She Works Hard for the Money, and Keeps More of it, too January 17, 2009

According to USA.gov, saving money is the third most popular New Year’s resolution in 2009, right behind weight loss and reducing debt.  Not surprisingly, many small business blogs started off the year by sharing some of their favorite money-saving tips.  My favorite money-saving tips are those that don’t require any sacrifice on your part, either of needed materials, services, or time.  Yes, I should probably re-negotiate my phone bill, but not everyone is good at haggling.  Here are a few of my easy faves:

• Re-examine your monthly bills: are you using all the minutes on that cell phone plan?  Do you pay to heat your entire home or office when you spend all day in just one room?  Does your bank charge you a fee every month for not keeping a mimium balance?  Take a look at your last few bills for gas, electricity, banking, phone and Internet service and make sure you are paying only for what you need.  Maybe a bright task lamp and a small space heater would be more comfortable and cost effective than turning on all the overhead lights and cranking up the thermostat ten degrees.  Maybe you don’t need to be paying for that text plan on your cell phone but you do need a better fit in your checking account.

• Use coupons: before you buy anything online, Google the website and the words “promotional code” or visit a site like RetailMeNot or CouponCabin to find relevant discounts for your order.  These days you can save on almost every purchase, from office supplies to plane tickets.
• Purge: (see my previous post on The Great Purge) I’ll bet there’s a lot of crap in your home or office that you don’t want, need or use.  Get rid of it–but DON’T throw it out.  Donate it to a school, thrift store or other non-profit, or if its got some value, sell it online.  Either way you’ll get money back, whether it’s cash, store credit or a tax write-off.
• Invite more people over.  Rather than hanging out at bars or restaurants, eat, drink and socialize at your own house (or a friend’s).  Our friends used to have a weekly ritual called the “Triple D,” which involved dinner, drinks and dessert at a neighborhood restaurant.  This got really expensive, really fast, and was phased out in favor of a new ritual, “Family Dinner,” in which each week one of us hosts everyone else for dinner.  Those who don’t cook all pitch in to do the clean-up.  It’s usually better food, and it costs a whole lot less.

Hungry for more?  Check out the money saving tips on I Will Teach You To Be Rich, The SCORE Women’s Success Blog and Entrepreneur magazine.

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Your Finance Education October 8, 2008

Every time you turn on the tv or the radio, all you hear about is the economic crisis–or the election, which has become about the economic crisis.  But what if you don’t know what makes a mortgage “subprime”?  What if you don’t know the difference between a money market, a mutual fund, and a money market mutual fund?  And what the hell is “commercial paper?”

For an education about the swirling mess around you in plain English, look no further than NPR.  Start by downloading the episode of This American Life entitled, “The Giant Pool of Money,” reported by Alex Blumberg.   It explains just how this whole mortgage crisis started.  I had to pay attention to what I was listening to–you can’t just have it on in the background–but after I heard the episode, a lot of things clicked into place.  Apparently they clicked for a lot of people, because shortly after airing that episode, NPR began a new regular podcast called “Planet Money,” which explains each new disaster with the market as it occurs on a daily basis, often through answering listeners’ questions.  This American Life also aired a second show about the economy, called, not surprisingly, “Another Frightening Show About the Economy.”

But what does that mean you should do with your money?  Generally speaking, don’t panic.  The economy  operates cyclically, and sound personal finance principles apply no matter where we are in the cycle.  Two books I have found very helpful on this topic are Suze Orman’s The Money Book for the Young, Fabulous and Broke (yes, her delivery is mildly annoying, but the info is solid), and The Complete Idiot’s Guide to Personal Finance in your 20s and 30s (or your 40s and 50s), Third Edition by Sarah Young Fisher and Susan Shelly.

And what about buying a home?  Is now the perfect time to take advantge of lower home prices?  Is it even possible to get a mortgage anymore?  And how do you avoid becoming one of the millions in danger of foreclosure?  Take a class.  Many city agencies around the country hold free first-time homebuyer workshops.  Some of them have been doing it for decades, but lately the demand has skyrocketed, so now there are even more places to find courses.  Here in San Francisco, there are five different agencies that offer homebuying workshops.  All of them are listed here, through the Mayor’s Office of Housing.  I took my class at the Consumer Credit Counseling Service of San Francisco (CCCSSF).  It was just three hours of one Saturday morning, but afterwards I felt much better prepared to tackle the prospect of buying a home, whenever that happens to be.

Two small pieces of advice regarding homebuying workshops: firstly, go now, not after you’ve already started the emotional and tempting process of visiting open houses.  Secondly, do all of the numbers  yourself.  Our instructor stressed multiple times that buying a home was the best investment we could make, since it meant we would be “breaking the rent cycle.”  But that’s not the whole picture, especially if you live in an expensive city or are not planning on staying in your first home for the entire 30-year length of your mortgage.  This article presents some compelling reasons for a New Yorker to keep on renting.  We figured out that for the first 5-10 years of our potential mortgage, we would be paying as much money in bank interest as we are currently paying in rent.  The little bit that would go towards the principle, and therefore eventually come back to us, would just be tied up in the house, instead of earning interest in some sort of savings account.

Speaking of savings accounts, now is a fantastic time to start one.  Because banks are competing so desperately for deposits, they are offering higher and higher interest rates on savings accounts.  I recently opened up a personal CD at WaMu that earns 4.93%, and a Money Market account for my business that earns 3.99%.  With a trillion dollars in assets behind it, JP Morgan is unlikely to tank with my savings, but even if it does, it’s all insured by the Federal Government.  It’s a virtual no-risk situation, even in these risky times (unless the government itself goes bankrupt).  So if you happen to have some extra money sitting around in your checking account, don’t stick it under your mattress, put it to work for you.  In this economy, who couldn’t use a little extra cash?

Portland and Seattle d*s Biz Lady Meet-ups February 26, 2008

Portland and Seattle ladies! Whether you have a successful design business already or are just thinking about making your craft hobby a full-time gig, you have to go to the design*sponge Biz Lady Meet-up.  This is one of the most useful informational events you will ever attend, not to mention one of the best networking opportunities available.  The San Francisco meet-up is what inspired me to start this blog in the first place, so GO GO GO!

The Portland meet-up is tomorrow, February 26th from 7-9pm at Design Within Reach Portland and the Seattle event is on Thursday, February 28th from 7-9 pm at Design Within Reach Seattle.

You’re supposed to RSVP but at this point, the ever gracious Ms. Grace Bonney is letting folks in anyway.  The event is free, but it is polite to bring a snack or drink to share with the group.

The meet-up is structured as a round-robin.  There are four speakers, who will speak about business financials, press and marketing, retail/wholesale, and successfully balancing life and work.  Everyone divides into smaller groups of four and spends about 20 minutes with each speaker before rotating to the next.  Bring a notebook and a lot of business cards with you and get ready to meet a lot of other very cool, like-minded BizMisses.  I met the super funny and very talented Christine Schmidt of Yellow Owl Workshop at the SF event.

I cannot stress the awesomeness of this event enough.  If can go, go.  I promise, you’ll thank me for it.

Business Credit Cards February 20, 2008

When I signed up for my WaMu business credit card, I regretted it. It’s got a pretty high interest rate and gives me no rewards of any kind. I just signed up for it because I was already at the bank and my accounting seminar instructor said it’s much easier to keep track of your finances with a credit card than with a debit card (this is true–especially if you use Quickbooks).

This week I got an offer in the mail from Citibank, so I figured it was time to switch. They wanted me to apply for their CitiBusiness Card with Thank You Network. It seemed like a pretty good deal. When you wade through the point nonsense, you essentially get 3% back on “qualified business purchases,” which they define as “purchases at certain office supply merchants, and on professional services,” and 1% on everything else you buy. You can also transfer your balance from another credit card and get 0% APR on it until May. Still, I thought I might be able to do better.

I did most of my research at CreditCards.com. This site is basically just a list of rewards cards. They don’t provide much specific information about any of them. For that you need to visit the card provider’s web site and read the terms and conditions. You really need to read the fine print carefully, because there is some weird stuff in there. For example, I got pretty excited about the Chase Business Cash Rewards Card, because it advertises in HUGE type that you can get 5% cash back with every business purchase. When you read the fine print, however, you discover that this only happens when you spend exactly between $2,000 and $2,500 every month. This is clearly a rule that was written just to screw the undiscerning applicant, since there is no logical reason whatsoever to encourage people to spend within that precise $500 range. The American Express Blue card has similar bizarre restrictions.

Other hidden rules have to with sliding rewards scales.  You can theoretically earn 3-5% cash back on lots of cards, but if you spend, say, less than $1,500 a month, you’ll only get 0.25% back. This makes more sense from a business perspective (after all, the more you borrow, the more interest you might have to pay), but it’s still kind of sleazy.

In the end, it came down to the CitiBusiness Visa and the Amex SimplyCash.  The CitiBusiness Visa was tempting because of the huge signing bonus (10,000 frequent flyer miles when you first enter the site, 15,000 when you’re trying to leave it), but Citibank web sites are extremely slow and unreliable on my computer.  I’ve also heard some not nice things about Citicorp as a company.  So I went with the Amex, because the rewards were simple, high (5% on business purchases, 1% on everything else), and never expire.  As an added bonus, Amex will also give you discounts at lots of major companies through their “Open” business network, like Delta, Hertz and FedEx Kinkos.  The discounts average 3-5% and it’s automatically deducted from your credit card statement, so you don’t have to remember to show or mention anything at checkout.

If I were just starting out, I might sign up for both cards, since some retailers don’t accept American Express.  I’m just going to keep my WaMu business Visa for now, though.  It may not give me any rewards or cash back, but it has an awesome online module to track my credit profile (including free FICO score tracking!).  WaMu websites are the best in banking, in my opinion.  They’re simple, fast and provide all of the information I need in a format that makes sense.

Business Checking Round-Up February 7, 2008

Of all the advice I’ve heard about starting your own business, the sentence I hear most often is, “Keep your personal finances separate from your business finances.” I’m still trying to get the hang of this, since my personal finances often have to pay for my business and vice versa, depending on the month but this is nevertheless a good recommendation. Especially if you have a partnership, an LLC, or any other business entity other than a sole proprietorship (click here if you don’t know what these are), mixing business and personal finances can get you (and others) in a lot of trouble if you ever get sued or audited.

The easiest way to start to draw the line is to open a business checking account. You can get a separate debit card and checks that you only use to pay for business items. When you do your taxes at the end of the year, you’ll be grateful that everything on your statement ends up under one single category.

But how on earth do you decide what kind of checking account to get? Not only are there a plethora of local and national banks and credit unions, each one has a multitude of business checking accounts and extra options. In searching for my own answers, I put together a detailed comparison for the five financial institutions closest to my home office: Bank of America, Wells Fargo, Washington Mutual, Citibank, and the Embarcadero Credit Union. You can download the full spreadsheet here.

Out of the five, only two financial institutions offered free business checking accounts: Washington Mutual and the Embarcadero Credit Union. I ultimately decided to go with WaMu for a few reasons:

1. The folks working at the credit union couldn’t find anything except for schwag. They didn’t know what any of the options or limitations were on a business checking account and could not locate any documentation for it. The semi-related brochures and paperwork they did find was barely legible and confusing.
2. The WaMu employees were are very forthcoming about sneaky ways to avoid every fee the bank could possibly charge, including the $20 international wire transfer fee (which I incur often).
3. There are WaMus everywhere, and they’re easy to find.

If you’re just starting out and have extremely simple banking needs, and/or if you have trouble keeping a three- or four-digit minimum balance, this might well be a good option for you. On the other hand, if you need an account that can handle a lot of separate deposits, or lots of cash transactions, you might want to look into some other options. No matter what you choose, take your time and don’t let anybody bully you into opening an account your first day. Always ask for a fee schedule. Brochures have no helpful information in them, they’re just propaganda. In case you can’t read the spreadsheet (or don’t need that much information), here’s a brief run-down of the five:

• Citibank’s Citibusiness:
  • Monthly fee: $10-16
  • Minimum balance: $0-10,000
  • Per check fee: $0.12-0.30 (after 100-200 free checks)
  • Maximum deposits: 100-200 or $1.25 each
  • Notes: Separate teller lines for business customers. Really slow online banking site.
• Washington Mutual:
  • Monthly fee: $0-16
  • Minimum balance: $0-10,000
  • Per check fee: $0.25 after initial 250
  • Maximum deposits: 250
  • Notes: Somewhat of a cattle-call environment. Bankers will encourage you towards ways to avoid their fees. Fast and easy online banking.
• Wells Fargo
  • Monthly fee: $8-15
  • Minimum balance: $0-8,000
  • Per check fee: $0.30 after initial 20-300
  • Maximum deposits: 20-300
• Bank of America
  • Monthly fee: $7.50-29
  • Minimum balance: $2,500-15,000
  • Per check fee: $0.12-$0.30 after initial 0-200
  • Maximum deposits: 300 (20 per slip)
• Embarcadero Credit Union
  • Monthly fee: $0-1
  • Minimum balance: $0-2,500
  • Per check fee: $0.10 after initial 25-200
  • Maximum deposits: 25-200 ($0.10 each thereafter)
  • Notes: Banking here supports local credit unions over potentially irresponsible multinational corporations. Little knowledgeable help.

Little Thing I Learned Today January 28, 2008

In trying to set up my payment gateway tonight so I can begin accepting credit card orders on my web site, I learned that while you are required to collect every customer’s CVV2 number (the three-digit one on the back of the card), it is illegal to store it in any way for any length of time.  I verified this right here on page 12 of Visa’s Merchant Rules document.