2003 Fall/Winter Volume No. 2
For the majority of small portable restroom business operators, your personal finances
and the financial life of your business are closely tied together. If your personal credit
shows problems with late payments or missed payments, you will also have problems
getting financing for your company. To gain a handle on the money trail, keep your
finances simple and your costs under control.
PolyJohn Enterprises Corporation
Here are six quick tips to consider to make the
checkbook balance, and to build personal security.
Most people run their business on a budget, but are less concerned about planning family expenses. A budget is an important discipline no matter what income bracket you're in. You can't make rational decisions about how you want to spend your money until you know how you currently spend it.
The first part of creating a budget is to keep track of all family expenses for a few months. An easy way to do this is to live for a while without cash. These days with cash cards and credit cards accepted virtually everywhere, even fast-food joints; you can plunk down the card for nearly every purchase you make. At the end of the month, you'll get a handy statement showing clearly where every dime was spent.
Create a spreadsheet with your expense sheet organized in separate columns. The headings can be anything that makes sense for your lifestyle. Here are some suggestions: food-groceries, food-dining out, family fun (movies, trips, sports), personal fun (golf, etc.), fun expenses (boat, RV, ATV, Club payments), transportation (car payments, repair, gas), living expenses (mortgage, taxes, utilities), extra utilities (cable, internet, cell phones), and miscellaneous shopping (clothes, shoes, house wares), education expenses, savings/investments.
Add up each column. Now determine what percentage each category uses from your monthly income. Is this really how you want to divide your wealth? If not, create a plan to shift priorities.
2. Reorganize and Consolidate
Now that you know where the money is going, simplify how your money gets there. Consolidate payments to as few institutions as possible. You could spend hours each month paying bills or you could spend ten minutes and be done with it. One way to consolidate is to use a line of equity credit card. Typically these cards offer low rates similar to your mortgage and they have very high limits based on the equity you have in your home. With this type of card you could pay off car payments, boat/RV/toy payments, department store bills, and credit card payments to reduce interest rates and the time you spend writing checks each month. Also, carrying just one card and writing a very large check each month is a sobering reminder to reign in spending. One warning using this method; pay the full amount you charge each month plus your due payments, otherwise you could quickly run this card higher and higher into debt.
By paying a little extra each month, you can also run yourself out of debt much quicker, while also establishing a stellar credit rating to help secure business loans and financing to grow your business.
3. Pay those pesky little bills automatically
Bills $100 and under that hit you with regular charges such as cable, newspaper delivery, internet access, long distance, cell phone, telephone, insurance, etc. can be set up for automatic payment directly from your checking account. Two things to be careful about are: only set up automatic payments with reputable companies you trust. And, be sure you know the timing of deposits and withdrawals so that you will never be caught short.
4. Avoid Debit Cards
They look like a credit card and act like a credit card, but debit cards can be a lot more dangerous. If a credit card is lost or stolen, you are liable, in most cases, for only the first $50 in fraudulent charges. With debit cards, thieves can clean out your entire account and they don't need your pin number to do it. Thieves can use your debit card in credit mode to make purchases until you are wiped out.
The other problem with debit cards is that it is awfully easy to get a little extra cash every time you make a purchase. These cash withdrawals are hard to track unless you write each one down and use it to balance your account each month. As we all know cash quickly burns a hole in pockets, and receipts disappear like snowflakes in the summer.
5. Don't fall over trying to balance your account
Balancing a checkbook is never fun, but it can be completely unnerving when you try to account for every penny. The answer is to forget the pennies. Round up or down each withdrawal in your checkbook to the nearest dollar. If your figure is within a dollar or two of your bank's figure, that's close enough. Peace of mind and the time you'll save, is certainly worth a buck or two.
6. Pay your future each month
There is no better way to accumulate wealth than to put yourself on your list of bills to pay. Set up a savings account and send a steady payment to it each month. How much you send should be based on your monthly budget. Don't use it to save for short-term goals like vacations or other extravagances. Don't think of it as anything more than a bill. And don't touch the money for any reason.
A healthy savings account will be great for your business and personal credit rating. Eventually in 20 or 30 years, it will also be a great asset. Then deciding how to use it will be a lot more fun.
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