Monday, May 18, 2009

Big Changes Ahead

I'm moving out of state. I'm quitting my job. I'm renting out my house. I'm starting a business. I'm trying to max out my 403b before my last paycheck. I'm trying to live on $660/month (plus the money from my roommates who pay for my mortgage). I actually think this will all work out. Craziness!

Moving Out of State
I am thrilled to have finally made the decision to move further south. I've been in the Northeast now for almost a decade and I am SO tired of the cold, the brown slush, the SALT, the pot holes, the greyness. The sunny skies south of the mason-dixon line have been calling me for a while!

Quitting My Job
This one was tougher. I've stuck around here as long as I have because I love the work I do and the people I work with. But it is time. My last day of work is June 5th. My last paycheck is August 31st.

Renting Out My House
The idea of putting my house on the market, hoping to find a buyer, and coming back up here for closing was not at all appealing to me. I figured I might as well see what kind of potential there was for renting out the house. I do have some experience being a landlord, I have a rental property a few miles away.

On May 7th I posted some pics on Craigslist with a pricetag that sounded good to me. I got 17 emails within 24 hours. I made appointments for the following week with 3 people. They came, they saw, they loved it, they wanted it. It's true, my house is very cute.

I offered it to the ladies who wanted to rent it furnished for an extra $100 a month (yay, I don't have to move my decade-old stuff...!) They are coming down on Thursday to sign the lease. So, starting July 1st I will get $1295/month for a house that costs me $840/month in mortgage, insrance and taxes. That's right, that's $455/month more than I have to pay. I told you, cute house.

Starting a Business
Now this one will be quite an adventure. I've done a lot of research, I think I have the right market, the right demographic for my services, and some funds for start-up costs. I'm excited to see how this turns out!

Maxing out the 403b (or Trying to)
I was all set to max out my 403b by the end of December. But now that I won't be getting much of a salary once I start my business, I want to put away as much as I possibly can while I'm still getting a paycheck here. I've upped my contributions to the point that my paychecks are about $660/month. I do have some roommates now who pay me enough to cover my mortgage. So, that $660 has to be enough to cover utilities, groceries, gas, internet etc. Oh, and and a $750 charitable contribution pledge. I think I can do it. I may post the exact budget some other day.

Definitely big changes ahead.

Monday, March 30, 2009

Trying To Do Business Taxes By Myself:

Bad Idea.

Starting An S-Corporation When I Don't Even Make Enough Money to Break Even Let Alone Pay An Accountant: Worse Idea.

Waiting Until April To Figure This Out: Worst Idea.


Asking A Friend For An Accountant Referral: Slightly Better Idea

Dissolving the S-Corp: Quite Possibly a Good Idea

Not Worrying: Definitely A Good Idea

Making Plenty of Money to Pay An Accountant: Fantastic Idea

Sunday, March 29, 2009

Making Money Is My Current Hobby

I enjoy making money. It's such a fun hobby! It's a little hard to explain to people that this is one of my favorite pass-times though. Money still isn't considered polite conversation in most circles. Shame.

My previous hobby used to be saving money. I got such a kick from figuring out how to squeeze the most value out of every free or inexpensive resource available to me (as evidenced by my random desire to make up a budget for living on minimum wage) But I think now I much prefer the idea of having a lot more money flowing through my life.

I want to take a look at what I've been able to do with my income over the past few years. Let's start in 2006.

Main source of income: job, salary of about $30,000
Bought a house: no income yet
Bought a rental house: no income yet
Decided to start a little online business: no income yet
Total: $30,000

Main source of income: job, salary of about $32,000
My house: roommate income about $8700
Rental house: tenant income: (before expenses: $8,500) after expenses, about $500
Business: (before expenses: $650) after expenses about -$1500 :(
Total after expenses: $39,700

Main source of income: job, salary of about $40,000
My house: roommate income about $9850
Rental house: tenant income (before expenses $9500) after expenses about $1500
Business: (before expenses: $3500) after expenses about $2200 :)
Total after expenses: $53,550

2009 (projected)
Main source of income: job, salary $40,000
My house: roommate income about $11,000
Rental house: tenant income (before expenses $9840) after expenses about $1700
Business: (before expenses: $6000) after expenses about $4800
Total: $57,500

Ah, I love watching that number go up! Now, to make it go up faster.... that can be the next challenge in this Great Money Challenge.


Saturday, March 28, 2009

Figuring Out How Much to Charge for Organizing Services

I think I just fell into the world of professional organizing.

I like to organize and my friends know it. I've helped out quite a few of them in the past getting their homes, work places, and even classrooms, organized. Well this week, for the first time ever, a friend referred me to someone she knows who is "feeling overwhelmed and wants help getting organized". I know I can help this person but what I don't know is how much I should charge.

There are two ways I can approach this:
  1. Charge by the project
  2. Charge by the hour
Charge by the Project
At this stage, I don't really know how long a particular project will take. I've never timed myself before and I don't want to quote something that will be way off. I really value my time and I don't want to end up under-estimating and be stuck with a project that will suck hours of my time without adequate compensation. Having said that however, I think once I have a sense of the time required to complete certain projects, this is a better way to go. It gives a nice wrapped up pricing package to the client and there are no surprises.

Charge by the Hour
It looks like this is what I will be going to start with. There are a couple of things to take into consideration here. How much value am I providing to the client (how much my services are actually worth) and how much I value my own time (how much will I trade my time for).

I do value my time a lot and I much prefer to set up streams of passive income where I don't actually have to trade my time for money after the initial set-up is done. If this is all I was going by, then I would charge quite a lot. At one point I had a consulting gig where my client paid me $125/hour.. and that was nice.

Now, how much value am I providing this client? As I said, I'm good at organizing, and I'm also actually pretty good at the psychological game of helping someone through a process like that. But, I am just starting out so I know there will be glitches. I also spent a little bit of time with this client today and I know that he's got good ideas and doesn't really need my "expertise" to help him come up with strategies and systems, he really just needs someone to be there while he does it.

So, what are the various price ranges I could consider? Here are the price points for contract work that I am familiar with in my world, from highest to lowest:

$125/hr Paid to me for my consulting services by a very well-off family.

$75/hr Rate for local professional organizer

$60/hr Acupuncture

$20/hr What I pay friends who I hire for handyman type work

I'm thinking It'll have to be somewhere between $20 and $60. Let's figure out what I feel about these numbers...
  • I'm not giving up an hour of my life for just $20 or $25.
  • $50 seems too much for just "being there"
  • $30 or $40?
Ok, I think I will go for $35/hour for this client and see how I feel about it by the end. I wonder if he'll accept that though? I may be willing to negotiate down to $30, but not lower than that.

Will update after this gig is over with thoughts about a future pricing plan.

Thursday, March 26, 2009

Lamenting the Lost PR

Oh woe. That's what I get for abandoning the blog for a year. It took me less than 3 months to get up to a google page rank of 3, and now here I am, down to a 1. Why do I care? There's a competitive streak in me somewhere.

Wednesday, March 25, 2009

If I Had a Million Dollars would I spend it? I'm a fan of Your Money or Your Life by Joe Dominguez and Vicki Robin so my focus tends to be more on my time and how I want to spend that rather than accumulating stuff (which is not to say that I don't have stuff).

I'm also a fan of Rich Dad, Poor Dad and the main thing I walked away with after I read that book was the idea that I don't work for money, money works for me.

Here's how I would make my million dollars work for me to give me more time: in a nutshell, I would try to set up a source of fairly passive income so that I could pay for all my expenses without having to be tied down to a job. Don't get me wrong, I still love my job, but there's a freedom that comes from knowing that you don't have to do that job, or any job for that matter.

I know how to live pretty cheaply. Some commenters don't seem to believe my budget is accurate, but oh well. If I had a million dollars, I would definitely want to raise my standard of living, so let's say I double it. Let's say I want $5000 a month before taxes.

So, how can a million dollars give me $5000 a month?

1. Put it in a Savings Account

If I put it in a savings account or CD averaging 3% APY (who knows what the economy will offer in the next few years) and took out $5,000 a month, I would run out of money in 16 years. Lame.

2. Invest it in Stocks and/or Mutual Funds

Let's be really optimistic and assume the economy recovers well and we go back to average returns of about 10%. How long would my million dollars last? According to this MSN Money retirement planner, the money would not run out! That sounds good. But the 10% return rate just seems like such a dream right now :(

3. Real Estate?

I have some experience being a landlord. I currently own my own house in which I rent out two bedrooms, and I also own a small rental house that I rent out to a family. Let's see what's possible if I replicate the numbers from my rental house experience.

I live in a place where home prices are pretty cheap. I bought my 3-bedroom single family rental house for under $60K and I put in about $2K for repairs. Seriously. I currently rent it out for $820/month not including utilities and I pay $260/month for property taxes and insurance.

So, let's assume I can buy a similar house for $75,000 after all closing costs and repairs and that I can rent it out for $800. Assuming I spend/save $400 each month for taxes, insurance and put some money away for future repairs, I can make $400 per month.

In order to generate cash flow of $5000/month with that, I'd need 13 houses. It would cost me $975,000 to buy those 13 houses for about $75K each. My positive cash flow from that portfolio would be $5200/month. Even if I had two houses vacant at any given time, my positive cash flow wouldn't go under $4500/month.

AND, as the years go on, I can raise the rent to keep up with inflation.

I think I like this plan the best. So far.

Thirty Bucks in the Mail

I love getting unexpected money! A long while ago I'd filled out some random form to participate in the class action settlement for Airborne. I had forgotten all about it, but yesterday they sent me a check in the mail :big grin:

I've started keeping track of the random bits of money that finds its way to me. I love looking at that list. Just a month ago Nielson's Ratings sent me $30 cash in the mail to fill out a viewing diary. Heck, that was easy, I barely watch any television.

Then, the week after that my mortgage company sent me about $270 dollars because I had an escrow overage for the year. AND they told me that my monthly payments were going down by $10 every month.

I love these money gifts from the Universe.

Tuesday, March 24, 2009

Relearning How to Update The Progress Bars

Shucks, it's been so long, I've forgotten how to update them! I'll muck about with them later. In the meantime, here's where i stand right now:

Credit cards -personal: $2045 due
Credit cards- business: $0
Repay my sister: $0 (paid off $10,000 last year)
Student Loans: $0 (paid off every last cent last year)
Mortgage-residence: $75,316 due

The retirement accounts took a beating last year. I'm hovering at $16K right now.
Charitable giving for 2008: $10,000

Net worth is about $1500 short of where I was last year. I guess considering the economy that's not so bad.

I still have my job!

I have great tenants in my rental house, and great roommates at MY house!

Things are pretty good actually.

Why Did I Stop Blogging?

About this time last year I stopped updating my blog.

I'd only been writing for three months, but it had suddenly become like a full-time job. For some reason I felt compelled to keep up with what the other bloggers were saying, to comment on their articles, to submit my posts to carnivals... and I didn't even know why!

I never intended to make a big thing out of this blog. But my fourth post EVER got mentioned on one of the MSN money blogs (wha....?!). That little bit of attention was fun but then it set up a pattern of trying to keep that up.. and that was no fun. Yuck.

So, one day last March I just went back to writing in my paper journal, with my ball point pen, for me. Much better.

But maybe now I'll start posting again. I probably won't go back to commenting on other blogs or submitting to carnivals. And I don't know if I'll have any readers. But that's ok. Nice and slow and mellow.

If you happen to be reading and feel like leaving a comment, go for it. I may or may not respond. If you leave a complimentary comment, it will be much appreciated (who doesn't appreciate some flattery?); if you leave a neutral comment just sharing your thoughts, I will ponder it; if you leave a negative comment blasting me for something I've written, then I may ignore it or delete it.

I'm going back to using this blog for its original purpose! A place for me to play around with my ideas about money. How to live with it. How to love it. How to leave it. How to make more of it. How to give it away. How to experiment with it. How to make it a science. How to make it an art form. Yes, sounds good.