Dirty Little Secrets

Saving money is at the top of plenty to-do lists these days. But what’s truly amazing is how low some of us are willing to go to get a free meal, pinch a few pennies at a yard sale or keep our fridge stocked with free condiment packets from McDonald’s. Phil Villareal knows. His new book, Secrets of a Stingy Scoundrel: 100 Dirty Little Money-Grubbing Secrets, is a primer on how to do just that. Don’t get me wrong; some of his tips are handy. But others give “shameless” a whole new meaning. Like when he suggests keeping empty cups from Wendy’s, McDonald’s and Burger King in the back seat of your car, so you can stop for free refills whenever the mood strikes you. (Apparently they’re good for 10 refills before the paper finally disintegrates.) You can decide for yourself which tricks to file away – or not. Here are a few, both worthy and…well…too gross to contemplate.

Tips worth considering

Don’t pay for website subscriptions. If you have any paid website subscriptions, cancel them – there are probably several dozen or a hundred websites that offer the same information for free. In fact, Villareal points out that “the only sites worth paying for are those that give you an embarrassment of essential material and occasionally ask for donations in return.” And just because someone asks, who says you have to answer?

Get yourself bumped off a flight. Villareal offers a mother lode of information on how to get yourself bumped off a flight – and get a ticket in exchange for the inconvenience. Among the many tips he offers are these: Show up late, avoid Internet check-in, buy the cheap ticket, and opt out of frequent-flier programs because being a member practically ensures that you’ll be the last person they want to bump. Those with more flexible schedules could rake in the free plane tickets, as he points out, by getting bumped off lots of flights. His fantasy? To never pay for another ticket again.

Don’t diss coupons. Sure, there are coupons in the Sunday newspaper, and that’s a good place to start, but there’s also a whole world of coupons out there in cyberspace. Villareal suggests visiting the home page of businesses and manufacturers to look for online bargains. Those bargains might come in coupon form (just print it out) or as a link to an online coupon clearinghouse like Coupons.com.

Get rid of your landline. Really. Just go all-cellular, all the time. For Internet access, you can either get DSL or, if you have cable TV (unless the rising prices have finally proven too high), then go with cable. But a landline is just another $30-$50-per-month drain on your checking account. And you really don’t need it. Really.

Tips that make you say “Oooh, gross.”

Dumpster diving. Is he serious? Hard to tell. But he does point out that discarded dorm furniture could outfit his entire house, from living room to kitchen. All you have to do is position yourself near a university dumpster and wait for your future goodies to get tossed out. Or in.

Skipping out on a potluck dinner contribution. This suggestion is truly skeevy, especially when you consider how many schools and companies host potlucks. Villareal’s ideas include: Conveniently avoiding the sign-up sheet and then showing up anyway, claiming forgetfulness; signing up but for something cheap and lowbrow like dinner rolls; or signing up for napkins, plastic forks and spoons, and then grabbing them by the handful at a few fast-food joints. Can you say, oooh gross?

A cheap white wedding. In this pearl of masculine wisdom, Villareal suggests that once a couple has decided to tie the knot, the guy should present her with a cubic zirconium engagement ring. Blech! Then he should hold out as long as possible on wedding plans – basically until he has driven the poor woman so bananas that she’ll agree to be married in the Chapel of Love in Las Vegas. Or in City Hall. Or in the back yard. Cheap ring, cheap white wedding. (Note: The author admits that he didn’t present his wife with cubic zirconium. Instead, he let her parents pay for the wedding…)

Icky ideas notwithstanding, this book is a fun and witty – if occasionally off-color – read. And if you look really hard between the lines, you’ll see that Villareal advocates some sensible behavior, too, like eliminating your credit card debt, taking advantage of coupons, walking out on a deal if it’s not exactly what you want and more. Even so, you may never look at a dumpster the same way again.

Keep Business & Personal Finances Separate

You know you’re growing up as an entrepreneur when you realize that it’s time to for your business finances to fly on their own. No more commingling of accounts, no more grey area, no more personal checks for business expenses. There’s business, and there’s personal. And there comes a day when the two have to go their separate ways.

When you’re first starting out, it doesn’t make sense to go overboard with new accounts or a dedicated credit card. Who knows if anyone will buy what you’re selling? You hope they will, and you’re willing to sacrifice your weekly latte to make sure they do. Then you hit paydirt. Calls start coming in, clients multiply, costs increase. Suddenly, you need a website, an accountant, business cards, supplies, even a few ads.  Maybe it’s time to separate your business finances from your personal accounts.

Yelena McManaman, social media marketing specialist and founder of 1Click VA http://www.oneclickva.com, knew it was time to make her move when she and her husband were buying an apartment. Her business was already generating steady income, but she hadn’t yet set up a separate business account – all her earnings went into the family account and expenses were charged to her personal credit card. So when the agent asked McManaman to verify her income, she couldn’t. There was no proof of cash flow. Whoops. “That’s when I realized that having a separate business account was not only good for my business, but essential for getting any type of financing deals in the future,” she says.

Clearly, at some point it pays to separate your personal finances from your business finances. But how do you know what to do and when to do it?

You know it’s time when…

• You’re not sure how much money is going in or out.  Budgeting is overwhelming. Costs are rising, and you’re losing track of receivables.
• In theory, you “should” be earning more; in practice, you still can’t make ends meet and you never seem to have enough in the bank.
• You wish you could run reports (expenses, income), but you can’t easily access the data.

A few ideas on what to do…

• Incorporate as a limited liability company (LLC). Be sure to speak with a lawyer because every situation is different!
• Set up a separate checking account. Make it your business bank account.
• Get a separate credit card. Concerned about running up more debt? You should be. If you’re really sweating it, get a debit or prepaid card instead. Remember: A credit card is free as long as you pay off the balance every month, and there are plenty of cards out there with no annual membership fees.
• Deposit all income from your business into your business account. Technically ALL profits are your earnings, and you’ll have to pay taxes on the profits. So put yourself on a fixed “draw,” make sure there are operating funds in the account, and budget accordingly.
• Set a goal to hire a bookkeeper with Quickbooks expertise. (Don’t learn it yourself — it will take valuable time away from your business). Request monthly profit-and-loss statements. You need real data to understand which areas of your business are performing well – and which aren’t.

For Kate Lister, founder of Undress4Success.com and author of Undress For Success: The Naked Truth About Making Money at Home, the defining moment came when she was line-item audited by the IRS. Among the issues were credit card membership fees, if the card was used for both business and personal expenses. “In the end, they owed me money,” Lister says. “But it wasn’t enough to pay the $2,500 it cost me to defend my innocence.” Since then, she has started three successful businesses – and become religious about keeping separate accounts.

By separating your accounts, your personal financial choices (good or bad) can’t affect your business – and vice versa. And that’s something to think about. So keep them separate.

7 Things to Do Before You Launch a New Business

Thinking about going into business for yourself? The good news is that you don’t have risk your house or go into debt to do it. But you do need to consider how you’ll supplement your income as you build your new venture. Rumor has it that only one in 10 new businesses succeed, and most of them gobble up cash for years before they show a profit, which is usually not for about five years (maybe sooner, if you’re really lucky). By planning for alternate sources of income, you can protect yourself from crippling financial damage. And that’s a good thing.

Here’s are a few things you should consider doing before stepping into the brave new world of entrepreneurship:

• Figure out what you need to make on a monthly basis. According to Terry Starr, co-founder of MyWorkButterfly, a social network that advises, supports and offers solutions to mothers returning to the workforce, this step is critical in figuring out how you are going to survive while you launch your business. “Even though we launched our company in January 2009, we recently went through the exercise of figuring out how much money on average we were spending monthly, and were shocked at the numbers,” she says. Fortunately, she and her partner could afford it, but not everyone is in that situation. Her suggestion: If you realize that you won’t be able to afford the investment in your new company, you can either take out a loan, or take on a business partner to defray some of the costs. So before you do anything else, do the math. Factor in your business start-up costs, and maybe a latte or two. This is your number. Own it. Or share it, if you have to.
• Ensure that you have a steady source of income. That might mean taking on a part-time job or some steady freelance gigs. If you freelance, assume you’ll only be able to bill clients for up to 20 hours of work per week; it’s harder than you think to bill for more than 20 hours as a freelancer. When Nathan Shackles decided to found his own business two years ago, he first started by taking on 10-20 hours per week of extra work, in addition to his day job. “I saved every dime of the money I made from the contract work to provide capital for my business,” he says. One month ago, he launched his new product, ApplicantStack, a Web-based applicant tracking and recruitment software for human resources and staffing agencies. While Nathan was able to work full days and extra hours on top of that, that kind of schedule isn’t for everyone. You may want to approach your current employer about reducing your hours or transitioning into a contract position. Given the uncertain economy, your boss may be open to ideas that may save the company some money while giving you the time and flexibility to set up your own business.
• Set up a savings account. If you’re leaving a full-time job, do it six months before you announce your departure. Then commit to making regular deposits. Laura Rangel and Lisa Steen Proctor, co-founders of Karito Kids, a multicultural doll company that teaches kids about giving back, started their company with $10,000 each from their savings accounts. Both agree that putting money aside now to help fund your future business is the best way forward. So save as much as you can. Six months’ worth of savings may be a pipe dream for many of us, but it’s a worthy goal. Check out Smarty Pig, where you can open an account, establish some savings goals, and monitor your progress.
• Identify your most bankable skill. That means the skill you have that can make you the most money easily. Making money while you’re launching a business doesn’t have to be glamorous or fulfilling. It has to be lucrative. Lisa and Laura of Karito Kids found that their skills saved a ton of money on professional services – Lisa is an attorney, and Laura is a marketer. Both of those backgrounds and skills were critical in helping to do things like create a brand and negotiate vendor contracts. Use your skill to your advantage.
• Find a mentor with experience in your space. Everyone can use advice from someone who has been there and done that – and been successful at it.  A mentor can point you to networking opportunities, troubleshoot financial pitfalls and provide you with support when you most need it.
• Line up part-time work in advance. Ideally, weeks or months in advance. Sometimes, you can’t; opportunity doesn’t always knock when you’re ready for it. But if you have the luxury of lead time, figure out where your steady income will come from before you dive into the new business.
• Don’t burn bridges! If you leave your  job on good terms, your former employer might be open to hiring you on a part-time contract or hourly basis. But remember to have the part-time work conversation with your employer before you leave.

Nobody should start a business with the unrealistic notion that they’re going to make tons of money right out of the gate. That’s just not going to happen. Building a successful new business takes time, money and a lot of sweat and effort. By the same token, embracing entrepreneurship doesn’t mean that you have bleed red ink all over the place.  It’s okay to pursue your dream. Just be sure to plan ahead for it.

What to Do with Your New Free Time

Once upon a time, you had a career and a life outside the house. But when you started having children, you decided to stay home. Now time has flown by (what with potty training and play dates and all that). In fact seven years have snuck right by you, and it’s time for your kids to start school. Suddenly, for the first time in who knows how long, you have a chunk of time – say, 9:00 a.m. to 3:00 p.m. – to call your own. Can you imagine what you’ll do with all that time? Here are a few inspired possibilities, just to get the ball rolling:

• Have coffee with neighborood WAHMs. Find fellow work-at-home moms in your hood and organize a coffee gathering to discuss your emerging careers. There’s nothing like human contact to inspire creativity and productivity. WAHMs even have their own webzine. Check it out here.

• Tweet Tweet. Join Twitter to find other mothers who have just re-entered the brave, new world of free time. If you’re perplexed by the Twitter phenomenon, you are not alone. Here’s a guide to help you get started.

• Teach a class. Nothing says expert on a resume like “teacher.” Cooking, web design, quilting, refinishing furniture, budgeting, growing vegetables, flower arranging — teach whatever you love and are good at.

• Open an account on Networth IQ. Now that you have some extra time, figure out your personal net worth and find out what you can do to grow it. Check it out at http://www.networthiq.com.

• Attend a webinar. It’s a convenient way to learn a useful skill that interests you (think Photoshop, Excel or Power Point) or to catch up on what’s new in the world of business and entrepreneurship, such as using social media to expand your business. All from the comfort of your own PC.

• Exercise. Join a gym, learn to box, take a yoga or pilates class – or just turn on your iPod and get on the treadmill. Being physically active keeps you sane.

• Turn a hobby into a money-maker. Take what you’re good at and make it work for you. If, for instance, you can speak a second language, walk dogs, write html, bake amazing cakes and pies, or play an instrument, then you can make money. As a piano or French teacher, as a techie or a dog walker, even as a dessert caterer. Before you know it, you’ll have your own part-time business.
• Meditate. Spend fifteen minutes a day meditating. Relax. Close your eyes. Breathe slowly. Start your day peaceful and calm, not frazzled and disoriented. Click here for a few tips on getting started.

• Volunteer. A few hours of volunteer work every week is a great use of your time. Help out an understaffed library. Plan fundraising events for your favorite local charity. Work at a soup kitchen or a shelter for homeless women and children. Not only will it make you feel warm and fuzzy all over, but it will also set a great example for your kids.

Don’t Shoot Yourself in the Foot

Does it feel sometimes as if you are your own worst enemy? Join the crowd. Most of us are guilty of some kind of self-sabotage. Why? Well, pundits, psychologists and trend-spotters have blathered endlessly about the whys and hows.  But T.T. Mitchell in his article, Sabotage: What Holds Us Back, offers up a handful of pretty simple, sensible reasons:

• We’re not as driven as we should be. If you really want to succeed, you have to want it really, really, really badly and be willing to work for it.
• We lack focus. Our increasingly complicated lives are getting in the way of our focus. Never mind the incessant noise of the media.
• We want to be safe. An entrepreneurial spirit takes the “sure thing” with the “what if?” And let’s face it. We may say that we want change, adventure and independence, but it’s predictability and stability that lull us to sleep at night. Then again, job security is pretty much a fairly-tale concept these days.
• We feel undeserving of success. Financial or personal. This one is for the therapists to unravel.

So how do we cast off this penchant for self-sabotage? There are, in fact, a few things you can do that make sense:

• Set realistic goals. Don’t set the bar so high that you’re guaranteed to fall on your ass. Overnight success is rare.
• Remind yourself that you deserve success. Constantly.
• Think big. think positive. Even when you feel like throwing your laptop out the window, quitting your job or closing the curtains and climbing into bed.
• Do something every single day to help keep you motivated. Maybe that means going to a yoga class, running three miles, taking a bubble bath, gardening, talking to your mom or best friend in Chicago, whatever keeps your boat afloat.

Make Room for Wealth

Your office is a fire hazard. Your desk is covered with crap. Despite acute attempts to go paperless, the mailman continues to deliver reams of catalogues, credit-card offers and other dead-tree items to your door. And your Quicken log hasn’t been categorized in months. Here’s the catch: you can’t create wealth while waging war with ongoing chaos. Wealth, like any organic matter, needs space and light to grow.

Need help getting organized? You could:

• banish junk drawers, or better yet, banish junk.
• try a modified version of the six-month “maybe” box
• bite the nerd bullet and get a label maker
• keep a recycling basket next to your desk and toss any junk mail into it. (the trees will thank you.)
• go as paperless as you comfortably can.

Learn more about these ideas and more in this article on LifeHacker.com: Clean Your Workspace — and Keep it That Way.

Gotta Love Change

If it feels like you’re stuck in the mud, spinning your wheels and getting nowhere fast, maybe it’s time to get out and push, or just walk away and do something completely different. Either way, it’s time for a change. So here are a few practical (and maybe not so practical) ideas:

• join a business networking group
• do lunchtime yoga
• take a public-speaking course
• rearrange your office according to feng shui
• host a small conference for professionals in your business
• tell your hairdresser to give you a fabulous new cut
• learn a completely new computer program
• get active in a new online community

And so on… Suddenly that rut won’t seem so deep – or so muddy.

If nothing on our list sparks your fancy, Seth Godin – permission marketing guru, entrepreneur and author of The Purple Cow – offers another 45 ideas in “Can you change everything?“

The Power of 10

You’re not using the power of the people you know. Folks who can help you, listen, offer ideas, make calls on your behalf. Make a list of 10 people you know. Why 10? Why not five or 16?  Because 10 is a magical, mystical number — at least that’s what numerologists and biblical scholars think. We have 10 fingers and 10 toes. And for those who care, there were 10 Commandments, not nine.  Plus, according to Malcolm Gladwell, author of Blink and The Tipping Point, most business leaders have been working hard in their chosen field for 10 years. Once you have your list down, start contacting them one by one. Who are your 10 people? And why did you choose them?

Read what Malcolm Gladwell has to say about the magic of the number 10: The magic number: 10 years.

(A version of this post originally appeared on Daily Worth)

Who Needs Reality TV When There’s a Recession?

As recessions go, this one really bites. It’s affecting virtually every aspect of my family’s life: going out to eat, grocery shopping, taking vacations, keeping our jobs, educating our children, even where we buy socks. And then there’s recession stress. I’m stressed, my husband’s stressed, and that makes our marriage a stressful place to be. It’s bad enough when I feel guilty about spending money on lip gloss. Does my relationship with my spouse have to suffer as well? You betcha. I think the phrase “toxic assets” has more to do with our monthly bills than with any floppy sub-prime mortgages. Since the economy started its descent into the toilet, we alternate between ignoring the elephant in the room and talking about it until we’re shouting at each other. Neither scenario really works.

The reality is that this recession is affecting nearly everyone, even Warren Buffett, even those of us who are well educated, financially responsible and good enough at what we do to command a respectable wage. Here’s the rub. We have two kids in private school, and we’ve worked hard to be able to keep them there. But now we’re faced with having to take one of them out next year and put him in public school, unless we can pull a financial rabbit out of our collective hat in the next nine months. I’d rather eat beanie-weenies for a year than deprive either of my children of a top-notch education. But have you seen how expensive beanie-weenies are these days? Never mind private school tuition.

This piece first appeared in Daily Worth, a financial therapy website for women.

8 Ways to Cut Your Credit Card Debt

This piece was written for DailyWorth.com

If you’re overwhelmed by nausea every time you even think of using your credit card, you’ve probably been on the “charge it” carousel just a little too long. Time to get off. But can you possibly climb out of that sizable debt hole you’ve dug for yourself over the past few years? You’ve racked up a $14,000 bill across three credit cards, and you only pay the minimum balance on each one. What’s worse, the interest rates range from 16%-18%, so you always pay more than you owe. It’s a demoralizing cycle that leaves you feeling like a hamster on a wheel, running as fast as you can but getting nowhere.

Don’t cry. There’s good news. You can pay down your debt, even pay it off, if you’re willing to put a little effort into it. After all, what’s a little work when you’re faced with years and years of irritating credit card payments?

1. Figure out what you owe. To successfully dig yourself out of debt, you need to know how deep the hole is. Are you in it for $2,000 or $20,000?
2. Keep track of what you charge. Every time you swipe. Sounds like a headache, but once you have a better idea of how much you’re putting on the plastic, you might be inspired to cut back.
3. Pay the balance in full. If you can do that, you’ll avoid getting screwed by late fees, minimum payments and all the other sneaky ways that credit card companies and banks (remember, we’re bailing them out!) have for convincing us that it’s okay not to pay all we owe, all at once.
4. Pay more than the monthly minimum. If you can’t pay your balance in one shot, pay more than they’re asking for. You’ll reduce your debt more quickly, and you won’t just be flushing your income down the high-interest-rate toilet.
5. Apply for a new card. That’s right. No-interest, low-interest, no-annual-fee cards are out there calling your name. Finding the right card means that you can move your debt across town, and save a ton of money in extra monthly charges. It does not mean that you can go wild at Nordstrom’s semi-annual sale.
6. Out of sight, out of mind. Choose your favorite credit card, and cut up the rest into itty-bitty pieces. Bury the chosen one in the backyard, stick it in the freezer, or ask your husband, boyfriend or best friend to hide it. Maybe under the poopy newspaper in the bottom of the birdcage.
7. Use your debit card. It comes out of your checking account in real time. If your balance is on the brink, the little machine will tell you.
8. Ask for help. If you’re really up to your eyeballs in debt, get in touch with an organization that can help like Consumer Credit Counseling Services, the National Foundation for Credit Counseling or Credit.org.

Follow these sometimes painful steps, and you’ll beat your debt senseless. But let’s face it. The easiest no-hassle approach to credit-carditis is to use cash. It’s a radical idea: Buy only what you can afford. If you can’t pay cash, you can’t have it. Try it. You may not like it at first, but it will work.