Kenneth Boyd's Blog, page 64
June 13, 2018
4 Persistent Myths About Business Finance Busted Wide Open
Going into business for yourself can be incredibly liberating. If you’ve spent years working for someone else, the prospect of being your own boss can be incredibly appealing. You’ll have the ability to choose your clients, the type of work you do, and the prices you charge. Owning your own business can also have a positive impact on your personal finances.
How Economies Benefit
The vast majority of businesses are classified as small businesses, and smaller operators benefit the local economy in numerous ways. They generate wealth, which tends to be redistributed into the local economy, and business owners support other local owners.
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Small businesses hire local employees, who also spend their money locally, all of which benefits the communities in which the owners and employees live. Smaller businesses tend to have less complex tax returns, and they pay their corporate taxes much more dutifully than tax dodging giants that you might read about in the media.
What About Risks?
While small businesses can be of enormous benefit to the local community, and a passport to a more rewarding career, it would be disingenuous to say that they were risk free endeavors. Only around 50% of businesses make it past their first 5 years and of those, only 25% make it past the 15 year mark.
But the inherent risk of starting a new business needn’t impede smart, capable, inventive, and adventurous people from at least attempting to start their own business.
Even entrepreneurs that fail have a tendency to bounce back stronger for their initial failure. Indeed, failure can be a motivator that leads to bigger and better things. From Thomas Edison to Richard Branson, there are dozens of wealthy and influential people who failed in their early endeavors.
Do You Believe In Myths?
Many would-be entrepreneurs are put off by the notion of failure, or are misinformed by persistent financial myths that lead them to believe it would be impossible or unprofitable to bring their businesses to life and therefore deprive the world of their clever, inventive, and viable businesses ideas.
If you’re recovering from a financial setback, this article may help.
Here we’re going to bust some of those myths wide open and in so doing hopefully empower you with the knowledge and confidence to start your business journey if you haven’t already…
#1: Banks Hate Entrepreneurs
While banks are far from the only game in town, they are a largely reliable source of credit on equitable terms. It’s certainly true that in the wake of the financial crisis of 2007-2008 banks (along with all manner of lenders) have become a lot more careful when it comes to lending money- and this should be seen as a good thing.
Nothing will hamper your business like being given more money than you need or more than you can realistically pay off in your all-important early years. A bank should, in fact, be your first port of call for business funding even if you are a first time entrepreneur. Is there a chance that they might say no? Absolutely.
But a banker may be able to provide valuable feedback, which could make your enterprise more viable with a few subtle tweaks to your business plan.
If you live in the UK, you should most certainly make a bank your first port of call. Even if they are unable to help you, under the Small Business Enterprise and Employment Act of 2015 they are legally obliged to help you find alternative funding, even if they turn you down for a business loan.
#2 Bankruptcy Ends It
While bankruptcy can be an impediment to success in business, we’ve been conditioned by a childhood spent playing Monopoly to believe that a declaration of bankruptcy must be the end of our entrepreneurial ambitions. But all it takes is a look at all the successful business people and celebrities who’ve been declared bankrupt at least once.
Successful people from Walt Disney to Steve Jobs have been able to bounce back and create multi billion dollar empires. Bankruptcy needn’t be the end for your business. In fact, there are benefits of filing bankruptcy when you run a business.
Indeed, it can even save a floundering business, because bankruptcy can help to save a business from creditors who may try to liquidate your assets and buy you the time you need to get your financial affairs in order.
#3 Bad Credit Is a Non-Starter
Bad personal credit can certainly be infuriating, but rarely need it slam the door of business opportunity in your face. Sure, it may make your life a little harder, but wily entrepreneurs with worse credit ratings than yours have been able to find ways of making it work.
When applying for business loan, the lending decision will usually rest with an analysis of your personal and business finances. Of course, if you are a nascent entrepreneur, the decision will be based entirely on your personal finances. Yet, even if your credit rating is disastrous, you may be able to right the ship by getting a consolidation loan.
Not only will a consolidation loan make your debt more manageable, it will be advantageous to your credit score, as it will replace all of your existing debts so that on paper you will only have one debt rather than several. So long as you’re able to meet your commitments to this debt, you’re financial situation can improve greatly over time.
Plus, let’s not forget that there are other funding channels such as crowdfunding in which your personal credit plays no role.
#4 Low Overhead Is The Key To Everything
By all means be conscious of your overhead and make sure that they don’t spiral out of control. At the same time, however, canny entrepreneurs know that a reasonable level of spending is required to succeed. Sure, you should guard against indiscriminate spending, but be aware that under investing in your business can be just as toxic as over spending.
Rather than focus on keeping your overhead down to maintain your profit margins, you should spend with an eye on calculating your investment’s fiscal multiplier and how long it will take for your investment to show a healthy return.
Break Your Mold
If you believe the myths explained above, take a hard look at your beliefs about starting a business and break out of your mold- be open minded. With a great deal of planning and hard work, starting your own business may work 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
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4 Limited Company Liabilities and Legalities You Should Know About
Two major issues for any business owner are the ability to generate profits, and protection from legal liability.
The U.S. tax law provides for Limited Liability Companies (LLCs), which offer ownership flexibility and legal protections for the owner. The UK offers business owners a similar business structure: a limited company. Here are the pros and cons of the limited company structure, and the potential impact on your personal finances.
For many years, you have been drafting plans for your new business; you’re creative, savvy and smart, but that doesn’t mean you won’t make any mistakes along the way. Your startup can achieve success if you know the ins and outs of business, including becoming a limited company.
With a limited company, the liability of your members or subscribers is limited to what they have invested in the company. With this in mind, there are actually many advantages of making your business a limited one. There are also legalities and legislations you should be aware of too. Let’s explore four issues that you might come across when you set up your business.
Why Tax Issues Are So Important
When you form a limited company, it will be recognized as an entity in its own right as long as you correctly register with HMRC and Companies House. An advantage of being a limited company is that you will only need to pay 19% corporation tax on your company profits until 2020. A business structure with a lower tax rate allows you to keep more profits each year.
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You should also be made aware of the IR35 legislation, which is relevant to any UK contractor operating via a limited company. Keep up to speed with the latest advice here, IR35 – Expert IR35 Advice & IR35 Resources – Qdos Contractor. Sign up for guidance on IR35 from renowned experts. Don’t get caught unaware; expand your knowledge and make sure you’re covered.
Your Personal Liability
Your personal assets will be protected if your business is faced with a legal liability. A limited company business structure helps reduce the need to use personal money to pay off debts that the company owes. Because the business is a separate entity, the limited company bears responsibility for its own financial decisions.
If you’re recovering from a financial setback, this article may help.
If your business expands and offers shares to investors, each shareholder’s liability is limited to his or her original investment.
How Pension Plans Work
When you run a limited company, you’re able to invest into a pension scheme, using pre-tax dollars. This is a more effective option than using your own income to start up a personal pension, because personal pension contributions are funded with after-tax dollars.
Having a pension is extremely important, especially as an entrepreneur. You can fund a persion plan as a business owner, which allows you to save for retirement.
Your Legacy
If you remain as a sole trader (sole proprietor), the business won’t be able to operate without you. A limited company is independent from you; you can have a staff of people who can carry on your work when you no longer involved.
Whether pass away, or can no longer dedicate time to the business, it will still be able to operate in the future. The profits generated after you’re gone can provide an income to your surviving beneficiaries.
So, brush up your business knowledge and make your company limited; if you already run a limited company, make sure you seek out advice from the experts, so that you can plan for business growth and put a succession plan in place.
For informational 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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June 8, 2018
Business vs. Personal Finances: Keeping Things Separate
How is your business performing? Are you making a profit?
For many business owners, the answer is: “I’m not sure…”
When you set up a new business or start to work for yourself, you need to establish some business accounting records, and can keep your business and personal finances separate. If you combine the two, things will get complicated, especially when it comes to filing your personal tax return and corporate tax filing. Avoid problems with your personal finances by using the tips explained below.
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Why Hire An Accountant?
When you establish your business, hire an accountant, such as https://bacallconniff.com/ if you don’t already have one. Accountants assist you with both your personal and professional finances, and serve as an extra set of eyes on your records.
They will let you know if you classify a personal expense as a business one, or the other way around. Accountants have reliable methods for keeping your personal and business finances separate- here are two of those methods:
Chart of accounts: An accountant will help you set up a chart of accounts for your business, which is a list of each account you need and an account number. For example, you may have account #1000 for cash and #4000 for accounts payable. Accounting software packages allow your accountant to quickly set up your account list. Since every business transaction must be assigned to an account, personal transactions can be avoided.
Bank reconciliation: You should maintain a separate business bank account, and your accountant can either perform your bank reconciliation, or review your work. A quick review of the bank account activity can identify personal transactions that should be removed.
The cost of an accountant will pay off, because your CPA can help you keep business and personal transactions separated.
Should You Have One Credit Card?
You should have separate business and personal credit cards, just as you have separate checking accounts.
If you already have a credit card for personal use, you should take a look at https://best.creditcard/ and find one that you can use with your business account. This then gives you the chance to start building up a credit history for your business. It’s important that you have different credit ratings for yourself and the business, so that one credit rating doesn’t impact the other.
Smart choices regarding your business credit rating increase your chances of being accepted for business loans.
Dealing With A Salary
As a business owner, you will have the chance to pay yourself a salary from the business account. This will be paid straight into your personal account on the same date each month.
Once you know that there is regular money coming into your personal account each month, you won’t be as likely to dip into your business money to make a purchase. This will help your business and personal finances stay well within budget.
Keep Receipts Separate
Whenever you have any expenses, whether business or personal, it is always necessary to hold onto the receipts, and you need to keep a file of business expenses to support the information on your tax return. Store your personal and business receipts in two different boxes, or as files on the cloud.
Make The Process Easy
As you can see, it isn’t too difficult to keep these two sets of finances separate, so use these tips to keep your records in order. If you ever end up mixing the two, though, it’s worth reaching out to your accountant for help and advice.
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
The post Business vs. Personal Finances: Keeping Things Separate appeared first on Accounting Accidentally.
June 6, 2018
3 Ways Being Cheap Can Prove To Be Costly
Thinking about your spending decisions is important, but don’t overdo it.
To improve your personal finances, you have to become frugal. This is especially true if you’re trying to pay off debt; you may want to slash your budget to the bone, so that you can repay your debts as soon as possible.
Sadly, frugality is often confused with another type of financial behavior: being cheap. It’s tempting to think that living as cheaply as possible is a great decision. After all, by being cheap you’ll pay your debts off quickly and be able to amass decent savings— so how could being cheap ever be a problem if it produces those results? Read on to find out…
Why Replacements Are So Important
Sometimes, you can buy an item for an incredibly low price and it’ll last for years. However, there are types of products where buying cheap items just isn’t worth it, because the item will deteriorate quickly and you’ll have to replace it. It never pays to skimp on:
Footwear
Electronic equipment
Cooking equipment
I still use a pair of hiking boots that I bought for college 30+ years ago. They were expensive, but they’re still wearable. Spending less on these areas just means you will have to replace items more often, which will ultimately prove to be more expensive than just buying quality products to begin with.
Long-Term Decisions
When your only concern is spending as little money as possible, you’re not going to make intelligent decisions for the long term. If your decision is only based on saving the most money now, you may be worse off over time.
Let’s say you’re out on the town and enjoying yourself. You’ve probably had a bit too much to drink; you’re not drunk, but you’re not feeling 100% sober either. You could take a taxi home, but that’d be expensive, so you decide to drive home. The consequences of this decision could be absolutely dire; you could get in an accident, be prosecuted, and even a find yourself defending a case against firms such as Aitken – Aitken – Cohn; firms that have vast experience in winning cases against people in your situation. Ultimately, that one cheap decision could cost you your driving license, or your job.
If you’re recovering from a financial setback, this article may help.
This, of course, is an extreme example, but it explains why being cheap may have dire consequences. When money is the only factor in your decision-making process, your decision-making process is inherently flawed.
Is Rewarding Yourself OK?
When it comes to managing your finances and your personal budget, it’s easy to assume the only thing you have to worry about is numbers on the page. However, you need to balance your desire to reduce costs with your emotional well being.
It’s ok to reward yourself every once in a while.
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If you choose a continuous path of “as cheap as possible”, it won’t be long until you begin to feel denied, left out, and restricted. Good financial management should never impact your emotionally; there should always be some room for flexibility, and the occasional financial indulgence every now and again. Treat yourself occasionally, rather than insisting on being as cheap as possible; it will do wonders for your overall mood, willpower, and determination to manage your finances in future.
When you reach a goal or have an accomplishment, reward yourself.
Are You Balanced?
Having a frugal, thrifty attitude to your finances is good, but being cheap is bad. Try to balance your need to save with the desire to indulge. Balancing these desires is crucial to successful personal financial management, so keep these points in mind, and make sure you stay in balance.
This 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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June 5, 2018
Let’s Talk About Wealth And How You Can Increase Yours
Creating a plan for your personal finances can help you get better outcomes, regardless of your current financial situation. Your financial plan should address your monthly expenses, managing your debt, and funding a savings account. Use these tips to improve your personal finances.
Why Expenses Are So Important
The best way to increase your wealth is to reduce your expenses, because controlling your expenses provides funds to manage your debt payments and to invest. You can make your salary go much further, if you think carefully about your current spending.
As we’ve discussed in the past, the best place to start is to create a monthly budget. Once you have an idea of how much money you need for your fixed costs (car payments, home mortgage or lease, insurance premiums), you’ll know how much income you have for discretionary spending (food, clothing, entertainment).
If you budget doesn’t leave dollars left over for savings, you should aim to reduce your expenses. Think creatively when it comes to your expenditures, and take a look at every spending category. Start with your discretionary spending, because those are variable expenses that you can cut. Try eating out less, or cut back on buying coffee at Starbucks. Ask your insurance agent to review your coverage, to determine if you can reduce your premium payments.
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With some effort, you can reduce your total spending and free up dollars to save and invest.
The Danger of Debt
If you don’t manage your debt properly, it will have a damaging impact on your personal finances. You’ll pay far more interest on loans that is necessary, and you may incur additional fees and penalties. If you don’t make debt payments on time, your credit rating will suffer, which makes it more difficult and expensive to borrow money in the future.
Think about your money in the same way that a business thinks about its finances – you can maximize your profits by reducing your costs. And one of the biggest costs that people face in life is debt. Much like your gas bill or mortgage payments, debt payments become a monthly occurrence that slowly drains your bank account. However, for many of us, borrowing money is unavoidable; you probably needed a loan for college or your first house.
That being said, there are ways to make your debt repayments more manageable. You could check out studentloansconsolidation.co for programs that will help you to consolidate your student loans into manageable payments. You can’t increase your wealth until you get your debt under control.
The Magic of Investing
Investing consistently can generate a large amount wealth over time, because of the magic of compounding interest. Compounding interest refers to earning “interest on interest” by reinvesting your interest and dividend payments. If you reinvest your earnings, you’ll earn far more money over time. The sacrifices you make to cut your expenses and invest can pay off, if you compounding your earnings.
Investing your money is the best way to create wealth over time, as explained over at nytimes.com. Rather than leaving your earnings in your bank account to slowly gather interest, you should withdraw some of your money and seek opportunities to compound your earnings at a higher rate of return.
If you understand the real estate business, you might buy properties, renovate them, and upsell the property at a gain. You can also research and invest in a diverisified portfolio of stocks and bonds. As stated over at barbarafriedbergpersonalfinance.com, increasing your wealth may involve taking risks.
This 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.
The post Let’s Talk About Wealth And How You Can Increase Yours appeared first on Accounting Accidentally.
June 2, 2018
The Core Principles of Starting Your Own Business
Entrepreneurship may seem lucrative, and successful business owners are discussed and promoted in the media. Being an entrepreneur may look exciting and fun, but the road to success is very difficult. Those who succeed take huge risks, work long hours, and find a certain amount of luck along the way. Your decision to start a business also has a big impact on your personal finances.
If you’ve had some professional success and accumulated some savings, you might consider starting your own business. Before you take the plunge, consider these great tips from business owners who actually made it over the 5-year hump. Their advice may put you in a better position to manage your start-up and reduce its amount of debt over time.
Why People Are So Important
People add more value to your startup than any other factor. You may already realize that your staff is the most important part of your business – but do you know how to make sure you’re taking care of their needs, compensating them adequately, and helping them advance their careers?
Understanding how to be a great manager- and how to create a startup that will attract highly talented people- is vital to your success. Invest in employee training, which allows your workers to increase their skill sets and advance their careers. Offer a set of benefits (insurance, retirement plans, profit sharing) that is competitive in your industry. These steps will motivate great employees to join your firm and stay with you over the long term.
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Word gets around.
It you treat people well, help them increase their skills, and compensate them fairly, you can quickly replace a talented employee who decides to leave.
How to Finance a Business
Regardless of what you might think, you can actually get start-up business loans with bad credit. The trick to taking out a business loan and growing your startup is to learn how to manage your debt – and how to stay realistic about your loan payments.
Invest the time to write a comprehensive business plan, because the process forces you to consider most of the variables- good and bad- that may occur in your business. Your plan should include financial projections for several years, and you can find software that will create the projections for you. If you plan on borrowing money, your cash flow projections should include the principal and interest payments on the loan.
Many entrepreneurs work part-time while they start a business. If your projected sales and profits aren’t large enough to generate a full-time income, consider starting the business while you work part-time.
Who Can Help You?
Anybody embarking on a new journey in life should find a good mentor to guide them through the toughest paths. Choose wisely, however, and make sure it is someone who has already built a successful business, rather than someone who didn’t make it – the latter will surely have a lot of advice, but it’s a good idea to listen to those who actually made it.
Startups are risky and you should do a lot of research and preparation before giving up your day job. Write a formal business plan, talk to successful entrepreneurs, and be realistic about the amount of work required to succeed.
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
The post The Core Principles of Starting Your Own Business appeared first on Accounting Accidentally.
May 31, 2018
Finding The Light At The End Of The Debt Tunnel
For many consumers, managing debt can seem overwhelming. Finding an effective way to reduce debt is a key to improving your personal finances. Use these tips to find a light at the end of the debt tunnel and improve your finances.
In 2017, household debt in the U.S. rose to more than $13 trillion. While debt is rising, many borrowers are seeing small increases in their income, or no pay raises at all. This situation makes paying down debt more challenging, which is why you need to think carefully about a plan for debt management.
An Important First Step
When you owe money, it’s often easier to ignore bills and statements than to face up to what’s actually happening in your accounts. If you’ve been guilty of neglecting your finances, or you haven’t checked your balance or your credit card statement in a while, there’s no time like the present.
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Open those letters from the bank, go online and check your balances, and write everything down. You need to have clarity before you can move on, and it’s essential to understand how much you owe and who you need to pay. Once you have this information, you can work on taking the next step.
What Should You Pay First?
Each debt has a different payment schedule, and you can use that information to create your debt repayment plan. Your mortgage loan may have a repayment schedule over 20 years or more, while a car loan must be repaid in 2-4 years. Your credit card bill must be paid in months, rather than years, to prevent a large amount of interest on the card balance.
Put all of your debts on a spreadsheet, create a column for each month, and list your monthly payments for each debt. If you’re only making minimum monthly payments on your credit card, you’ll have to pay interest on the balance- and possibly additional fees.
Why a List of Priorities Matters
Your first priority is to find some extra dollars each month to pay down the credit card balance. Take a look at all of your monthly spending, and review the dollars you spend on food, meals, and entertainment. These variable expenses can be cut, and you can use the extra dollars to pay down your credit card.
Once you pay off the credit card, you can use the dollars you were paying toward the credit card to reduce another debt. Since the car payment comes due next, pay more on that loan. You’ll reduce your total interest costs if you pay down principal on the loan faster.
Impact on Your Credit Rating
Reducing your debt will have a positive impact on your credit rating. If you have black marks on your record, this can affect your credit rating, which will make it harder to borrow money in the future. For more information about credit scores, check out this guide http://money.cnn.com/2017/05/08/pf/credit-score-tips/index.html.
If you prioritize the debts that are costing you money to prevent fines and reduce your overall debt, and your credit rating will improve.
Where to Find Help
It can be distressing to feel like there’s no way out, but you can find light at the end of the tunnel. If you’re in trouble, seek help from an experienced debt advisor. They can talk you through your options and help you move in the right direction. It may be possible to consider options like debt consolidation loans available from sites like debtconsolidation.co or to come to an arrangement with a creditor, which enables you to clear a debt by paying installments. The sooner you seek help, the better, because debts can spiral quickly.
If you owe money, you may feel like there’s no way out. The good news is that help is available. Don’t hesitate to seek advice and explore your options. The sooner you act, the higher the chance of finding a practical solution and alleviating unwanted stress.
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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May 29, 2018
The Struggles Of Earning Money From Rental Properties
For decades, real estate has been a useful investment option, particularly as a way to diversify a portfolio that contains stock and bond investments. One way to produce a return on real estate is to generate rental income, and this form of income can improve your personal finance situation.
If you can develop a regular source of income, you can use the funds to maintain the property, make principal and interest payments on a property loan, and reinvest any excess cash.
Keep in mind, however that many property owners lose money on rental properties. There are risks related to the property location, maintenance costs, and renters who are not reliable tenants. Use these tips to understand the biggest struggles of earning money from rental properties and how to avoid them.
Get free sample chapters from my book: Not Another Personal Finance Book.
Are Your Tenants Reliable?
The biggest issue you face is renting to tenants that don’t pay rent on time, or stop paying completely. Your first line of defense is to have a formal rental agreement reviewed by an attorney, and to have each tenant sign and date the agreement.
If a tenant does not pay, that person is violating a contractual requirement- but it can be challenging to demand the money from them if you’re managing the property by yourself. To avoid this, you need to seek out residential property management services, which will enable others to take control of rent payments. This means you have a team working on your property and ensuring people pay when they need to pay.
Finding Tenants
It’s essential for a rental property owner to find tenants whenever the property is vacant, so that the property can produce rental income consistently. Without tenants, you’re wasting an investment, and you need to think about what to do.
The key here is to market your property effectively. Get it on various websites, including lots of beautiful photos, and list all the amenities a tenant will receive.
The rent price is almost important; the price should match up with other prices in the area for a similar property to yours. If your rental price is too high, tenants will rent similar properties that are less expensive, and you won’t generate sufficient rental income.
Are Tenants Staying?
Lastly, a rental property can struggle if it doesn’t manage to hold onto tenants for a long time. Let’s say you finally find someone that rents your property, but they leave after six months. You’re back to square one without any tenants.
Obviously, if someone signs a short-term lease, then you should continue advertising the property, but make it clear it’s only available after their lease ends. This helps you find interested parties before they leave, meaning you can make a seamless transition when they go. But, if they leave because they’re unhappy with your property, then you need to work on being a better landlord and providing better services.
Essentially, all your main problems are tenant-related! If you can find tenants, ensure that they pay rent on time, and can keep them for a long time, then you end up producing a consistent stream of rental income.
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: Karol M Houses all in a row (CC By 2.0)
The post The Struggles Of Earning Money From Rental Properties appeared first on Accounting Accidentally.
May 21, 2018
Protecting Yourself Financially As You Age
Managing your finances effectively becomes critical as you age.
Smart decisions about your finances help you generate enough assets to retire, and create wealth that you can pass on to your family. Here are some pointers you can use to get on track financially:
Why You Need a Contingency Plan
One of the most important things you can do is create a contingency plan, as this will help you in the event of mental decline. Your plan can include written instructions to consult with family members or other professionals such as physicians, social workers, and counselors.
If you don’t have any close family members, then you might authorize the financial adviser or a trust company to handle your affairs.
This isn’t something most people like to think about, but it’s an essential concern to consider in advance.
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Key Factors For Retirement
If you’re approaching retirement, it’s important to remember that each extra year of work will increase your retirement income, and delaying the start of your Social Security benefits can increase your benefit payments.
If you stay in the workforce longer, you’ll have more money in retirement. If you’re approaching retirement age, consult with a financial advisor and get their feedback on your planned retirement date.
In Your 30s-40s
If you’re in your 30s and 40s, keep on making your 401k contributions, and take advantage of the current market to rebalance your investments. You should have a diverse mix of stocks and bonds, and this strategy will protect the value of your assets over in the long run.
In Your 20s
You’re in a position to cash in, if you’re in your 20s. At 25 years of age, you’ll be investing with many years until retirement, so in addition to your workplace 401(k), put as much as you can realistically afford (up to $5,000 this year) into a Roth IRA. This money will build up tax-free until you need it for your retirement.
Use as little cash as you can for everyday life so you can put as much as you can into your retirement accounts. In a 15-20 years, you can build a large investment balance using this strategy.
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What About Financial Documents?
Make sure that you keep documents secure, including your estate planning documents. You’ll also want to ensure you have any medicaid planning documents from https://www.elderneedslaw.com files securely. You may need a will, a living trust, a power of attorney, and other documents, so that someone can handle your affairs if you’re medically disabled, or when you pass away.
Ensure that you organize these important papers, and let somebody know where they are. Make a list of your assets and ensure that the documents and passwords are kept secure.
A waterproof box or a home safe are good places to consider, and you can also store copies on the cloud. Somebody you trust should know where the documents are, in case of an accident or illness.
Keep It Simple
Simplify your accounts as much as you can. Consolidate brokerage and bank accounts, and close any accounts that have only small amounts of money.
Use these tips to protect yourself financially as you age.
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
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Rich People Didn’t Get Rich By Accident
“What do you do and how do you do it?”
It’s only natural to be curious and slightly envious of those who have accumulated a lot of wealth, but it’s not just because their big bank accounts. Many people become wealthy through their own efforts, and the process they used to achieve success has tremendous value.
High-income people may seem to have some traits that others don’t, such as self-discipline, determination, and a knowledge of how to accumulate wealth.
Financially successful people don’t get rich by accident, because they have a plan that requires willpower and a long-term vision. Here is a list of habits that rich people use on a daily basis, and you can replicate this plan to achieve your own success.
Early Bird Catches The Worm
That’s how the old-age phrase goes. But it’s not the really the worm they catch; it’s taking advantage of compounding interest.
Compounding interest refers to earning, “interest on interest”, which means that you reinvest your interest and other earnings into your investments. By reinvesting your earnings, you earn a return on a larger sum of money, and the total return on your investments is higher over time.
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This is why you need to put your money to work sooner rather than later, and let the earnings build up over time. Every paycheck you earn gives you a chance to contribute to a savings account and benefit from compounding interest.
Automate As Much As Possible
Self-discipline is a necessary trait to achieve financial success, because most people become their own worst financial enemy. The ability to stay on track and stick to a plan will increase your chances of success.
It’s easy to neglect your financial goals in search of instant gratification by spending that little bit more than you should. Everyone has this temptation to one extent or another, but there are tools that can help you avoid the problem.
One piece of advice: automate your savings. Instead of leaving it to you to make a transfer each month, have your bank move a specific dollar amount into your savings automatically each month.
Ask For Help
These new habits may not come naturally to you; so if you feel lost in the world of finance, get help from a financial professional. There are several types of experts who can help you financially.
That could be a tax advisor that can keep your tax liability to a minimum. It could also mean seeking out pedestrian accident help to make sure you get the compensation you deserve after an injury.
You can also seek out a financial advisor who can help you understand the key financial concepts, the dos and don’ts of investing, and how to come up with a strategy to meet your goals. No one knows everything, so use the people that know the things you don’t in order to achieve financial success.
Are You Diversified?
Ask any successful investor for one tip and they are likely to say, “Diversify your portfolio”. Investing is a game of managing risk, so to be successful you need to manage risk by spreading your wealth across a variety of investments.
This strategy won’t eliminate the risk of losing money, but it will increase your chances of making a higher return on your investments. Stocks, mutual bonds, real estate investments, collectibles, tech startups, coins, art – there are a dozens of different investments out there, so use them.
Use these tips to accumulate wealth over time. 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
The post Rich People Didn’t Get Rich By Accident appeared first on Accounting Accidentally.
