It’s close enough to Black Friday, Small Business Saturday, and Cyber Monday to talk a bit about online shopping. Some very scary statistics from 2017 showed a marked increase in online shopping fraud, using stolen credit and debit card numbers. This is not necessarily surprising because consumers are starting to trust online ordering, and the total number of “eCommerce” transactions were up by 19% over 2016 numbers. Sadly, the number of fraudulent transactions during the 2017 holiday season also increased, to 22% over 2016. And a staggering 1 in 85 transactions online was an attempted fraud. GAH!

Online retailers are taking steps to prevent fraud such as collecting IP addresses and requiring the “CVV” or verification code on the back of the card used for a purchase. But, while they do their part to protect their businesses from fraud (yes, they sustain incredible losses from fraud, it isn’t only the consumer), there are easy steps you can take to minimize the risk of being a victim of credit or debit card fraud:

1. Use Unique Usernames and Passwords for Each Merchant

Never reuse usernames and passwords for multiple merchants. If the retailer is compromised, and your login is stolen, thieves can log in to other sites using your information and make unauthorized purchases. This time of year, shipping and billing addresses often differ, so that delivery address discrepancy may not trigger a “potential fraud” flag on the merchant side. Yes, it can be a pain, but so can losing all of your holiday money temporarily until the bank refunds your fraudulent losses.

2. Check the HTTP (S)

The “s” at the end of the hypertext transfer protocol (you bet I had to look that one up) means, https://www.entrepreneur.com/article/281633 “secure.” The security includes data encryption. When you are on a site with only, “http” the data sent to the site can be intercepted by a third party.

3. Use the Code on the Back of the Card

The three or four digit verification number on your credit or debit card is requested to prove that you have the physical card in your possession when making a purchase. In addition to a billing address and card number match, the code can help reduce fraud by requiring a third data point for a purchase.

4. Limit the Potential Financial Loss

This is particularly important for debit card users who shop online this holiday season. Have a second (free) checking account with a debit card for online purchases, and only put enough in the account to cover your shopping budget. This limits the potential loss if the card used online is compromised. And always use the same card, tied to the dedicated account, when shopping online, or traveling.

5. Keep Copies of Everything and Watch Your Accounts and Statements

Print out copies of invoices and receipts. This way you have confirmation of what you ordered, and the total amount paid. If your card is compromised, you will be able to flag unauthorized purchases, while confirming the ones you actually made. And watch your statements and account carefully. Some financial institutions have a feature where you can receive an alert (we get a text) if there is a purchase made over a specific threshold. One word of caution, however, my husband was alerted to his holiday gift by this feature. The bank let him know when I purchased his gift.

There is a real emotional toll on consumers who have lost money and had to file fraud reports over the holidays. Nobody needs that stress and frustration while trying to buy gifts or make travel arrangements. There is one other layer of protection available you should consider: make sure you take advantage of the FREE credit freeze to limit access to your personal information, reducing the risk of a fraudster opening a new account using your identity.

 

flickr.com

In many states, the driver’s license and car registration expire on your birthday. The not so gentle reminder that you are a year older, and they want money. When you stop and really think about it, there are probably a few things that are renewed annually. My Microsoft 365 for example, some insurance types, etc. These are not necessarily discretionary items- many of us need computer programs and certain insurances to work and protect our property. So, because I am a nerd, I started to think about the annual fees we pay, and when they are due.

Lawyering bar fees and practice related fees aside (which are also annual) our family pays roughly $468.00 a year for various things. Our computer programs, including virus and malware stuff, state registration renewal on two vehicles, and yes, I have Amazon Prime (I can explain, but I don’t want to). The due dates are sprinkled throughout the year, with some due in November, March, July… you get the idea. Since we know these fees are coming every year, we should plan for them. Lots of people plan for Christmas, birthdays, holidays and may save a bit aside, but not for our expected, routine, boring annual commitments.

If we round up our annual commitments to $500.00 a year, and divide that by twelve, I have to save roughly $42.00 a month to cover these fees. If I receive 26 paychecks a year (paid bi-weekly) I have to save about $19.25 each payday to meet our commitments. This is the basic idea of a “sinking fund,” aptly named because businesses deposit money into these accounts to “sink the debt” (fun fact)**.

Placing the estimated amount of money into a “holding” type account or reserving them separately in your checking account will allow you to have the funds available when the payments are due. Here are a few things to consider when you decide to start a sinking fund, and save a little each payday for your expected annual expenses:

1. Make sure IF you open a separate CHECKING account at the bank, you have a FREE account. Service fees will eat up what you put aside and cause you to go a bit backwards. I recommend a small(ish) regional bank or credit union for these accounts.

2. Do NOT open a SAVINGS type account if you will make frequent withdrawals to pay these bills as they come due. “Regulation D” is a federal rule that limits the amount to free transfers or withdrawals to six, afterward, you can be charged a fee for each additional .

3. Have that baby emergency fund,$500-$1000.00 saved, BEFORE you start a sinking fund. Those pesky little emergencies, such as the need to buy a tire or repair a leaking faucet, can quickly eat up the money you allocated for other expenses.

4. In the beginning, you may have a bit of overlap with what’s due and what is saved, so you may have to pay a bit more and continue saving. I know if you are living paycheck to paycheck this doesn’t always allow much room, but if you don’t start soon enough before the next expense, you may have to stretch. Example: You have $85.00 due in three months. You typically put away $21.00/ month. In three months, you have $63.00 saved, but are $21.00 short. Pay the $85.00, but still try to put away the $21.00 so you are on track for the next expense due.

It’s so easy to get frustrated we forget when the annual bills come due, and of course they still come due. Consider the sinking fund as a way to put a little away each check to cover what you will need. The stress is really reduced when the amount you need for an expected expense isn’t squeezed 100% from the same paycheck.

**And for all of you bond asset types, yes, there is a sinking fund term meaning to pay a trustee an amount to retire bond debts before they come due… though most of us have no idea what that even means. I just don’t want angry email.

This past weekend consisted of various discussion with the (grown) children about Halloween costumes for the grands and some early planning for the holidays, and it hit me, we are close to the 2018 holiday season. This year has flown by, way too quickly. And now there are only 12 weeks until Black Friday, or for many people, six paydays. But before you close this article, call me “scrooge”, and delete me from your friends list because I want to chat about the Black Friday in September, give me a moment, and I will explain. So why is “Black Friday” my measure of the season and not the actual festivities on, say, Christmas or Hanukah?? Because that shopping day after the turkey traditionally “kicks off” the holiday season. And the spending begins for many. And we love to spend.

In 2017, consumers spent an average of $967.00, between Black Friday and Cyber Monday, accounting for approximately 20% of ALL annual online shopping those days. The amount budgeted on gifts for children has averaged about $500.00 per child, relatively unchanged over the last few years. But gifts aside, there are other expenses around the big season from food, wrapping paper, shipping costs, travel expenses, and new outfits that don’t always make it into the average household budget. In fact, last year almost two-thirds of the average holiday budget went to “non-gift” spending.

All these articles quaintly mention the “holiday budget” as if this was planned in advance. I really don’t know anyone, myself included, who likes a holiday budget. Because sometimes I see something and think, “wow, this is great for…”and want to purchase that thing. For many people, the total holiday cost is really only unveiled after the revelry as the statements start coming in the mail. And the reality comes in January that for too many people, they blew out past the budget, and accumulated quite a bit of debt for the season. The average American woke up in January 2018 with over $1050.00 in DEBT. Not what was spent as a whole, but what they spent in the hole to finance the season. For the 78% of average American families living paycheck to paycheck, an additional $1000.00 in debt, and at incredibly high interest rates, is a burden.

Good news, we all have twelve weeks, or an average of six paychecks to squirrel away some cash. But even better? Companies with seasonal hiring opportunities are at the best it has been in years, and with low unemployment, retailers are competing for seasonal employees. The reported average wage is $12.00/ hour for temps, but Costco is reportedly paying $20.00 and hour!

It’s not too early to start to plan the season. And not just where you are going for dinner on which days. It’s time to think about how to pay for it. Too many people raid emergency funds and take loans from retirement accounts to fund the holidays. And because these holidays come every year, it can become a vicious cycle. But, with all this time available before the shopping and revelry begins, that second job, or extra shift, or part-time side hustle may be just what you need to make this season “Merry and Bright.”

source: imtresidential.com

In a recent trend, I am learning that more and more entrepreneurs do not have a bright line separation between their business budget and their personal budget. And you NEED to have both. Separately. The written business budget is the plan to spend the businesses money. You need a business budget to know what you “must make” each month to cover all overhead and expenses. A personal written budget is the plan to spend your personal money. You need to make a written personal budget, so you know what your minimum “take home” salary needs to be. And yes, that “side hustle” is a small business, so even if it is “only” worked part-time, you must have a separate budget.

Once you know what the business needs to make and what you personally need to take home, you can prevent “co-mingling” your business and personal money. And it takes only a moment to fix: just write yourself a “reasonable salary” paycheck. On the personal side, after your paycheck, set aside the amount for your personal taxes. Have an accountant help you figure out your quarterly deposits but set aside each month (or each payday) towards your quarterly. Pay yourself on a regular basis (yes, for startups this can be hard). However, if you pay yourself a paycheck, on a regular cycle, you can budget personally.

If that sounds like an unnecessary “extra step” because it’s really all “your money anyway” you are skipping an opportunity to manage your finances better on both sides of the table. Many businesses have an “ebb and flow” of income and expenses. Proper budgeting allows for the buildup of a business emergency fund, the “management reserve” if you will. This is any money that the business has earned that is not needed for current expenses. This “extra” money, so to speak, should be set aside for lean months, when you are struggling to meet your minimums. By making yourself an expense, instead of just a “leftover” you know what you must do to make sure a regular paycheck comes in.

Why am I so adamant about this? Because we made this mistake early on as business owners. Using the business cash out of the till as it comes in, without tracking, can become a huge issue for taxes, as well as making overhead payments on time. What bills are you paying? Did you pay personal self-employment taxes on your draw? Do you know how much you’ve taken this week? Month? In fact, debt and taxes doom many small businesses. And you should know where it’s all going. This can be a huge challenge when you are just starting up, but you can make the decision early to schedule yourself in the budget, wait between paydays, and do not just write business checks for personal bills. Happy entrepreneuring!

                    www.nancynwilson.com

NOTE: I am not an insurance agent, I don’t sell any policies, and that is best left to the professionals in the field. This is just mine and my husband Mike’s story. A story about what we wish we knew to protect our family as small business owners. I am sharing primarily because it is a money topic, and many, many people have small businesses that generate at least part of the family’s income each month. I am just going to share our raw story, and our mistake that closed our company, threw us into severe financial difficulty, and took three and a half years to dig out. Also, this post is not about life insurance, the most obvious, or even insurance for our physical business. I want to share the types of insurance that we didn’t know about but can perhaps prevent financial ruin for another family. 

When Mike wanted to start a consulting business in 2011, I was so excited. And it was great. It really was. Mike and I followed the state guide, took all the legal steps, got our licenses and set up our office space in our home. Then we took courses through the Small Business Administration, met with awesome advisors through SCORE. In short, we followed the “rules.” We had a business plan, a (now defunct) website, worked hard, read everything, learned a lot, make a ton of rookie mistakes, embraced them, kept going. After about a year or so, we thought we had it figured out. And for the business, we sorta did.

But today we talk about UNEQ Consulting (pronounced unique), LLC, in the past tense. Because it’s been gone since March of 2014. Because on November 1st 2013, Mike was working at a site in Eufaula, Alabama and fell head first 18 feet off of a ladder. Onto concrete. Yup. In three seconds, our life was changed forever.

Here’s why it’s important. Because what we didn’t do, and really never thought about, was protecting our family as self-employed small business owners. Mike survived the accident. Thank God. Had he passed? This is a different conversation. But Mike survived, with a severe head injury and years of rehabilitation ahead.

So, here’s the short list of what we wish we knew:

• What types of insurance we needed to protect our family- not just the business
• The importance of disability insurance on Mike, or “business continuity” or Key Man insurance.
• That in many states, unemployment insurance is for the employed- just not the self-employed
• And that Social Security has an “exclusionary” period for around five months, where even if you are approved, there is no back pay
• Oh, that we shouldn’t incur debt, because we had debt. For example, credit cards “we paid off every month” until the deductibles started needing to be paid, and I had to choose
• We wish that for all of the business preparation, that we would have been told to go and speak with someone about what we may need for this unlikely situation.

This November 1st 2018 will mark five years since our life changing event. Mike has made an amazing recovery, but it has taken years of digging in and working hard to recover financially. We paid it all in full, including the IRS lien on the house (for back self-employment taxes), and have sworn off debt. We hope that this post reaches just one person who needs to read it. Please share our story with every self-employed person and small business owner you know.

It is no secret that companies want me to buy stuff. They want to separate me from my hard-earned money at every turn. Exhibit A: we moved about a year ago from another state and wouldn’t you know it, I got a catalog yesterday in the mail, with “easy terms” and “guaranteed credit line.” Now, I haven’t ordered from this company in years, opted out of “junk mail” over a year ago, and never forwarded my address to any catalogs.So, what gives? Opting out of “junk mail” is not as straightforward as it seems. There are literally four different processes to get rid of the marketing mailers, pre-approved offers, and sales calls. The Direct Marketers Association charges $2.00 to opt out for five years. Catalogs must be opted out through another process. GAAAH.

I hear some of you reading this, going, “What’s the big deal? It’s just a catalog. Recycle it and quit whining.” I hear you loud and clear. But, I was very surprised by this stupid catalog, that they tracked me down to my new address out of state. I also don’t want the temptation to order on credit around because they make it easy to spend without thinking. There is always a birthday, anniversary, holiday or occasion to spend while you are budgeting and working on your debt-free walk. “I’ll pay it off next month” is way too easy to say. Problem is, if we don’t spend actual cash or shop on impulse, Murphy has a way of wreaking havoc right before the bill is due to be “paid off.” It happens almost every time.

The easier a company makes it for us to spend, well, the more likely we will buy from them. There are many articles and sales books on the topic of reducing “sales friction” to help customers buy products. Amazon is continually finding creative ways to make it easier for you to buy. The latest friction reducer is the delivery to the trunk of your car. Amazon recognized customers grew wary of having packages delivered at home hours before anyone arrived to retrieve them, which created an environment ripe for thieves. Apple is another master at making buying easy and convenient for customers. In their own stores you can just “scan and go” to purchase items. For other retailers, “Apple Pay” puts purchasing at the swipe of a phone. It’s crazy.

Guarding Against Temptation

To guard against impulse shopping or spending more than you planned on a purchase, I have two suggestions to help you take control of your money. First, a written budget is a must. You are the boss of your money. You get to tell it what job each dollar is assigned each month. If you don’t have a job for every single dollar that comes in the door, it’ll just run away and spend itself on things you may regret later. The bill always shows up, whether the dollar ran off and became catalog spending on credit or putting purchases on your phone bill.

Second, use cash. Just do it. Try it for the next month. Create your own “friction” between you and the seller. You will think twice when you hand over bills rather than entering a card online or waving a phone. Imagine having to get up off the couch, put shoes on, drive to the store, open your wallet, give bills to the cashier, drive back home… you get the idea. You will probably think twice about buying that “thing” if it doesn’t show up in two days with “free shipping.”

Third, (although I said only two) opt out of the junk mail, sales calls, and catalogs. Block out an hour or so, make a cup of something to drink, sit down and go through the steps above. Get rid of the pre-approved credit cards and the spending opportunities that show up in your mailbox. You know, lead me not to temptation.

 

 

This post is primarily for rising seniors and their parents. First and foremost, congratulations, you are almost done! This is that big year with lots to do and lots to plan. This is THAT year of Senior Prom, Yearbook quote, and ditch day (but not by YOU of course.) You have worked hard, and graduation is right around the corner. With school starting again in a few, it’s getting real. This fall you will likely start the application process for your next step. But before you race off to the exotic out of state private school, I want to talk a moment about the one thing often overlooked at this time in your life: College is a business decision.

Every investment requires thoughtful consideration, and education is an investment. With the student loan debt in America approaching $1.5 Trillion, and graduates being saddled with college debts as long as 25 years, your selection should take some real cost-benefit examination. A quality education does not only come from the expensive private schools. I hear all about the “College Experience” students “should” have,however, student loan debt is currently being blamed for 1 in 8 divorces in the United States. Turns out high student loan debt gets in the way of buying cars, homes, and starting families.

Know the Cost of Attendance Vs the Cost of Tuition (per Credit Hour)

The high education figures we all see thrown around in the news are typically the amounts published in the estimated Cost of Attendance. Each school publishes the cost estimate per year for parents and students, but primarily because, “This estimation may also be used by financial aid offices and loan companies to evaluate how much money they should loan a prospective student based on how much money they will actually need to attend. Each year, the average cost of attendance typically increases.” The cost of attendance estimates room and board, fees, transportation, tuition, and books and materials.

The actual cost of your education, the Cost of Tuition, can be determined by looking at the cost per credit hour, which is a very different number. Published in an article by Student Loan Hero last January, here are the current national averages of costs per credit hour:

• Four-year, public: $324.70
• Two-year, public: $135.09
• Less than two years, public: $281.17
• Four Year Private: $1039.00

Keep in mind, these are the national average, and your state or private school credit hour cost may be higher or lower. But let’s do a little math here. A four-year bachelor’s degree is around 120 hours or so. A four-year public school at $324.70 is about $38,964.00 for all four years. That’s under $10,000.00 per year. Compare that to the four-year private school average, the same 120 hours will run approximately $124,680.00. Before you buy a book, get a sandwich, or go to your science lab. In many parts of the country, that is the cost of a starter home. Still, $10,000 a year for a four-year public school is a lot of money.

Another option is to get your pre-requisites, such as English, Social Sciences, Western Civ and Math courses done at a two-year college. Let’s math again. If you complete 60 hours at Community college, you’ll pay an average of $135.09 a credit and $8,105.40 total. A little over $4,000.00 a year, and a savings of 60% off the four-year public university option. For many families, this is a wise decision.

Even more wise, is to “cash flow” or pay for tuition in cash each semester. With a full-load averaging 15-16 credits, each semester would cost about $2,161.44. Add books and fees, and you are still probably coming in at about $2,800.00 a semester or $5,600.00 a year. If you start working this fall, you need to save about $467.00 a month to fund your first full year at a two-year public school.

So, Why Cash?

Using Loans increases that cost per credit once interest is added! Looking again at the cost per credit hour, each credit costs more, when you take out a loan to pay for it. As of the article published in January 2018, the Department of Education has interest on federal Direct Loans at 3.76% APR. That is an effective rate of about 20 percent over 10 years. Adding that interest to each credit changes the cost:

• A two-year public-school credit at $135.09 would cost $162 over 10 years ($27 in interest)
• A four-year public-school credit at $324.70 would cost $390 over 10 years ($65 in interest)

Mathing again, the 60 hours at Community College can grow to $9,720.00. An increase of $1,614.60, then interest is also added on the books and fees if you have a loan for each semester to cover those as well! Think how great it would be to finish college without debt. To make that investment in yourself in cash, it takes planning. A combination of work and saving, living cheaply or at home, and getting any shortfall through scholarships (try My Scholly) should all be part of your smart education investment. Enjoy your senior year!

 

The second definition for “Price” in the Oxford dictionary online is, “an unwelcome experience, event, or action involved as a condition of achieving a desired end,” and the usage example given is, “the price of their success was an entire day spent in discussion.” For many Americans, the price of their credit cards, or driving a car with high payments, or a mortgage payment that is keeping them “house poor” is that unwelcome experience. And a result of that unwelcome experience is debt. And the price of that debt is stress.

Americans are stressed about their financial condition. The price of such worry is costing money in healthcare related to stress, relationship issues related to fights over money, and job productivity decline. A very recent and startling statistic, published by CNBC in March 2018, reveals 30% of Americans are stressed about money, “constantly.” And a whopping 85% reported being stressed “sometimes.” Here is the top reason from the article:

   “Why? Well, 66 percent of adults, including 71 percent of millennials, say it’s because they don’t have a three- month  emergency fund, and 46 percent say it’s because they don’t have any savings set aside in one to cover an unexpected expense like a job loss or medical problem.”

This is not a new phenomenon that all of the sudden Americans are stressed about money. A 2014 report from the Consumer Financial Protection Bureau found that seven out of ten American workers say financial stress is their most common cause of stress, and almost half (48%) say they find dealing with their financial situation stressful.

Why am quoting stats when you may be visiting this article for ANSWERS because you are up at night unable to sleep due to money worries? Because you need to realize up front that are not alone. CNBC’s report translates to almost 3 out of 10 Americans are stressed constantly, over 8 out of 10 are stressed sometimes. I know, I know, “my situation is different…” and I know that it is! Everyone’s situation is uniquely theirs.

What I am on a mission to change is the shame, guilt, hopelessness and embarrassment people feel when they are deep in money problems. I think that is so important. Debt is hiding in the households of the American family and it is killing the livelihood of many of us. We need to throw open the curtains and look around and understand we are not alone. You CAN take control of your money and regain your peace of mind. You CAN find people to walk with you. You CAN create the plan that is right for you and your unique situation. And you can get back that good night’s sleep.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from The Law Office of Dawn K. Kennedy or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.