As I pondered what I should write about today, a quote from Amit Kalantri popped up on my screen, “To a farmer dirt is not a waste, it is wealth.” It would appear that our viewpoint changes based on who we are.
Yesterday I was reading an Ed Batista article about the ladder of inference (a concept put forth by Chris Argyris based on work by S.I. Hayakawa and Alford Korzybski) which examines how we look at a situation, process it and finally take actions. The bottom of the ladder is selecting specific data to focus on from the observable data (Selection). The second rung of the ladder is interpreting the data and giving the data meaning (Interpretation). The third ladder rung is developing theories and beliefs that explain our interpretation of the data (Conceptualization). Finally, we take action based on our beliefs and theories (Action).
Each of these steps has opportunities for error.
During selection we rely on our individual make up (upbringing, biases, heuristics, etc.) to select the data we believe matters the most. We can ignore data that might be important to better decisions and actions. Are we focusing on the right data?
During interpretation we apply our own personal lenses (culture, social standing, beliefs, personal experience, etc.) and apply highly subjective meaning to the data we have chosen. This creates a tendency for us to assume that the meaning we have applied is inherent in the data while it may be something we have constructed. As Inigo Montoya in “The Princess Bride” says, “You keep using that word. I do not think it means what your think it means.” Perhaps we should pause to ask ourselves does this mean what I think it means or do my lenses create distortion?
During conceptualization we try to be efficient in our decision making which can shorten the process of making decisions. We may sacrifice quality for speed. We leave out large amounts of data whenever we make a decision. Our own theories and beliefs may fail to account for everything that is going on.
As we take action, we switch to autopilot and move forward bypassing as much resistance as possible. Batista states, “when our attitude and our behavior are inconsistent, we experience discomfort and even distress, and we modify either our attitude or our behavior to reduce inconsistency.” We will even change our theories and beliefs to bring ourselves in line with our chosen action. Are we on autopilot or are we taking thoughtful action?
Back to our “dirt is wealth” quote of the day…If we had put our farmer lenses on, we may have seen that.
Each of us processes millions of bits of data every hour and when we take the time to slow down our decision making process, especially for bigger decisions, we may be able to see opportunities and wealth in the dirt.
“We’ve been conditioned to believe fear is bad. And, yeah, fear can save your life or keeping you from doing something stupid, but avoiding it can also keep you from doing something great, from learning something new, and from growing as a human being. Fear is a natural part of growth…” – Steve Farber, “The Radical Leap.”
In this time of uncertainty, each of may have experienced some sense of fear. It may have come as your business doors were closed because of government orders. It may have come when you lost your job, laid off or from a temporary furlough. It may have come because you have immune compromised relatives and you can’t go see them. There is plenty to fear if we want to look for it. It can depress us, cause anxiety or cripple us. It can also drive us to become better human beings in the process of overcoming it.
The best way I know to overcome fear is to love. There is an element of fear in loving. Love can create fear as we must let our guards down in order to love. Steve Farber wrote, “Acting out of love creates fear and love gives me the courage to work through that fear”
Take some time to think about the cause of your fears and then think about how love can conquer it. What great thing can you do? What new thing can you learn? How can you grow as a human being?
In the wonderful movie “The Princess Bride”, a loving grandfather reads the story to a sick grandson. We are introduced to characters and their stories. In one part of the movie, the princess escapes her captors by jumping into shrieking eel-infested waters. Just as the princess is about to meet her fate by a charging eel, the story stops – well, the grandfather stops reading. He pressed pause on the story to alleviate any concerns the grandson might have been having. Once he has checked that the grandson is okay, he continues the story.
It seems to me that we were living our busy lives and suddenly the narrator pressed the pause button. The trajectory of our lives, our stories, has been paused. We have kept living and breathing but our lives as we knew them have been placed on hold. We are in the great pause. Now is the chance to ask ourselves if we are okay, really okay and if not, plan to make changes to be okay before the story continues. We may never have this opportunity, of a great pause again. Someday, hopefully soon, the narrator will continue our story.
Today is Tax Day, April 15th. In a normal year, I would be finalizing extensions for clients who were not ready to file and making sure extension payments and quarterly estimated tax payments were sent. At the close of the day, I would take a deep breath and take my foot off of the gas pedal. This is not a normal year. My normal year has been put on pause.
To be honest, I have been very busy but not with what I would normally be busy with at this time of year. Instead of tax returns, I have been voraciously reading poorly written loan guidance and congressional acts. I have been collaborating with colleagues to make sure we all understood the various stimulus packages and how they impact clients. I have been working with clients to help them determine which stimulus would be best for them and helping them apply, There were days of back to back phone calls – inbound ones. There were very late nights helping clients gather information and documents needed for a loan. The past two weeks have been exhausting.
In a call yesterday with fellow CPAs in a CPA network I belong to, the consensus was that the best description of the feeling we have been having is “surreal.” This is real life but it is so different from the normal life we are used to. One of the questions asked of the group is what lessons have you learned or taken away from all of this? I shared a few things but as I have pondered that question, the more I realize that during this great pause, we have the opportunity to reshape what we want normal to be when the “play button” is pressed again.
We have the opportunity to look at what we have learned and make changes to our lives going forward.
We may have taken family and friends for granted and can take the opportunity to improve those relationships. We may have been unprepared for an emergency and can take the opportunity to set aside stores of food, money and skills for the next one (yes, there will be a next one). We may have lost a job and can take the opportunity to develop new skills and find a better job. We may have lost a loved one and can take the memories of their lives into our hearts. What are you going to do differently because of what you have learned during the great pause?
We can look at our businesses and how we have been impacted and can take the opportunity to develop business continuity plans. The doors may have been shut but we can make a plan for what we are going to do when they open again. We may change our service offerings. We may change our level of customer service. We may setup budgets and cash flow forecasts. We may establish emergency funds for our businesses. We may change our business model. What are we as business owners going to do differently because of what we have learned during the great pause?
While we are still on pause, I invite all of you to think about what lessons you have learned over the past few weeks. Write them down. Then make plans to change and adjust based on those lessons learned. The flash flood of normal life will come and the lessons we have learned will be washed away if we don’t take advantage of the great pause.
Over the last two weeks, I have found myself working later even until the early morning, not getting enough sleep, sitting in a chair most of the day, having poor posture at the computer or holding a cell phone to my ear, eating stuff I shouldn’t just because it is there and the kitchen is now so close, and more. Most of the extra time spent was unpaid just trying to do what I can to help clients and friends survive as their businesses are struggling. I have realized that through all of this I have neglected self-care. My body is feeling it and my mind is beginning to.
I know I am not the only one who has recently neglected themselves.
Each of us needs to take a break, breathe and focus on ourselves and our own health regularly, especially during this pandemic where we have been asked to keep our distance. We want to avoid isolating during this time.
The National Association of Social Workers recommends the following ideas for improving self-care:
We have been asked to socially distance but we need to avoid socially isolating. We can still stay connected with each other. I have found my conversations with members of a CPA Network I belong to invaluable to discuss work and personal items with.
We have looked for ways to support each other and keep open communication. I enjoy phone calls and message chats with family and friends. I have enjoyed this extra time with immediate family. We reach out to our neighbors who shouldn’t be going out and get their needed grocery items for them while we are out. We send encouraging messages.
Take some time to do the hobbies you like to do. Read a favorite book or a new recommendation. Do something for yourself.
To avoid burnout, set a time limit. I am finding I need to stop and get up and walk around so I set a time for me to do that. I have also set a quitting time to stop working at a reasonable time and be present with my family. (I do need to get better at not answering work phone calls after hours.)
Schedule a relaxation or rest time. Take a nap. Stretch or do some yoga. Meditate. Do something to re-center. Set a bed time and go to bed at a decent hour.
We are all experiencing a temporary new normal. We, myself included, should take a little time to take care of ourselves.
Which bailout is right for you?
Last week the President signed into law the bill passed by the House and Senate – the Coronavirus Aid, Relief and Economic Security Act (CARES Act). Contained within its pages is $2.2 trillion in spending to help us combat this virus and help support our economy through it. Before I begin to describe the major things pertaining to you, may I give a disclaimer that things have been changing and updating constantly. It is hard to keep up. So, this represents my best understanding at the time.
Prior to the CARES Act, the Treasury announced that most people would receive advanced stimulus loans. These are the checks of $1,200 per taxpayer and $500 per dependent 16 years or younger you have heard about on the news. These amounts are phased out for single adjusted gross incomes over $75,000 or married filing joint over $150,000 (based on your 2018 return or 2019 if filed before the Treasury’s snapshot period). It is reduced by $5 for every $100 of income over that limit. If you have dependent children that filed their own tax return but you claimed them as a dependent on your return, they are considered dependents and fall under the $500 age based determination for dependent checks. This is not free money. This is a tax advance loan. It will be required to be paid back on your 2020 return (the one filed in 2021) if your income exceeds those $75k/$150k thresholds. These checks or direct deposits are anticipated in late April, early May, 2020.
If you received Social Security but did not need to file a tax return, your stimulus money will be sent to the same account or address used to deposit or mail your social security payment.
If you didn’t qualify based on your 2018 return but would on your unfiled 2019 return, we don’t know what date they are using as the cut-off so it may already be too late to file your 2019 return to qualify for the check.
If the IRS doesn’t have a bank account on file for you and you have moved since filing your 2018 tax return without letting the IRS know your new address, your check may go to your old address. You may want to consider filing a mail forwarding request with the postal service.
For those with businesses, there are several options for help through these times of struggle.
SBA Economic Injury Disaster Loan (EIDL)
The most promising aspect of the stimulus is the SBA economic injury disaster loan (EIDL). You apply on the SBA website or a paper return.
Apply online: https://disasterloan.sba.gov/ela
The disaster loans are for small businesses that have been financially impacted as a direct result of the COVID-19 since Jan. 31, 2020.
These are low interest rate loans up to $2 million to help meet financial obligations and operating expenses which could have been met had the disaster not occurred. Loans may be used to pay fixed debts, payroll, accounts payable and other bills that can't be paid because of the disaster's impact.
The interest rate is 3.75% for small businesses. The interest rate for private non-profit organizations is 2.75%. Repayment term is up to a maximum of 30 years.
For more information call SBA's Customer Service Center at (800) 659-2955 or email email@example.com
The loan is open for application for one year. If you apply now and you find it is not enough funding, you can request additional funds later. Likewise, if you apply and find you don't need that amount, you can return funds.
The funds come from the U.S. Treasury and the loans are administered by the SBA. Banks are not involved.
You can request up to $25,000 without collateral - so $25,000 can be an unsecured loan. For loans of more than $25,000, the SBA will not decline a loan for lack of collateral, but will require borrowers to pledge what is available.
The requirements for the loan do not say how many years your business needs to have existed. However, an application could be turned down because there is not enough information for them to make their evaluation and determination, including sufficient operation and financial history.
Disaster Grant ($10,000)
As part of the EIDL, there is a box to check to receive a $10,000 loan advance. You don’t have to take more than the $10,000 if you don’t want to but make sure you check the box to receive the $10,000 loan advance. The loan application is slightly different for sole proprietors vs. other small businesses.
If used to help keep your business going, the $10,000 loan advance is considered a grant and does not have to be repaid.
After you apply, you may be contacted by the SBA to provide other documents such as the ones below. But be sure to do this ASAP because once they give out all the grant money, it’s over.
It is recommended that you fill these other forms out just in case the SBA requests them.
a. Personal financial statements
b. Request for transcript for tax returns
c. Schedule of liabilities
d. Additional filing requirements form
Payroll Protection Program Loan
The stimulus bill covers businesses with less than 500 employees hurt by the virus under the Payroll Protection Program Loan. The amount you can receive is the total average monthly payroll costs for the last year x 2.5 if you will keep your business open, meaning you do not go out of business, and don’t layoff you employees or if you are forced to close and don’t layoff your employees. Payments received by independent contractors may be included in determining their wage costs.
If you use these funds to satisfy payroll, rent, utilities and certain insurance, and maintain your 2/15/2020 employee headcount, the entire loan can be forgiven. Amounts not used for these purpose by June 30, 2020 will be converted into a low interest loan with a 10 year period.
The loan will have no collateral and no guaranty if you commit to have the same number on your payroll as you did Feb 15th. All you need to provide is your payroll costs for the last year.
The loan amount is 2.5 times the Average total monthly payments for the following payroll costs up to $10 million:
Salary, wage, commission, or similar compensation
+ payment of cash tip or equivalent
+ payment of vacation, parental, family, medical, or sick leave
+ allowance for dismissal or separation
+ payment required for the provisions of group health care benefits, including insurance premiums
+ payment of any retirement benefit
+ payment of State or local tax assessed on the compensation of employee
Employees compensated in excess of $100,000 of annual salary are not included.
The application for this loan was released this morning and lenders will begin accepting applications on April 3rd. It is intended for federally insured banks and credit unions to administer this loan. I would check with your preferred SBA lender about the application process.
It is currently believed that if you receive the $10,000 Disaster Grant and the PPP loan, the $10,000 grant will reduce the forgiveness amount of the PPP loan. It is also currently believed that if you receive the PPP loan and the EIDL, the PPP loan will be rolled into the EIDL amount or vice versa (can’t have both at the same time.)
Income Tax Filiing and Payment Due Date Extension
Prior to the CARES Act, the Treasury extended the April 15th filing and tax payment due date to July 15th.
Delay of Payment of Employer Payroll Taxes
If you are not participating in the Payroll Protection Program Loan, you may defer payments that would be due semi-weekly or quarterly until 2021 or 2022. This is essentially a zero interest loan for the amount of payroll taxes due. The required payroll tax returns should still be filed timely and the amounts due tracked.
Small Business Debt Relief
If you already have an SBA 7a Loan, you may be able to have principal and interest payments on this loan covered for up to six months. You should work with your lender to coordinate this benefit.
If you are local to Utah, there are also local programs available:
Utah Bridge Loan – A 0% five year loan for up to three months of operating expenses for businesses with fewer than 50 employees impacted by the pandemic. Information is at https://business.utah.gov/utah-leads-together-small-business-bridge-loan-program/.
If you would like to talk with someone about which stimulus might be best for your personal situation, feel free to reach out to me.
One warm and humid day in Brazil, my friend and I were walking along a dirt road. In front of us was a beautiful blue sky. We were unaware that behind us, storm clouds began to gather. Things began to get a little darker and we turned around to see a storm forming. We continued our conversation as we walked while occasionally looking backward to keep an eye on the storm. We had just crested a hill when we heard the sound of falling water. We turned around and I saw something I had never before seen in my life having grown up in a dry and arid mountain desert. Above my head was blue sky but I was looking at a black cloud rapidly heading our way. From this cloud fell a wall of water. This was not the summer rain drops I was used to. This was a literal sheet of water pouring from the sky. It was beautiful and amazing and scary at the same time.
My friend and I began to run down the hill in an attempt to out run the storm. We were running fast. We had run from chasing stray dogs before but this run was a full sprint. A wall of water hit us just as we ducked under the canopy of a street side grocery shop. In an instant we were soaked. The sound of the water was deafening as it poured from the sky determined to break through the sheet of tin now protecting us. We looked at each other panting and smiling.
There is a paradox with rain. Rain helps things grow and the world is dependent upon rain for life but it can also soak us to the bone while walking a dirt road or keep us in a tent during a rainy camping trip. Too much rain creates flooding while not enough creates droughts. It can be a nuisance unless we choose to view the rain as a blessing.
Each of us has had our lives turned around because of this virus.
I am in awe of the health care workers on the front lines. I spoke with a neighbor who is a nurse who related what she has been going through. She has felt the stress and anxiety that has come with this.
I am in awe of the teachers who have adapted to a new method of teaching from a distance because they believe that through all of this our children should still be learning. Many of them are parents and are doing double duty. I read a text from one of these wonder teachers about the stress and anxiety that has come with this.
I am in awe of the parents who are working from home, keeping children motivated and entertained and doing things without breaks. I know they are having feelings of stress and anxiety that have come with this.
I am in awe of struggling business owners who are feeling the stress and anxiety of temporarily closing their businesses knowing rent is still due.
I am in awe of those who go to work to provide essential services to us so we can continue to eat and be safe putting them in a daily potential for exposure. I have read accounts of the stress and anxiety of these workers.
Most of all I am in awe of those who fall in many of these groups – the stress and anxiety is multiplied.
All of this we are going through can be a nuisance unless we choose to view it as a blessing.
I have seen more of my children in the past week and a half than I have seen in months. I get to spend more time with my spouse. We get to do things together because we don’t have anywhere else to be. We play games. We watch a favorite show together. We worship together as a family and are drawing closer together while our learning is deeper because we are teaching. We have family chats and video calls with extended family to stay in touch much more often than we did B.V. (Before Virus) as we seek connection. All of these are blessings.
There are stresses. There is anxiety. We may break down and cry once and awhile as we are overwhelmed with hard things. We can’t do everything but we can do anything. Getting through this will happen. Looking for the good wherever we find it and recognizing the blessings in the storm can help us stay positive and deal with our stress and anxiety. At the end of this, we may end up soaked and panting but we will be smiling.
This blog allows you to experience the raw, gut wrenching drama of human conflict through accounting in each of its three stages: preparing to do battle, the thrill of victory and the agony of defeat.