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How You Can Grow When You Stop Dreading Payroll

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We'reOpenDepositphotos_74088177_m-2015Operating a business is generally an enjoyable, albeit stressful, undertaking for the people who start it. They typically have an easy time with setting up most parts of the operation, but there seems to be a frequent disruption when they start needing to deal with payroll.

When a business begins to take off and reaches a size that requires employees beyond just the entrepreneurs themselves, there can be a real hiccup in growth. The need to log hours correctly, calculate withholdings accurately, and get payments made on time creates a new stress on the managers, and it can leave them struggling to navigate through the process.

It’s at this stage that many entrepreneurs realize that it’s time to get expert help. And because most firms of this size aren’t able to open a full accounting department, many are taking on MasterTax tax compliance software as a tool to overcome the complexities of getting an employee’s calculations from earnings to the take-home level.

There are several reasons why an automated system like that can keep your company from sinking just as it’s beginning to swim.

Employee Retention

Nothing is quite as unpleasant for a worker as getting a surprise at tax time. When they report their exemptions to you at the onset of their employment, they are counting on you to withhold accordingly and help them meet their goals with the government. For some, they measure precisely and aim for no net cost to the IRS. Others shoot for a big refund. Whichever path they have chosen, they are expecting your company to get things right.

When you don’t, you have a serious problem. You may have people who owe large tax bills and end up being subjected to a wage garnishment. Others may feel you’ve let the government hold part of their wages, interest-free, for an entire calendar year. Either group will be very unhappy, and that’s a hard worker to hold onto.

Government Compliance

Of course, it isn’t just your workers who can run afoul of the government. You are required to make withholding payments, payroll taxes, and possibly occupational tax payments in order to keep yourself in compliance with the law.

When a company fails to meet these ever-changing obligations, the effects can be devastating. Assets can be seized, bank accounts can be frozen, and the company can start down a path that will never allow it to recover.

Using a system that correctly calculates what you need to send and where you need to send it will avoid this devastating spectrum of oversights, keeping you in operation and in the money.

Lower Overhead

These are magic words to most new businesses. As we noted earlier, it’s impossible to take on a full department of experienced payroll workers in the early days of a business, when there are only a few workers actually out there doing production.

By simply using a computerized payroll calculation system to deal with your withholdings and earnings, you are effectively getting that experienced payroll staff at a fraction of the cost. Best of all, your workers get all the benefits of that staff, and ultimately, you get to cash in on long-tenured staff who are as satisfied with their paychecks as they would be at one of your monster competitors. It’s a win-win, low-cost situation.

When all you have to do is calculate cash sales, pay the bills, and keep the profits for yourself, your payroll isn’t too tough. Once you bring other people on board, though, you have an obligation–both morally and legally–to do right by them when it comes time for them to be paid. Failing to do so can destroy your business. But it’s not necessary.

From the first day that you have an employee beyond yourself, keep current on how to withhold and pay your staff properly. It will bring dividends for as long as you operate.

Image: DepositPhotos. © masha tace

 

Inflation

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Yesterday I paid $15 for a quart of ice cream and a small container of heavy cream.

Now, granted: I buy top-of-the-line stuff. But still…what is it? Milk, egg, and sugar with some flavoring thrown in. The leftovers from making skim milk. A plastic container with a screw-on lid (value: about 20 cents). A small glass bottle suitable for use as a cute bud vase or redeemable for two dollah. Nothin’ in there is worth 15 bucks.

We’re told that inflation is not only NOT rising, it may even be dropping. And  yeah, we’re all mighty happy to see gas prices under $2 a gallon, thanks to somebody somewhere finally having the sense to see the U.S. should be mining its own petroleum products instead of depending on our enemies to supply our energy needs.

But still…hmmm…

Jestjack, a favorite reader and commenter in these parts, sends this report from his part of the country:

I don’t care what the folks at the Fed say. Prices are rising and just getting crazy.

I’m working on one of my rentals on a “#@+&#!” of a job. This is the plumbing coming into the house in the lower unit’s bath….tight quarters..in a wall…behind tile AND sheet rock…. Good times!

Anyway, I go to pick up the parts to do the job at my favorite store that has “toys for big boys” (Home Depot) and, I swear, a lunch bag full of parts: $50.

Had to return today to get a part to finish the job. Standing in line, I speak to a guy who has carriage bolts in his hand….the same kind I had bought at a yard sale last fall. I bought a #10 can full of carriage bolts for 50 cents and promptly used about 10 to build a set of racks for my truck with some free recycled lumber.

So as the guy is getting rung up I notice ONE of the carriage bolts is $1.19 plus tax, or $1.26. I felt faint for the guy.

Has anyone else noticed such crazy prices? The bright side is this plumbing job would have easily been $500 to $600. Just seems to me like folks are getting squeezed…

Your thoughts?

Then we have this from SDXB, who, as a professional tightwad, is exquisitely sensitive to pricing:

I busied myself today charging up the big numbers.

Well, not that big, but big enough to cause a rush of momentary anxiety.

Today I went furniture buying—not a job at which I consider myself competent. Pat provided guardian angel service as I wandered aimlessly through a cavernous American Furniture warehouse store. And then I spotted the two stuffed chairs that will soon replace the yard-sale bargains in my living room. Ding, zap: $700.

I needed a glass of ice water after that. Sipped collegially with one of my shooting pals, who commiserated about the horrors of furniture buying. Better left to women, as he shook my hand and wished me good luck at Lazy Boy.

Pat guided me through the place yesterday. I was hungry then, surly and cantankerous (as opposed to Hungry Bitch Syndrom [HBS]). I was cranky (as opposed to bitchy). And I was unreceptive (as opposed to open-minded). But we did find love seats with supportive backs and not pillows, and they were well-made by American workmen.

Do you get what you pay for, always? Only $2,200, delivered, and I think they’ll look great in the TV-kitchen entertainment area. I slid the plastic joyfully—ding, zap. I was touched deeply in my cheapest place.

What’s going on? Me, spending money?

I looked around and realized my place was looking  shabby. You can’t make a silk purse out of pig’s ear, but you can try.

You’ll like this one: for 13 years I’ve put up with a toilet seat that would slam down like a deadfall when least expected, like when I was taking a whiz. I feared for my life, where my brains dwell. Decapitation was always a centimeter away.

Ah, but now…a slow-close toilet seat proved the fix. Thirty bucks, ding, zap.

Somewhere in the past a voice said, “You deserve better furniture.” How was I to know what “better furniture” was?

“Look for bigger numbers,” an angelic voice suggested. And so I did.

Once I recovered from the strangeness of the concept of SDXB buying furniture anywhere other than a yard sale or a thrift store (or making it himself), I cruised over to the Ashley site. Ashley sells middle-of-the-road furniture, not great but not outright junk.

A typical kinda ugly beige fabric chair (little or no choice in fabrics, apparently) is $383, allegedly “marked down” from $450. A leather chair comparable in appearance to the one in my living room is $975, marked down from $1300!

Over to Pottery Barn, where I bought the leather chair in the family room lo! these many years past, when I had a job. One that’s roughly the same style? Sixteen hundred and ninety-nine dollah!

Holy sh!t.

I sure couldn’t afford that today. Nor would I have felt I could afford it when I was employed and earning 60 grand a year.

Yesterday my son remarked, in a tone of resignation, “I’m poor. And I have to deal with the fact that I’m poor.” In fact, he earns a little more the median household income in Phoenix. That’s not saying much: this is a right-to-work state with vast swaths of true slums and large working-poor tracts that are on their way to slumhood. If two typical salaries add up to what he earns, a typical salary here is a handful of peanuts.

Still… What say you, dear reader? Do you see something that looks like inflation in your parts? Or are we crazy?

Cell Phones: Oughta be a law?

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Did you read about the guy who was arrested for using a cell phone jammer on a commuter train?

LOL! Good for him. What a nuisance cell phone yappers are!

Places where people have to be crammed together in public — like trains and theaters and churches and shopping malls — should be equipped with cell phone jammers as a matter of course. They could be set to turn off in an emergency, but during business as usual, it shouldn’t be a matter of politely asking people to turn the damn things off: it should be a matter of course that the things don’t work in those places.

Recently one of the professional-grade singers in the Chamber Choir remarked on some nitwit’s phone having gone off in the middle of a complex, difficult piece. She said it messed up the rest of the performance of that piece: the phone’s ringer was a “song” and the jingly notes distracted the choir enough to cause them to lose track of the musical line. They felt the performance was spoiled —  meaning it was also spoiled for everyone in the audience. But by golly, that phone subscriber didn’t miss a single hail from friends and merchandisers!

The other day, the weather was astonishingly beautiful, so I went out for a one-mile walk around the park. As I’m trotting along, what should I encounter but a woman with two adorable children, one in a stroller and one, about four or five, prancing along the sidewalk….and what’s she doing?

Yakking on the phone!

She didn’t even seem to be aware of the kids’ presence, so engrossed was she in her chatfest.

Damn! Lady, have you no clue that your kids need your attention? And will you be surprised when they get into trouble as teenagers? Or fail in school because you’ve been too distracted all their lives to teach them anything?

Out of curiosity, I decided to keep track of the number of people who were yapping on the phone while walking vis-à-vis the total number of people I encountered.

And the number? Four out of ten.

That’s right. Forty percent of walkers were distracting themselves from a spectacular day in a beautiful park where children were playing and birds were singing and leaves were whispering…by yammering on the goddamn phone.

Their loss. Ours, too: they’re distracting everyone else as they anaesthetize themselves to the world around them.

Does it not occur to the phone-yackers that the details of their personal lives or the sound of their babbling voices is not what other people want to focus on? Or even that they are NOT the focus of the universe? Honest to God.

Another time I turned onto a neighborhood street from Feeder Street NS about 50 or 100 feet ahead of another woman who was coming up Feeder from the south. She wasn’t talking into the phone. She was yelling into the phone. The sound of her noise was just flat grating: she overrode everything around her.

What is it about a cell phone that makes some people feel they have to shout into it to be heard?

This broad was hollering into the phone at the top of her already unpleasantly sharp voice. And she walked fast enough to keep up with me — yakking didn’t distract her from moving her legs and feet. I stepped it up to get out of hearing, to no avail. Finally I broke into a run, trying to put some distance between us: didn’t help.

Didn’t get rid of her annoying voice until I ran around the corner and up another neighborhood street.

No wonder the less stable among us pick up guns and start shooting. Criminey!

Partying on the Way to Wellness

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woo-HOO! My friends Tina and Ron’s wedding reception was terrific! She looked SO pretty in a beautiful ebony satin dress with an awesome new hairstyle, and he was handsomer than handsome all dressed up in a nice suit. Daughter was spiffed up, too: this one, in addition to being startlingly bright, is showing every sign of growing into a spectacular young woman. Everybody behaved well, at least within reason, and a good time was had by all.

People came from all over the country to celebrate the marriage. The two families have a very interesting combined set of friends and relatives.

Y’know, whenever you get to know new people, you realize that your limited little definition of what is happiness or well-being does not by any means cover the bases. At dinner I sat next to a woman from another flyover state (Arizona being one of those) who lives in a city much smaller than Phoenix. Despite what must have been some very hard times, she came across as a contented and self-confident person — holding down two jobs and making her way through a pre-nursing program. She clearly has a good relationship with her grown daughter and dotes on her gorgeous nephews, who are indeed too adorable to be real.

It’s the second time I’ve met a person who lives a good life that probably would make me restless. SDXB’s childhood buddy and lifetime friend never left the Upper Peninsula. He stayed in the tiny town where they grew up, held the same steady work for year after year, and raised a healthy family in a modest home. When I met him, I thought he was the happiest man I’d ever met. Still true, come to think of it: I’ve never known anyone who seemed more contented and confident in the goodness of life than that guy.

Personally, I’m like my mother: a city girl. I much prefer to be in a big city where few others know my private business. I deeply hated living in the ultra-small town that was the American camp where I grew up in Saudi Arabia, and didn’t blossom until we returned to the US and took up residence in San Francisco.

Yet I can see that people benefit (evidently) from living in a place where everybody knows everybody else’s business. Maybe it’s good for you when everyone knows every time you take a deep breath. I dunno. One thing’s for sure: what’s sauce for the goose is not necessarily sauce for the gander.

Speaking of sauce: the dinner was awesome. The young people had hired a patio at our favorite hang-out, the House of Tricks, which catered hors d’oeuvres, wine & beer, and a delightful dinner. The weather was unbelievably gorgeous: none of the crazy winds we’ve had, an absolutely perfect evening.

Against my better judgment, I had a glass of wine, a pile of carrots, quinoa risotto, and a piece of roast pork tenderloin. And then a large piece of brain-bangingly rich and wonderful chocolate cake. The salad looked gorgeous, too, but I was too scared to eat lettuce.

And what do we have here that’s poisonous to the old lady?

• wine
• vegetables that haven’t been boiled limp and puréed like baby food
• roast meat
• chocolate

If it tastes good, if it has any texture, it’s gonna try to kill me.

But…nay! Even though I felt like I had a rock in my stomach after consuming all that food, I wasn’t sick. Went home, went to bed, slept seven hours without benefit of Zantac or Benadryl. And when I woke up? No lump in the throat, no queasy stomach, no diarrhea.

It’s a freaking miracle!!!

Maybe I just need to eat three meals a day at Tricks. 😀 It surely would be worth the price to not wake up sick every morning.

Actually, it’s not that big a surprise: whatever ails me has slowly been getting better, in two-steps-forward-one-step-backward fashion.

I suspect the problem was likely an ulcer brought on when the Year of the Six Surgeries coincided with the misbegotten publishing enterprise, which probably would have failed even if it hadn’t been star-crossed by the medical horror show. Either of those would have been highly stressful on its own. Combined, they were toxic.

Six weeks of uninterrupted megadoses of omeprazole — plus giving up on even trying to sell books — seems to be doing the trick.

Young Dr. Kildare thought it would take eight weeks for the stuff to work. The new teen-aged internist at the Mayo thought more like three months.

WhatEVER. It’s so amazing to get up in the morning and not feel miserable, especially after having made an entire meal of trigger items, that I’m willing to gulp the stuff till the cows come home. Osteoporosis (which it causes…) be damned.

seedfeederThis morning I felt so good I took it upon myself to refill the bird feeders, after god only knows how many years, with some stale seed that has been taking up room in the garage cabinets.

Now that the Cat Repelling System is keeping Pretty Daughter’s goddamn cats out of the back yard, I think it’s safe to call in the regular birds. There’s already quite a few — they seem to have discovered the area is relatively safe. They’re welcome to stay, and bring their friends. They do keep the noxious insect population down.

The ant population is much diminished in the presence of the current tribe of birds. I haven’t had to put out ant bait for several months, nor have I seen any of the little gals in the house.

A-a-a-a-n-d…as we scribble, here comes a hummingbird to inspect the newly refilled hummer feeder, too. Hummingbirds eat mosquitoes, along with gnats, aphids, and other small delectables.

HummerFeederEven though the CDC says our area has a low to moderate risk of getting the zika virus very soon, I’ve seen A. aegypti in the house. Whether the little ankle-biting desert mosquitoes will also carry the disease remains to be seen…but I can’t imagine why they wouldn’t. A blood-sucking bug is a blood-sucking bug, no matter what its genus.

Now that the economy is better, fewer houses in the ‘hood have empty pools with green mosquito-breeding puddles at the bottom. So we have had fewer skeeters these past few springs and summers. But we haven’t had a hard frost for years…and that’s about all that keeps the nuisance bugs at bay around here.

Here’s a curve-billed thrasher, too: voracious ant-eater. Dude! Have a few seeds and make yourself to home! 😀

It’s been so long since I refilled the hummers’ feeder that the jar of sugar water I keep in the fridge for the purpose had a wad of black fungus floating around in it. That is something! Because supersaturated sugar syrup is not what you’d call friendly to microbes.

So I had to dump that out and make a couple of quarts of new sugar water for the three feeders front and back.

Cassie just chased a young mockingbird off, the little twit! Fortunately, he wasn’t fazed.

The arborist is supposed to show up here mid-morning. It’s now after that, but he operates on mañana time, so I’m not concerned.

This guy is a great tree dude. Nay, he’s an artist: he really knows how to trim and shape trees. He does the job by hand, and he engages the brain…and a formidable eye for tree development. So I’m mighty happy to have found him (at work in a neighbor’s yard!) and to be able to persuade him to come in my direction.

The trees have run amok this summer, so the bill is going to be pretty bracing. Trees that he worked on last year still look pretty good — they only need a little pruning. The ones we skipped now need some serious work, though. They’ve all grown exuberantly this spring, thanks to the soaking rains we got during the winter. If only we could have El Niño permanently…

If and when Tree Dude arrives and gets himself established for the day, I hope to meet M’hijito at Costco, where I propose a) that he help wrangle a year’s supply of pool chlorine tablets into a basket, then into the car, then into the back shed; and b) that he advise and consent on the purchase of a new iPhone.

Yes. As much as I cringe at the prospect of yet another attempt to lash myself to an electronic tether, I see that Costco offers a monthly plan for the iPhone at just about what I’m saving by extracted a rate cut from Cox.

I’m told that the iPhone is a little easier for elderly pholks to learn. And since I’m already familiar with the mentality behind Apple’s software, I’m hoping that I can figure out how to use one of the things.

If I can make it work and find I actually use it, then after a year (when Cox will try to up its rate again), I’ll cancel the land line service and connect the cordless phones to Ooma, a VoIP service that will let me use NoMoRobo and costs a tiny fraction of Cox’s gouge.

The plan to use Cox’s selective call-blocking and anonymous call rejection features to cut down on the phone solicitation nuisance has had, as expected, only qualified success.

I’m no longer getting half-a-dozen calls a day. At least, for the nonce.

However… To use selective call blocking, you have to enter a code: #0#. My phones read that as “start a conference call.” And they refuse to STOP the conference call. So the first time I tried to block some SOB who got through the anonymous call rejection, I tied up every phone in the house and could NOT untie them.

Tried to call Cox on the flip cell phone, but found I couldn’t dial through the umpty-umpteen berjillion god-DAMNED punch-a-button hoops because the keys are so small my fingers can’t press them accurately. After five tries at 9:00 on Friday night, I was beginning to feel a little desperate: too late at night to call friends to ask them to let me use their phones. And pretty damn scary, not being able to dial 9-1-1.

Finally I was able to get through on the one remaining non-cordless phone by going around the house and unplugging EVERY cordless extension and power charger from the power and from the phone outlets. Cox’s tech and I screwed around for half an hour trying to un-conference-call the phones. Eventually another mass unplugging and replugging worked.

But I sure don’t want to do THAT again.

So now I’m getting two calls a day, consistently. That’s better than six. But I’d sure as hell rather have none. Zero. 0.00. Zip.

NoMoRobo is reputedly the best junk-call bouncer available. So, if I can force myself to learn how to use an iPhone, then I can use that for personal calls and the VoIP for business calls. How exactly you keep people from pestering you with ads on a cell phone escapes me, but we’ll cross that bridge if and when we get there.

Welp, I’ve killed half the morning here…and probably  in your precincts, if you’re read this far. And so, away…

 

 

So totally do not want to work…

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Loafing away the afternoon. In another couple of hours, have to leave for our beloved Tina’s wedding reception. In between times: doing exactly nothing.

Yesh. Remember Revanche‘s angst over the wedding and the family and all that? Well. The drama in Tina’s family rises to match Revanche’s…and like Revanche, she seems to have the strongest grasp on her sanity in the tribe. No. That’s wrong. She has a fully sane sister. But since it’s a LARGE Italian-Mormon family, that means it’s two against…well, against a roistering party. 😀

Tina, being a pretty smart little bird, came up with a particularly fine idea: She and Fiancé (now DH) eloped to the County Courthouse, adorned in their best bluejeans and silliest T-shirts, where they tied the knot in public privacy, unaccompanied by hysterical family members. She sent over a picture…I don’t think I’ve ever seen her looking happier.

Then they arranged a reception at a favorite restaurant — and paid the restaurant to do all the heavy lifting! We — her crazed family and followers — all meet tonight to toast the Event. Which, we might add, occurred about two weeks ago, allowing plenty of time for some of the dust to settle.

Pretty brilliant, eh?

About all I’ve accomplished this week is to create a new website for our networking group, the Scottsdale Bidness Association.

It turned out pretty well, IMHO. Our former Web guru, a long-time Arizona art director whom I’d met on the job at Arizona Highways days, used to be a member of the group and had taken on the job as a kind of low-paid lagniappe. At one point, though, he packed up his business in a cedar chest and took a full-time job (gasp! can you imagine?) producing a monthly custom magazine for a national company based in Scottsdale. Recently, after several years at that gig, he took it into his head to retire.

In the process he shut down his account with the web host he was using, thereby killing our much out-of-date website.

I managed to retrieve the content from a cached version. A couple of pages needed to be completely revamped, but three of them required only minor tweaking.

That’s a very ordinary WordPress template, but I think it looks reasonably nice. As freebies go, that is. We’ll use the right-hand sidebar to post a plug for our charity, Every Kid Counts. Here’s a draft of the widget:

EveryKid(If you’d like to donate, it’s never too late!! Click on the image to go to their website.) This group serves poor kids in one of the city’s most underprivileged school districts…and in Arizona, that is sayin’ something. It does a lot of good, and we’re proud to participate.

Right now I’m just waiting on approval of that design…probably will put it up this weekend or early next week.

Beneath the EKC widget, I propose either to arrange all our company logos, into infinity (which I think would make the site look unduly strange), or, if we can swing it, to post a “Member of the Week” or “Member of the Month” widget.

This sounds like a PITA, but once the widgets are built, I don’t think it will be. We have one member speak each week (see the  Calendar), and so what we could do is make the current speaker be the Member of the Week. With the widgets stored to WordPress.com, it would just be a matter of moving one widget down to the unused widget space and snaring another to move up into the sidebar.

To build visibility, I’d love to use the site’s blog function (it is a blog, with a static front page and, so far, no posts) to publish our dog-and-pony shows. Doubt that’s going to work, though: many of us speak ex tempore and so don’t have prepared speeches. One guy, a former high-school teacher, does some awesome presentations using videos and PowerPoint, but even he probably doesn’t have a speech written out.

So…I don’t know what to do about that idea. Probably nothing.

Otherwise, it’s been a day in La-La Land. I’d planned to run errands at three venues today. Jumped in my car, drove and drove, got to the first place, shoved my way into a parking place…and realized I’d left my purse at home.

So I had to drive all the way back to the Funny Farm, retrieve the suitcase, and drive all the way back to the Overpriced Gourmet Grocery Store. At that point I decided to opt the other two chores. Was able to find a couple of things there that I’d planned to pick up elsewhere, so none of the rest is very necessary.

At OGGS, I came across some artisanish mayonnaise that contains no sugar and that looked like it might actually taste like mayo used to taste. And yea verily, it does: rather better, actually, because it uses stone-ground mustard instead of mustard powder or Dijon.

I happened to have a can of pink salmon lurking on a shelf. So mixed that up with a quarter of an apple (minced) and a few capers. The result was quite tasty!

LOL! Having bought some Overpriced Gourmet Seed-Strewn Crackers caused me to remember, on the way home, that when I was a little kid (in another century!!), my mother and I used to make a snack by spreading mayonnaise on Saltine crackers.

They were so good!

Can you imagine? I haven’t even seen a Saltine in years.

Women used to use them to fend off morning sickness. The idea was that you should munch a Saltine before you lifted your head from the pillow. 🙄 I never found that very effective myself. But then I didn’t have morning sickness. I had morning-noon-and-afternoon sickness.

It’s getting late, so I must get ready for the evening’s shindig. Luz the Arborist was just here. He reports that the traffic between here and the East Valley is truly horrible, so I suppose I’ll have to get an early start for lovely downtown Tempe.

And so, away…

PF Notecard #3: Live Below Your Means

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Advice on a card 2On the index card that lists everything you need to know about personal finance, point #3 is “Live Below Your Means.” But what the heck does that mean?

In my notecard stack, it means more than live “within” your means, which suggests you live up to the limit of what your income will support. Living below your means is spending significantly less than you earn, and doing so in a meaningful, strategized way.

The primary way to accomplish this is to automatically set aside a portion of your income for savings. Most employers that direct deposit can deposit portions of a paycheck to different accounts. If yours will do that, arrange to have, say, 10 percent of your take-home pay deposited to a savings account. Alternatively, you can set up your bank account to do an automatic transfer from checking to savings on a certain day of the month. If you have a side gig, you may be able to put the most or all of that net paycheck into savings and live on the income from your main job.

That’s after you’ve had a specific amount withheld for a 401(k) or 403(b). If your employer doesn’t provide a savings plan, then set up an investment savings fund and have 15% of your pay deposited to that, right off the top. IMHO the preferred device for this is probably an index fund with a low-overhead mutual fund company such as Vanguard or Fidelity. At least part of this amount should go into a Roth IRA, which will protect you from the onerous and tax-heavy Required Minimum Distribution rule after you retire. Keep the rest of it in regular funds, if you think there’s any chance at all that your income after retirement is likely to be close to what you get while working.

So: 15% of your pay should go to an employer retirement plan or, if contributions are not matched, to your own long-term investment savings. THEN at least another 10% (up to 20%) of the remainder goes into savings in a bank.

What’s left is what you live on. That’s living below your means.

And how do you accomplish this frugal lifestyle on the few pennies you have left? Any number of ways…

  • Buy a smaller house than you can actually afford.
  • Buy in a lesser neighborhood than you could in theory afford.
  • Buy less expensive cars than you can afford.
  • Eat in most of the time. Learning to cook is one of the biggest moneysavers out there.
  • Never charge more than you can afford to pay out of pocket in a given billing cycle.
  • Stay out of debt. If you can’t pay for something in cash, don’t buy it.
  • Never pay full price for anything. Buy clothing on sale, at outlet stores, or in thrift stores.
  • Vacation frugally. Consider a camping trip instead of a flight across the globe.
  • Break the “Stuff” habit: don’t buy things you don’t need. Pass on a clothing purchase if you already have something that will do.  And refrain from collecting bric-a-brac and useless items, be it piggy banks, comic books, computer games, or old CDs. Think minimalist.
  • Choose a hobby that doesn’t break the bank. If it requires pricey equipment or supplies, find another way to pass the time.
  • Learn to do things yourself.

None of these is very hard.

What about that 10% you put into the bank? Before long enough will accrue to provide a decent emergency savings stash. If you’re lucky and two or three years pass without a really big unplanned bill, you may have enough to skim off some to contribute to your retirement savings.

I have three sets of savings: short-term emergency savings (enough to cover a routine plumbing or car repair, for example); long-term emergency savings (major repairs, non-routine dental bills), and retirement savings. A bank account will do for the first two; retirement savings, of course, should go into some kind of investment. Back in the day when CDs paid a little interest, I used to have long-term emergency savings in a credit-union CD. Now it’s all in the same savings account. My retirement savings are professionally managed; most of it is with Fidelity.

All You Need to Know about Personal Finance Fits on a Notecard
#1 Get an Education
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