Although it’s a little late this month, it’s now time to share my personal finances. I’ve been doing this roughly every month since Consumerism Commentary started in July 2003. I did recently make one important change — I am no longer counting my “business” bank accounts in my net worth. I’m trying to separate my business, which consists mainly of Consumerism Commentary, from my personal accounts.
October was an interesting month. I traveled to my brother’s wedding in California, so there were a number of extraordinary expenses related to the event. I do have some good news, however. The IRS has approved the reclassification of my side business from a sole proprietor LLC to an S-Corporation. this should result in a refund of over $8,000 from my 2008 tax payments.
It could take a while to receive the refund, so I’m not planning anything for it yet, but it will most likely stay in a savings account for a while.
Here are the numbers. [click to continue…]
Now that I am working with an accountant, I have been making some changes to the way I track my finances. By the end of the year, I hope to have all of my business-related finances in QuickBooks. Although I am not quite at that point, I am working to separate my personal finances from by business finances. Currently, I tend to move money from my business bank accounts to my personal bank accounts as needed, which makes it difficult to track.
The report I publish on Consumerism Commentary each month will no longer contain anything business related. Any business bank accounts or credit cards will not be listed. I also won’t be publishing my business income online.
This change has affect by net worth numbers going back several years, so if you compare today’s report with any prior month’s report, the bottom lines will be significantly different.
September was another good month in terms of income. My online business continue to diversify and grow. Even with a significant payment to the IRS for quarterly estimated taxes, I managed to bring more in money than I spent. While I won’t be including a full income and expense report, I will post a quarterly investment report shortly.
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You may have noticed that over the past few days, Consumerism Commentary has been featuring a number of guest authors. A few weeks ago, I wrote about the cost of funerals, inspired by the passing of my paternal grandmother. My maternal grandmother entered hospice care around that same time, and a few days ago, she passed away. I decided to travel to California on short notice to be with my family on the west coast for a short time. I appreciate the assistance with Consumerism Commentary provided by our writers Smithee and Jeff as well as the guest authors.
Every month, I publish personal finance reports to keep myself accountable for my financial decisions, and the travel I mentioned above is the reason August’s report is a little later than it would be otherwise.
2009 continues to be a successful year, but I have some room for improvement. My “modified net worth” includes the balance of all my bank accounts, investment accounts, invoices I have sent out to those I do business with that have not been paid yet, invoices I have received that I have yet to pay, and credit card expenses which I pay off every month. This “modified net worth” is reflected on the bottom line of the first report.
While August’s net worth is up, I expect September’s to be down due mainly to the quarterly tax payment that I will be sending to the IRS. September’s expenses will also reflect the airfare for the flight to California, which was purchased only one day in advance. Most airlines do not offer bereavement rates, or if they do, they are inconsequential discounts off a full fare. I’ll write about this in a future article.
In terms of income, August was a healthy month for my side business, but there is a lot of unexplored opportunity yet to be tapped. With all the projects I am involved in, it’s increasingly difficult to keep track of and manage everything. Additionally, I seem to be getting headaches more often, possibly due to spending too much time in front of computer monitors. At the end of last year, I decided to let the recession play out before deciding whether to leave my full-time job and pursue my side projects full-time. We’ll see how much longer I can continue both aspects of my life.
I’ve also noticed that the automated charitable payments I had been making seem to have stopped, and I’m wondering if that is a result of a change in my credit card number. Once I have a chance, this is something I’ll need to look into.
Continue reading to see my balance sheet and income statement without any further commentary. You can click on the reports to zoom in to full size. If you have reasonable questions, feel free to post them and I will answer. [click to continue…]
This year is passing by too quickly. It is time again for my monthly financial reports, originally designed to keep myself accountable for my financial (usually, spending) decisions. This was a technique that has worked well for about nine years, the last six of which have included this monthly public review.
July was a strong month due to two important factors. First, there were three paychecks in this month rather than the usual two. As months are not divided evenly or equally into weeks, two months each year contain two biweekly paychecks, and July was one such month in 2009. Also, the stock market performed well in July, buoying my investments.
Overall, with a “modified net worth” approach $256,000, which may exceed that amount with some details still pending, I am up almost 40% for the year.
Some of my charitable contributions are taken care of automatically, but the payments seem to have stopped. This is likely a result of a credit card number change recently. My income and expenses report has reminded me to update my payment information on file with the organizations I contribute to.
Almost $500 in dining out? I don’t see how that’s possible, but that should be a wake-up call. I need to make better usage of the grocery store.
Continue reading for the details without further commentary. Many of the questions you might have have been answered in previous months, but if you have any questions, leave them below. [click to continue…]
When it comes to financial success, your most important tool is your income. Without an income you can’t pay the bills, reduce your debt, or even buy the simple things you need to survive. With a properly maintained income, however, nothing is impossible. No matter what your personal financial philosophy, an income is one thing you can’t do without.
One the first things I learned about personal finance that has always stuck with me is the idea that risk is having only one source of income. I don’t remember where I read that little nugget of wisdom, but anyone can see the sense of it. The more places you have money coming from, the less likely you are to sink your financial boat.
Protecting your income streams can help you maximize your earning ability and simplify your life. Here are some of the things I’ve learned over the past few months:
Come to grips with your return on investment
It’s a good idea to know how you’re spending your time and how much money you’re making. An interesting exercise involves dividing up a week (or a month) into the different activities you spend your time on, and coming up with percentage of the total time spent. You don’t need to count sleeping or eating or relaxing, just focus on the things you do that make money (or have the potential to make money).
Once you’ve got your percentages figured out, calculate how much money you’ve made from each source. Your chart might look something like this:
- Job: 70% Time, 80% Income
- Hobby 1: 10% Time, 3% Income
- Hobby 2: 8% Time, 15% Income
- Side Job: 12% Time, 2% Income
After you’ve done this, it’s easy to see where your money-making time can be most effectively spent. Hobby 1 and the Side Job are taking up a lot of time, but aren’t necessarily making any money. Does this mean you should stop doing them? No! Of course not. Hobbies are great. You may, however, want to stop counting on them as sources of income. If you wanted to make more money, you could devote that extra time to Hobby 2, which appears to have some serious money making power.
This can be a tough exercise. Your hobbies and businesses on the side are usually things you’ve put a lot of thought, sweat and love into. You’ve got a lot of personal equity in the project, and deciding you’re just going to do it for fun kind of feels like giving up. You’re not completely giving up though, and you can always keep trying to change and improve it.
Anticipating change
Is there a pink slip coming your way? Are your contracts drying up? Start looking for another way to make money. So many people get stuck in between income sources and their problems snowball. Your job can be extremely enjoyable, a source of pride and joy, and even part of your identity, but don’t forget that at its core, it is a way to make money. It can be difficult to move on.
I’m at a position right now where I’m finally planning on leaving an internship where I’ve been for two years. I’ve got a lot of great memories there, and will miss out on some awesome perks. A new and better opportunity has come along, though and no matter how I’m tied to my old job, I can’t miss out on what the future holds.
Controlling spending
While income is important, wealth isn’t how much you make, but how much you save. Your income will be much more powerful if a lot of it gets to hang around in your high-interest checking account or some sweet mutual funds or an IRA. Lifestyle inflation can suck the power right out of a raise, so it’s important to remember that as you make more money, you should keep more as well. Spending smart is an important step to take.
Being proactive and finding new ways to maximize your money-earning time, plan for problems, and keep more of what you earn will help maximize your income and realize more of the benefits that come from the money you’re earning and maximize your income.
What are some of the things you do to make the most of your wages?
We have reached the half-way mark for 2009, and time certainly does fly when you keep busy. As long-time readers know, the original purpose of Consumerism Commentary was to keep myself accountable for my own financial decisions and to blog about interesting things I find on the web. I freely admit that Consumerism Commentary has expanded quite a bit since the first post in 2003. One thing that has remained constant is the monthly report of my finances.
So far this year, my “modified net worth” has increased about 30% since the end of 2008. Despite fluctuating levels of income and irregular expenses, this seems to be in line with my earning and saving pattern for the past several years. This modified net worth is not a true net worth because I do not include some items like my household inventory and tax liability. I would also need to include the value of my business to get a full accounting of what I am worth financially, but I just like to keep things simple. I do include the private-party sale value of my car from Edmunds.com even though I do not intend to sell, and I only update the value once or twice a year. And if I decide to buy a house, I would include its value as well.
The quarterly tax payment due in June took a bite out of my monthly income. I plan for this my transferring a portion of my other earned income into an account earmarked for tax payments each month, but income will likely not keep pace with my estimations.
Continue reading to see my balance sheet and income statement without commentary. You can click on the reports to zoom in to full size. If you have reasonable questions, feel free to post them and I will answer. I will include my quarterly investment report in a following post. [click to continue…]
Every month, consistently for the past few years, I take the opportunity at the beginning of the month to develop financial reports. The first report I post every month outlines my “modified” net worth, basically a balance sheet including my bank accounts, investments, the approximate value of my car, and my credit cards. Following the net worth report, I publish an income and expense report. This includes details about the income I earned during the month as well as my discretionary and non-discretionary expenses during the same period of time.
After my net worth decreased last month, mainly due to a large tax payment and poor market performance, my net worth is back up 6.3% for the month of May. Income, on the other hand, is significantly down this month, more in line with my expectations moving forward.
Keep reading this article to see my May financial reports. I will not give further commentary, but I will answer any reasonable questions. [click to continue…]
Each month I open my personal copy of Quicken Home & Business to the public. This tradition was the original impetus for creating Consumerism Commentary in 2003. At that time, at the age of 27, I was about one year into managing my own finances. Prior to that, my own money was mostly something I ignored. That was not a successful approach, so I made the decision to switch gears.
Since then, I have been posting my net worth statement here, keeping myself accountable for my decisions. More recently, I expanded this voyeuristic exhibitionism to include a report listing my income and expenses. The two reports help provide a fuller picture of my finances.
April was not a bad month for my finances in general, but my net worth decreased this month. The biggest driver for the decrease was the check I wrote to the IRS. A large tax bill means I’ve been doing something right on the income side of the equation. Speaking of income, I saw an expected decrease this month. I also expect a bigger decrease for May. Keep reading for my balance sheet and income statement. I’ve included thumbnails in the post, and you can click on the images to zoom in. [click to continue…]
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