Track Transactions With Accounting Code Guide Basic

If you plan on starting a business, a basic knowledge of the accounting code guide is necessary in order to keep track of your transactions. Even if you are not a bookkeeper and you decide to hire a professional, the basic accounting knowledge is always a plus in the success of your business.

Accounting information is organized within the financial system of your company through the Chart of Accounts (COA). A list of all account names and numbers (cost elements) that appear in the company's General Ledger is included in this document.

The COA is used to classify transactions as income, expenditure, assets, liabilities and equity. All financial transactions must be coded against an internal order (indicating ownership) and cost element (what the transaction represents), which provide the basis for budgeting, monitoring and reporting. The elements of the COA are:

FUND
This is a 6 character code which basically describes to source of funding in a transaction. Generally, the first 5 digits represent the office of the president fund number, while the final digit is used to establish sub-funds for further breakdown.

ORGANIZATION
It is also a 6 digit code, which represents the department of a company.

ACCOUNT
It is a six character code which represents the basic accounts classification. There are 7 different account types, and these are: assets, liability, system control, fund balance, revenue, expenditure and transfer.

PROGRAM
Yet another six character code, it represents the functions of the respective company.

ACTIVITY
This is designed for future use.

LOCATION
It is a six character code, and it is used for identifying assets from transactions.

INDEX
This one is a seven character code and it represents FOPAL (fund, organization, program, activity and location). The first three characters of the index are letters and they represent the name of the organization. The last four identify the FOPAL combinations.

This is a simple and basic walkthrough in the world of the accounting code guide. A professional bookkeeper is much more than that though, and if you consider an accounting career, you should know that it's a work that requires a lot of patience, but it can pay off in the end.

You should also consider purchasing accounting software (although you can also get it for free) if you are serious about your company. The choice is yours, and it really depends on the size of your organization also. Most of the business owners leave the accounting stuff to specialized people, who are able to process all the information correctly, people who have a good knowledge of the accounting code guide.

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Tips For Creating A Business Budget...

Creating a business budget is very similar to creating a personal budget. However there are some differences. When you own a business, taxes are not directly taken out of your income, which makes your income and any quarterly tax payments extra important to track. Having an accurate and realistic budget will help you make accurate spending decisions and make it easier to predict profits. Which means the more frequently you track you costs, the better.

Here are the recommended steps for creating your business budget:

Step 1: Determine how frequently you want to track your costs and income. Generally, it is advisable to choose every week or every month. At first it may seem like a time-consuming task to track and enter your spending every week, but it will pay off in the long run and as you become accustomed to it, you'll find that it really only takes you a few minutes every week.

Step 2: Determine your expenses. This means your operating costs like your phone and web hosting fees, the costs of your taxes, the costs of outsourcing and the costs for marketing, publicity and so on. Make a list of all categories you anticipate having costs and all areas where you already know your expenses.

Step 3: Now the fun stuff! You get to predict your income. The best bet is to predict on the conservative side. That way if you have a bad month, your budget isn't blown; however, when you have a good month, and you will have many good months, you'll have extra money to work with.

Step 4: Track your expenses and income and review your budget often. Your budget isn't set in stone. It is a living breathing thing that will change as your business changes. If you find you're spending more in one category, make the adjustments in your budget. A business budget isn't a diet or a strict regimen, it is a spending plan.

Step 5: Realize that in the beginning, it is likely that you'll have more expenses than income. This is normal for most start up businesses. Track the difference between what you do spend in each category and what you planned on spending. This will help you predict the future and keep your budget realistic and accurate.

Budgeting your small business is good business. Without a budget you're unable to make accurate predictions and keep your business profitable and going strong. If you're serious about being a successful business owner, you can't do without a business budget. The good news is, it doesn't have to be difficult. A simple spreadsheet and a little time can make all the difference.

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The Importance Of Risk Managements

Risk management for business is a very important aspect of any company. This is because it identifies and treats any risks that an organisation may face. It develops a strategy in order to tackle potential risks and prevent any failures from happening. It is impossible to predict what can happen to a company and when which is why everyone should look into risk management for business in case something does happen.

An exposure to a risk could lead to disaster for any company which is why it's important to assess the probability of it happening. This process uses the correct tools, methods and processes needed in order to manage risks and control them. Employees and employers can feel a lot more safe and confident knowing that these steps have been implemented because with them there is less chance of a disaster occurring.

The reason why risk management for business is so successful is because it identifies the risks before they occur. This gives companies the time and space to prepare for it and to put solutions in place if needed. If a business is aware of any risks they have then they can do things to prevent them from occurring so there is less chance of a downfall.

There are many different processes involved in risk management for business to help ensure that the job has been done correctly and accurately. Some of these steps include identifying the risks relating to the business being analysed, reviewing the probability of these risks occurring, understanding the risks and how to respond to them and implementing the tools required in order to prevent the risk from happening.

All of the steps involved in risk management for business result in improved decision making, planning and prioritising skills. As well as this it allows company owners to anticipate any problems before they happen. All of these things help to improve delivery within a businesses time frame and budget and help improve the overall running of the business.

Risk management for business is extremely important if you are venturing into a completely new market and business. This is because it is imperative to know how well or bad a market is doing before investing in it. If you open up a business in a market that is in a decline you are very unlikely to succeed.

It is no surprise that so many companies look into risk management for business. It can mean the difference between succeeding or not and also helps people feel more secure about the future.

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The Facts About Medical Billing Companies...

The service offered by these companies serves as the key for a doctor, or any healthcare provider for that matter, to get paid. The healthcare industry in America is alive and well, but in spite of this, many doctors and other healthcare providers dont have any idea how to get themselves paid quickly and efficiently. The answer, of course, lies in insurance. And how are insurance claimed? This is where medical billing companies come in.

Medical billing companies are the ones who would submit claims to insurance companies in order to receive payment for services rendered by a healthcare provider. The process is basically the same for most insurance companies, regardless of whether they are a private company or a government-owned one.

The Billing Process

Essentially, the first step to jumpstart the whole billing process is the patients office visit. The healthcare provider will see the patient, diagnose his illness, and suggest treatment for such. Afterwards, depending on the service provided and the examination, the doctor then creates or updates the patients medical record. This record contains the summary of each of the patients visit, including details about treatment and demographic information related to the patient.

When you combine the treatment, diagnosis, and duration of service, this forms the procedure code, determined for usage in the billing of insurance. The doctor can of course take care of claims processing himself. However, the work can become tedious, especially when he should be focusing more on his healthcare practice than on insurance. Hence, the medical billing companies shoulder the burden for him.

The medical billing companies will use the information provided by the doctor to formulate the billing record. This record is generated manually or through the use of a software program. Often, the companies generate the billing record electronically. However, there are some that also produce hard copies as well (usually on a standardized form called an HCFA). This form includes the various diagnoses identified by numbers from the current ICD-9 manual.

It is the medical billing companies who will submit this billing record or claim to a clearinghouse. The clearinghouse acts as an intermediary for the information. Typically, when electronic billing is used, the medical billing companies must send their records to the clearinghouse.

Sometimes though, the record may also be sent directly to the insurance company. This is to ensure that everything is processed as efficiently as possible.

Doctors depend on medical billing companies for the money they get for the services they rendered. They can hardly find time to process everything themselves. The services offered are a great help in reducing the things they would have to worry about.

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The Difference of Getting Paid With a 1099 Verses a W-2.

Whenever a business starts there is always the question of how the people that provide services for the business will be paid. Will those services be performed by employees or will independent contractors be used?

Before the business can determine how to treat payments they need to know and make clear the business relationship. It is important to establish this relationship because an employee has taxes withheld, social security and medicare matched by the employer, unemployment insurance paid, workers compensation insurance paid and often benefits provided. An independent contractor just gets paid. It is a big expense difference.

To determine whether an individual is an employee or and independent contractor, the relationship of the business and worker must be examined. It comes down to does the business have control over what and how a job will be done or do they just control the results of the job. The determination falls into three categories: behavior control, financial control, and type of relationship.

Behavioral Control

Employees are generally subject to instructions about when, where, and how to work. The employer controls when and where the work is performed and what hours the person will be at the job. The person is told what tools and equipment to use, who else can be hired to assist with the work and where to purchase supplies and services. They are told what work is to be performed by a specific individual and what order or sequence to follow. Employees also may be required to receive training by the employer.

Independent Contractors can be hired to do a certain job in a certain place and be completed by a certain time. However, how the job is done is up to the contractor. When the work is performed, what equipment is used, who is hired to assist and where materials and supplies are purchased are up to the Independent Contractor. They also obtain and pay for their own training.

Financial Control

An employee is generally guaranteed a regular wage amount for an hourly, weekly or other period of time, even if the wage or salary is connected with a commission. They may be paid whether work is being performed or not. An employee generally does not have an investment in the company unless there are stock options available. They usually have any expenses they incur for things such as travel, phone, or equipment reimbursed.

An Independent Contractor is not reimbursed for any expenses. They generally have a business of their own or a significant investment in the facilities and equipment used to perform the work. An Independent Contractor is free to offer services to the general public and can take on jobs for other companies or individuals. They generally advertise their services and maintain a home office or visible business location. They generally get hired and paid by the job, usually a flat fee. Although some jobs can be billed hourly. An Independent Contractor can make a profit or loss on the job.

Type of Relationship

An Employee generally signs a employee contract. The employee is generally provided benefits such as insurance, pension plan, vacation and sick pay. Employee's are engaged for an indefinite period of time. They perform activities that are a regular daily part of the business. They fill out an IRS W-4 form that tells the employer how much taxes to withhold. They are not free to do business for other companies and in fact some companies have penalties if they do.

Independent Contractors have job by job contracts or for specific project or periods of time that state they are responsible for their own taxes. They are not provided with any benefits. They fill out an IRS W-9 form telling the IRS that no taxes are required to be withheld.

It is important to determine what kind of relationship from the beginning of your business. If you treat an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that person. Also, if you pay an individual as an Independent Contractor, they do not qualify for unemployment of workers compensation so if they try to collect it, you will want to be ready to verify they are not an employee.

More information about Employees and Independent Contractor is found in the IRS publication 15A.

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The Difference of Getting Paid With a 1099 Verses a W-2..

Whenever a business starts there is always the question of how the people that provide services for the business will be paid. Will those services be performed by employees or will independent contractors be used?

Before the business can determine how to treat payments they need to know and make clear the business relationship. It is important to establish this relationship because an employee has taxes withheld, social security and medicare matched by the employer, unemployment insurance paid, workers compensation insurance paid and often benefits provided. An independent contractor just gets paid. It is a big expense difference.

To determine whether an individual is an employee or and independent contractor, the relationship of the business and worker must be examined. It comes down to does the business have control over what and how a job will be done or do they just control the results of the job. The determination falls into three categories: behavior control, financial control, and type of relationship.

Behavioral Control

Employees are generally subject to instructions about when, where, and how to work. The employer controls when and where the work is performed and what hours the person will be at the job. The person is told what tools and equipment to use, who else can be hired to assist with the work and where to purchase supplies and services. They are told what work is to be performed by a specific individual and what order or sequence to follow. Employees also may be required to receive training by the employer.

Independent Contractors can be hired to do a certain job in a certain place and be completed by a certain time. However, how the job is done is up to the contractor. When the work is performed, what equipment is used, who is hired to assist and where materials and supplies are purchased are up to the Independent Contractor. They also obtain and pay for their own training.

Financial Control

An employee is generally guaranteed a regular wage amount for an hourly, weekly or other period of time, even if the wage or salary is connected with a commission. They may be paid whether work is being performed or not. An employee generally does not have an investment in the company unless there are stock options available. They usually have any expenses they incur for things such as travel, phone, or equipment reimbursed.

An Independent Contractor is not reimbursed for any expenses. They generally have a business of their own or a significant investment in the facilities and equipment used to perform the work. An Independent Contractor is free to offer services to the general public and can take on jobs for other companies or individuals. They generally advertise their services and maintain a home office or visible business location. They generally get hired and paid by the job, usually a flat fee. Although some jobs can be billed hourly. An Independent Contractor can make a profit or loss on the job.

Type of Relationship

An Employee generally signs a employee contract. The employee is generally provided benefits such as insurance, pension plan, vacation and sick pay. Employee's are engaged for an indefinite period of time. They perform activities that are a regular daily part of the business. They fill out an IRS W-4 form that tells the employer how much taxes to withhold. They are not free to do business for other companies and in fact some companies have penalties if they do.

Independent Contractors have job by job contracts or for specific project or periods of time that state they are responsible for their own taxes. They are not provided with any benefits. They fill out an IRS W-9 form telling the IRS that no taxes are required to be withheld.

It is important to determine what kind of relationship from the beginning of your business. If you treat an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that person. Also, if you pay an individual as an Independent Contractor, they do not qualify for unemployment of workers compensation so if they try to collect it, you will want to be ready to verify they are not an employee.

More information about Employees and Independent Contractor is found in the IRS publication 15A.

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Ten Commonly Missed Tax Deductions For Businesses...

There is nothing worse than preparing Income Taxes and finding that there were many deductions we didn't keep track of. Not keeping track of deductions can be very costly come tax time. It is very important to keep good records all year round.

For every dollar you don't deduct, you could be paying up to 35% back to Uncle Sam. If the dollar has been spent, taxes shouldn't have to be paid on it. Think of the productivity of your business if you could put 35% of your income back into your business rather than in the hands of politicians. What kind of advertising campaign could you do with 35% extra cash flow every month. With a little organization and planning this can be possible.

Most business owners remember to take the big obvious deductions such as cost of goods sold, materials, tools, supplies, and employee expenses. But often times it is the small seemingly insignificant deductions that can make or break a company. Lone Peak Business Solutions has the 10 most commonly missed business deductions.

1. Advertising - Business cards, newspaper ads, information packets you hand out, free samples, flyers, product testing, videos and CD's.

2. Children - Money paid to children for helping with such things as delivering flyers, product, stuffing envelopes, cleaning office and car, etc.

3. Dues and Subscriptions - Dues to professional organizations and magazines that have to do with your trade or business.

4. Educational Expense - Classes or seminars that you take to improve your business.

5. Gifts - Gifts to clients and associates.

6. Laundry and Cleaning - This includes uniforms and Protective clothing and also your clothing when you are out of town.

7. Travel - Hotels, airfare, cab fare, parking, cleaning while away from home, trip log.

8. Home Office - A home office must be a separate room in your home to do business and accounting. Part of your living room or bedroom will not count. A percentage of utility Bills, home owners insurance, property tax, mortgage interest, refinance fees, repairs and maintenance, cleaning supplies, office decor, etc. are deductible. You find out the percentage by dividing the square footage of the office by the square footage of the entire house.

9. Mileage or Vehicle - There are two ways to take a vehicle expense. One is to take the mileage you use when picking up product, supplies, office supplies, meetings, handing out advertising or business cards, meals and entertaining clients, etc. The other way is to take the expense of using the vehicle: fuel, parts, mechanics, oil changes, etc. Along with taking expenses, you can also depreciate the vehicle.

10. Telephone - Cell phone, long distance calls on home phone, extra phone lines into home for business, fax or Internet.

Items such as paper clips, bank charges, credit card charges and home office expense seem small and unimportant at the time, but multiply those little things over a year or two and then multiply it times 35% and it can add up to quite a bit of money that should be in your pocket rather than in the government's pocket.

Along with keeping track of expenses it is important to evaluate your income and expenses on at least a quarterly basis. This allows you to determine if too much is being spent any one place. It allows you to determine if all the deductions that can be are being claimed. It allows you to determine how to better increase sales and decrease costs.

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Small Business Accounting Software Equals Simple Bookkeeping

Accounting software is used by accountants to enter many complex financial transactions into the financial books of account and is almost invariably based upon double entry bookkeeping principles. A major advantage to those companies and the finance staff is the extent to which financial information contained in the database can be queried for financial control purposes.

An accountant needs to not only ensure the financial records are accurate but also retrieve any part of the accounting records to answer accounting questions on the accounts, provide a legal basis for the transactions and report the financial statements at regular periodic intervals.

The small business has different accounting needs which are better described as bookkeeping than accounting. For non limited companies that do not need to produce a balance sheet then a simple income and expenditure account can be produced much simpler using single entry bookkeeping principles.

Less financial control is often required from small business accounting software as the bookkeeper is often the owner manager who already has an intimate knowledge of each transaction. Books are still required for tax purposes and a solid requirement of preparing a set of financial books for tax purposes is that each entry is supported by third party evidence.

Examples of third party evidence would be sales invoices, purchases invoices and bank statements. Financial transactions where no receipt exists can still be entered in the business books although all transactions not carrying third party evidence could subsequently be disallowed for tax purposes and certainly would be if the amounts entered indicated unusual income or expenditure.

Producing an income and expenditure statement using single entry bookkeeping is little more than making two lists of financial transactions. Those lists being one of sales income received from sales invoices or receipts issued to customers and the other of purchase expenditure being from purchase invoices received from suppliers.

To record sales income it would not normally be sufficient to simply add up the total of the invoices as such a summation does not leave an audit trail of the items which have been included. A written list of sales invoices does provide an audit trail.

Sales accounting for a small business accounting purposes can be either a manual list of the sales invoices or by using a spreadsheet package a list can be made on a bookkeeping spreadsheet. Using a spreadsheet for the bookkeeping has advantages as simple formula can be used to add up the column totals.

The essential information to enter for a sales invoice would be the date of the sale, name of the customer, sales invoice number if applicable and optional a brief description of the item sold. In the next column would be the total sales invoice amount. If items like value added tax are required to be accounted for then an additional column would be required to accommodate the vat or sales tax accounting.

A further small complication might be if at the discretion of the small business owner additional information was required from the bookkeeping records to indicate the totals of the different types of products and services then additional columns could be incorporated to enter the net sales figures in these columns.

There it is then, a simple list of sales invoices to satisfy the sales accounting requirements for a small business where a balance sheet is not required.

On the expenditure side of the business the bookkeeping can also be a simple list of the purchase invoices and receipts showing the amount spent. The list should also produce an audit trail by showing the date of the purchase invoice, name of the supplier, purchase invoice for identification purposes and the total amount spent.

Usually tax returns are the main purpose of producing small business accounts and invariably some analysis is required to show what the expenses have been spent on. That is not difficult to achieve and as with the sales accounting the owner manager can add additional standard columns to the bookkeeping spreadsheet.

The expenditure analysis columns do not need to be a different column for each type of expenditure. It is better to set up and group the analysis columns in general headings which can accommodate all the expenses.

Such columns may include stock, other direct costs, premises costs, general administrative costs, transport and delivery costs, repairs and maintenance, travelling and hotel costs, motor costs, bank and legal costs and other expenses. It is better not to enter too many items under a general heading of other expenses as this is more likely to be investigated as the type of expense has not been precisely identified.

One important column to also include is for asset purchases as fixed assets usually have different tax rules applying to the claim of the expense against tax and should be separated from other expenditure.

Having set up two bookkeeping spreadsheets the task is then to produce the income and expenditure account by collecting the totals of each of the analysis columns. The sales total is the sales turnover from which is deducted the totals of each of the expenditure classification totals with the result being the net profit and loss of the business.

Where stock is bought and sold a further adjustment may be required to account for the difference between opening and closing stock. This is done by taking a physical stock check and valuing the stock at the start and end of the financial period.

On the income and expenditure account adjust the stock purchases figure by adding the value of the opening stock and deducting the value of the closing stock. The result is not the stock purchases total as shown in the bookkeeping spreadsheets but the cost of the goods which have been sold to produce the sales turnover being reported.

Simple bookkeeping for a small business accounting purposes can be two lists of sales and purchases supported with sales invoices and purchases invoices.

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Secrets of the Family Budget Plan...

With the rising cost of everyday items today creating a family budget plan is becoming more and more important to keep track of where your family's money is going. Making your money work for you is the ultimate goal of any budget, but you need to be patient if you have never made a budget before.

Most financial problems, both personal and family, are a result of poor budgeting skills or the failure to follow the budget that is made. This is true of people in all income ranges. If you want financial freedom you need to be bale to track your assets and liabilities and your income and expenses.

The fact is that people of all income levels have the same struggles with money. People who earn thousands of dollars per pay check can have the same financial problems as those who earn just a thousand dollars per pay check. The problem isn't the amount of money one makes at their job; it's their behavior with their money once they get that paycheck. And the financial behavior of the majority of people is very poor.

A family budget plan is nothing more than a cash flow plan. A plan for your money. We make plans for everything else, from where we are going on vacation to blueprints for houses, but we seldom make a plan for our money. And if there is no plan then your money does not know what it is supposed to do other then get spent on stuff.

A good budget, once you get the hang of it which can take around three months, should take all of your family income and outgoing expenses into consideration. There should be a balance between the income and expense side of the equation. If not then it is time to start finding areas to cut back on. As you work your budget over time it should free up enough money that you can start making allowances for savings and retirement accounts.

The first step of any family budget plan is writing down on a piece of paper your total monthly income and your total monthly expenses. When writing down your expenses be sure to include everything from your biggest payment to the smallest expense. Subtract the expenses from the income and see if anything is left over. If not then you can start looking at the expense column and start cutting out unnecessary items that are costing money that could be better put to use else where.

If you have money left over you need to seriously consider where this money needs to go. If you have debts such as credit cards or car payments it is wise to put some or all of this money towards paying them down. If you have no extra debts start saving and investing. Before long you'll have a nice little nest egg built that will secure your family's future.

If you are having trouble keeping within your family budget plan here are four quick tips that can help you meet your goals.

1. Keep a log book or ledger where you can list you income and expenses on a daily or weekly basis. One of the hardest things for most people is keeping track of their daily money habits.

2. When buying groceries make a list before you go and buy all your groceries at one time. Make sure to stick to your list and do not buy things that are not on it.

3. Don't go to the store if you do not need to buy necessary items. Impulse buying is a budgets worst enemy.

4. If you are tempted to buy something think about it before you make that purchase. For large items over $300 or so take a day to think it over. Chances are you don't really need whatever it is.

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Safeguarding Tax & Financial Records

The IRS recently published a newswire urging people to safeguard their records. IRS Acting Commissioner, Kevin M. Brown stated, "With forecasts calling for an active Atlantic hurricane season, the IRS encourages taxpayers to protect tax and financial documents that can be hard to replace." (Newswire dated June 1, 2007)

Actually whether or not you live in a hurricane area, there are many things that can happen to destroy important records. We all think about big natural disasters such as hurricanes, tornados, earthquakes, etc. But there are other disasters that can affect anyone no matter where you live. They include such things as fires, flooded basements, theft, accidentally throwing things away, etc.

If you happen to get audited, the IRS doesn't particularly care why you no longer have your records and they will go off the records they can gather. The IRS can provide you with W-2 information, income from interest, dividends, stock sales, 1099 information, interest paid on government student loans, and how much mortgage interest you paid to a financial institution. They don't have records of business deductions, donations, dependents, alimony paid, daycare expenses, medical expenses, etc.

There are several ways you can choose to keep your records safe.

1. Paperless Record keeping: With the wide use of computers, internet bank records, W-2 forms, and other documents can easily be downloaded to your computer. Other documents can be scanned in. This can then be saved onto a USB drive as a back up which can be store in a safety deposit box and/or sent to a relative in another city.

2. CD or DVD: Records can be scanned into the computer and burned onto a CD or DVD. Several copies can be made inexpensively and stored in several places.

3. Record Keeping Companies: There are companies that will copy and keep your records in their vaults so that in the case of a disaster they can provide you with a copy.

4. Protective Boxes and Safes: You can purchase fire proof and water proof boxes and small safes to keep valuable records in. They can work well if you don't live in a place were place where a natural disaster will likely take down the entire house.

Other items you may want to document and keep safe are personal records such as birth certificates, social security cards, passports, insurance documents, home closing documents, and investment documents. In large disasters, it is important to be able to prove who you are and that your children belong to you. If your home is destroyed you may need to prove ownership.

There once was a family of eight. One evening the whole family went to the local pool for an evening of swimming and fun. They were gone about two hours and when they arrived home, their home was on fire. The fire department was there and the neighbors had all been frantically trying to find them. The plug on their toaster had shorted out and started the fire. It was a small fire that was quickly contained, but the fire department wouldn't let the family go in until they were sure everything was safe, which took a day. They stood there with nothing but their swimsuits and towels as neighbors ran to their homes to find clothing and diapers so the family could at least get dressed.

When they were finally able to enter their home, the smoke had damaged everything. They spent a week in a hotel until the insurance could make arrangements to find temporary housing, Then came the task of listing all the things that had been destroyed and working with the insurance company to fix their home and replace the contents.

This was a relatively small disaster as disasters go. But it could happen to anyone. In any disaster it is good to have a record of your personal belongings, especially items of greater value. Photographing or video taping the contents of your home can be a great help when filing an insurance claim after a disaster.

Also, if you do not have insurance to cover losses, they can be deducted on your tax returns. Recording what you have, when you purchased it and what you paid for it can also expedite claims. The IRS has a free disaster loss workbook that can help individuals and businesses compile a detailed list of belongings. The IRS publication 584 is for individuals and the publication 584B is for businesses.

Nothing can take away the pain and trauma of a disaster, but being prepared can make the recovery process much easier. Review your emergency plan annually. Make sure records that have been safeguarded are current and up to date. Being prepared takes much of the worry out of life.

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Reliable Debt Cures You Can Trust...

Debt cure has always been an issue. Today however, the amount of debt Americans are racking up is astronomical in a way that far surpasses any other time in history. Our national debt is in the trillions, and it looks to be seriously doubtful that we will ever get out of doubt as a nation. What is worse however, is the critical amount of debt that individual Americans are in. We are talking billions of dollars. Debt that is crushing thousands upon thousands of our families, leaving them in bankruptcy, and to the poor house!

One thing you should watch out for, are the companies, and so called experts who are promising so called secret debt remedies, in exchange for a high price tag that is only going to put their customers in more debt. With that being said, here are some proven steps you need to take in order to get yourself out of debt, and on your way to financial freedom.

First, quit taking on new debt. You need to make a decision right now to quit taking on any extra monthly expendetures. One of the main reasons so many Americans are in deep debt is because of our extravagant life styles. There is nothing wrong with having nice stuff, if you can afford it. But if you honestly cannot afford to live like a celebrity, do not charge it so you can! The first thing you have to do in order to start climbing out of the pit, is make a commitment to live a simpler life. Start by figuring up how much money absolutely has to go out each month. This would include things like food, rent, utilities, gas, insurance, and the like. Take a simple inventory of what you must have, and write it all down.

Next, add up the amount of income you are currently able to bring in every month. Most anyone will be able to cover their basic bills with a regular 40 hour per week job. If you make enough to pay your necessary bills, then great. If not, its time to simplify even more. Get a room mate who will split the cost of living with you, in order for you to have a bit of extra income each month.

After you have simplified your life, and calculated the amount of extra money you have left over each month its time for step two, which would be finding your smallest debt to pay off. No matter how small it may be, knock it off the list. If you have only a hundred dollars on a credit card, then your first goal is to pay it off completely, while making minimum payments on your other bills. The only way to eat an elephant is one bite at a time, so start here. After it has been paid off, cut it up, and look for your next smallest amount of debt to attack, and determine the maximum amount you are able to pay on it each month until it is also gone. Repeat this process over and over.

The next thing you should do, is invest. I know you are probably thinking it is crazy for you to invest when you have more bills to pay, but remember you life is simple now, and you do not currently waste money on things like cable, internet, subscriptions to magazines, and other junk you were before. What kind of investment am I talking about? An investment in you. You need to learn a new skill that will allow you to increase your earning power. If you only have one hundred dollars to invest, then go buy a power washer or another tool that will enable you to earn extra money on the side. You can charge seventy five dollars to use your power washer a few times each week, and make good extra money that will go toward paying off more debt.

If you can, invest in some education that will allow you work with your brain instead of your back. This is imperitive to accomplishing your goal because if there is one principle you must know, it is that there simply are not enough hours in a day to become rich. There are only two ways to make money. You can trade a service for dollars, or you can trade hours for dollars. I am willing to bet you can only trade sixty hours or so each week, and unless you are making over twenty dollars an hour, you will never get ahead.

Learn a trade, or something you can exchange other than your hours for dollars. Reaching this goal will be the best debt cure you implement because truly time is money. Make it your goal to simplify your life, and create more time for yourself to gain more earning power.

So to recap, the first thing you need to do is commit to take on no more debt. The next thing you need to do, is figure up how much you absolutely must spend to stay afloat each month, and how much you are bringing in. Next you are going to determine what you smallest amount of debt is, and attack it full on, while making minimum payments on your other debt. Pay them off one by one, it may take time, but you will be freeing yourself from it, and building credit at the same time. Lastly, you are going to invest in yourself each month. You will do this by investing into a tool, or knowledge for the ultimate goal of transfering your life from an hours for dollars type of arrangement, to a service for dollars type of arrangement. The more knowledge, and the more tools you gain, the faster this will happen. Once it does happen, you will have more time to leverage your earning muscles, and pay off even more debt.

It is not flashy, but it will work. Hard work, and wise planning are always a safe bet. If you apply these simple steps, and have someone keep you accountable to doing them, you will be out from the oppression of the collectors, and on your way to financial freedom.

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Mortgage Refinancing Gone Wrong | Todays Credit Crunch

Mortgage refinancing is a good move in most cases and can be very beneficial for the home owner. On the other hand, mortgage refinancing can go wrong and the reality is you might end up with a new agreement that is worse then the previous one.

You need to understand when and how to properly concider any type of refinancing. We all want to save money and lower insterest rates, but losing money through a bad deal can be avoided with proper understanding of basic terms and a little research.

We are usually faced with mortgage refinancing gone wrong when there are wrong calculations when switching interest rates. When an individual decides to refinance a mortgage they do so because the market is showing lower interest rates than when compared to the ones linked to the current mortgage. You must not start mortgage refinancing just because you notice lower interest rates.

In most cases, in order to be successful, the interest rates available need to be 2 percent or more lower than the your current morgage. There are also fees that are activated in the event of different situations. Most mortgage loans will have such fees linked to paying off the entire contract in the event of mortgage refinancing. When we see that the money gained from mortgage refinancing is lower than the fees paid we are faced with "mortgage refinancing gone wrong".

Many individuals forget to calculate the taxes that need to be paid. When switching to a new mortgage via refinancing we are faced with lower interest rates; Therefore, lower amount of the interest will be deducted from tax.

This leads us to a higher amount to be paid in taxes and thus adds to the above mentioned elements that are to be subtracted from the savings made through mortgage refinancing. While most individuals are aware of the risks linked directly with interest rates, few know about the tax related problems. This is another common reason why we notice mortgage refinancing gone wrong.

When individuals are faced with problems in their life, the human mind tends to not think properly and action is based in instinct. You can thus notice a great mortgage refinancing option that looks suitable for your personal needs but because you are blinded by need, you may neglect different aspects. This leads us to balloon mortgages, another popular reason for mortgage refinancing gone wrong cases. These mortgages seem very good because what you actually pay each month stands in only the interest or the interest plus a small amount of the principle.

This means that the monthly payments will be a lot lower than what you are paying now, but you might be hit with the need to pay the entire principle or a huge percentage of it at the end in one payment. These offers look like an advantage because most people think that the lower monthly payments will lead them to saving money that can be invested and thus the principle payment will be easy to pay due to the long terms of the loan. It is highly risky to think this way and you never know what the result will be. You might be faced with mortgage refinancing gone wrong once you realize that you can not payback the principle and you are hit with loosing your home.

If properly analyzed, mortgage refinancing can not go wrong. Unfortunately, some people will not look at the problem seriously and they are actually gambling with the biggest asset they own: their home.

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Michael Jackson's Fiscal Disaster...

When you live in Never Never Land, aren't things supposed to be fun? According to Michael Jackson's latest financial woes the answer is no. Earning large amounts of money since he was five, how can Michael Jackson have a fiscal fiasco?

It boils down to spending versus watching the bottom line. Although Jackson's bottom line included 50% ownership in The Beatles Catalogue, a stake in the Elvis Presley and Bob Dylan Catalogues estimated to be worth ½ a billion dollars, not to mention his own catalogue how can anyone go broke? By not paying attention to the bottom line.

Here is what Ms. Rae has to say, "In the highly competitive world of the music industry, it is never wise to sail alone. Equipping yourself with the necessary resources can ensure safe passage through the often rough waters of show business, and lead the aspiring musician straight to musical success."

So what are some good choices for those seeking out high profile careers and the money earned in those careers?

Seek out great financial advice.
Learn from others who are where you want to be.
Contact those people you respect and admire and seek out their advice and get the names and contact information of accountant's and financial managers who have helped them.
Read veraciously on the Internet and in the library.
Most of all watch the bottom line. Oprah still signs her own checks and watches the accounting ledger like a hawk. If you don't do this, you will be giving your money away and walk away with nothing or bankrupt.

Jaci Rae has been talking about the bottom line in the music industry or any industry for that matter for several years. Countless hours on her radio show, aptly name The Jaci Rae - Rae of Hope Show and in her best selling music industry business manuals, The Indie Guide to Music, Marketing and Money and The Ultimate Guide to Music Success, Ms. Rae goes into great detail to help the struggling artist or star struck hopeful learn how to avoid financial disaster and still keep the creative juices flowing.

Perhaps Michael Jackson should pony up the mere $25.95 for one of these books and tune into her radio show every week. In any industry it is imperative to watch the bottom line so you won't fall off the cliff.

Michael, if you're reading this, seek out a financial counselor instead of the "yes" people you have around you. In the long run they aren't helping you at all. But most of all, forget the spending sprees, you've run out of quarters to go on the rides at Never Never Land.

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Maximize Your Chances Of Success By Fully Funding Your Goals...

Do you have a burning desire to achieve in a sport, hobby, talent or business venture but you never seem to have the time or money to achieve it?

Today I am going to talk about the importance of budgeting in relation to goal setting. For years and years I have set goals but I never used to fully fund the goals.

Before I had a home loan it was pretty easy actually, I would make a list with my family of all the things we wanted the following month. The purchases were prioritized and purchased as funds became available each week. Once I had a home loan, which obviously was one of the goals on our list, I found that our finances were a lot tighter than what they were before and it became a lot harder to set aside funds for the other things our family wanted to have and do.

So what tended to happen was the money was consumed immediately and for longer term goals there was no funding whatsoever. One of my goals was to go motor-racing, and there always seemed to be something more important to do than to put aside money for a go-kart, for example.

It took me years and years to get around to actually buy a go-kart; we would buy this or that or there was something else which needed doing. To actually have a lump sum available, $4000 or $5000 to buy a go-kart never seemed to happen. I think I ended up getting it from a tax refund.

However, what we do now is set aside some money on a regular basis for our longer term goals. Even if this does not fully fund your goal, let's say you wanted to buy a go-kart for $5,000, maybe you put aside $100 a week and in a year, you've got your $5,000; maybe you can't afford $100 a week, maybe you can only afford $50 a week, then at the end of the year you've got $2,500, and then you go and finance the balance of $2,500 some other way.

Without putting aside funds, things go from bad to worse and your goal will never happen. Let's say your objective is to get to the national championship of your sport and that every week without balancing your budget you find that you run out of money. Most people will start doing overtime for example, to make more money. If you start doing more overtime, then you might have less time to put towards your sport or your hobby. So instead of training five nights a week on your sport or talent, all of a sudden or it could be practicing a musical instrument or that, you find that you start cutting your time down and spending less and less time on your goals and more and more time on trying to make ends meet.

Wouldn't it be better to have a balanced budget in the first place, to make sure that you have got enough money coming in to cover your expenses, and sure you might have a national trip coming up and say I need $6,000 to go on an overseas trip to go to the international championships and maybe you debt finance a part of it. Still, we are talking about planning and spending as opposed to spending and planning.

Since we've started having a balanced budget, I have found is that it is a lot easier to hit those goals that we've been aiming for, and still have enough for all those things like Christmas and holidays and replacing cars and all that sort of thing.
In fact, my wife told me the other day that she's made $500 of interest on the money she's spent this year. It goes to show that once you get your budget balanced, that money can start working in your favor instead of against you. Now that's not an overnight thing and I don't promote the idea of just going to try and pay off your credit card all in one hit, or pay off all of your debts in one go.

It is more important to get the habit right than to get the actual debt paid off because it really takes some discipline and practice to establish the habit and you really need to set aside the funds that you need so that when your bills come in, you can afford to pay for them.

Once I set up my automatic payments for my big goal, I also set up high yield interest earning accounts and set aside funds for other known events such as holidays and gifts, car registration and repairs and I set up automatic payments for those things that my family uses weekly such as utilities. My wife and I have separate card accounts for day to day things and I know that I can spend all of the money in the card account without blowing the budget and my big goal.

Disclaimer: This document is educational and should not be considered advice. If you are in financial difficulty please get professional advice.

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Managing The Financial Aspect Of Your Serious Home Business..

Financial management is one of the biggest pitfalls for people who are actively engaged in a serious home business. Even if your have chose a good home business you may have no idea on how to manage your business financially, you will most likely end up losing a lot of money. Since you cannot afford to waste your money, you better shape up and take care of your finances early on. It will not really do you any good if you just keep working on your business not really knowing if you are making enough money to compensate for your efforts.

Getting started

The first thing that you need to do to get your financial systems in place is to open a separate bank account for your business. A lot of home business owners keep their personal funds together with their personal accounts that they end up drawing money, which should have been for the business and vice versa. The practice of mixing up your personal funds and the funds for your business is very dangerous because you will not have much control over you business and personal finances. By opening separate bank accounts for your business and for personal use, you will be able to manage your money better.

Aside from setting up a separate bank account for you business, you must see to it that you also set up a separate funds for your business expenses. Since you are working form home, try to separate all the expenses that are related to your business from your home expenses. For instance, your business phone should be paid by money coming from your business account. You might also want to bill your business for utilities and rent. You can do this by setting a certain amount every month for utilities and rent then take this amount from the business account.

Out of your business earning, you might also want to set up a certain amount, which you can draw out as your salary. The good thing about setting a certain amount of money every month as your salary is that you will be able to determine if you are indeed making enough money to pay for all your business expenses and at the same time pay yourself for your efforts. Make sure that you only draw-out the extract amount of money from the business for your salary. Even if your business is doing well and you have plenty of money in the business account, do not be tempted to draw more than you should. Keep the money in the business account for future use. You might want to expand your home business later on.

At the end of the year, you might want to give yourself a bonus. If you have been religiously following your own rules regarding your finances, you will be surprised at how much money you will have left in your business account at the end of the year.

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Let's Get Fiscal | Relaxing The Fiscal Rules

It seems to me that, for large swathes of the public, the two "fiscal rules" that govern economic expenditure are, if not totally incomprehensible, at least too shatteringly dull to care about. One states that borrowing should not exceed the bracket of 40% of GDP whilst the other, the 'golden rule', refers to the balancing of the budget over the economic cycle.

It's not exactly Bad Boys II is it? For the past 11 years these Brownite commandments have largely gone undisturbed. However, with financial storm clouds gathering overhead, it looks like they might not be as perennial as people thought.

The problem with this, naturally, is that if someone starts moving the goalposts, it somewhat throws the match into disrepute. The Conservatives, as one might expect, are practically queuing up to attack the Treasury over the issue. "The last nail in the coffin for Brown's reputation for prudence" they're calling it. The shadow chancellor George Osbourne, for example, rather sniffly referred to Brown "giving the prisoner the keys to their own cell"

A couple of rather adroit analogies aren't they? Well, yes, until you read what Cameron said about these 'fiscal rules' at his party's economic summit only two days previously:

"I don't believe it's impossible to try to get some political consensus [with the government]...about tight rules on fiscal policy"

That's how he decided to phrase his intentions for steadying up the economy. Elsewhere he claimed that he wanted to "Reform the fiscal architecture" Which sounds remarkably like the way Kevin McCloud might describe Labour's policy of 'relaxing the fiscal rules'

Of course, as the old saying goes, the duty of the opposition is to oppose, but to describe Brown (and invariably it is Brown and not the Treasury or Alistair Darling... I wonder why?) as some prodigal cad and then hint at proposing the exact same measures is pretty rich isn't it?

Many financial commentators have described Brown's cabinet as standing at a crossroads with this issue. Either, they tighten their belts, raise taxes and feel the brunt of public unrest, or they slacken their belts, throw caution to the wind and indulge in a little more borrowed cash. The choice, clearly, is a tricky one:

ROCK: Oi! Brownie! How can you justify sticking to a set of outdated rules that will unnecessarily burden the public?

HARD PLACE: Oi! Gordon! where do you get off talking about borrowing more money when the financial situation is in such trouble?

Still, I suppose either of the two main positions are better than what Nick Clegg's thrown into the mix. His 'fair tax' party has done somewhat of a u-turn of late and are now saying that they can solve the sticky economic climate by... lowering taxes.

Mmmm...? Well, we'd all like to see how that plans out wouldn't we Nick? Sure you've thought this one through? Because I find it very hard to believe that every other economic advisor has dropped the proverbial clanger and forgot to add up these huge sums of money that are secreted around the different nooks and crannies of public spending. Brown doesn't keep a penny jar does he?

So what have we learnt? That the government is in trouble; that the opposition will belligerently scratch and claw at everything the cabinet say, and that Nick Clegg could feel the benefit of a nice sit down. Well what's new? Of course, detractors will rally around to call this the 'end of the Brown era of economics' but that only matters if you believed in such short-sighted spin in the first place.

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Learning how to Budget Money...

As we grow from children through the teenage years and into young adults we are taught many things, both from our parents and through school, but the one thing the vast majority of people are never taught is how to budget money. Unfortunately this is the one skill that everyone needs to know. Keeping a proper budget and tracking what your money is doing is the best way to stay out of debt and build wealth.

Money is a powerful tool in life, if we learn to make it work for us. Most people work for their money but once they have it, in their paycheck, more often then not they do not keep track of it once it hits their checking account. Writing down expenditures in the check book register is not keeping track of your money because once it is written in there it is never looked at again.

Learning to budget your money is an important step in your financial health. Once you have written down your income and expenses you will start to see where you money is going and some of it may surprise you. It will be the small expenses that add up the quickest. Spending five dollars on lunch everyday, or that morning coffee you get on the way to work can add up to several hundred dollars a month. That is money that could be doing more good if used more wisely.

Let's put some math to that. If you spend 5 dollars for lunch a day during the work week that's $25 a week or $100 a month, give or take $5. Over the course of a year that's $1200 spent on lunches. If you start adding all the other small expenses that occur every month before long you may find you have enough to pay off any debt you may have but also start saving towards a healthy financial future.

The first step to learning to budget money is writing everything down. Start with you monthly income and write that down at the top of a piece of paper. Now you know how much money you have to spend through the month. Start figuring up all your monthly expenses. This includes everything from your mortgage and utility payments, car payments, credit cards on down to the smallest expenditures. Write these down keeping them in specific categories. Subtract your expenses from you income and see what's left.

This is your first budget because it shows you what your money has been doing every month. Now that you do indeed have a budget you can look at it becomes much easier to not only see where the money is going but also take back control of where the money is going. And when that happens you can start to set goals, both short term and long term, for your money.

It will take some time to get your money budget dialed in. Most people say that if they stick with it they start to get a firm grasp on their budget and money situation in about 3 months. If you never learned to properly budget money the best way to get started is to just get started.

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If You Spend More Than You Earn Then You Better Start Budgeting...

Knowing how to manage money can help you make smart choices. Your money will work harder for you. You'll be more likely to avoid traps that can undermine your ability to attain your financial goals. You'll be in a better position to pay off debt and build savings.

Calculate how much money you earn in a month after taxes. For this budget plan, use your net pay or take home pay. Include tips, supplementary income, side-jobs, investments etc. This is your income.

Figure out your expenses. The best way to do this is to save receipts for a month or even a couple weeks. Knowing how much per month you spend on groceries or gas makes the next part much easier. If you want to start writing your budget today, and don't have receipts, that's OK, it's just a bit more difficult.

Read and post messages on personal finance and budgeting topics with other people from around the world. Everything from saving money on groceries, to understanding your credit rating. This will get you some good tips on where you might be able to trim.

Break your budget up into some basic categories. You might want to organize your expenses into needs - such as your loan and electricity - and wants - such as clothing and entertainment.

List all your spending under each of these categories. Let's take Auto as an example: $300/month car payment, $100/month insurance, $250/month on gas, $50/month on maintenance, 10$/month on fees such as registration. So, your total Auto budget for the month would be $710/month. If you don't know the exact amounts you spend, try to make good estimates. The more accurate you are, the better chance your budget has of working.

After getting an overview of your monthly expenses, look for anything that you can cut down to help you save money. For example, if you always eat out at work, try bringing left over or home cooked meal. You can also bring sandwiches and drinks. This can save you an average of $200 per month if you estimate $10 of lunch per day.

Limit your movie watching to once or twice a month instead of four times a month. For a huge family this can be a lot of savings. Before going to the movies, eat first to cut down on food and drink expenses. Just buy drinks or bring your own if you can. You can cut down transportation fees such as fare, gasoline and toll fees if you participate in a carpool or ride sharing.

A simple budget can be written on a piece of a paper with a pencil, and optionally, a calculator. Such budgets can be organized in three-ring binders or a file cabinet. Simpler still thre are the pre-formatted household budgeting or bookkeeping forms that creates a budget by filling in the blanks. It is really easy to budget if you want to, but as most people don't follow thier own plan most are doomed to fail.

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How To Stop Arguments About Money..

Have you ever had an argument with your partner about money? Has he or she spent more than they should? Have you over-spent and tried to cover it up to avoid a fight? I have developed a system to stop the arguments over money. I have been married for nearly 14 years and we never ever fight about money.

I will provide some simple steps for you to take to stop the arguments over money permanently but before I get to that I will make a disclaimer. If you are deep in financial trouble, go and seek professional help immediately. And for everyone, I don't know your personal situation so seek advice from your bank or financial advisor before doing anything. This article is education and should not be considered advice.

What causes fights over money anyway? Is it the lack of money? Perhaps if you just make more money, then the arguments will go away? I believe that this is never the case. In business, clubs, churches, community groups and even government there are always arguments over the allocation of money. Bringing in more money might fix things in the short-term but once your lifestyle adapts to the new income level, the same issues will arise.

There must be a way to allocate money so that money is set aside for those things that are important but not so that you have to walk around with a check-list on how much you have spent. Of course I am talking about a budget but don't switch off just yet! there are two fundamental kinds of budgeting:
(1) Accounting for what you spent
(2) Providing for what you need in future.

The most common form of budgeting is accounting for what you have spent. To me, this is like driving your car along the road only using your rear view mirror. Every time you see that the car has hit the dirt, you start adjusting the steering wheel to get back on track. Analogies aside, 1-2% of analytical people and accountants love this style of budgeting and no one else can stand it!

The other form of budgeting is implemented by larger organizations where they make provisions for future expenses. I am not talking about accounting tricks to save money on tax either. I mean that cash is deliberately set aside in a bank account to be used at a later date, for a specific purpose.

So how do I implement a forward-looking budget that provides for future needs and will stop arguments about money at home?

Firstly, I accepted the fact that both my partner and I must have a certain amount of "mad money" that is not accountable at all. We both have our own separate card account that is our own responsibility respectively. This might be ten dollars a week or it might be a hundred - that will depend on one's circumstances but the amount is regular and agreed to by both of us. No one should have to account down to what one did with a few dollars of change in your pocket.

Secondly, there might be regular things like purchase of food and is common sense that this would be the responsibility of one partner or the other and this would go into their card account as well. In our case, my wife is responsible for groceries, so that goes to her account. I pay for the children's sport from my card account.

Thirdly, there are regular expenses such as electricity, telephones and utility expenses. It may include rent or loan payments. Consider the bank fees and charges before taking the next step and shop around if possible but pay for all of these regular expenses out of a clearing account. I use a no fee, high interest bank account for this purpose. I call this a clearing account and that is where my pay goes (not my card account).

Finally, I use about 10 no fee, high interest bank accounts for other savings goals (or provision accounts). I transfer regular amounts from my clearing account into these Let me tell you about some of them. As an example I will also show how much I put aside each 2-weeks into these accounts and the annual goal.
Holiday Account - $40 x 26 = $1040
Car Registration and repair - $57 x 26 = $1500
"New Car Account" - $40 x 26 = $1040
Electrical, computers etc $20 x 26 = $520

The list goes on. I also have accounts saving towards a new home, gym fees and so on. I have a separate account for our investment property, with sufficient funds to provide for minor repairs and unexpected property expenses. The total above is $4100 and with a quick bit of math, the average balance would be $2050. At 7%, that is $143 of interest to me as a reward for setting aside the money that I am going to spend anyway.

Why does this work for me? It still takes negotiation to decide how much to put aside for holidays and so on but once I set up the payments I found that I have always had the money set aside for the regular bills. After Christmas, I had no credit card debt at all because our family didn't over-spend on what was set aside in a separate account. Right now, it is a little tough for us with unexpected medical bills coming in. I am negotiating with my partner where this money will come from.

When I go to the automatic teller (or use internet banking) I can see how much is in my card account and I know that I can spend it guilt free and consequence free. I know not to go over the amount in my card account. So if I want to take the family on a treat, then I know how much is available and so I can choose accordingly.

In a sense, I guess, I have turned the banking system around to do my budgeting for me. After all, isn't that what technology is meant to do for me?

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How To Set A Financial Goal to Reduce Personal Debt...

Firstly, what do I mean by a financial goal? For most of us, that would generally be a goal to either increase income or reduce consumer debt. Of course there may be times in our lives where we want to increase consumer debt to acquire goods and services sooner or to reduce our income as a trade off to have more time but in this article, let's set those situations aside. In particular, let's look at the scenario of reducing consumer debt by 50% in six months.

My standard formula for goal setting is to select a coach, have the required resources in place and to have a plan-A and a plan-B in place so let's see how a financial goal fits in with this.

Selecting a financial coach these days is difficult indeed. Most financial advisors will only try to sell you products, thereby limiting their own risk in a highly litigious environment. If your goal is to reduce your personal debt by 50% in 6 months the financial advisor might be dismissive if there is no chance of selling a product into your situation.

Similarly, a debt financer will try and sell you a product that appears to reduce your debt but in fact does very little. Finally there are educators, who provide information but are prohibited by law to give financial advice. While they can give illustrations or tell you what they did, they cannot specifically advise you what to do and therefore cannot really be your coach.

I am aware, however, of some wealth creation companies that provide 'integrated' solutions providing all of the required professionals in a single meeting. By nature, however, the cost of this service is out of reach of many. One solution might be to use self-help websites and software to help resolve this situation, in conjunction with education and perhaps a visit to a financial advisor if necessary.

What resources do you need to reduce personal debt? Well first of all, you must be able to measure and control what you are spending. Yes, I am talking about the dreaded budget. With internet banking and plastic cards, it is relatively easy to download transactions from all of your banks and put them into a spreadsheet. I believe that the most important tool, however, is the banking system itself. With high interest-earning no-fee accounts available it is possible to use the banking system and the utilities to do a lot of the budget accounting for you.

The Plan-A is what you will do if you are on track to achieve your goal. Is there some kind of reward for achieving your goal? Clearly to reduce personal debt, you must have a system to control what you spend, so at a minimum a separate card account and bills account but more likely around 9 high interest no fee accounts and one card account per partner, preferably a debit card (or secured credit card).

The Plan-B is to identify the biggest risk and what to do if it happens. If, for example, you think that your car might need $1,000 of repairs but you can't set aside that much money over the next 6 months, what will you do? Will you change the deadline, or cut costs in other areas? Can you do without a car?

Finally, tracking a financial goal and measuring the level of success is straight-forward when you have the right tools in place, such as internet banking.

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How to Hire an Asset, Not a Liability...

Finding the right employee to fill any position is important but it becomes even more critical when you are filling a bookkeeping position. This person is responsible for inputting & maintaining your valuable financial information. If it is not accurate, the repercussions could be devastating to your business! Not only could it cause problems with the IRS & State Government but also with vendors, customers, creditors, etc.

If you hire the wrong person, it can cost you nearly 3 times
that persons’ monthly salary to correct the mistake.
Source: American Management Association

Whether you are hiring a staff bookkeeper or a 3rd party bookkeeping service, you need someone in charge of your books who has the training and experience to get the job done right. But finding a quality bookkeeper can be a challenge – unless you know what to look for.

FIRST, they need the right qualifications (resume)

It’s important to understand that bookkeepers are not necessarily the same as accountants. An accountant’s job is to provide financial advice and prepare taxes ~ a bookkeeper’s job entails the day to day things like recording income & expenses, reconciling bank statements, processing invoices & administering payroll.

The qualifications to look for in a good bookkeeper include:

ACCOUNTING KNOWLEDGE - Many people think only an accountant needs accounting knowledge. The truth is anyone who has anything to do with your financial information needs an understanding of accounting and how the big picture all fits together. This will help to ensure that your records are accurate & it will save you a lot of money because your CPA won’t have to spend as much time “fixing” things before they do your taxes.

EXPERIENCE - Although education & training are important, there is no substitute for experience. A qualified bookkeeper may or may not have a degree in accounting - some of the best bookkeepers you’ll find don’t. In fact, hiring someone that has only completed a couple of bookkeeping courses and has no actual bookkeeping experience is a recipe for disaster.

TECHNOLOGICALLY COMPETENT - You want to keep your books on a computer, not by hand, so ensure that your bookkeeper is competent in using a computerized bookkeeping program like QuickBooks.

FAMILIAR WITH INDUSTRY - Having a bookkeeper that is familiar with your industry will shorten the learning curve & provide better details.


NEXT, they need the right personality (interview)

While it is important to make sure the applicant will “fit in” with the other members of your team, you also want to make sure they have a “bookkeeper” personality!


DETAIL ORIENTED - Bookkeepers live for details & accuracy. Therefore, it is vital for them to have detail-oriented personalities. If the person seems disorganized during the interview, that’s a good sign that they may not be the right person for the job.

INTEGRITY – Not only do you want someone who won’t steal from you but you also want someone who will make sure no one else is either! Also, someone with integrity will understand the importance of confidentiality and not discuss company financial information with ANYONE. If the applicant divulges private information during an interview about other companies they have worked for, you can be sure they will do the same with your company information.

PROBLEM SOLVER – Problems arise almost daily in any business. You want a bookkeeper who is a thinker and who is willing to help figure out solutions.

PROACTIVE – A good bookkeeper isn’t afraid to ask questions if they don’t understand – they don’t just “wing it” or code everything to “miscellaneous”. Also, a proactive bookkeeper may help anticipate financial issues before they arise - keeping “issues” from becoming “problems”.


FINALLY, you need to verify their qualifications & their personality!


There are 3 types of applicants:
Those that tell the truth about their job experience, those that exaggerate & those that lie!

Many businesses still make staffing decisions based on a resume & an interview. Although both are important to the hiring process, they are not enough to insure a proper fit. In addition to a work reference check, you may also want to verify academic credentials by calling their college. A credit history check and a criminal background check are good tools to help reduce the risk of embezzlement. Pre-employment testing is also a very valuable & under-utilized tool!

The best way to increase the chances of hiring the ideal employee
is to test the applicant for the required skills.
Source: American Management Association

Pre-employment tests include the cognitive ability test (predict future job performance), the personality test (evaluate social interaction skills), the aptitude test (assess basic academic knowledge), the integrity test and the specialized skills tests (QuickBooks or other software). You will probably not want to give an applicant all of these tests, but you should look at each of them to determine which would be most beneficial to your company.
• Most of these tests can be found at www.resourceassociates.com
• The American Management Association recommends the DISC test (a personality test), it can be found at www.internetassessments.com.
• A QuickBooks skills assessment exam can be found at www.qbtests.com. These exams are industry specific so the applicant is tested on the skills they will need for your business. Also, the feedback from the test isn’t just a test score; it’s an overview of what level of user they are & what duties they should be able to perform in QuickBooks.
(These websites are my personal favorites but there are other sites offering these services).

The expression “An ounce of prevention is worth a pound of cure” applies 10 fold when hiring a bookkeeper. If you don’t spend the time and money finding the right person to begin with ~ you will spend much more time and money cleaning up their mistakes and starting the hiring process all over again.

The bottom line is finding a qualified bookkeeper is PRICELESS!

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How to Eliminate the Frustration from a Small Business Owner...

If you are the owner of the small business company you always have heaps of work, regarding your company finances. The fact is there and still do you need to go to the professional to take the stress off your shoulders?

Visiting with your personal accountant is similar to going to your dentist. Time is money; the longer you delay your visit the more it will cost you.

First you need to know how to set up your business and to consider advantages and disadvantages of every business entity (LLC, Partnership or C Corporation, etc).

You can spend many hours away from your business learning about entities on your own or you can hire a specialist who saves you time and gives you qualified advice on how to protect your hard-earned money.

But any way you are the specialist in your business, and to be competitive in your field you need to invest a lot of time. At the start, most of the entrepreneurs work in average of 12 hours a day.

In addition to your business can you learn everything about accounting and then handle it? Most likely the answer is no.

Your business' finances are vital for your success, and your needs are unique. At the Me My Money and I, we take your individuality seriously, focusing on your business' special situation and needs.

To make the right financial decisions for your company, you need Financial Statements; Balance Sheets, Income Statements and Statement of Cash Flow for every month of the business activity.

All of them are concerning to the company financial reports. What do you know from these financial reports are briefly described below.

From the Balance Sheet reports know what your company owns and what does it owe. Other words, you know your company resources and obligations of your company.

From the Income Statement reports you know the economic performance of a company for the given period. Other words, you know your gross and net income.

From the Statement of Cash Flows reports you know the amount of cash generated and consumed by a company through the following three types of activities: operating, investing and financing.

The statement of Cash Flows is the most objective of the financial statements because it is somewhat insulated from the accounting estimates and judgments needed to prepare a balance sheet and an income statement.

Real world and real understanding of your company finance goes beyond numbers on a page to show to a small business owner how accounting and bookkeeping come into play in your company.

Without good bookkeeping service you can not plan ahead (business planning), get organized, stay informed on the financial matters of your company, avoid costly mistakes, reduce costs and save time.

Why do small business firms fail? Not always because of competition but because of lack of financial information. You are making money, but where do they go to? What is the main outsourcing of your finance? The right answer gives you a huge benefit for your company.

Other benefits you are getting if you go to a professional accountant are the ability to focus on your core business, getting organized, staying informed, avoiding costly mistakes, reducing costs and saving time and improving your cash flow.

And one more great benefit is the good timing because all these benefits work only if performed in the right time. Timing is the key to your business's success. With the help of a qualified bookkeeper and accountant you will have it under control and making the most profit.

Running a successful business takes more than just hard work but also making sure your hard work is profitable. Good record keeping provides you the solid foundation needed for excellent business growth.

Your company's reliable financial information eliminates the frustration from your small business company and your financial reports become the powerful tools for surviving in today's business world.

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How Business Bookkeeping Can Make Budgeting Easy...

Small business owners generally fall into two categories. There are the business owners that let their accounting tasks, invoicing, and payables pile up on their desk - or even in a shoe box, until they're forced to face the music. Usually this happens around tax time.

The other sides of the coin are the business owner that are amazingly organized and know where every penny of their money is going. What do these business owners have that the rest of us don't? More time? A PhD in accounting? Nope, chances are they have a system. To put it more simply, they're organized. If you're in the crowd of business owners that let it all pile up, there are a few things we can learn from the more organized folks. If we take just a few of the steps organized business owners take, not only will we save several days of excruciating paperwork, we will have a firmer grasp on our money.
Here are some recommendations for good bookkeeping practices:

#1: Record income and expenses on a regular basis. If you have a budget, recording this information is as easy as taking a few minutes each week or about an hour a month and recording your income and expenses on your budget. Your budget will have expense categories that reflect your business and which are broken into subcategories that make it easy for you to record. For the less organized, a simple system is to keep a file for your week's receipts and payments. Using this method all you have to do is pull out your paperwork at the end of the week, add it up, record it, and you're good to go. Literally 10-15 minutes of your time.

#2: Create expense categories that make sense for your business. Trying to fit your business budget and bookkeeping categories into a standard form may not work for you. Not all categories will apply to your business and it can end up feeling like an incomplete and inaccurate project. For example, a direct sales company will have an expense category that includes shipping and receiving as well as an inventory category. However, a service business won't have those categories and will end up with blanks in their spreadsheet. Spend some time going over your accounts and create a list of expense categories that work for your business.

#3: Have a method. When you have a bookkeeping method, a software program or a spreadsheet, and you use it, transferring the information to your budget or vice versa is just like cutting and pasting the information from one document to another. It's easy.

Having control over your money is a necessity as a business owner and if you're not keeping a budget or tracking your accounts, you're less in control of your money. It's worth taking a few minutes and organizing your accounts. You won't regret it!

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Household Budgets - The Secret Weapon in the War on Debt

Ah, America...land of the free, home of the indebted. According to CNNMoney.com, the average American household has almost $9,200 in debt. That's the average. Some have much, much more. Interest rates generally run in the mid to high teens, so counting interest and payments on other debt, such as mortgages, the average American is dealing with a heavy debt load.

So what can you, Mr. or Ms. Average American, do to get yourself out of this nasty situation? The first step, which may be the most uncomfortable, is the most critical: get your life under control!

And that means preparing a household budget.

A successful business prepares a budget. It attempts to anticipate funding needs going forward, and then does its best to stay within the budgeted amount for its expenditures. You probably have an advantage over most businesses in that you have great foresight in anticipating your financial needs. You know what you typically spend in a given month on various things such as food, clothing, utilities, and rent or mortgage. If you don't have an idea of what you spend on these things, take a look at your checking account registry, or your online checking account information. Your past financial dealings are right there for you to see.

It may also be helpful to use a financial tracking application such as Microsoft Money. You can find out more about Money at http://www.microsoft.com/money/. These types of applications are excellent for becoming more aware of where your money goes. A free online application that is designed specifically for improving your awareness of your spending patterns is http://mint.com. The application automatically labels many of your expenses and lets you classify expenses any way you want. One unique feature of the site is that it lets you compare your spending to the spending habits of people in any city, state, or nationwide.

Just becoming aware of how you spend your money will greatly increase your power. You will likely find yourself becoming less prone to wasting money once you develop this awareness. Once you have a handle on where you money goes, the next step is controlling where it goes. And for that, you need a budget.

The first items in your budget should be the necessities - expenses that are not optional. These would include things like your house payment or rent, electricity, water, car payments, gas so you can get to work, and food. Many financial experts recommend that you pay yourself before paying anyone else, and by that they mean you should take 10% (or however much you can afford) and put it in savings or an investment account. However, if you don't have a roof over your head or food in your stomach, then saving is a moot point. So for purposes of creating your first realistic budget, I recommend that first you take out the necessities. Necessities, of course, vary greatly from the mind of one person to the next, but think of it in terms of BARE necessities - things you absolutely have to have to survive.

If you're really, really serious about getting out of debt, you might want to take a hard look at those car payments. If you could get by with something less, and you're not "upside down" (meaning you owe more than the car is worth), it probably makes a lot of sense to sell and downgrade. It will likely save you some money on a monthly basis, and may even put some immediate cash in your pocket.

Next, take out 10% for your savings. If you can't afford 10%, allocate SOMETHING. But strive for the magic 10%. It is also recommended that you allocate another 10% for charity. This may be an item you leave off until last, but many good things happen to those who are willing to give away some part of their income with nothing expected in return.

After savings and possibly funds for tithing, factor in your debt payments. Yeah, this is when you start to feel the pain. There are steps you can take to help ease the situation, such as debt consolidation. Another strategy is to pay off your debts in ascending order of size; i.e., pay off your smallest debts first, as fast as you can. As debts are paid off, add the amounts you were spending on those debts to what you pay to service larger debts. It's a snowball effect, whereby over time you end up paying larger and larger amounts on your biggest debts in order to get them paid off faster.

Next, factor in your non-necessities. This is where you really have to take a hard look at your life. Are you spending too much money on entertainment? Alcohol? Clothes? Fancy cars (as discussed above)? If you are serious about getting out of debt, then you've got to scale down these types of expenses. Just becoming aware of how much you spend on non-necessities may shock you into action. You should budget for these types of expenses, but cut them back, and allocate the remainder for debt repayment.

The final step in preparing your budget is to write down your income, and make sure everything balances out. You can't spend more than you make (that's probably how you ran up all that credit card debt to start with). If your expenses are too high, start cutting back on the non-necessities. In the end, you'll have a nice, balanced budget.

Once your budget is in place, you've got to find a way to stick to it. One recommended strategy is to use a cash system. The problem with the way money is handled today is that it's just too easy to spend it. Just whip out your debit card. No cash required. No check book and no ledger entry required. But you quickly lose track of how much you're spending. The solution is to allocate your budget requirements into cash categories. Literally put cash into envelopes every month for various categories of expenses. You will be less likely to spend money needlessly if you literally see your pile of cash getting smaller. And you will have much more clarity about your financial situation.

If you follow these steps, it can have a profound impact on your life. You can get out of debt quicker, take control of your finances, and feel much better about yourself. It's all up to you. And it all starts with a budget.

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Getting Control of Your Finances with a Cash Based Budgeting System

In this day and age, it is easier than ever to spend money - just whip out your debit card and buy whatever you want. The problem with these nearly frictionless transactions is that it is difficult to keep track of your money. When most people wrote checks for every day purposes, at least they had transactions recorded in their checkbook. Every time a check was written, the person writing the check would be forced to write down the amount and see how much money was left in his account (assuming the person kept his checkbook balanced). Nowadays, it seems like very few people use checks for anything but monthly bills and very large purchases. Meanwhile, cash gets drained from their bank accounts while they use their debit cards without discretion. If this situation describes you, then you should pay close attention to the cash-based budgeting system discussed below. A cash-based budget can go a long way toward helping you get your financial situation under control.

In a nutshell, a cash-based budgeting system is one in which you take cash from your bank account for cash transactions and then divide that cash into categories. Each cash category receives its own envelope to hold the cash. That is all of the money that you are allowed to spend in that category until the next budget cycle begins.

To begin the process, you need to decide what your spending categories are going to be and how much cash you should allocate to each category. Common categories would include groceries, clothing, eating out, and entertainment. To decide how much to allocate for each, it will be helpful to look at your past spending patterns. You will probably be surprised at how much you spend on non-essentials, so it is very likely that your budgeted amount will be less than you have spent in the past. This will free up money for saving, giving away, or paying off debt. At the start of the month, withdraw the required amount of cash and divvy it up among the category envelopes.

Now comes the hard part. During the month, when you find that all of your cash for a particular category is gone, you cannot spend any more on it. If you find that it is impossible to get by on what you have budgeted for particular categories, then you need to adjust your budget for the next month. But until the next month begins, do everything you can to avoid spending more money on the category. If you have excess cash in other categories, then you can move money from one envelope to the next. The one thing you do not want to do is use your debit card to get more cash. That throws this whole system out of whack.

There are some items that will not fit into a cash system, mostly monthly bills that require a check for payment. But if you can get to the point where all of your bills are paid with check or on-line, and all other spending takes place in the context of your cash budgeting system, you will find that you have much more clarity and control of your finances.

The reason this system helps to control spending is that seeing your pile of cash disappear has much more emotional impact than using your debit card to make payments. You will be much less likely to over-spend. Even in the twenty-first century, when most transactions are done electronically, cash is still king. It is probably going to take some time to adjust to your new system. You will probably fall off the horse a few times. But if you force yourself to be disciplined and stick with it, eventually you will become a money managing machine.

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Financial Modeling,, Murder by Numbers

To borrow a line from the Police, it might seem as easy as your a-b-c's, but there's a lot that goes into effective financial modeling.

For my entire career, financial modelling has always been central to the analysis I've relied upon to evaluate a business' health or justify an investment in its growth.

There are several important steps to follow in developing a financial model which will serve your objectives as an entrepreneur, whether you're trying to manage what you have or raise capital for what you could. This is particularly true for newer enterprises, as the discipline associated with identifying and thinking through the key business drivers is invaluable to the early planning process.

1. Figure out what you're trying to accomplish.

As an entrepreneur, you have a number of competing objectives. Depending on how established you are, you may have a business to run on a day-to-day basis, and it's hard to find the time to plan, build and manage against a set of financial models.

You may be tempted to build a simple income statement-type spreadsheet that lays out revenue assumptions and backs out costs.

But effective financial models can and should be used for so much more. Using them, you can look six to sixty months down the road to plan for organic growth, evaluate opportunities to enter new markets or take on new sources of capital, or anticipate liquidity problems.

I highly recommend taking the time to build a model which will generate a consolidated set of financial statements that will provide a more comprehensive picture of your business. And the sooner you identify the range of scenarios, the easier it is to plan and build your model to accommodate them.

2. Plan, and then plan some more

A rule of thumb in traditional software design and development is that for more complex projects your engineering team may spend half of the overall project timeline in planning and design. In my view, that's overdoing it for financial modelling, but not by much. Key planning considerations include:

Breaking down the key business drivers and assumptions, and how they are all related (more on this below)

Determining the level of detail / drill-down capabilities

Building a simple map of how your supporting sheets will roll up to your consolidated financial statements

Determining what type of sensitivity analysis you want to model and present

3. Identify the key business drivers and assumptions

Particularly if you're looking to raise capital, breaking down and modelling your key assumptions and drivers is the most important aspect of building your projections, and one of the most important elements in presenting your business.

It will reflect your understanding of your market(s), growth opportunities and drivers, operating requirements, and what it takes to pull it all together. It is also an opportunity to demonstrate that your aspirations are firmly grounded in the reality of reasonable expectations about time to market, delays, cost overruns, etc.

So if you're modelling a new product roll-out, it's not sufficient to say you'll sell X Widgets each month for $Y per and multiply the two numbers. Instead, you need to model out what drives unit sales, what are the elements of pricing (including discounting, upsells, bundling, etc.), how each of these elements might change over time, and then pull it all together.

As you gain more information and market experience, or if you simply want to run some scenario analysis, you'll be able to tweak each of these variables and watch it flow through the analysis.

This holds true for almost every revenue and cost driver - wherever possible, use formulas to do the work on clearly identified sets of assumptions that can be easily updated without needing to reformat the sheets manually.

4. Do the Sanity Check

Far too often, reasonable assumptions accumulate to generate unreasonable outcomes, particularly when the financial model is extremely sensitive to changes in key variables or if compounding effects occur in the revenue streams.

For example, in modelling an e-commerce business line recently, seemingly minor changes in the conversion rate of site visitors to paid subscription accounts (from, say, 0.75% to 1%) had a dramatic effect on the cumulative revenue stream over the 36 month forecast period.

So it's essential that the model pass the smell test. If the compounded growth rates are not credible, it is frequently a reflection on your judgment as an entrepreneur, and it can negatively affect your access to capital.

Putting dampers on your model, such as by decreasing growth rates once you achieve a certain market penetration, or simply adjusting your assumptions downward at various stages can help present more reasonable outcomes.

5. Put together a range of scenarios

You'll want to generate downside and upside scenarios to complement your base case view of the business. Again, this requires judgment to put the pieces together and determine which scenarios make sense and which ones are a perfect recipe for disaster by showing a complete business collapse or a path to unlimited growth.

6. Take a step back and figure out what it all means

Frequently, someone will present a set of numbers who hasn't taken the time to figure out what they really say or how they stack up to comparable companies.

Understand and communicate, in plain language, what your margins are, where your forecast business is most sensitive to breakout opportunities or potential setbacks, and what your overall level of comfort is with the forecast.

Of course, the sad fact of model building is that no matter how careful you've been to lay everything out, you're going to be, well, dead wrong. It's simply not possible, particularly in a newer (or even pre-revenue) business, to predict what's going to happen with any level of precision.

But the process of building out the model will not only test, and then shore up, your understanding of your business, it will give you a sound foundation to measure your results, analyze them relative to your expectations, refine them, and continually improve your ability to plan for your business' growth.

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