Just starting a business is no guarantee of a solution to your money problems.

If you have money problems, you may have had the idea that the solution will come in the form of a business.  More likely, you'll just recreate your financial issues in a different account.

Before I started my first business, I definitely believed starting a business would solve my money problems.   After all, the main problem I thought I had was “not enough money”, and we all know entrepreneurs make lots of money, so starting a business should solve my problem, right?

What I found instead was that starting a business has costs that have to be funded personally until the business starts to bring in cash, and the bad habits I had in my personal account showed up again in my business account.  That shouldn't be surprising, but for some reason it was to me!

If you underearn and/or overspend in your personal account, you will likely do the same thing in your business account.  If you have a deep-seated scarcity consciousness, you will not feel like you have enough even if you do earn lots more in your business.  What's needed is an understanding of what is driving your behavior so you can change it. This understanding and these changes are the most powerful work I do with clients.

For me, it still seems like magic when I do my own work in this area.  While we don't teach this in school or talk about it in society, the truth is that we can change the money scripts we were given.  We can work through emotional memories, which has the result of sort of “compressing the file” so it takes up less of your mental cycles.  We can pull and change individual beliefs by working directly with the subconscious mind so that you don't constantly sabotage ourselves.

In order to resolve our money problems, this is the deep work that is necessary for growth.  If you are ready to make a change in this area, schedule a call so we can work together.  I look forward to working with you.

A photo from the screened in porch of our former  “Sweet Home, Alabama”.

We purchased a lake house as a way to get my husband, Darren, to unplug and relax so he could come back re-energized to work at our consulting company, STS.  And while it did serve the purpose of getting him revitalized so we could bill out more of his hours, in truth, most of the time the place sat empty and was more of a drain than a help for our finances.  So how did we turn the situation around, and what lessons can we take from that experience?

1.) Turn liabilities into assets.

Whenever possible, turn the things that cost you money into things that earn you money. 

Let's say on a whim you decide to buy a giant tortilla making machine like the ones they used to have at On the Border (am I the only one who remembered those things?).  While you have piping hot fresh tortillas whenever you want, most of the time the thing is off and you are just making payments, because how many tortillas does one household need?

In this scenario. the tortilla machine is a liability (and likely the source of some fights with your spouse).

Now, imagine that you decide to rent the machine out for parties. Or you keep it running 24×7 and package up and sell the tortillas. Suddenly, that machine has shifted from a liability to an asset.

If you are willing to work through your own resistance, nearly every liability you own can be turned into an asset.

You can rent out your car, your boat, your spare bedroom – nearly everything you own through the sharing economy.

If times are tough, thinking about what you own in a different way can radically shift your financial situation.

2.) Turn expenses into business expenses​.

Technically we learned this lesson with our IT consulting company, but with the vacation rental there were whole other categories of expenses we could write off.  If we went out to eat while staying at the vacation home and then wrote up a review of the place for our visitors guide, that meal sounds to me like a business expense.  If we had to fix up wear and tear on the property, those repairs were now business expenses.  Basically everything we did associated with the vacation home became a pre-tax expense that we got to write off against the rental income.  While the process of renting the house out did create some expenses we otherwise would not have had, there were definite expenses we would have had either way that now were business expenses.

Now, I'm not a CPA, so take what I'm saying as inspiration and talk to a professional to understand how to apply this to your situation within the boundaries of the law.  We don't want to mess with the IRS.  But whenever possible, paying for life in a pre-tax way is a great hack.

3.) Plug into an existing marketplace.

When we decided to rent our our lake house, I made up flyers, posted on Facebook, and emailed people I knew.  Not a lot of activity was generated that way.

If you can, plug into an existing marketplace.  If you make hand made goods, people are more likely to find you at a booth at a holiday fair than at home in your spare bedroom.  Etsy already has traffic – your brand new baby website does not.  No one is looking for you if they don't know you exist.  Whenever you can, plug into an existing marketplace to boost your traffic and revenue. These sites will likely take a bite out of your revenue, but this is a cost of doing business and for getting leads you wouldn't have gotten otherwise.

This, by the way, is what network marketing companies are doing TO you, not FOR you.  They are hooking into your existing network of friends and family.  Yes, occasionally someone may come to their site and get directed to you, but for the most part, you are the sales and marketing for those products.  Copy their model for yourself by plugging into other people's networks whenever you can.

Hopefully these tips will help you think differently about your money and increase your financial successes.

 An emergency fund is basically an insurance policy where we pay the premiums to ourselves. 

If you have your emergency funds in an investment account right now, you probably get why this isn't a great place for your cash.  With that being said, our memories are short, and in five years everything will be back to “normal”, the market will be soaring, and the temptation to invest your emergency money will be back.  So let's go through the thinking now, so then we can look back on it.

Often, our personal emergencies are caused by circumstances outside our control.  And often, our personal emergencies occur at a time when we aren't the only one having an emergency.

If your hot water heater croaks while the market is on a tear, no big deal.  If the market is up from when you put money in, you can take money out without a problem (except transaction costs and taxes, but let's ignore that for now).

 The catch is that often your personal emergencies will tie to larger emergencies in the world around us.  If something happens (oh, say, a pandemic) the markets will fall, businesses will fail, and jobs will be lost.  If this is your emergency, sure, you can still pull your cash out and use it for your living expenses, but you will be pulling cash out of the market at the worst possible time.  Remember the rule to buy low and sell high?

The truth is most people do exactly the opposite.  When the market is trending upward, they hear how well everyone is doing and they want in.  When the market is crashing down, they panic and want out.

Do yourself a favor and keep some cash in savings for emergencies so you can access it without taking a loss on your investments, ok?

Part of a series. Covers the change to the US Federal tax return filing deadline and the direct payment.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for regular Americans. This article covers two of those items: additional time to deal with Federal taxes and direct payments to individuals.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.

On March 21, 2020, an unprecedented spike in first time jobless claims was announced by the Labor Department.  There had been 3.2 million first time unemployment claims.  The single largest week record before then was for 700,00 back in 1982.  Check out this article from Business Insider for details.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

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This article covers changes for federally-backed student loans made as part of the CARES Act.

This is perhaps the neatest and cleanest aspect of the CARES Act, as it is one of the few areas where the federal government already had complete control and direct communication with citizens.  If you have a student loan direct from the U.S. government, your payments will be waived until June 30th, 2020.

Do note that this is only applicable to loans that are direct, FFEL from Department of Education prior to 2010, or Parent Plus loans from the government.  Any payments missed during this time will count as payments if you are working toward forgiveness.  No interest will accrue.

If your financial situation is good, you can continue to make principal payments, but accrued interest gets paid off first.

No action is required to take advantage of this program.

 Please note:  this program does not include FFEL loans held by private institutions, Perkins loans, or other private loans.

Journal questions:

How can you best manage your financial goals despite your student debt? 

Getting a feel for the cyclical activity of the economy helps you anticipate what is coming next.

“Who could have anticipated this?” I hear Americans cry.  Only everyone who was paying attention.

I am a Gen Xer, which means I've ridden this Merry-Go-Round a few times now, and I feel like I'm starting to get the hang of it.  I want you to get a feel for it, too, so all of us can be in a less vulnerable position the next time around.

I graduated from college in the late 90s and into the tech boom and Y2K preparations. Both of those things meant the economy was doing pretty well, especially for those of us who landed in IT.  Then someone decided to drive some planes into some buildings, and everything fell apart.  Those who were traveling at the time got routed who knows where and had to make their own way home.  As a country we were traumatized and distracted and the economy took a hit.

“Who could have anticipated this?”

Slowly, slowly, Americans got back to the new normal and the economy started to grow again. People on Wall Street played strange games with mortgages, and when the music ended many of us found ourselves with more house than we could afford and the economy on fire around us. First those who had benefited from the housing boom (carpet and tile manufacturers, furniture makers), and then those who benefited from those companies benefiting (services based companies who had those customers as clients, etc.), and then finally nearly all of us felt the effects.

“Who could have anticipated this?”

 After eleven years of recovery, first to the level we should have been without the games of bad players on Wall Street, then on beyond that, and then higher still, the rumblings began among those who pay attention to market cycles. Over time they got louder and louder.  “We are due for a recession,” they said. 

Now, suddenly, out of nowhere, a pandemic.

“Who could have anticipated this?”

Now, maybe I am making patterns where none exist.  The human brain loves to do this.  It makes it feel safe.  So take what I say with a grain of salt.  But it sure seems to me that every ten years or so we just DO this. While the exact pin that goes into the bubble is a surprise, people who are paying attention generally do know that there is a bubble and that it is due to pop.

So what is the average person out there like you and like me supposed to do about this?

Here are my suggestions:

– Improve financial literacy.  Think about how easy it would be to take advantage of someone who is unable to read.  “Don't worry about the details, sir, just sign right here!” Yet how many of us are financially literate?  How many of us get taken advantage of when it comes to money and numbers?  It was difficult to learn to read, but you did it. I strongly recommend you now do the same thing with finances. There's always more to learn – I don't pretend to know it all, but I'm willing to share what I have learned. Read books, find a mentor, dive into this topic.  We all now see how very frail the little social safety net under us as Americans really is.  We can either change that or understand we aren't immune from it and prepare.

– Understand financial cycles.  The economy and the stock market are always trying to find the correct level.  I think of this as being the same as a pot of water and pasta I'm trying to boil on the stove.  I turn the heat all the way up to get it going, and it starts to boil over, so I turn it way down, and then it doesn't cook the pasta at all. That's how the economy works – cycling through overheating and then being sort of cold and dead and not doing much at all. The next time it seems like all is well, you will know a downturn is coming and will prepare yourself accordingly.

– Work through your stuff.  Many of us have money scripts we are unaware of – things we picked up in childhood that we don't realize are still lurking in our subconscious mind and running our lives.  If you want to start to explore this, check out this worksheet that you can use to start the analysis. It will also get you signed up for my newsletter, which will keep this topic top of mind for you.

– Understand that now is the perfect time to learn how all this works, especially if you have more free time than normal. If you use this time to clear your limiting beliefs and clean up your mind and your finances, when we finally do come out of this you will be in the perfect place to live quietly and stack up cash, knowing that the next downturn is coming.  The next time it comes you'll have what you need not just to survive, but to thrive. In chaos there's opportunity, but you can't take advantage of it if you don't prepare ahead of time. 

Journal questions:

In what ways would this be an ideal time to master your money and mindset? 

Part of a series. Covers the change to the US Federal tax return filing deadline and the direct payment.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for regular Americans. This article covers two of those items: additional time to deal with Federal taxes and direct payments to individuals.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.

On March 21, 2020, an unprecedented spike in first time jobless claims was announced by the Labor Department.  There had been 3.2 million first time unemployment claims.  The single largest week record before then was for 700,00 back in 1982.  Check out this article from Business Insider for details.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

_________________________________________________________________________________________________________________________________

This article covers changes for federally-backed mortgages made as part of the CARES Act.

First and foremost let me say, if you can make your mortgage payment, you should. Congress has not forgiven or erased anyone's debt.  However, for those who have lost their income due to the pandemic, if you have a federally-backed mortgage this law did provide for some temporary relief.

If you were on the verge of foreclosure already, the CARES Act included a 60 day moratorium starting on March 18th.

 If you are not able to make your payment, you should contact your servicer to see what options are available for you.

The CARES Act provided for 180 days of forbearance, which could be extended an additional 180 days.  However, many servicers appear to not be leading with this offer.  Apparently 90 days is more common in reality.  As with all things, what you get will depend upon how familiar you are with your rights, how committed the organization you are negotiating with is to it's goals (and how much flexibility and power the rep on the phone has), and what the two parties can agree upon.

When you contact your servicer, you should state that the need for forbearance is due to the COVID emergency.

The servicer may just pile up the payments due during the forbearance period and ask for them to be paid at the end of the forbearance period.  So for example, if you are allowed to skip your $1,000 mortgage payment in April, May, and June, at the end of that time period you would owe $3,000, plus the $1,000 for July that would be due on the regular schedule.

Needless to say, if someone is out of work and out of cash to the point where they can't pay their mortgage payment, it is unlikely that in 90 days they would magically have several times that amount in free cash.  Even if someone is back working, they'd likely have the regular payment amount, not a large lump sum.  But if you were the bank, wouldn't you ask for that if you could get a client to agree to it?

Be aware that you can request that instead of a lump sum being due at the end of the period that you add payments on the back of the term of the loan. 

If you and the servicer agree to something more limiting than what is allowed under the CARES Act, you should honor your agreement, although you could certainly call back and try to renegotiate.

During the time of the forbearance, the CARES Act requires that servicers report you to credit bureaus as paying as agreed (current) and that they charge no fees and no interest during the forbearance.

If your taxes and insurance payments are escrowed, discuss with your servicer how this should be handled.  Not having to pay your mortgage payment due to forbearance does not exempt you from having to pay your homeowner's insurance premiums or your taxes.

Journal questions:

What does the current crisis expose about the need for emergency funds? 

If you feel there should be more government assistance available now, does this change your thoughts on how our social programs have been constructed to date?  

Part of a series. Covers the additional funding being given to states to supplement unemployment.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes additional funding for states to supplement their unemployment programs.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.

On March 21, 2020, an unprecedented spike in first time jobless claims was announced by the Labor Department.  There had been 3.2 million first time unemployment claims.  The single largest week record before then was for 700,00 back in 1982.  Check out this article from Business Insider for details.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

This article covers the additional funds made available to the states to supplement their unemployment programs.  Details are outlined below.

 It is important to remember unemployment programs are run by the Department of Labor of each individual state.  Those departments determine who is eligible for unemployment.

The CARES Act made funding available for the following: 

• Extra federal help – if unemployed or partially employed due to COVID19 (layoffs, furloughs, reduced hours)
• Includes independent contractors, self-employed, and individuals with limited work history
• Covered if you had to quit job to care for someone with coronavirus, child due to school closings, or quarantine order
• State funded benefits ($400/wk national average), plus federal supplement ($600)
• Payments can be made separately, but have to be in the same week
• May need to complete an additional form to get the supplement
• Up to 26 weeks normally, +13 weeks federally funded
• Typically takes 2-3 weeks to apply, then 1 week waiting period. CARES Act requests the waiting period be waived.

Here are some frequently asked questions:

Can I apply for the SBA loans and for unemployment?

If you are applying for a small business loan, you are not considered to be unemployed.

Can I apply for unemployment because my side hustle ended?

If you have a full time job you are not considered to be unemployed.

And a frequent complaint:

“I tried to apply for unemployment and the website crashed/I haven't heard back/etc.”

Yes. 

I think it is fair to assume that IT teams in their testing never anticipated this sort of a spike in demand, so rather than being a conspiracy, it may just well be that systems are slammed. 

When staffing departments, a spike in demand like this was also likely not anticipated.  The folks working these organizations are overloaded, and just like all of us, are trying to balance working, childcare, and their own concerns and anxieties.

Depending upon your politics, you can either see this as the inevitable result of relentless budget cuts meeting unforeseen circumstances, proof of government incompetence, or both. 

My suggestion would be to continue trying to apply.  At the same time, check out your local news and local government websites to see if alternatives are available.  I know some jurisdictions are gathering information on paper forms as an emergency backup.

Journal questions:

What would you do if you were laid off?  How can you best prepare in case you are impacted in the future? 

Part 4 of a series, covering the Paycheck Protection Plan for small businesses.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for Americans, both as individuals and for small business owners. This article covers the Paycheck Protection Plan.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

This article covers one of those goodies:  the Paycheck Protection Plan (PPP).  To participate, a business must either be running payroll or doing distributions to owners.  If you are in start up mode and have not yet taken money out of your business, you will not be able to participate.

The PPP allows businesses to borrow two and a half times their wages, rent, and utilities.  Average monthly wages are determined by totaling the amount paid between 4/1/19 and 3/31/20 and dividing by 12. 

Provided the funds are used on approved expenses and at least 75% of those funds are used for payroll, the loans can be forgiven.

The funds must be spent by June 30th. There is no requirement that you show you have been impacted by COVID-19. 

To apply, contact your local bank or credit union.  Many banks are requiring that you have an existing relationship with them in order to apply, so the bank where you have your business checking account would be a good place to start.

These loans are available to self-employed people and independent contractors.

For more details, check out this press release on SBA's site. Here is another article with relevant information from the SBA.

Journal questions:

Is this a great time or a terrible time to be a small business owner? Why? 

Part 3 of a series. Covers the $10,000 from the EIDL that does not have to be repaid.

The Coronavirus Preparedness and Response Supplemental Appropriations Act included SBA loans for small businesses.  The first $10,000 of the loan does not have to be repaid.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On March 6th, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act became law.  This law included funding for telehealth for Medicare, for vaccine development, for public health funding, and for medical supplies and preparedness.  Additionally, extra funding is allocated for departments and agencies.  This law included disaster loans to be provided to small businesses through the SBA.  Those Economic Injury Disaster Loans (EIDL) are discussed in this post.

As a general rule, I believe government programs and loans are best avoided.  However, I also believe we are not going to quickly return to normal in the next few days or weeks, and it is hard to know now what in the future we will wish we had done now.  With that in mind, I decided to apply for the EIDL loan.

My understanding is that if you are in a state that has declared a disaster, you can apply for the EIDL loan from the US Small Business Administration (SBA).  Disaster declarations can be found here.

You will need to disclose your gross receipts for the period from February 1, 2019 to January 31, 2020 plus your cost of goods sold (if applicable).  The application only takes a few minutes to complete.  The loan would be for up to 50% of your gross receipts.

The most interesting part of this program, though, is the $10,000 advance.  This initial money supposedly will be sent directly to your business's account (you will need to provide the routing and transit numbers), and it does not have to be repaid. For more details on the advance, check out the information on the SBA site here.  It is my understanding that accepting the advance does not require you to take out a loan.

I have applied for this program for our IT consulting company.  If you would like to apply, the application is here. 

After I applied, the confirmation screen said I should hear from them via email in about a week to let me know they are processing my application.  I imagine they are completely overwhelmed, but we will see how it goes.  I'll keep you all posted.

In addition to this program, there is also another SBA program, the Paycheck Protection Program, that is intended to help employers keep employees on the payroll.  A portion of that loan can be forgiven.  As I am able to assemble information, I will post more on that as well.

Journal questions:

If you are a small business owner, how has your company been affected?  How do you think this situation will continue to unfold?  What steps could you take now to position yourself for the future? 

Part 2 of a series. Covers the change to the US Federal tax return filing deadline and the direct payment.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for regular Americans. This article covers two of those items: additional time to deal with Federal taxes and direct payments to individuals.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.

On March 21, 2020, an unprecedented spike in first time jobless claims was announced by the Labor Department.  There had been 3.2 million first time unemployment claims.  The single largest week record before then was for 700,00 back in 1982.  Check out this article from Business Insider for details.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

This article covers two of those goodies:  the change to the Federal tax deadline and the payments to individuals.  Details are outlined below.

1) Extension to both file and pay 2020 Federal taxes from 4/15 to 7/15.  Note:  while most states have followed suit, not all have (Mississippi is Mississippi-ing again. Check with your state and this article for more details.).

2)Direct payments to individuals.  This is why you came here, right?

It is my understanding that if you in the past got your refund via direct deposit, this money will come in via that same process.  You do not need to take any action.

Please be very cautious as scammers are sadly taking advantage of the opportunity.  If you receive a phone call asking for a bank account or card number in order to get you this money or expedite this process, please do not give out any personal information related to your bank account or social security number.  Older folks are especially at risk from these types of scams, so please reach out to them to help them avoid becoming a victim.

If you have always been a paper check person and can wait for the paper check, I recommend you do so to avoid scams.  However, if you have an emergency situation and cannot wait, the IRS is planning to set up a site to let you give them your bank account details.  Be very sure you are on the IRS's site when you do this.  More information is available at the IRS website.

Most individuals will receive a one time payment of $1,200 each. Kids are worth $500 each, which should cover roughly two to three of the panic grocery shopping trips you did when this whole thing kicked off.

Upper income earners will see the payments begin to phase out for incomes between $75,000 and $99,000.  If you are married filing jointly, the phase out begins at $150,000. The number used to determine this payment will be what you show as your annual income for the most recent tax filing (so 2018 if you have not yet filed for 2019.  2019 if you already got this latest tax return in or can do so before they get to you.)

Journal questions:

What would be the highest and best use of this direct payment?