How to Handle Getting Laid Off

If you want to read what I've done to stretch out my funds to keep my family afloat, skip this and scroll down

I and seven other were pulled into the department manager's office. There was some small talk about what we'll be doing for the weekend, and some status updates about various projects; however, the manager was looking as if she was holding back some news. It was at this point that I knew something was amiss, and my instincts were correct. 

We were told that our last day was Friday, and that we are now being transferred to the temp department for the company. Many of the people teared up, along with the manager, but I felt oddly calm. I never been in this situation before. Any job that I had, I left on my own terms. I was never fired or laid off, but this was different. 

Now, after the whole shock of losing my job wore off, I need to make a plan of action. As you may know, I have a toddler and my wife who is now pregnant. We had plans for the next year with our budget and what we wish to accomplish, but now those plans are gone. I no longer have a steady paycheck or benefits. This is the same situation anyone who lost their job is feeling. The "I lost my job and can't pay my bills."

Thankfully, I have enough resources to last me until mid January. I do have a side business doing consulting and selling items online that pulls in a few extra dollars. I can still cut expenses. 

So now you know what my current situation is. My goal, since I now have so much free time, is to blog what and how I will cope with this life changing event. My goal is to either find new employment or move my business from part time hustle to a full time endeavour. I hope you join in for the ride of a life time.

But you are not reading this just for a sob story. Here is what I've done so far to handle with change of losing my job:

Ten Things I did when I got laid off:

1. I looked at my YNAB reports to see any and all spending trends since March 13. I identified areas that we were spending money in that could be cut back.
2. Called up my internet company and reduced our broadband from 40Mbps to 20Mbps saving 30 dollars.
3. We are withdrawing only 100 dollars per month to spend in three very basic categories: Groceries, Household supplies, and blow. We normally spend around 600 dollars in this area, so we are now only spending 400 dollars. We reduced spending by 200 dollars or 33%.
4. Thankfully, I am not upside down in my car loan, so I am researching how to sell a car with a loan. This would save 160 dollars per month (payment and insurance).
5. We are cutting Hulu and I bought an antenna to get free television. 
6. I am looking at doing some freelance work at various freelance websites.
7. I am learning how to cook.
8. I am learning Python programming language.
9. I am offering free training in QuickBooks and QuickBooks Point of Sale
10. I am relying on Stoicism and faith a lot more. (I know, it is an odd combination!) 

This is just a rough list that I've done, everyone is different. If you have any advice or comments feel free to share!

Accounting for Real Estate Agents

As a Realtor  your paychecks completely depend on your abilities to sell a house. Unlike others types of employees who receive steady paychecks, Realtor paychecks fluctuate wildly from each sale. For this reason, managing your finances is a paramount importance. 

The major question you may ask is what financial software should you use? This should be your second question, your first question to ask is if you are a independent contractor or employee. 

If you are an employee for your brokerage, then you can use any time of personal finance software to manage your money. I would suggest YNAB for its budgeting capabilities read more here, however, if you need to track expenses for tax purposes then using Quicken Premier/Deluxe would be best. 

Independent contractors should aim use QuickBooks Pro or QuickBooks Online Essentials. These programs help make tax season a breeze and will reduce the number of times your accountant rolls their eyes when you come in to have your taxes done. While Quicken does handle businesses, QuickBooks will place your taxes in a format that your account would be familiar with, namely using P/L statements, Balance sheets, and other business reports that accountants use for tax filing. 

QuickBooks has a robust tax line mapping compared to Quicken, and it is solely a business accounting program unlike Quicken home and business. If cost is something you are worried about and you also need a mobile solution. QuickBooks Online Essentials will give your the tax reports, mobility, and excellent money management for less than $30 dollars per month.

If you have any questions about setting up your QuickBooks company file or deciding which program to use, leave a comment!

Personal Budgets That Work

Budgets do a lot of good, but you probably heard that already. If budgets do so much good, then why do we avoid them? 

Budgets are like exercise and eating right. We know diet and exercise is good for us. We know diet and exercise will help us be better people. We know the amazing benefits that happens when we follow a diet and exercise. Yet, we don't. It is easier, and more rewarding in the short term to gorge ourselves and sit and surf the interwebs. 

Budgets suffer the same stigma like diet and exercise. We know the benefits, but the discipline and work involved to maintain a budget or dieting or exercise scares us to accept the short term pleasures in lieu of long term success.

How do we make a budget work? If you're single and you have a money spending issue, then get someone who you trust and is responsible. Make them your "sponsor" and submit yourself to their direction and oversight. Some churches offer budget counselors to help in this area. 

Married couples need to be on the same boat. If one person controls the creation and maintaining of the budget, make sure to do weekly budget meetings with the other spouse. The reason is to make sure that everyone is clear on where the money goes during the week. This will prevent one person having all the control and keeping the other spouse in the dark.

The last thing you should do is get a budgeting program. If you read my other posts, you'll  know I'm a fan of YNAB. The cost for YNAB is $60 dollars but you can get $6 dollars off by following this link. While $60 dollars may be a lot of money, just remember YNAB offers a 34 day free trial, and if you follow the rules in YNAB, the money you'll save will  pay for the cost of the program.

Using YNAB for Small Business Finances

I've used YNAB for a while now, and as you can see from my blog, I like the program. My wife and I are not perfect and sometimes we hit financial setbacks that are beyond our control; however, each time we do we stick with our budget. What we see is that we always have enough to pay for bills and get food. YNAB does work, and it works well for personal finances. 

However, what about small businesses? Does YNAB work for a business owner? 

The answer is... It depends.

It depends on your business. YNAB does extremely well for cash flow budgeting and cash based businesses. If you use a cash based accounting system (you get paid when a product/service is rendered and you pay bills when you receive them) then YNAB is great for you. If you need to have an accrual system, YNAB may not be the best choice.

I have a small company that I run part-time, I sell items online and also do some consulting work. I have QuickBooks Pro (since I am a QuickBooks consultant), but I find myself using YNAB more often. Even though I use both systems, there isn't a lot of work since both programs are able to import and categorize transactions. 

I use YNAB to help me keep my cash flow steady and also keep my spending under control. It has the same effect on my company's finances like it does on my personal finances. There are some things that QuickBooks does that YNAB doesn't, like track and manage taxes. Also, YNAB doesn't track inventory. Lastly, the reporting features are lacking when it comes to business reporting, and it cannot do a balance sheet yet.

However, Jesse (the creator of YNAB) is working on improving YNAB for small business owners, so I believe these features will be available eventually. 

If you want more information follow these links:

YNAB for Small Business

Different businesses who use YNAB

Video about YNAB for small business

How To Pay Off Credit Card Debt

Debt is a horrible master. Nothing saps wealth like being in debt. Just take your monthly payments, add them together, then times it by twelve.

How much do you spend on debt?

Once you get the number go to this compound interest calculator. Set as the interest rate a reasonable rate (try 6%). Then set the years to the average length of a car loan (5 years), then take your monthly amount you spend on debt and add it to the calculator. Select the compound interval to yearly. What is the number you get? Image what you could buy or save if you paid off debt!

How do you pay off debt? Follow these simple steps:

1. Get the current balances for your debt accounts.
2. Throw the amounts and list in excel or Google spreadsheets.
3. Sort the list from smallest to greatest.
4. Add due dates, minimum monthly payments
5. Pay off the smallest amount ASAP
6. Take the minimum payment you were paying for the smallest balance and add it to the next smallest balance. Ex: Visa minimum is $50 per month, Master Card is $100. After VISA is paid off, apply th $50 to the Master Card monthly payment making it $150
7. Keep doing this until you reach your mortgage.
8. At this point I would apply half of what you were spending on consumer debt to pay off your mortgage faster!
9. Celebrate!!