Trust me, I don’t enjoy being the bearer of such obnoxious and boring information, but being on top of your employee payroll and taxes is very important.
First of all, it will keep you out of trouble. The IRS is quick to tack on extra penalties for late filing and interest charges. Second, if you have this aspect of your business under control, you will be able to focus on your core business, rather than being bogged down by the stress of not knowing how to handle these things.
Yesterday, I covered the forms necessary for hiring a new employee, and previously, I went over the withholding that is taken out of each paycheck. Today, I will summarize the forms necessary for reporting and paying the employee taxes that are owed to the federal government.
To complete all of these forms by hand and to submit them by mail is probably not the best use of your time and resources. QuickBooks offers a very easy-to-use payroll add-on for about $250 per year. This will also make electronic filing a lot simpler.
Form 941 – Due Jan 31, Apr 30, Jul 31, Oct 31 (for IRS)
Quarterly form that reports all wages and withholding paid that quarter. If your employees are seasonal and you do not have taxable wages every quarter, be sure to check the “seasonal employer” box on line 19. You only need to file this form when you have paid wages for the quarter.
Form 944 – Due Jan 31 (for IRS)
Annual wages report. You may be told to complete this form if your wages drop beneath a certain amount. Do not complete this form unless you are directed by the IRS.
Form 940 – Due Jan 31 (for IRS)
Annual form that summarizes unemployment withholding from previous year.
Form W2 – Due Jan 31 (for employee)
Form you present to employee summarizing wages paid for previous year. Your employee(s) uses this form to complete his/her personal income taxes.
Form 1099 – Due Jan 31 (for independent contractor)
Form given to independent contractors, summarizing what you paid them the previous year.
Form W3 – Paper copy due Feb 28 OR e-file due Mar 31 (for SSA)
Summary of wages paid from previous year to be submitted to Social Security Administration. Along with this form, you should also submit copies of each W2 and 1099 forms that you presented to your employees and independent contractors.
These are only the federal forms required. You will want to also check your specific state requirements. Also, I will talk more about the differences between employees and independent contractors in the future.
Wednesday, June 10, 2009
Tuesday, June 9, 2009
Legal Documents For New Employees
So you’ve made the decision to take on a new employee. You put word out there, conducted your interviews, and narrowed it down to one. Now what?
Here is some info on what you need to do to properly and legally hire a new employee.
W-4 Form
Have your employee complete this form. It is a federal form that collects pertinent information and determines how much withholding should be taken from each paycheck.
I-9 Form
Another federal form that verifies the employee is legally allowed to work in the States. You will need to make a copy of a valid ID and attach. You must keep this on file and available for any government agency to verify.
New Hire Reporting
Each state has its own policies on how this should be done. Wisconsin has a website for employers to submit new employee information. They request a copy of the W-4 form as well. Also note the time frame in which this should be done.
As far as getting your new employee up and running, you only have to complete these three items. The next step you will want to take care of is setting up a payroll system. Look for instructions on that in a future post.
Here is some info on what you need to do to properly and legally hire a new employee.
W-4 Form
Have your employee complete this form. It is a federal form that collects pertinent information and determines how much withholding should be taken from each paycheck.
I-9 Form
Another federal form that verifies the employee is legally allowed to work in the States. You will need to make a copy of a valid ID and attach. You must keep this on file and available for any government agency to verify.
New Hire Reporting
Each state has its own policies on how this should be done. Wisconsin has a website for employers to submit new employee information. They request a copy of the W-4 form as well. Also note the time frame in which this should be done.
As far as getting your new employee up and running, you only have to complete these three items. The next step you will want to take care of is setting up a payroll system. Look for instructions on that in a future post.
Monday, June 1, 2009
Today Only! QuickBooks Pro 65% off!
OfficeMax.com is offering QuickBooks Pro for only $69.99 (regularly priced at $200). This is a one-day offer and is only available on their website.
I've talked about QuickBooks in the past, and it is definitely the best financial and accounting software for small business owners. Don't feel intimidated. You can use the software in its most basic form, and use the advanced features as you become more acquainted with how it works. I'm also available to answer any questions you may have along the way.
Even if you don't want to start using the software right away, you do not want to pass on this great opportunity.
I've talked about QuickBooks in the past, and it is definitely the best financial and accounting software for small business owners. Don't feel intimidated. You can use the software in its most basic form, and use the advanced features as you become more acquainted with how it works. I'm also available to answer any questions you may have along the way.
Even if you don't want to start using the software right away, you do not want to pass on this great opportunity.
Friday, May 29, 2009
Producing a Positive Monthly Cash Flow
Cash flow is a key indicator of the strength and vitality of any business. It is defined as the net amount of money your business takes in or spends in a given time frame. If you specify the time frame as one year, you are essentially calculating your annual net profit.
The wedding industry can be very seasonal, depending on the specific business you conduct and/or the part of the country in which you reside. “Engagement season” may mean a lot of deposits, “planning season” will bring about additional expenses, and “wedding season” means final payments, but also additional payroll expenses. You may even have a fourth season in there that results in no cash flow at all!
I want to challenge you to strategize your business in a way that will allow it to produce a positive monthly cash flow.
Now, I am not saying that this is necessary for a business to be successful. Perhaps you take three months off during the winter and don’t want to worry about anything during that time. Trust me, I understand. I make 60% of my annual income in 6 weeks out of the year.
I am recommending this strategy for someone who conducts business all year-round and is looking for a way to stay profitable through the slow times, rather than stressing out and dreading tax day.
So what can you do during your slower months to boost your revenue? As a wedding planner, offer hourly consultations. Maybe you can package three or four together and guarantee your client will come back for four consecutive months. How about engagement planning? Photographers can create customized Christmas cards for their clients over the past year. If a stationer, create your own greeting card line and sell them at local boutiques, or online for that matter.
The idea is basically to be making some sort of profit every month. If you set a monthly goal with which you are satisfied, you will no longer depend on the big months, but rather enjoy the extra income they bring.
What are some things you have done to increase your monthly cash flow?
The wedding industry can be very seasonal, depending on the specific business you conduct and/or the part of the country in which you reside. “Engagement season” may mean a lot of deposits, “planning season” will bring about additional expenses, and “wedding season” means final payments, but also additional payroll expenses. You may even have a fourth season in there that results in no cash flow at all!
I want to challenge you to strategize your business in a way that will allow it to produce a positive monthly cash flow.
Now, I am not saying that this is necessary for a business to be successful. Perhaps you take three months off during the winter and don’t want to worry about anything during that time. Trust me, I understand. I make 60% of my annual income in 6 weeks out of the year.
I am recommending this strategy for someone who conducts business all year-round and is looking for a way to stay profitable through the slow times, rather than stressing out and dreading tax day.
So what can you do during your slower months to boost your revenue? As a wedding planner, offer hourly consultations. Maybe you can package three or four together and guarantee your client will come back for four consecutive months. How about engagement planning? Photographers can create customized Christmas cards for their clients over the past year. If a stationer, create your own greeting card line and sell them at local boutiques, or online for that matter.
The idea is basically to be making some sort of profit every month. If you set a monthly goal with which you are satisfied, you will no longer depend on the big months, but rather enjoy the extra income they bring.
What are some things you have done to increase your monthly cash flow?
Thursday, May 21, 2009
The Extra Costs of Having Employees
If you are considering hiring an employee and are unsure of the extra costs that this would incur, this post is for you.
You are probably already aware that if you hire an assistant or an intern, you need to factor in more than just their base pay. But how much? If you are going to do it right (legally), below are some things you should consider:
[Some expenses below vary by state. For ease of explanation, I used Wisconsin rates as an example. I would be happy to research your own state for you if you are interested. Please inquire!]
Base Pay: This is the one thing you can control! What can you afford? What is your employee worth?
Social Security: This is a federal tax. The 2009 rate requires you to withhold 6.2% of the gross pay from the employees check and requires you to pay an equal amount (6.2%) out of your own pocket.
Medicare: This works the same way as Social Security. The rate is 1.45% for both you and your employee.
Unemployment Insurance:
Federal: Maximum tax of $56 per employee per year (the amount could be less based on gross wages and/or how long the employee works for you)
State: This rate definitely varies. For newer businesses in WI the rate is 3.25%.
Unemployment Insurance payments are paid out of the employer’s pocket, not employee withholding.
Workman’s Compensation Insurance: The purpose of this insurance is to cover your employees if they are injured on the job. It is required in every state (except Texas), but rates will vary. We pay $0.72 per $100 of gross wages. Wisconsin requires that a minimum premium amount be met. After all is said and done, it amounts to about 2% of gross wages.
NOTE: Work comp. rates are heavily determined by the type of tasks your employees will be performing. (There is obviously more risk for someone who does on-site installations versus someone who does office work.) Do not let the insurance agency who handles your work comp. insurance enter a classification code that does not describe your employees’ tasks. This happened with our policy and I had to go through a long process of getting it changed. We ended up saving $800 by making sure everything was straight, so it was worth it.
When you add all of this up, it comes out to approximately 13% of gross pay. A $10 per hour job has just become $11.30. This obviously does not include extra costs such as health benefits, parking, payroll software, and much more depending on your specific business.
In a future post, I will cover the how-to of processing the necessary payroll paperwork.
What other expenses (direct or indirect) do you find yourself incurring with the hiring of employees?
You are probably already aware that if you hire an assistant or an intern, you need to factor in more than just their base pay. But how much? If you are going to do it right (legally), below are some things you should consider:
[Some expenses below vary by state. For ease of explanation, I used Wisconsin rates as an example. I would be happy to research your own state for you if you are interested. Please inquire!]
Base Pay: This is the one thing you can control! What can you afford? What is your employee worth?
Social Security: This is a federal tax. The 2009 rate requires you to withhold 6.2% of the gross pay from the employees check and requires you to pay an equal amount (6.2%) out of your own pocket.
Medicare: This works the same way as Social Security. The rate is 1.45% for both you and your employee.
Unemployment Insurance:
Federal: Maximum tax of $56 per employee per year (the amount could be less based on gross wages and/or how long the employee works for you)
State: This rate definitely varies. For newer businesses in WI the rate is 3.25%.
Unemployment Insurance payments are paid out of the employer’s pocket, not employee withholding.
Workman’s Compensation Insurance: The purpose of this insurance is to cover your employees if they are injured on the job. It is required in every state (except Texas), but rates will vary. We pay $0.72 per $100 of gross wages. Wisconsin requires that a minimum premium amount be met. After all is said and done, it amounts to about 2% of gross wages.
NOTE: Work comp. rates are heavily determined by the type of tasks your employees will be performing. (There is obviously more risk for someone who does on-site installations versus someone who does office work.) Do not let the insurance agency who handles your work comp. insurance enter a classification code that does not describe your employees’ tasks. This happened with our policy and I had to go through a long process of getting it changed. We ended up saving $800 by making sure everything was straight, so it was worth it.
When you add all of this up, it comes out to approximately 13% of gross pay. A $10 per hour job has just become $11.30. This obviously does not include extra costs such as health benefits, parking, payroll software, and much more depending on your specific business.
In a future post, I will cover the how-to of processing the necessary payroll paperwork.
What other expenses (direct or indirect) do you find yourself incurring with the hiring of employees?
Wednesday, May 20, 2009
Learning What You Need to Succeed RECAP
As I mentioned in the beginning of this series, the five “keys to success” that I discussed were specific to my own needs as a business owner and entrepreneur. I realized these needs of mine through past business experiences and writing them down has helped me keep them on the forefront of my mind.
I hope you have been able to apply some of these strategies to your own life, and have also been able to come up with your own. If you take the time to look back at some key moments in your history, it won’t take long for you to recall some of your own strengths and weaknesses. Consider what those might be, and come up with an action plan to overcome those weaknesses and benefit from your strengths.
Think of a time when you received much praise, or were awarded something based on your achievements. What did you do to get to that point?
What about a time when you failed, or didn’t meet up to the expectations? Why not, and how can you surpass those expectations next time?
When do you feel most confident? When do you feel completely incapable?
What inspires you? What causes you to lose all motivation to move forward?
If you take the time to analyze these questions, you will learn so much about yourself, and will also be miles ahead of those who are afraid to face their own insecurities and tackle their weaknesses.
Are you willing to do what it takes to succeed?
I hope you have been able to apply some of these strategies to your own life, and have also been able to come up with your own. If you take the time to look back at some key moments in your history, it won’t take long for you to recall some of your own strengths and weaknesses. Consider what those might be, and come up with an action plan to overcome those weaknesses and benefit from your strengths.
Think of a time when you received much praise, or were awarded something based on your achievements. What did you do to get to that point?
What about a time when you failed, or didn’t meet up to the expectations? Why not, and how can you surpass those expectations next time?
When do you feel most confident? When do you feel completely incapable?
What inspires you? What causes you to lose all motivation to move forward?
If you take the time to analyze these questions, you will learn so much about yourself, and will also be miles ahead of those who are afraid to face their own insecurities and tackle their weaknesses.
Are you willing to do what it takes to succeed?
Monday, May 18, 2009
Learning What You Need to Succeed Part 5
5. Surround yourself with experts
I’ve always felt weird about the term “self-made millionaire”. In fact, the image it portrays in my head is quite sad. I picture a person who has finally “made it” (I use that in the loosest terms possible), and had no help or support from anyone along the way. I know I may be using a strict interpretation of the phrase, but it still provokes some interesting thought.
Will you one day be declared ‘self-made’ or will you be able to point to people and resources that have guided your success? Much wisdom can be gained from those who have gone before us. If you haven’t already, seek out a mentor that you can learn from and consider anything they may have to say. Look for someone in your industry that has years on you or has already retired.
The week before my rummage event took place I received a random phone call at night. The older gentleman on the other end of the line started asking me all about the event I was putting on. His questions were very pointed – almost like he was quizzing me.
It turns out that he was a very well-known promoter in our area since the early 70’s. He is no longer in the business, but is still very connected with those who are. As he was shooting down every response I had (apparently, I was doing everything wrong!), part of me wanted to dismiss him and continue on in my blind ways. But instead, I decided to keep listening, filtering everything he had to say.
In fact, all weekend I had curious promoters visiting my event to see what was going on. They each had their own ideas about what was going well and what could be done better. The best thing to do was to keep smiling and soak it all in.
Are you turning down potential quality advice from anyone? Don’t feel like you have to do this on your own.
Sure it says a lot about a person who went from rags to riches by their own will-power. But is the lonely journey to get there worth the title?
I’ve always felt weird about the term “self-made millionaire”. In fact, the image it portrays in my head is quite sad. I picture a person who has finally “made it” (I use that in the loosest terms possible), and had no help or support from anyone along the way. I know I may be using a strict interpretation of the phrase, but it still provokes some interesting thought.
Will you one day be declared ‘self-made’ or will you be able to point to people and resources that have guided your success? Much wisdom can be gained from those who have gone before us. If you haven’t already, seek out a mentor that you can learn from and consider anything they may have to say. Look for someone in your industry that has years on you or has already retired.
The week before my rummage event took place I received a random phone call at night. The older gentleman on the other end of the line started asking me all about the event I was putting on. His questions were very pointed – almost like he was quizzing me.
It turns out that he was a very well-known promoter in our area since the early 70’s. He is no longer in the business, but is still very connected with those who are. As he was shooting down every response I had (apparently, I was doing everything wrong!), part of me wanted to dismiss him and continue on in my blind ways. But instead, I decided to keep listening, filtering everything he had to say.
In fact, all weekend I had curious promoters visiting my event to see what was going on. They each had their own ideas about what was going well and what could be done better. The best thing to do was to keep smiling and soak it all in.
Are you turning down potential quality advice from anyone? Don’t feel like you have to do this on your own.
Sure it says a lot about a person who went from rags to riches by their own will-power. But is the lonely journey to get there worth the title?
Saturday, May 16, 2009
Learning What You Need to Succeed Part 4
4. Manage your time
I will be the first to admit that time management is not in my top-five list of personal strengths. I could talk up the value of it all day long, though. And I am slowly, but surely getting better at it. My sister-in-law likes to say I operate on “Gill Standard Time”.
I have determined that my schedule gets out of whack when I either put off tasks that I don’t want to do, or take too long on tasks that I enjoy. Can you relate in any way?
So rather than giving you advice that lacks personal credibility, I want to refer you to postings by Liene Stevens of The Smart Planner and Ron Dawson of Cinematic Studios.
They explain, in detail, the advantages of using a block-scheduling format for planning out your day, week, and month. By the time you are done reading these two posts, you will be motivated to change your time-management habits.
Think of how many hours you waste in any given week. What else could you be doing with that time, and how much more successful could your business be if you were able to devote those hours toward something else?
I will be the first to admit that time management is not in my top-five list of personal strengths. I could talk up the value of it all day long, though. And I am slowly, but surely getting better at it. My sister-in-law likes to say I operate on “Gill Standard Time”.
I have determined that my schedule gets out of whack when I either put off tasks that I don’t want to do, or take too long on tasks that I enjoy. Can you relate in any way?
So rather than giving you advice that lacks personal credibility, I want to refer you to postings by Liene Stevens of The Smart Planner and Ron Dawson of Cinematic Studios.
They explain, in detail, the advantages of using a block-scheduling format for planning out your day, week, and month. By the time you are done reading these two posts, you will be motivated to change your time-management habits.
Think of how many hours you waste in any given week. What else could you be doing with that time, and how much more successful could your business be if you were able to devote those hours toward something else?
Friday, May 15, 2009
Learning What You Need to Succeed Part 3
As I talked about yesterday, it can be very difficult running a small business by yourself. You have to keep track of the marketing, sales, accounting, payroll, legal aspects, cleaning, maintenance, public relations, human resources, and not to mention, the actual business that you conduct.
What I have found, is that when one’s time and efforts are spread out between all of these things, the overall quality of each aspect declines. The quality of your main service that you offer will certainly decline if you cannot focus on that the majority of your working hours.
An important thing to remember if you want to grow your business without experiencing a nervous breakdown is to:
3. Know your limits
You must be able to admit to yourself that you are not excellent at everything. The time is going to come when you must hire someone on to fulfill your specific needs, or outsource to a specialist.
When you look to hire someone, don’t immediately seek the candidate who can do “a little bit of everything.” Determine your most pressing needs and find the person who will meet those needs even better than you could yourself.
One of the best examples of this is A Bryan Photo, out of Birmingham. This team of nine has two main photographers and seven staff members to keep the details in place. Each one has their specific roles that, when combined, create an incredible service and quality product for their clients.
It is sometimes difficult to hire a new staff member if the task you need fulfilled is short-term, seasonal, or requires minimal hours. In this case, consider contracting or outsourcing with another person or business.
If you are working on redeveloping your promo materials and neither you nor your staff are quality graphic designers, it’s time to find someone who is. If you are always buried by paperwork that needs to be filed or entered into QuickBooks, contract with someone to come in once a week and take care of it. Is it time to get a cleaning person? They’re all over Craigslist these days.
Maybe you would LOVE to implement some of these ideas, but there is no way your budget can cut it right now. Consider temporarily cutting back on some aspects of your business. If the design and quality of your website is doing more harm than good, and you aren’t in a place to a) design your own from a template or b) hire someone to do the job, you may be better off scrapping it. Focus on your blog instead. If drawing up new business is your highest concern right now, hire a sales person and put them on strict commission.
You can’t afford to run yourself ragged. If you can learn to delegate and outsource, you will have much more time and energy to put into what you do best.
What I have found, is that when one’s time and efforts are spread out between all of these things, the overall quality of each aspect declines. The quality of your main service that you offer will certainly decline if you cannot focus on that the majority of your working hours.
An important thing to remember if you want to grow your business without experiencing a nervous breakdown is to:
3. Know your limits
You must be able to admit to yourself that you are not excellent at everything. The time is going to come when you must hire someone on to fulfill your specific needs, or outsource to a specialist.
When you look to hire someone, don’t immediately seek the candidate who can do “a little bit of everything.” Determine your most pressing needs and find the person who will meet those needs even better than you could yourself.
One of the best examples of this is A Bryan Photo, out of Birmingham. This team of nine has two main photographers and seven staff members to keep the details in place. Each one has their specific roles that, when combined, create an incredible service and quality product for their clients.
It is sometimes difficult to hire a new staff member if the task you need fulfilled is short-term, seasonal, or requires minimal hours. In this case, consider contracting or outsourcing with another person or business.
If you are working on redeveloping your promo materials and neither you nor your staff are quality graphic designers, it’s time to find someone who is. If you are always buried by paperwork that needs to be filed or entered into QuickBooks, contract with someone to come in once a week and take care of it. Is it time to get a cleaning person? They’re all over Craigslist these days.
Maybe you would LOVE to implement some of these ideas, but there is no way your budget can cut it right now. Consider temporarily cutting back on some aspects of your business. If the design and quality of your website is doing more harm than good, and you aren’t in a place to a) design your own from a template or b) hire someone to do the job, you may be better off scrapping it. Focus on your blog instead. If drawing up new business is your highest concern right now, hire a sales person and put them on strict commission.
You can’t afford to run yourself ragged. If you can learn to delegate and outsource, you will have much more time and energy to put into what you do best.
Thursday, May 14, 2009
Learning What You Need to Succeed Part 2
When you run your own small business, and it’s a one man show, things can get VERY lonely. Everything hinges on you alone. The pressure from that can be extremely stressful and enthusiasm can die quickly. Have you ever asked yourself, “if I just ‘closed shop’ today, would anyone even notice or care?”
I started to feel this way toward the middle of this project, and knew something needed to change – which brings us to #2:
Obtain the right kind of support.
If you can gain this support on both a personal and professional level, you will most likely gain the motivation you have been lacking.
On a personal level, be sure to have two or three close friends or family members who have an interest in seeing you succeed. These people will typically know your strengths and weaknesses and can help you stay level-headed when times get tough. Allow them the opportunity to be honest with you, thanking them for their opinions when they are finished. If you shut down their ideas, or are quick to disagree with them, you are doing much harm to one of your greatest sources of feedback.
My wife, The Fabulous One, picked me up plenty of times during this process. When vendor applications were slow to come in, she was able to offer a new perspective on how to streamline the application process, which encouraged more vendors to sign up.
If you don’t currently have these kinds of people in your life, think about who you would like to have that role. Invest in those relationships and show a genuine interest in them and what they are pursuing. If that friendship builds, they will probably return the favor.
In addition to the personal support, you will definitely need professional support to keep your doors open. Are you networking? Do you have other businesses vouching for the services or products you offer? I’m not talking about trading links on a website here. Find a way to add value to other businesses you work with, and they may just do the same for you. If you are a wedding planner, do you simply pass on the name of a specific vendor to your brides, or are you passionately selling that bride on all of the great reasons she should hire them. The latter is definitely the way to go if you are going to build true partnerships with the other vendors in your industry.
If you are looking to start a new business, and don’t have these relationships in place, pause. Take the time to work on this. Work for someone else in the industry for a while, and not necessarily in the specific field you are pursuing. A lot of wisdom and perspective can be gained by being able to see things through the eyes of others. You don’t want to jump in prematurely.
A couple years ago I was looking into starting a business that rented out chiavari ballroom chairs. At the time, I had very few relationships built up with local wedding vendors and venues. I could have started the business and tried to work it from the ground up, but knew that it is a better investment to work on those relationships. If you do this, your start-up will be much smoother and word will spread about you much faster.
So remember, it will be very difficult to survive on your own. Reach out, build up your relationships, and experience the benefits of learning from others.
I started to feel this way toward the middle of this project, and knew something needed to change – which brings us to #2:
Obtain the right kind of support.
If you can gain this support on both a personal and professional level, you will most likely gain the motivation you have been lacking.
On a personal level, be sure to have two or three close friends or family members who have an interest in seeing you succeed. These people will typically know your strengths and weaknesses and can help you stay level-headed when times get tough. Allow them the opportunity to be honest with you, thanking them for their opinions when they are finished. If you shut down their ideas, or are quick to disagree with them, you are doing much harm to one of your greatest sources of feedback.
My wife, The Fabulous One, picked me up plenty of times during this process. When vendor applications were slow to come in, she was able to offer a new perspective on how to streamline the application process, which encouraged more vendors to sign up.
If you don’t currently have these kinds of people in your life, think about who you would like to have that role. Invest in those relationships and show a genuine interest in them and what they are pursuing. If that friendship builds, they will probably return the favor.
In addition to the personal support, you will definitely need professional support to keep your doors open. Are you networking? Do you have other businesses vouching for the services or products you offer? I’m not talking about trading links on a website here. Find a way to add value to other businesses you work with, and they may just do the same for you. If you are a wedding planner, do you simply pass on the name of a specific vendor to your brides, or are you passionately selling that bride on all of the great reasons she should hire them. The latter is definitely the way to go if you are going to build true partnerships with the other vendors in your industry.
If you are looking to start a new business, and don’t have these relationships in place, pause. Take the time to work on this. Work for someone else in the industry for a while, and not necessarily in the specific field you are pursuing. A lot of wisdom and perspective can be gained by being able to see things through the eyes of others. You don’t want to jump in prematurely.
A couple years ago I was looking into starting a business that rented out chiavari ballroom chairs. At the time, I had very few relationships built up with local wedding vendors and venues. I could have started the business and tried to work it from the ground up, but knew that it is a better investment to work on those relationships. If you do this, your start-up will be much smoother and word will spread about you much faster.
So remember, it will be very difficult to survive on your own. Reach out, build up your relationships, and experience the benefits of learning from others.
Wednesday, May 13, 2009
Learning What You Need to Succeed Part 1
Below are five things I have learned recently that I need for success. Your list may be a little different than mine, but what’s important is that you know what you need.
1. Believe in whatever you pursue
2. Obtain the right kind of support
3. Know your limits
4. Manage your time
5. Surround yourself with “experts”
Over the next week, I am going to explain each of these needs in reference to a project I just completed last month.
I took on the task of promoting a large-scale rummage/flea market event that was marketed to the Greater Milwaukee area as kind of a “kick-off” to the rummage sale season. Although I have worked in and around events, I have never done something quite like this before.
The concept is quite simple, but the details were many. Rent out a building/space, sub-rent 10’x10’ spaces to vendors, advertise, and charge a small fee for admission. Where’s the difficulty in that, right?
Well it turned out to be quite the emotional roller coaster as things began to unfold. You don’t really know if you have a show or not until you have enough vendors to fill the space. And it’s hard to get vendors for a first-time show because they don’t want to risk it being a flop. It is also difficult to know how much money to spend on advertising because you don’t know what your total revenue will be in the end.
After this constant balancing act, the final product turned out extremely well. We had over 3,000 customers, over 6,000 food donations, happy vendors, and I was even on the news on Saturday morning. In fact, I actually turned a profit! But what was more valuable than the money I made, were the lessons I had learned.
1. Believe in whatever you pursue.
Being a promoter for this type of event is a perfectly legitimate business. The popularity of these events is even growing with the economic times we are experiencing. But, I came to find that my heart just wasn’t in it and it didn’t feel true to who I am. I don’t know how else to explain it but by saying I was nowhere near waking up every morning (or any morning, for that matter) excited to work on this project. I realize there are days when this will be the case for any business. But if your business or job is depressing you, it’s time to get out – fast!
I already had vendors in place, investments in advertising, and a reputation to keep, so I knew I had to finish it out. And even though this event has a lot of potential for growth and profit, I’m deciding to call it quits. Many people think I’m crazy for doing so, but there are other worthwhile (and personally meaningful) projects ahead.
Do you believe in what you are pursuing and is it true to who you are?
Tomorrow: Obtain the right kind of support.
1. Believe in whatever you pursue
2. Obtain the right kind of support
3. Know your limits
4. Manage your time
5. Surround yourself with “experts”
Over the next week, I am going to explain each of these needs in reference to a project I just completed last month.
I took on the task of promoting a large-scale rummage/flea market event that was marketed to the Greater Milwaukee area as kind of a “kick-off” to the rummage sale season. Although I have worked in and around events, I have never done something quite like this before.
The concept is quite simple, but the details were many. Rent out a building/space, sub-rent 10’x10’ spaces to vendors, advertise, and charge a small fee for admission. Where’s the difficulty in that, right?
Well it turned out to be quite the emotional roller coaster as things began to unfold. You don’t really know if you have a show or not until you have enough vendors to fill the space. And it’s hard to get vendors for a first-time show because they don’t want to risk it being a flop. It is also difficult to know how much money to spend on advertising because you don’t know what your total revenue will be in the end.
After this constant balancing act, the final product turned out extremely well. We had over 3,000 customers, over 6,000 food donations, happy vendors, and I was even on the news on Saturday morning. In fact, I actually turned a profit! But what was more valuable than the money I made, were the lessons I had learned.
1. Believe in whatever you pursue.
Being a promoter for this type of event is a perfectly legitimate business. The popularity of these events is even growing with the economic times we are experiencing. But, I came to find that my heart just wasn’t in it and it didn’t feel true to who I am. I don’t know how else to explain it but by saying I was nowhere near waking up every morning (or any morning, for that matter) excited to work on this project. I realize there are days when this will be the case for any business. But if your business or job is depressing you, it’s time to get out – fast!
I already had vendors in place, investments in advertising, and a reputation to keep, so I knew I had to finish it out. And even though this event has a lot of potential for growth and profit, I’m deciding to call it quits. Many people think I’m crazy for doing so, but there are other worthwhile (and personally meaningful) projects ahead.
Do you believe in what you are pursuing and is it true to who you are?
Tomorrow: Obtain the right kind of support.
Tuesday, May 12, 2009
What Do YOU Need To Succeed?
There are thousands (upon thousands) of business ideas out there. And it only takes ONE to be successful. But which one is it going to be? That’s the million-dollar question, right?
Take a look at this list of 999 business ideas drafted up by Seth Godin’s Alternative MBA team.
If you are anything like me, as you go down the list you are blown away by all the great ideas and think your head is going to burst because you don’t know which one to pursue first.
But the point this team is trying to make is if you don’t act on an idea nothing will come of it. The truth is most people won’t act on a good business idea. Even entrepreneurs will never follow up on every eureka moment they experience in their lives.
So what does it take to make an idea work? That’s the REAL million-dollar question.
And the answer will be slightly different for each individual. Given your personality, availability, financial situation, strengths, and weaknesses, what has to happen for you to succeed?
Tomorrow, I will share a few things I have recently learned that I need to succeed, in hopes that it will help you determine your own needs.
[Until then, don’t get too caught up in your 15 new ideas you pulled from SAMBA!]
Take a look at this list of 999 business ideas drafted up by Seth Godin’s Alternative MBA team.
If you are anything like me, as you go down the list you are blown away by all the great ideas and think your head is going to burst because you don’t know which one to pursue first.
But the point this team is trying to make is if you don’t act on an idea nothing will come of it. The truth is most people won’t act on a good business idea. Even entrepreneurs will never follow up on every eureka moment they experience in their lives.
So what does it take to make an idea work? That’s the REAL million-dollar question.
And the answer will be slightly different for each individual. Given your personality, availability, financial situation, strengths, and weaknesses, what has to happen for you to succeed?
Tomorrow, I will share a few things I have recently learned that I need to succeed, in hopes that it will help you determine your own needs.
[Until then, don’t get too caught up in your 15 new ideas you pulled from SAMBA!]
Friday, May 8, 2009
A New Direction
[This post is a response to the continual support of my wife and Molly to keep at it.]
I know it has been way too long since my last posting. To those of you who still check up on me every once in a while or still have me in your Reader, I am humbled.
The truth is, over the last couple months, I have not only been finishing up a new business venture (which I will go into more detail about soon), but have also been seriously considering the direction and focus of this blog.
I have enjoyed being able to offer financial advice to my readers over the last year or so. But, I have recently come to the conclusion that there are many personal finance blogs out there that offer sound wisdom for those looking to eliminate debt, save for retirement, and get the most out of their dollar.
Therefore, I have decided to shift the current focus of The Dollar Dance, and will begin a transition into something new. With the mentality of finding a need and striving to meet that need, I am certain that I will be able to accomplish more through this blog than ever before.
I invite you to join me as I turn the page. If you own your own business, or play a key role in handling the finances of a small business, I think you will like what is to come.
As I continue to work through this process, I will be sharing some life lessons I have recently learned that, quite frankly, must be experienced in order for them to be truly grasped.
Looking forward to it!
Tim
I know it has been way too long since my last posting. To those of you who still check up on me every once in a while or still have me in your Reader, I am humbled.
The truth is, over the last couple months, I have not only been finishing up a new business venture (which I will go into more detail about soon), but have also been seriously considering the direction and focus of this blog.
I have enjoyed being able to offer financial advice to my readers over the last year or so. But, I have recently come to the conclusion that there are many personal finance blogs out there that offer sound wisdom for those looking to eliminate debt, save for retirement, and get the most out of their dollar.
Therefore, I have decided to shift the current focus of The Dollar Dance, and will begin a transition into something new. With the mentality of finding a need and striving to meet that need, I am certain that I will be able to accomplish more through this blog than ever before.
I invite you to join me as I turn the page. If you own your own business, or play a key role in handling the finances of a small business, I think you will like what is to come.
As I continue to work through this process, I will be sharing some life lessons I have recently learned that, quite frankly, must be experienced in order for them to be truly grasped.
Looking forward to it!
Tim
Saturday, April 4, 2009
Peapod...Survey says...
I did not forget about my promised Peapod review.
The Fabulous One and I started using Peapod a couple months ago for two reasons:
1. To help us keep our grocery shopping held within a strict budget.
2. To save us some time as our lives were so busy we needed every hour we could get.
I must say, both of these needs were met in very large ways. We were able to plan exactly what we wanted to buy. There were no surprises at the checkout, no gravitational pulls toward the Drumsticks, and I wasn't circling the store four times to find a "small jar of capers".
After establishing our food budget, we planned on spending about 70% of it on Peapod and the other 30% was to be spent at the grocery store if we needed a quick 1/2 gallon of milk or a loaf of bread.
We found the Peapod delivery drivers to be very friendly. They showed up in the time frame that was established, and carried the bags of groceries right to the middle of our kitchen. If this seems a little too intimate and/or creepy to you, you will certainly appreciate their unattended delivery where they leave your groceries in very sturdy boxes next to your door. The refrigerated items are in an insulated cooler with ice packs and the frozen food is stored in a cooler with dry ice. I was quite impressed!
Peapod also offers weekly specials that were unexpected. One week we were able to choose one of three frozen entrees (to be cooked in the oven) for free ($12 value). It was very good and there was plenty left over for lunch the next day.
Okay, so what was the catch? The expected downside is that the prices do tend to run more expensive than the stores. I couldn't calculate a consistent markup. But you do definitely get less food for your money.
Also, the delivery charges range between $7 and $10 depending on your order amount. We simply built this charge into our budget.
Our schedules have since eased up a bit and we are not currently using Peapod on a regular basis. I do however, see us taking advantage of this service again this summer when our businesses really pick up.
That's my two cents. Are there any other opinions out there?
The Fabulous One and I started using Peapod a couple months ago for two reasons:
1. To help us keep our grocery shopping held within a strict budget.
2. To save us some time as our lives were so busy we needed every hour we could get.
I must say, both of these needs were met in very large ways. We were able to plan exactly what we wanted to buy. There were no surprises at the checkout, no gravitational pulls toward the Drumsticks, and I wasn't circling the store four times to find a "small jar of capers".
After establishing our food budget, we planned on spending about 70% of it on Peapod and the other 30% was to be spent at the grocery store if we needed a quick 1/2 gallon of milk or a loaf of bread.
We found the Peapod delivery drivers to be very friendly. They showed up in the time frame that was established, and carried the bags of groceries right to the middle of our kitchen. If this seems a little too intimate and/or creepy to you, you will certainly appreciate their unattended delivery where they leave your groceries in very sturdy boxes next to your door. The refrigerated items are in an insulated cooler with ice packs and the frozen food is stored in a cooler with dry ice. I was quite impressed!
Peapod also offers weekly specials that were unexpected. One week we were able to choose one of three frozen entrees (to be cooked in the oven) for free ($12 value). It was very good and there was plenty left over for lunch the next day.
Okay, so what was the catch? The expected downside is that the prices do tend to run more expensive than the stores. I couldn't calculate a consistent markup. But you do definitely get less food for your money.
Also, the delivery charges range between $7 and $10 depending on your order amount. We simply built this charge into our budget.
Our schedules have since eased up a bit and we are not currently using Peapod on a regular basis. I do however, see us taking advantage of this service again this summer when our businesses really pick up.
That's my two cents. Are there any other opinions out there?
Wednesday, March 4, 2009
Understanding The Financial Credit Crisis
Here is a visual aide to help you understand how we got into this financial crisis. The political aspects of everything have been left out of this video. It is more of a visualization to explain the process that happened. Many thanks to Brandon Meves for finding the video.
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
Saturday, January 31, 2009
One Month Down
As you may recall, my wife and I have declared this the year of getting out of debt. January has come and gone, and it has been an interesting ride thus far.
I cannot say we made significant progress in decreasing our liabilities. This is mainly due to the fact that our businesses are extremely seasonal (winter being our low season). And, while our income is at a minimum, our bills and expenses continue to be the same. Add to this some advertising opportunities we wanted to take advantage of.
Therefore, this month's focus was on monitoring our spending. We only spent money on that which was necessary. We kept a very close eye on our grocery budget and only ate out (fast food) when we had no other choice.
This month we said "No" to:
A Friday fish fry (and going out to eat in general) x10
New cell phones
The Wynn's $109/night deal (not really!)
Arby's
Drumstick ice cream bars
Going to the movies
A Juicy Couture swimsuit (for Monica)
Using a really good coupon to Express for Men
Bath & Body Works hand soap
A couple books
We've found that staying out of the malls and stores has helped a lot. Even staying out of the grocery store has kept us from buying unnecessary food, thanks to Peapod.
I have been working a part-time job and am also working on a new business idea that should help us make significant strides.
This month has taught me the importance of discipline. In order to balance everything I have going on in my life while keeping a close eye on our spending, I need to keep a thorough calendar of each day's events. I'm trying the block schedule approach suggested by Liene from The Smart Planner.
It's hard to say what February's focus will be. My income will go up this next month compared to January. With this extra income, I think the trick will be deciding how much should go toward our debt and how much should be saved for future expenses.
How has your year started financially? Have you been monitoring your spending more closely?
I cannot say we made significant progress in decreasing our liabilities. This is mainly due to the fact that our businesses are extremely seasonal (winter being our low season). And, while our income is at a minimum, our bills and expenses continue to be the same. Add to this some advertising opportunities we wanted to take advantage of.
Therefore, this month's focus was on monitoring our spending. We only spent money on that which was necessary. We kept a very close eye on our grocery budget and only ate out (fast food) when we had no other choice.
This month we said "No" to:
A Friday fish fry (and going out to eat in general) x10
New cell phones
The Wynn's $109/night deal (not really!)
Arby's
Drumstick ice cream bars
Going to the movies
A Juicy Couture swimsuit (for Monica)
Using a really good coupon to Express for Men
Bath & Body Works hand soap
A couple books
We've found that staying out of the malls and stores has helped a lot. Even staying out of the grocery store has kept us from buying unnecessary food, thanks to Peapod.
I have been working a part-time job and am also working on a new business idea that should help us make significant strides.
This month has taught me the importance of discipline. In order to balance everything I have going on in my life while keeping a close eye on our spending, I need to keep a thorough calendar of each day's events. I'm trying the block schedule approach suggested by Liene from The Smart Planner.
It's hard to say what February's focus will be. My income will go up this next month compared to January. With this extra income, I think the trick will be deciding how much should go toward our debt and how much should be saved for future expenses.
How has your year started financially? Have you been monitoring your spending more closely?
Wednesday, January 21, 2009
Peapod
In an attempt at being more precise in our grocery budgeting, we are seriously considering using Peapod, the grocery delivery service. We received an offer in the mail for $20 off our first purchase and free delivery for 60 days.
We have been working on comparing prices on the website to those we normally pay at the grocery store. So far we have found that some things are more expensive and some are less.
There are delivery charges we need to factor in, but at the same time we are considering the time we will save by not making long trips to the store.
We also figure that by having a running total at the top of the screen as we add items to our "cart", we know exactly how much we are spending and won't have any surprises at the checkout line. Also, there won't be those tempting sale items or mid-shopping cravings that cause us to grab a bag of Oreos. (Tell me I'm not the only one)
We have been told the produce is very fresh so we figure we won't be throwing out as much food as we have in the past.
Peapod also has their own sales at times and also accept manufacturer's coupons.
So, why not give it a try? I'll give you the report after all is said and done. In the meantime, have you used Peapod before? Please let me know what you're thoughts are.
We have been working on comparing prices on the website to those we normally pay at the grocery store. So far we have found that some things are more expensive and some are less.
There are delivery charges we need to factor in, but at the same time we are considering the time we will save by not making long trips to the store.
We also figure that by having a running total at the top of the screen as we add items to our "cart", we know exactly how much we are spending and won't have any surprises at the checkout line. Also, there won't be those tempting sale items or mid-shopping cravings that cause us to grab a bag of Oreos. (Tell me I'm not the only one)
We have been told the produce is very fresh so we figure we won't be throwing out as much food as we have in the past.
Peapod also has their own sales at times and also accept manufacturer's coupons.
So, why not give it a try? I'll give you the report after all is said and done. In the meantime, have you used Peapod before? Please let me know what you're thoughts are.
Sunday, January 11, 2009
A Wedding B-B-B-Budget
Engagement season has passed and wedding planning season is well under way. In the beginning stages of planning your wedding, the first topic you consider should be the budget. This may sound very elementary, but it is astounding how many couples start their planning without determining even a range for their budget.
If you are currently in this situation, I highly recommend you read three blog posts that will help put things into perspective for you.
First, Money Matters Not So Much was written by Monica to explain to brides that a budget is inevitable. If you don't talk about it, you are putting yourself at serious risk. Once you set your budget, you have at least some sort of framework in which to start your planning. Prioritization will obviously be necessary with any budget. Visit Monica at The White Box of Wedding Design if you need further inspiration or ideas.
Second, The $28,000 question: Why are we all hypocrites about weddings? was written by Ramit Sethi of I Will Teach You To Be Rich. Ramit takes a very realistic approach in this article as to how wedding budgets escalate as the planning process progresses. His biggest point made is for those who are currently not planning a wedding, but foresee one happening in the not-too-distant future...Plan Ahead! Start saving this month if you know you are going to be paying for the wedding yourself. This applies not only to weddings, but to cars, houses, furniture, appliances...anything!
Third, Liene Stevens of Blue Orchid Designs wrote Your Wedding Budget Does Not Define You. Don't be ashamed of your budget. Work with what you have and be fabulous no matter what. Liene will show you how.
SO, the moral of the story:
1. If you're engaged, set a budget for your wedding.
2. If you're engaged and live in Milwaukee (or are visiting), check out The White Box. You will certainly NOT regret it.
If you are currently in this situation, I highly recommend you read three blog posts that will help put things into perspective for you.
First, Money Matters Not So Much was written by Monica to explain to brides that a budget is inevitable. If you don't talk about it, you are putting yourself at serious risk. Once you set your budget, you have at least some sort of framework in which to start your planning. Prioritization will obviously be necessary with any budget. Visit Monica at The White Box of Wedding Design if you need further inspiration or ideas.
Second, The $28,000 question: Why are we all hypocrites about weddings? was written by Ramit Sethi of I Will Teach You To Be Rich. Ramit takes a very realistic approach in this article as to how wedding budgets escalate as the planning process progresses. His biggest point made is for those who are currently not planning a wedding, but foresee one happening in the not-too-distant future...Plan Ahead! Start saving this month if you know you are going to be paying for the wedding yourself. This applies not only to weddings, but to cars, houses, furniture, appliances...anything!
Third, Liene Stevens of Blue Orchid Designs wrote Your Wedding Budget Does Not Define You. Don't be ashamed of your budget. Work with what you have and be fabulous no matter what. Liene will show you how.
SO, the moral of the story:
1. If you're engaged, set a budget for your wedding.
2. If you're engaged and live in Milwaukee (or are visiting), check out The White Box. You will certainly NOT regret it.
Thursday, January 8, 2009
Suze Orman on Oprah - Free ebook
Suze Orman will be on Oprah today as part of Oprah's Best Life series. She will be talking about how to best deal with the financially hard times we are experiencing. Orman is well known for her sound financial advice and clear-headed ways of thinking.
She also has an ebook that can be downloaded for free on the Oprah Winfrey website. Download Orman's 2009 Action Plan here.
She also has an ebook that can be downloaded for free on the Oprah Winfrey website. Download Orman's 2009 Action Plan here.
Wednesday, January 7, 2009
The Smart Planner
I'm being featured today on a great blog called The Smart Planner. Liene Stevens is the founder of this blog that focuses on helping wedding planners build their businesses in a purposeful and logical way. It is already obvious that Liene has made a difference in the wedding planning industry. Even if you are not a wedding planner, you can still gain some great insight on leadership and managament from this blog and also her unique Twitter series.
I will occassionaly make guest appearances on The Smart Planner and will gear my posts toward helping planners make the best financial decisions as they grow their businesses. Check out my post today about the advantages of using QuickBooks software to manage the financial aspects of your business.
I will occassionaly make guest appearances on The Smart Planner and will gear my posts toward helping planners make the best financial decisions as they grow their businesses. Check out my post today about the advantages of using QuickBooks software to manage the financial aspects of your business.
Twitter Series
If you are a Twitter user, be sure to look for a short series of tweets called $Money Talks$. I will be featuring some interesting quotations from some popular financial gurus. Follow me at www.twitter.com/timgill.
Tuesday, January 6, 2009
$$ for your old ink cartridges
You may already be familiar with Office Max's incentive program MaxPerks. If not, it's basically a card you swipe with every purchase and you receive 5% back to spend on more office supplies. (The shopping list is always endless, right?) Occasionally, they will offer up to 25% back on certain brands or items. If this isn't worth it, the valuable coupons they send out definitely seal the deal.
Also, I found out the other day that for every empty ink or toner cartridge you turn in at the store, they put a $3 credit on your reward balance. You can turn in up to ten cartridges a week. This can really add up over time - especially if you have access to some cartridges from the office or elsewhere that are getting thrown away anyway.
Also, I found out the other day that for every empty ink or toner cartridge you turn in at the store, they put a $3 credit on your reward balance. You can turn in up to ten cartridges a week. This can really add up over time - especially if you have access to some cartridges from the office or elsewhere that are getting thrown away anyway.
Monday, January 5, 2009
The Emergency Fund
Upon completion of putting together your household budget and taking a close analysis of your financial situation, build up an emergency fund. Or, as Dave likes to call it, the "rainy day" fund.
A well-funded emergency fund will cover expenses of anywhere between three and six months of living. Depending on how much job security you have or how difficult it would be for you to obtain a new job, you may want to adjust your goal accordingly.
It will definitely take time to fully fund this account, but I recommend you make a goal of saving up $1000 as fast as you can to get the ball rolling. For some, this may be easy as you already have at least that much in the bank. For others, you may have never had that much money to your name - ever. Well, it is possible, and after doing so I trust you will have the motivation and momentum to keep saving more.
Do whatever it takes to save up this money. Get a second job. Sell stuff on eBay or on Craigslist. Shovel sidewalks. Deliver newspapers. Babysit. Clean houses. Anything.
Once you have your $1000, put it in a place that is accessible, but not too tempting to take advantage of.
Now the big question - What counts as an emergency?
Only use your emergency fund for unexpected occurrences that you cannot plan for.
Examples: an unexpected pregnancy, you suddenly lose your job, you blow the engine on your car, an emergency room visit, the furnace breaks down.
Examples of non-emergencies: routine car maintenance (oil change, new tires, new belts, etc.), your TV broke, a 75% off clearance sale at Banana Republic, an annual doctor visit, the need for new furniture, craving a mocha frappuccino, you get the idea...
Once you reach your $1000 goal, you can smile big for a day, but the battle is just beginning. After that, it's time to tackle that debt of yours and continue to fully fund the emergency account. Please feel free to share any ideas you have on how to build up your $1000.
A well-funded emergency fund will cover expenses of anywhere between three and six months of living. Depending on how much job security you have or how difficult it would be for you to obtain a new job, you may want to adjust your goal accordingly.
It will definitely take time to fully fund this account, but I recommend you make a goal of saving up $1000 as fast as you can to get the ball rolling. For some, this may be easy as you already have at least that much in the bank. For others, you may have never had that much money to your name - ever. Well, it is possible, and after doing so I trust you will have the motivation and momentum to keep saving more.
Do whatever it takes to save up this money. Get a second job. Sell stuff on eBay or on Craigslist. Shovel sidewalks. Deliver newspapers. Babysit. Clean houses. Anything.
Once you have your $1000, put it in a place that is accessible, but not too tempting to take advantage of.
Now the big question - What counts as an emergency?
Only use your emergency fund for unexpected occurrences that you cannot plan for.
Examples: an unexpected pregnancy, you suddenly lose your job, you blow the engine on your car, an emergency room visit, the furnace breaks down.
Examples of non-emergencies: routine car maintenance (oil change, new tires, new belts, etc.), your TV broke, a 75% off clearance sale at Banana Republic, an annual doctor visit, the need for new furniture, craving a mocha frappuccino, you get the idea...
Once you reach your $1000 goal, you can smile big for a day, but the battle is just beginning. After that, it's time to tackle that debt of yours and continue to fully fund the emergency account. Please feel free to share any ideas you have on how to build up your $1000.
Saturday, January 3, 2009
First Things First - Start with a Budget
If you're going to work at getting out of debt, you need to take a very serious and precise approach to the way you handle your money. Consider what you own, what you owe, and what you spend.
The key to creating a budget that makes sense is to assign every dollar you make to a specific category. Some categories are straight forward, such as a grocery budget. Every week you put aside a specific amount for food and each week you spend that amount. Other categories, such as automobile expenses can vary each week or month. Even though you change the oil in the car every three months, you should still put aside 1/3 of that cost each month. Perhaps you pay a life insurance premium annually. Be consistent in putting aside 1/12 of that amount each month.
Always remember, if an expense is expected, it is not an emergency. Plan ahead and you won't be caught off guard with these expenses. Any money that may be left over at the end of your budget, put toward an emergency fund until you have at least $1,000 on hand just in case the unexpected does happen. This could be an emergency room visit or perhaps the need for a new furnace.
You may fill out your entire budget and come to realize your spending outweighs your income. This is a serious problem, especially if it continues for a number of months. This issue must be addressed as soon as possible. Analyze the situation. Can you cut back on entertainment and eating out? I think so. Is your mortgage over 25% of your income? Maybe it's time to move to a smaller house.
On the other hand, how can you raise the top line? Can you work a second job? Deliver pizzas? Sell stuff on eBay? Plainly stated, if your expenses are more than your income, you need to either make more money or start spending less. It's that simple. The rest comes down to creativity.
I do not intend to sound unsympathetic. I understand people have all sorts of different financial situations. But, financial freedom IS possible. We have the privilege of living in a country where opportunity is boundless. If you feel so overwhelmed with the debt on your plate, that you have no idea what to do, contact a financial advisor who can look at your situation and help you out on a one-on-one basis. If you are in this situation, now is not the time to be investing money in the stock market or saving for your kid's college fund. It's time to prioritize and eliminate this debt one dollar at a time.
Use this form from Dave Ramsey to help you keep track of your monthly cash flow. Remember, the bottom number should be ZERO. Have a plan for EVERY dollar you make.
Next time, I'll go into a little more detail about the emergency fund and why you want to have it.
The key to creating a budget that makes sense is to assign every dollar you make to a specific category. Some categories are straight forward, such as a grocery budget. Every week you put aside a specific amount for food and each week you spend that amount. Other categories, such as automobile expenses can vary each week or month. Even though you change the oil in the car every three months, you should still put aside 1/3 of that cost each month. Perhaps you pay a life insurance premium annually. Be consistent in putting aside 1/12 of that amount each month.
Always remember, if an expense is expected, it is not an emergency. Plan ahead and you won't be caught off guard with these expenses. Any money that may be left over at the end of your budget, put toward an emergency fund until you have at least $1,000 on hand just in case the unexpected does happen. This could be an emergency room visit or perhaps the need for a new furnace.
You may fill out your entire budget and come to realize your spending outweighs your income. This is a serious problem, especially if it continues for a number of months. This issue must be addressed as soon as possible. Analyze the situation. Can you cut back on entertainment and eating out? I think so. Is your mortgage over 25% of your income? Maybe it's time to move to a smaller house.
On the other hand, how can you raise the top line? Can you work a second job? Deliver pizzas? Sell stuff on eBay? Plainly stated, if your expenses are more than your income, you need to either make more money or start spending less. It's that simple. The rest comes down to creativity.
I do not intend to sound unsympathetic. I understand people have all sorts of different financial situations. But, financial freedom IS possible. We have the privilege of living in a country where opportunity is boundless. If you feel so overwhelmed with the debt on your plate, that you have no idea what to do, contact a financial advisor who can look at your situation and help you out on a one-on-one basis. If you are in this situation, now is not the time to be investing money in the stock market or saving for your kid's college fund. It's time to prioritize and eliminate this debt one dollar at a time.
Use this form from Dave Ramsey to help you keep track of your monthly cash flow. Remember, the bottom number should be ZERO. Have a plan for EVERY dollar you make.
Next time, I'll go into a little more detail about the emergency fund and why you want to have it.
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