonio:

Victor’s “The Value Equation” almost looks too good to be true, true?  And that’s the problem… this isn’t the prospect’s first rodeo.  The prospect knows exactly how to make the ROI look even better – reduce the denominator! 

Nowadays, we live in an era of affluence.  Nonetheless, no one wants to pay high prices – perhaps that’s why prospects pit salespeople against one another to earn their business.  Do you compete on price?  Your prospects hopes so: 

The Law of the Marketplace: 

If only one price can be obtained for any quotation, the price will be unreasonable. 

Unknown Sage 

Still, who doesn’t enjoy getting a deal? 

            It's not the cheaper things

that we want to possess

But expensive things

that cost a little less.                       

Rolf B. White 

Every time I see a prospect wanting an expensive thing for “a little less”, I smile.  I remember my Dad and our Christmas trees.  (I also know why my Mom never joined us.  She would have valued the full-price tree.) 

OK then, those value statements I asked you to jot down above...  it was actually a trick question.  In the real world, only your prospects can define their value.  The key question is, are you asking them? 

GAP 

When life gets tough we could get a helmet… or… we could leverage the peace and share the power of a positive perspective.