The Tax Attic with Jerry Coon — March 11, 2010

Five steps to financial security

The income tax business is one of eternal learning. If it’s possible to keep your brain young by always learning, tax professionals’ brains should never get old—tired, maybe, but not old.

Jerry Coon, Enrolled Agent

Tax laws change constantly, both at the federal level and at the Michigan level. We get e-mail newsletters from a variety of sources, and it seems that these newsletters always have new information. It’s not unusual to get 20 pages in a week, explaining the latest changes and clarifications. However, we also read newsletters and books, attend seminars and conferences, and watch DVDs and videos that don’t have one new thing in them. They are all about current and old laws. It’s all about learning more about these current and old laws, so that we can help our clients navigate through our very complicated tax system.

I read in one of those newsletters that there are currently over 14,000 pages in the Internal Revenue Service’s publications and regulations. I can’t verify that figure, but I also don’t doubt it for one minute. I have a reproduction of the 1913 Form 1040 hanging on my office wall. That first Form 1040 was a grand total of one page. The attachments and instructions are a grand total of three more pages. We have gone from four pages up to a potential 14,000 pages in less than 100 years and, unfortunately, the 14,000 pages seems reasonably accurate to me.

Some of those 14,000 pages deal with Individual Retirement Accounts and retirement accounts. There are many experts in the field and there have been a myriad of books written on the subject.

One of the country’s foremost experts on the topic of IRAs is Ed Slott. He has written a multitude of books, gives seminars throughout the year, and writes one of those newsletters I discussed earlier. Mr. Slott is a proponent of education, education, education and more education, not only for tax professionals but also for taxpayers. As taken from his book, “Stay Rich for Life, Growing & Protecting Your Money in Turbulent Times,” Ed’s five steps to financial security are as follows:

1. Know who you are and where you are.

2. Educate yourself.

3. Avoid mistakes.

4. Don’t be shortsighted.

5. Take action in small, consistent steps.

You can’t make these five steps work without educating yourself or, perhaps to put it another way, by doing these five steps, you will educate yourself.

Know who you are and where you are—By working through this step, you find out what type of person you are, what type of investor you are, and you will know exactly what your situation is at the current time.

Educate yourself—Discovering the items in the first step will automatically lead to the second step, and you will become educated. If you are going to hire someone as an advisor, you will do a better job of picking that person because you have knowledge. If you decide to manage your assets yourself, this education will give you a fighting chance of making good choices.

Avoid mistakes—As your knowledge in this important area grows, your choices become better and you will avoid making mistakes. In these turbulent investing times, it is absolutely critical that you don’t make a mistake. His definition of a mistake would include investing in something that is too good to be true. Most Ponzi schemes entice people to invest in a product that is too good to be true or entice people to invest with a person who is too good to be true. Neither is a good reason to invest. As you become educated, you stand a better chance of not making that crucial mistake.

Don’t be shortsighted—By taking the long-term approach, you will make better decisions for the long term and you will avoid the short-term mistakes as noted in step three. Education will cause the thought process of making decisions to be based on the long term.

Finally, step five says to take action in small, consistent steps. Very few people strike it rich in one fell swoop. It happens when someone wins the lottery or when they buy a stock that takes off. These are lightening-in-the-bottle types of events and they do happen. They just don’t seem to happen to you and me. Most of us have to build a plan and stick with it over a very long period of time. By being better educated, those small, consistent steps will lead to a great future. Education is the key. This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent. Action Tax Service is located on Northland Drive in Rockford. Contact Jerry at Action’s website at

About Squire News 6221 Articles
The Squire has been Rockford’s free weekly newspaper since 1871. Our loyal readership includes over fifteen thousand homes in the Rockford area, including the affluent Lakes area of Lake Bella Vista, Bostwick Lake and Silver Lake; Belmont, Blythefield, as well as Algoma, Courtland, Cannon and Plainfield Townships. The Squire is distributed through the U.S. Post Office every Thursday. We also deliver to in-town businesses and homes with paper carriers and news stands in our grocery stores and over thirty local shops.