Kenneth Boyd's Blog, page 62

Investing is The Ultimate Path to Wealth

Some people just to things differently than the rest of us.

 

If you’ve read the book “Rich Dad Poor Dad” by Robert Kiyosaki then you already know how the wealthy use their time and resources.

What Is Leverage?

 

In a nutshell, the rich tend to invest their time into building assets, and then leverage these assets over and over again. Most people generate income by swapping their time for money, and that’s a less effective way to build wealth.

 

The fundamental principle underpinning the path to wealth is that of financial leverage. There are limits on how much money a person can make as an employee or small business owner, as they are essentially stuck on a treadmill, swapping their time for money. Since the total amount of time we have is limited, so is our ability to make income using only our time.

 

Get free sample chapters from my book: Not Another Personal Finance Book.

Small business owner and employee are both trading their time for money in a very linear way; the factory worker and the lawyer are directly swapping their time for money – just for different amounts.

 

What About Business Owners?

 

The same can be said for the small business owner and the self-employed. An ambitious consultant, for example, who charges $300 per hour is still “stuck on the treadmill” when it comes to wealth creation, because he only gets paid when trading his most valuable commodity; time.  If the high-paid consultant isn’t able to swap time for money, perhaps due to being sick, going on holiday, or simply being unable to find clients – his income stops.

 

Can You Leverage Time?

 

The big business owner or an investor, in contrast, has time leverage – and it’s this leverage that leads to true wealth. When you build an asset- say a published book for example- you can then leverage your initial effort multiple times to generate passive income.  The book can be sold month after month, without having to create anything new.

 

While might have taken an author hundreds of hours to write a book, if the author subsequently gets paid a $2 royalty on each book sold and sells 10,000 copies each year, that’s a passive income of $20,000 – meaning that he’s rewarded multiple times on their initial effort.

 

This it the path to true wealth and financial freedom, because the individual is now managing assets, rather than trading time for money.

 

Investor Benefits

 

Similarly, investors leverage their financial resources in order to make money – they might spend some time to review different cryptocurrency exchange platforms in order to invest their money wisely, but in doing so they aren’t directly trading time for money in the same way most people do that are employed or self-employed.

 

You can select the level of risk you’re willing to take, and that may vary greatly from one person to another.

 

The investor is ultimately leveraging their assets; meaning they have their resource of money working for them, rather than them working for it.  To understand the magnitude of how wise it can be to start investing, rather than trading time for dollars, think of how much a $1,000 of bitcoin would be worth today if you had bought it a few years back.

 

Make the Effort

 

Creating a passive income model takes a big investment of time, but remember that you can earn a payoff for years into the future. Consider building wealth with a passive income source.

This post is for educational purposes only.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.

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Personal Finance 101: Hints and Tips That Will Keep You in Control Today

Keeping in control of your finances is actually more difficult than you might imagine.

 

There are so many things that you need to keep in mind, and it is easy to get yourself into problems. Getting yourself into a financial mess can cause so much stress and anxiety, and often lead to a lot of problems within relationships.

Take action to improve your personal financial circumstances. There are a lot of things you can do that will help you achieve this, and it’s really a case of keeping on top of things. Take this as a personal finance guide that is going to help you keep in control of your cash right now! Check out these essential tips to set you on the path to great money management.

 

Refinance your Mortgage

 

One of the first things to consider if you are looking to stay in control of your finances is to make sure you refinance your mortgage payments. The mortgage is perhaps the largest financial obligation you’re going to have to deal with in your life, and it can sometimes become difficult to maintain payments.

 

You may consider refinancing your mortgage so that you can reduce your monthly payments This is a great way to reduce your spending each month and to improve your personal finances.

 

Reduce Your Phone Bill

 

Your phone bill is another place you are likely to be spending quite a bit of money.

 

A cell phone is a luxury as well as a necessity, but these days there are so many cheap options that it’s unnecessary to pay a lot of money toward it. There are plenty of things you can do to free up money each month, but reducing your phone bill is one of the most important and essential.

 

Your cell phone bill can almost certainly be slashed, but you should also look at trying to reduce the cost of your landline bill, if necessary, and you might even be able to get rid of your landline phone number altogether.

Get free sample chapters from my book: Not Another Personal Finance Book.

Switch Energy Suppliers

 

You may find success in reducing your energy bills by changing your suppliers. These days, so many companies are focused on attracting new customers to the business. As a result, they offer a lot of reduced offers to encourage people to join up with them.

 

Use this as a way of making sure you cut costs. You can actually do this each year, so you are constantly able to cut costs down and reduce your monthly expenses.

 

Save Each Month

 

Take action so that you’re putting aside money each month, and building a savings account. This step that can help you cover the cost of an emergency.

 

Emergencies are going to happen, and you need to make sure you are prepared. This means you need consistent savings, so you have to put money aside each month to help you save up cash for your emergency and rainy day fund.

 

If you find yourself struggling to save, come up with ways of generating additional income- and save that extra income you produce.

 

Do You Run a Business?

 

If you run a business, you are going to have extra financial considerations to make. This is something that is going to have a big bearing on your finances, and you need to make sure you stay on top of things.

 

There are a lot of courses on starting up a business, so consider educating yourself. Make sure you are factoring in the different costs you are likely to be facing as a business owner, and what you might be able to do to reduce these costs.

 

Get Help and Support

 

You have to make sure you are seeking out help and support if you need it. There are plenty of avenues you may decide to go down if you want to achieve this.

 

Consider speaking with a financial advisor and doing what you can to take charge of your money properly. There are also other avenues to explore, such as loans. Check out https://www.onlinecash4payday.com/cash-advance/ to see the sort of cash advance you might benefit from these days.

 

Make sure that you focus on improving and boosting your financial situation, which means you have to do your research, and ensure you have chosen the right kind of help and support.

 

Understand Your Money

 

It is essential that you understand your money, and the more you can do to keep on top of things the better it will be for everyone. There are a lot of different ideas that can combine to help you focus on improving your financial situation. Understanding your money means you can work out what expenses you are going to be facing every month, and the places you are spending your money where you don’t need to be.

 

 

The Future

 

The future is something you need to keep in mind, especially when it comes to your finances. You have to make sure you understand how much is involved in the process of building a secure financial future.

 

Too many people simply live in the moment when it comes to finances, and this can be a big problem later in life. You have to start building toward the future now. That means starting to get savings and pensions sorted, not to mention the need for making investments as well. This is essential, if you want a future where you can be more financially comfortable.

 

You Can Do It

 

Keeping in control of your money is something so many people seem to struggle with these days. There are a lot of different things that have to combine when it comes to improving and enhancing your personal finances. You need to understand the financial obligations you have for your family and yourself, as well as how you can work on making ends meet better.

Staying on top and in control of your financial situation is so important for easing a lot of stress and making things more comfortable for you.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0

 

 

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How To Manage When You’ve Got Yourself Into A Financial Mess

Money makes the world go around, it’s a vital aspect of daily life, and yet you don’t realise just how important having money is until you don’t have it anymore. Going from having plenty of money to struggling financially can be a ‘”culture shock”’, because the lifestyle change is dramatic.

If you’ve got yourself into somewhat of a financial pickle, shall we say, it’s important not to panic. You might be feeling like there is nothing that you can do to make things better and that you are destined to be financially troubled for the rest of your life, but that isn’t the case.

You can find a solution.

The stress can be enormous, and social studies have shown that one of the number one reasons for suicide is because of financial problems. It’s easy to feel like there’s no way out of the situation that you have found yourself in, but that’s not the case – there is always a way out of any financial problem

Managing when your finances have got out of control isn’t easy, but the truth is there are plenty of options available to you. You can get things back on track- you just need to know what steps you need to take.

Take a moment

 

First things first, take some time out to think carefully about your situation. What’s going on in your life may not be easy, and the main reasons that people get into financial issues are the loss of employment, relationship breakdown, and family problems.

Whatever the reason, it’s important to understand that you can make things better for yourself. So take a moment to think about your situation and get to grips with the fact that it’s fixable.

While you may not be able to fix the issue immediately, what you can do is take steps to start making amends. Spend some time thinking about where it all went wrong; this is important, because you need to know where it all went wrong in the first place. Once you’re aware of the issue, you can prevent it from happening again.

 

Write a list

 

The next step that it’s wise to take is to sit down and write a list of what your financial problems actually are. It’s easier to see things more clearly when they’re written down on paper, so doing this is most definitely worthwhile. Sit down and write a list of your financial issues; create a tick list that clearly shows every problem that you have financially. It’s also worthwhile totting up any debt that you have, so that you have all of the information that you need in one place.

You may feel shocked by the amount of debt you are in or how many financial issues you have but try to take a positive approach to the situation. Think about the fact that you are facing the issue head-on, which means that you can now start doing something about the problem and will soon get your life back on track.

It will take time but at least you aren’t burying you’re head- you’re taking a more proactive approach.

Work out what you owe

 

Call each of your debtors and ask them exactly how much you owe, add this to your running total of debt. It’s easy to see large figure and panic about it, but it’s best not to panic. Instead, stay calm and take the outlook that at least you’re on track to get your debt problem resolved.

The reason it’s so important to see exactly what you owe is that you can’t effectively chip away at it if you don’t know what the amount is. That’s why it’s best to get a total figure so that, over time, you can slowly but surely start knocking small amounts off of it and getting your finances back on track.

 

Get Support

Being in debt or struggling financially can have a huge impact on your mental health and wellbeing, which is why it’s a good idea to speak to a financial support charity. If you aren’t able to cope- or are finding coping difficult- then you may want to speak to a support charity to get some help and advice.

There’s plenty of support available, from anonymous online or telephone support to therapy sessions and group support sessions. Whatever support you need, you should be able to gain access to it.

If you’re not sure where to start, the best places is probably Google. Search ‘financial support charities’ and see what comes up – you’re sure to be met with a list of local and national charities that are available to help you get your finances back in shape while helping to improve your mental health and wellbeing at the same time.

Have a plan?

The most important step that you can take to get your finances back on track is also one of the most simple: make a plan. If you want to change your circumstances and get things back on track, it’s vital that you make a plan of action. If you require help making a plan of action, take the time to speak with a friend, loved one, or your therapist, and ask them to help you.

Start by calling each of your debtors and explaining the situation. Ask them how they can help you and what kind of repayment plan they can offer, and go from there. Just make sure that any payment plan you agree to is affordable, as you don’t want to fail to make the repayments as then you’ll end up in more debt.

If you feel like it would be easy to clear your debt if you only had to pay back one debtor, you could look to consolidate your debt. While there is the option of getting a debt consolidation loan, it’s probably better to take out a ‘normal loan’ such as guarantor loans from Buddy Loans, for instance. This type of guarantor loan could be ideal for you as it covers all of your debts, allowing you to pay them off, and then you’d only had one debt to pay back each month which would be to them, making managing simpler.

The next step is to look at your incomings and outgoings and work out what you can afford to spend each month on each aspect of your life. You need to ensure that you never end up in this kind of mess again, which is why it’s important to work out what you earn and what you can afford to spend. You can download an income and expenditure form from the Internet to use for this, to make working out what funds you have to live off, a little easier.

There are also apps that you can download to use for this, that can help you manage your money more effectively. These apps allow you to enter your bank information and create an income and expense form, and then allows you to set monthly spending limits. The beauty of these apps is that they alert you when you’ve spent too much more or are getting too close to your limit, to help make managing things easier.

 

You can do this

Being in a sticky financial situation is never nice, and it’s incredibly easy to get so overwhelmed that you quite literally don’t know what to do. However, what it’s important to remember is that being in a financial mess doesn’t have to mean that your life is going to turn upside down. It might be hard at first to cope but the tips above should help to make the process of managing the situation a little easier.

It won’t be easy getting things back on track but it’s important to understand that it is possible. If you take note of the tips and advice above, you can easily make changes to your financial situation. It will take time for these changes but if you persevere and take note of the tips above, you can change your financial situation for the better.

It is possible to make changes and overhaul your finances completely, even if it doesn’t feel like it right now, so try and stay calm and focus on the fact that you can change things for the better.

 

This post is for educational purposes only.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0

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Protect Your Money from a Personal Financial Crisis

The problem with a financial crisis is that you never know when it is going to strike. This means that you should be prepared when things are going well, so that you can recover better when they go badly. There are several ways in which you can put yourself in the best position to spring back from a personal financial crisis, and these are just a few of them.

Develop a Buffer Zone

One of the most simple things that you can do to protect your household finances is to amass a decent level of savings. This way, you don’t have to rely on credit or borrowing, should something happen like you lose your job or you are hit with an unexpected bill. As a general frame of reference, it is worth having at least three months’ worth of living expenses in your savings account, but you can take this up to six if you want to be especially prepared.

Make a Budget

Unfortunately, the vast majority of us simply don’t know where our money is going every month because we don’t keep track of it. So, now is the time to write down your weekly and monthly expenses. You may well find that there are cutbacks that you can make, if you are spending excessively in some areas. Minimizing your monthly outgoings is something which you can do regardless of how well things appear to be going at the moment.

Set Up the Right Current and Savings Accounts

In a difficult financial period, you may need to dip into your overdraft. If this should happen, you don’t want to max out on unnecessary fees because your account overcharges you. Similarly, when you put your money into a savings account, you want it to be working as hard as possible for you. You shouldn’t simply stay loyal to a bank, just because you have been using it for a long time if another one is offering you a better deal.

Claim What You’re Entitled To

Perhaps the financial crisis which you are going through is due to a personal injury which is not your fault, in which case you may need an accident lawyer. If you are dismissed from your job in a way which you believe to be unjust, you may find that you are entitled to some sort of compensation. Ultimately, you have to be the one who is pushing for it as no one else will do it for you.

Look at Alternative Income Streams

The final thing that you can do to make sure that you are left in the best financial position in a crisis is to look at the other forms of income out there. Perhaps you could make money from selling your things online, renting out a second room or doing some freelance work on the side. Thankfully, the internet has opened up more revenue stream possibilities than ever before which you can take advantage of.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0

 

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Five Fantastic Financing Methods You Need To Adopt Today

Where did all your money go?

You sift through piles of papers and receipts on your desk at home, trying frantically to figure out where all your money has gone this month. Recently, your financial situation has taken a turn for the worst, but you can’t figure out where you went wrong.

It’s frustrating, because you want to improve your accounting management and feel confident about the state of your bank account. You want to look ahead to the future and see something bright and promising, instead of constant crippling debt bringing you down.

In order to get on top of your personal finances, take a look at these five fantastic financing methods that are going to help you live more comfortably in the long run.

1. Can You Get a Loan Approved?

If your bills are too overwhelming and you are starting to incur late fees, you might want to consider getting a loan. This is a short-term fix that will get you by for a couple of difficult months. Credit Raters will allow you to compare different options, so you can find the best deal to suit your needs.

A consolidation loan can also be useful, because you combine all of your outstanding loans into one monthly payment. It simplifies your payments, and you improve your credit rating as the other lenders are repaid.

2. What About Your Home?

You could reduce your monthly costs by refinancing your mortgage payments at a lower interest rate. Recently, this has become more difficult, as interest rates have started to rise. If you haven’t refinanced- and if your credit rating has improved- look into this as an option.

3. Do You Save Each Month?

Create a monthly budget that includes a savings balance, and stick by your budget. This process will help you fund a savings account, and you can use your savings balance to pay for emergencies, such as a car repair. A savings balance will give you peace of mind.

4. How’s Your Business Plan?

Every business owner should operate his or her business based on a formal business plan, and the plan should be updated each year. Creating and updating a plan forces you to think through each aspect of your business- including spending.

 

 

Get free sample chapters from my book: Not Another Personal Finance Book.

If you are a business owner, review your expenses and consider cutting down on your monthly costs a little. Take a small break from expensive marketing strategies and rethink how much you are paying in overhead.

5. What About Costs?

Similarly, at home you can also try and negotiate a better deal from your energy, water and broadband providers. Most companies are willing to give you a discount, if you’ve been a loyal customer for several years. See how much money you can save by simply giving them a call.

You Can Do It

Getting your finances in order can be extremely frustrating, and solving the problem takes time.

If you think you need a loan to get you out of a short-term situation, carefully plan your repayment of the loan. To cut down your costs over the long term, review your monthly expenses, cut back, and stick to a tighter budget.

It’s never too soon to start saving, so make sure you’re contributing to a savings account on a regular basis. Be practical with your decisions and your financial situation will see a huge improvement.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

Image: https://images.unsplash.com/

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This Blog Post Will Persuade You To Improve Your Financial Management

We’re all busy- and being so busy has an impact on our personal finances.

We know that it’s a good idea to stay on top of our finances, but few of us are consistently trying to do that. It requires a lot of time and effort on your part, and it’s easy to forget about our finances, given other issues in our lives. However, consistently reviewing your financial situation will help you make course corrections and get better financial results.

Here are some actionable tips to improve your personal finances:

Paying Too Much in Fees?

 

If you don’t pay close attention, the amount of fees you’re paying can add up quickly- and take up too much of your monthly income.

It’s important to know exactly what you are paying for when you sign up for a new financial service, such as a loan or a credit card. That means that you need to read all the small print before you sign on the dotted line – you never know what kind of fees could be hidden away in all that text.

Once you do understand all of the different fees, you will get a better idea of whether the service or product is still affordable. If not, you’re better off looking elsewhere for another service or product that won’t sting you with so many fees.

Find more actionable tips about saving and investing here:

Finally, ask the vendor for a discount. A good friend of mine never fails to ask for a discount on any product or service he buys. He figures that, given the amount of competition in every business, he always has another option. Ask for discounts- you’d be surprised how much you can save.

Claiming Compensation

 

Did you know that there are lots of different kinds of compensation and payouts that you could be claiming- but probably aren’t? Improving your financial savvy will help you stay on top of all of this and help you figure out what’s worth trying to claim for.

Get free sample chapters from my book: Not Another Personal Finance Book.

These claims can take many forms. One form is simply taking advantage of coupons, discounts, and rebates whenever possible. Consider joining frequent user programs for restaurants, movie theaters, and other services that you use all the time.

If you are ever in a car accident, you might want to call The Rybak Firm to see about claiming car accident compensation. Other common claims include accidents in the workplace and personal injuries.

Can You Spot Fraud?

Monitoring your finances means that you know exactly how much money is in your bank account. So, if you are ever the victim of theft or fraud, you will spot it a lot quicker. That’s because you will notice any suspicious transactions that appear on your account, and you can raise the alarm quicker to your bank.

Your best defense against fraud is to reconcile your bank accounts within a day or two of getting your bank statement- preferably by accessing your online bank statement right after month end. By doing this, you can pick up on debits to your account that were not authorized. Review your credit card statement quickly, for the same reasons.

It’s always best to try and act as quickly as possible when it comes to fraud and online theft as that will give you the best chance of getting your money back.

How to Pay Off Debt Faster

Smart financial decisions can help you pay off your debt faster, and that will help you increase your saving habits, allowing you to find more money to put towards all of your debt.

Pay off the debt with the highest interest rate first, because that approach will reduce total amount of interest you’ll pay. You also might want to consolidate all of your loans into one monthly payment. It simplifies your life, and makes repayments easier.

As you can see, these are some really good reasons why you should try to improve your financial management. Use these tips to improve your personal finances and gain peace of mind.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0

 

 

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11 Actionable Tips For Saving and Investing

Managing your personal finances can be challenging, and the hardest step is to create a personal budget, build a savings account, and understand retirement plans.

Improve your personal finances with these 11 actionable tips:

#1 Change Is Hard- Be Willing To Change

“To improve is to change; to be perfect is to change often” – Winston Churchill

In 2017, Trinidad and Tobago (a country of slightly less than 1.4 million people) just beat the US Men’s Soccer Team (325 million people) to eliminate the US from the next World Cup soccer tournament. Every few years, we Americans get all jacked up about a new coach, new team members- and we don’t seem to make much progress in Men’s soccer.

Sounds like someone needs to make some serious changes.

(The US Women’s Team, on the other hand, are the current world champions (as of 2017)- which is more proof that the US can figure out international soccer).

Change is hard

The reason that people don’t diet, don’t exercise, and don’t resolve bad personal relationships is that change is hard. As a result, we don’t really, truly change and grow unless we’re in real pain. When we’re at that point, the pain of change is less severe than that pain of not changing.

#2- Delay Gratification

With discipline and time, I think most people can accumulate far more wealth than they think is possible. But growing wealth requires change- which is precisely why most people don’t make the effort. The changes I’m suggesting involve an old friend:

Delayed gratification

Some decisions are relatively small:

Dropping a subscription music service and just listening to the free version (Pandora, for example).
Making coffee at home two days a week, which means that you stop by Starbucks less often.
Buying afew more generic products when you go to the grocery store and Target. (I’m not going generic on salad dressing, however).

Since these are smaller decisions, the amount of gratification you’re delaying is small. You don’t mind listening the commercials on Pandora (I certainly don’t- I just turned down the sound), and the coffee at home isn’t bad.

Other decisions are much bigger. StudySoup wrote this great article on the average amount of money a college student saves by having a roommate. The average savings over four years is over $15,000.

Now, having a roommate is a big sacrifice, because you lose a fair amount of privacy. If privacy is really important to you, it’s a true delay of gratification (until you graduate, get a job and can afford to live alone).

OK- so what do I get out of all this delayed gratification?

You build wealth- which can give you peace of mind.

Here’s a practical example: By making changes to your spending and building a savings account, you create a $1,000 emergency fund. If your car brakes down, you can pay for the repair.

#3- Understand Salary Negotiations

Nearly everyone works as an employee at some point, and understanding salary negotiation has a huge impact on your personal finances. Here’s one of my salary negotiations:

I smiled.

“Yes- I think that number is reasonable, given my skill set and what you need.”

The next one who speaks loses- and I didn’t say a word.

Get free sample chapters from my book: Not Another Personal Finance Book.

Andy, the CEO, thought for a minute. He had asked me three times if I was willing to come  down on my salary demand, and I wasn’t willing to. There were a few reasons why:

 

High-risk position: The CEO was “creating a position for me”, which meant that I wasn’t replacing an existing job position. As I find out later, the CEO had come up with this new position idea after meeting me- which made it that much more risky. There was a higher risk that this job might not work out, and I wanted to be paid for taking that risk.

 

Others in similar roles: I was interviewing in 1997 for a role selling a corporate retirement product to corporations. The product was complex and had a long sales cycle. When I interviewed, I noticed that the people in similar roles were all older than me, and all well-qualified. If the firm had money to pay them, they ought to have the resources to pay me.

 

 Willing to walk away: Most importantly, I had other options and was willing to walk away. This attitude is critical for both salary negotiations and if you’re pricing work as a self-employed person (as I am now). Everyone needs to belief that they can find another job or another client. You need the willingness to say: “I appreciate it, but I can’t meet your needs.”

 

I’ve used that phrase a lot over the years- feels good to say it every once in awhile.

Ironically, my son has NO hesitation telling people no when the money isn’t right. He’s a recent college graduate and a freelance film and video producer. That skill will serve him well as a self-employed person.

#4- Use Negotiation Theory

I think everyone can benefit from an overview of negotiation theory. For starters, you need to keep in mind that, in a negotiation, both sides are giving consideration. In your business law class, you have learned that consideration refers to giving something up. In a job offer, the employer gives up salary and benefits, in exchange for the worker’s time and effort.

Here are some negotiation terms you should know:

Reserve price (reservation price): The minimum dollar amount that a party is willing to accept. Think about the owner of a painting at an auction who won’t take less than $10,000 for the artwork. In my salary negotiation, I had a minimum salary that I was willing to accept.

 

Small pie bias: Many people in salary negotiations underestimate the size of the bargaining zone– the range of salary that both parties are willing to accept. The concept is referred to a small pie bias. Is it a $5,000 range , or $15,000? If you bring value to the firm, it’s probably $15,000.

 

Zone of possible agreement (ZOPA): What need to find is the zone of possible agreement, or the range within which a deal can be reached. Think about a company sale, for example. The seller says: “I can’t accept less than $15 million”, but buyer doesn’t want to pay more than $13 million. Maybe the parties can tweak the negotiation and come up with a price range between $14 and $14.5 million.

Understand these concepts before you negotiate a salary, company bonus or relocation. You’ll be much better off financially, if you can use these tools.

#5- Create a Monthly Budget

The only reliable way to fund a savings account is to create a monthly budget and stick to your budgeting plan. That way, you’ll find ways to save money and budget for a savings amount each month.

You’ll save, because saving money is in your budget. It’s planned and expected. Here’s how;

Take a blank piece of paper and write your after-tax income for the month at the top left side of the page. Write “Fixed Expenses” below that, then skip about half way down the page and write “Variable Expenses”. Assume, for this example that your gross monthly income is $6,000.

 

Fixed expenses: OK, now think about the fixed expenses you have every month and list a description on the left below fixed expenses. That will likely include your home mortgage, car payments, and insurance premium payments. Assume that your fixed expenses add up to $4,500.

 

Variable expenses: You now have to fit your variable expenses and your savings into the remaining $1,500 each month. And variable expenses are the ones you have some control over. Maybe rather than eat out three times a month, you only go twice. Or another one- you brew coffee a home three days a week, rather than come here.

 

Savings account: Your budget should include a monthly amount for savings. The first thing you do each month is pull out your budgeted savings amount and more it into a separate bank account. That way you don’t spend it. As an example, 5% of monthly gross income of $6,000 would be a savings amount of $300.

 

Mobile apps: There are lots of mobile apps to monitor this stuff, but the key is to plan your spending and review where you are a few times a month.

#6- The Benefit of Saving Sooner, Rather Than Later

“Actually, I’ve always lived frugally and saved a lot of my income, so I don’t need to work for awhile”

Wow.

It was 1999, and I was talking to a co-worker, Ron, who was about 50 years old. A large insurance company we both worked for was merging with another firm, and we were both leaving the company. (I left to start my current business).

I had suspected that Ron well below his means, because I had a good idea of how much money he made. Both Ron and his wife worked, yet they lived in a blue collar-type neighborhood with small homes.

Ron wasn’t retiring early, but he had enough money to take some time off. He told me that he and his wife had planned financially, so neither of them would need to start working immediately after leaving a job.

They planned, they saved aggressively, and invested wisely.

This strategy can build wealth- even in times of market volatility. Give it a try.

#7- How an Annuity Explains the Benefits of Consistent Investing

In finance, an ordinary annuity is a series of equal payments made in consecutive periods, and the annual amount you’re able to invest may be an ordinary annuity. You can plug numbers into a future value annuity calculator to find out how much you need to invest each year to reach a $1,000,000 portfolio, for example.

Assume that you invest $10,500 in year one, and that you’re able to increase your invest 3% each year (as your salary or other income increases). They aren’t equal payments, but you still have an annuity.

Assuming an 8% annual rate of return for 25 years, you would be darn close to $1 million ($998,486.43).

What if, instead of investing in the stock market, you simply bought certificates of deposit (CDs) at the bank for 25 years? Assuming that the average interest earned on a CD is 3%, you’d have to invest $19,700 per year to reach $1,001,151.

The goal ($1,000,000 in 25 years) is much harder to reach if you buy CDs, vs. investing in the stock market.

The savings route

If you simply cut expenses and put the money in the bank, the amount of money you have to save must be large. As a result, the only people who accumulate wealth purely by saving (like my grandmother) must do so over many decades. A bank rate of return is so much smaller, and the amount invested is larger.

A little of both

Most people accumulate wealth by:

Creating a personal monthly budget
Saving money each month
Investing money saved in a diversified portfolio

 

It’s a little of both, because you must have the discipline to manage your spending, while you also take some risk as an investor.

 

#8- Understand Retirement Plans

 Using the benefits of a retirement plan allows you to accumulate investment earnings much faster. If your goal is to maximize the amount you can invest, you need to consider using your company’s 401(k) retirement plan

Most 401(k) plans allow you to invest pretax dollars into a retirement plan that’s provided through work. Let’s say you want to invest $100. If you use your company’s 401(k) plan, the entire $100 is invested. The $100 investment – and all of the earnings – aren’t taxed until you take money out of the plan at retirement.

If you didn’t use the company plan, you’d pay taxes on the $100 first, so not as much money would be invested. Instead of investing $100, maybe you invest only $80. Over 20 to 30 years, that extra $20 investment can make a huge difference in your total return.

 

#9- Why Retirement Plan Distributions Are Important

 

How you take money out of a retirement plan is just as important as investing in plan. Your decisions have a big impact on how much you can withdraw, and the taxes you’ll pay on distributions.

Assume, for example, that a $100 is invested and becomes $300 in 20 years. None of those dollars have been taxed yet. So, when you start taking money out for retirement, the entire $300 balance is taxed as you make withdrawals.

Work with a CPA and a financial advisor to understand the retirement plan dollars you must withdraw each year, and the tax impact of each withdrawal.

 

#10- How a Retirement Plan Match Benefits You

A retirement plan match refers to the additional pre-tax dollars an employer will invest in your retirement plan, based on the amount you personally invest.

Let’s say that you can earn a 5% on your 401(k) contributions. A 5% company match means that the firm will invest an additional $5, so your total investment is $105. If you don’t invest in your 401(k) and get the company matching dollars, you’re leaving money on the table. That extra 5% can make a huge difference between now and retirement.

#11- Rollover Your Retirement Plan To Keep Earnings Tax Deferred

The key is to keep your retirement plan funds in a tax-deferred account, and you can do that with a retirement plan rollover. In many cases, You can move your account balance into another retirement plan as long as you complete the rollover within 60 days of withdrawing the funds.

Here’s how you can do it:

Request a distribution from your current retirement plan.
Open an Individual Retirement Account (IRA) for your rollover balance.
Start investing in a retirement plan at your new job (if they offer it)

Keep in mind that you can move the IRA balance into the retirement plan at the new job- it’s an option, if the new plan has a good track record of performance.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

Image: Bullseye, Jeff Turner CC by 2.0

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How Other People Can Affect Your Financial Standing

Life is all about continuous change, and much of that change occurs in relationships with other people. Your relationships also have an impact on your personal finances. Consider how other people can impact your finances, and how you can take steps to prevent problems down the road.

There are very few instances of life where you’re truly by yourself, or where nobody else has an impact. For most things, you’re subject to the actions and influences of others, and nowhere is this felt more keenly than in our finances.

It can be difficult to balance your interactions with people and your need to monitor your spending and investing.

Here are some areas that can leave you in a financial mess, if you’re not careful.

Who Is Spending It?

Don’t worry about spending your money: others will happily do it for you. Have you noticed that people tend to earmark your cash for things that they want you to do? Their intentions are good, but when they’re inviting you to a wedding that’s overseas, or making lavish plans for a birthday night out, they may ask for a financial commitment that makes you uncomfortable.

There’s nothing wrong with saying no to spending a great deal of money.

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It’s a tough one to manage, because you may hurt people’s feelings. If the spending is going to put you in financial difficulties, however, you should simply say no.

What About an Injury?

It’s a crazy world out there, and you never know what’s going to happen. You could be driving along the road without a care in the world, and then, thanks to the actions of another driver, are injured and have to take time off work. You’ve done nothing wrong, yet your finances are in a downward spiral.

Fortunately, the law may be on your side. You can contact The Levin Firm and see if you’re able to claim compensation for the injuries that the other driver caused. An accident may cause physical and emotional pain, so reach out to family and friends, to that you can make an informed decision about this legal issue.

In the Family

Now, we’re not going to say that a family isn’t worth it – but we will say that it can be expensive! The cost of those initial dates, the wedding, and, perhaps most of all, any children you may have will have a huge impact on how much money is in your bank account. For many people, however, this is most likely a price that’s worth paying.

Facing Business Competition

If you own a business, then you’re only one other person away from potentially being in some financial difficulty. Business thrives on competition – there are no easy routes! If someone decides to set up a similar business in the same area, you could see your profits become to slump, which will naturally have an impact on how much money you have.

Keeping Up

Comparisons are a dangerous thing, because there will always be someone who has more money, a nicer car, or takes a more expensive vacation than you. Just take a look at social media.

Peer pressure- or the desire to be “better” than the person next to you- might be the biggest cash sapper of all. If you’re always buying material goods to prove your worth to others, consider what’s really motivating you. It may ease a lot of your financial burdens in the process.

Use these tips to assess major spending decisions and keep your personal finances on track.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0

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Making Sure Your Entrepreneurial Spirit Doesn’t Hurt Your Finances

People with an entrepreneurial spirit are driven, and they have lots of ideas and energy. If this describes you, consider how your business results impact your personal finances. Use these tips to keep your business and personal finances well organized, and to make informed decisions for both categories.

You’ve got a mind that’s flooding with ideas. You can see what your business will look like, how it’ll make money, and what you need to do to get the project underway.

But before you get too far down the rabbit hole of planning your business, keep in mind that your business is going to have an impact on your personal finances, even if the business records are completely separate from personal records. Take these steps to ensure your business journey doesn’t hurt your personal financial landscape.

Your Finances

You don’t have to have an entirely rosy financial standing in order to start a business, but it’ll help if it’s not in a state of disarray. If you’ve got a lot of debt, then you’ll find it more difficult to get the funding you need to get your business underway. While you may be able to get some types of funding, they are unlikely to be at reasonable interest rates.

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It might be worthwhile to focus on paying down some of that debt, and getting your finances under control- before pursuing a bigger project.

Business Risk

As good as your idea might be, it’s not worth wiping yourself out financially. Of course, there’s always a risk attached to starting a business. The trick is to make sure you’re taking a reasonable level of business risk.

So how you do assess the risk?

Invest the time to create a comprehensive business plan before you start your business. The plan should include marketing research, and several years of projected financial statements, among other items. Writing the plan helps you address every critical factor in your business, which can reduce risk.

Once you write the business plan, consider a variety of sources for the start-up cash you need to get your business up and running. You may consider traditional business loans, peer to peer loans, crowdfunding, or bringing investors on board.

How to Separate Finances

It’s imperative that you keep your finances separate, so that your business expenses should not overlap with your personal expenses, and vice versa. Do this from the very first day you open your business; the longer you wait, the more difficult it’ll be to sort one expense from the other. This means having a business account, credit card, and so on.

Keeping records separate allows you to accurately track your business profits.

If Things Go Wrong

You would like to think that your business is going to be a success, and will flourish for years and years to come. But of course, there are no guarantees; most new companies don’t make it to the five-year mark.

Make sure you’re planning for potential legal issues by working with a firm like Hackard Law; by implementing asset protection measures, you’ll protect your personal savings. You can’t prevent things from going wrong, but can minimize the extent of the damage.

Knowing When To Quit

You might have an unwavering belief in your business, and while this is usually a good thing, it can potentially be a problem. To keep your finances healthy, it’s important to know when you should continue to roll the dice, and when to quit.  These are tough, emotional decisions, so ask friends and business associates to help you with this issue.

Use these tips to keep your personal finances on track, and to grow your business.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0

 

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Cash Crash: How To Recover After An Accident

Recovering after a car crash can be traumatic, and it takes an effort to recover physically and financially from this type of event. Consider these tips to recover successfully from a car accident, and get your personal finances back on track.

As the population increases, accidents are getting more common. Millions of them happen every year, and they cause more than simply damage to the car. Crashes lead to injuries, and they force people to take time off work. As a result, your finances can take a huge hit, and the immediate future is in jeopardy. Sadly, it happens more than people realize and leaves families and homes damaged.

Recovering financially after an accident is as essential as recovering physically. Here are the basics:

Insurance Claims

The insurance premiums that you pay for coverage justify your decision to file a claim if your car is damaged, or if you have physical injuries. This is the whole reason to budget each month and pay for insurance premiums. Incidents that aren’t your fault deserve compensation. Otherwise, you’ll end up in financial trouble due to another person’s negligence.

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Secondly, the money can secure your finances for a long time. Talk to EmrochandKilduff.com today and go over the basics. Speaking with an expert may ease your anxiety and encourage you to move forward.

Negotiations

The amount you receive in a legal settlement is critically important, because it must cover the cost of fixing or replacing your car, along with the health care expenses that must be paid so that you can recover physically. It’s a big decision, so get help from an expert.

The lawyers are the ones who cut deals and advise their clients. However, this doesn’t mean you can’t list a handful of your preferences. For instance, some settlements involve contributions towards healthcare. Considering the cost of treatment is likely to be high, it makes sense to include it in the negotiations.

Yes, the lump sum payment will be smaller but the overall deal will be tailored towards your lifestyle. Doctors are flexible according to cnbc.com yet there’s no point taking the risk. Give your needs and wants to an attorney and let them do the rest.

Managing Funds

As soon as the news come through that you’ve been awarded a legal settlement, you’ll start spending the money, but you shouldn’t fritter away the money away on a whim. Rather, invest it in a portfolio of diversified stocks and bonds, so that the investment earnings can help to cover your medical and other expenses. Spending is risky, but investopedia.com has a guide to help. Also, get help from a financial advisor on this issue.

What About Lenders?

The worst-case scenario is that your attorney can’t negotiate a reasonable settlement amount. Or, maybe there is but it won’t come into view for quite a while. Bills and arrears don’t go away because creditors want their money back ASAP.

The best thing to do is pick up the phone and call your creditors. Talking to them about paying a lesser amount now and setting up a payment plan often works. Why? It’s because they want to see a return on their investment (their loans to you), even if the payments arrive later than scheduled.

Ask people for help, create a plan, and you can recover physically and financially from a car accident.

This post is for educational purposes only.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0

 

 

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