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Personal Finance

A$king and re¢eiving

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“A$k and ye shall re¢eive” is the motto of the American Society of Journalists and Authors, to which I used to belong until I figured out that freelance writing is a losing proposition. ASJA put me on to the fact that publishers don’t pay a fair rate for work done; they pay what they know they can get away with. They bank on the tendency of writers to work in their own little garrets, to cultivate social lives best described as null and void, and to be way too shy to ask other writers how much they earn. Magazine publishers in particular will pay one writer, say, $1.00 a word and another 50¢ or 75¢ for the same kind of work of the same quality. They recognize that some wannabe writers are so anxious to see their bylines in print they not only would work for free, they’d pay the magazine to publish them, and so the magazine plays that for all it’s worth. Which is plenty.

Entertainingly, today I learned that book publishers will do something similar when they outsource editorial work. My young business partner (late one of my research assistants) and I have been proofreading detective novels for a company that publishes nothing but mystery fiction. Because the work is easy and the copy so entertaining it’s hard to believe anyone would pay you to read it, we’ve been accepting the publisher’s offered rate of $12 an hour.

In response to our talking up our new enterprise, The Copyeditor’s Desk,a book packaging company e-mailed me and asked our rates for proofreading. Without thinking about the mystery publisher, I gave her a rate on the very lowest end of what I actually expect to earn: $25 an hour. Proofreading does not rise to the level of rocket science, and so I couldn’t reasonably ask for the amount I try to get by manipulating my copyediting page rate to fit the difficulty of the copy: $60 an hour. But on the other hand, there comes a point where you can’t just give it away. I figured $25 would be a bit rich for her blood.

To my astonishment, she wrote back and said our proposed rate was in the range of what they’ve been paying others.

Whoa! You are paying proofreaders twenty-five bucks an hour? You’re paying more than twice what we’ve been earning reading mystery novels? Are we talkin’ the same people who have the skills you could have expected from a bright high-school graduate a quarter-century ago?

Huh. Wonder what they would have paid if I’d suggested their arcane interior decorating books need a proofreader with a Ph.D. to make them right. . .

So the message is this: Don’t be shy about asking what you think your time is worth. If you don’t get it, maybe it’s for the best: the next client or employer will come up to your standards. And find out, even if it means bald-facedly asking colleagues what they earn, how much others in your trade or profession are earning for similar work.
Ignoran¢e is not bli$$.

New business enterprise gets under way

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Well, the tiny newborn business my friend and I are starting has climbed to its little feet and is toddling around. Yesterday we got our first serious nibble, if you don’t count the client we already had when we began. The contract isn’t landed yet, but we were thrilled to attract a serious expression of interest.

Here’s what we did to get the business under way:

First, we wrote a business plan. We articulated a) what we wanted the business to do; b) how we would deliver on that; and c) how the business would be organized (as a partnership).

Next, we set an earnings goal. Since this is a side business and we both have day jobs, we decided we would each like to be grossing at least $1,000 a month within one year.

Then we established two marketing strategies: 1) join the Arizona Book Publishing Association (ABPA); and 2) create a blog in the enterprise’s name, The Copyeditor’s Desk. The ABPA turns out to be a gold mine: its meetings are frequented not only by publishers likely to need our copyediting, proofreading, and indexing services but also by writers who are either self-publishing or seeking publishers and very much need our services. It remains to be seen whether the blog will bring in much business, but it gets our name out there, and if it develops much readership, it can monetized to contribute a few dollars toward our earnings goal.

Finally, we obtained some business cards, free, off the Internet, and we designed a brochure that we will have printed through her brother-in-law’s Kwik-Kopy outlet.

It’s pretty rudimentary and at first blush doesn’t look very ambitious — until you consider that we both have jobs and she has a family to take care of. We think it will keep us busy, and if we’re lucky it will generate the fairly modest financial goal we’ve set for ourselves. Keeping it simple should at least keep it manageable.

Dollars and nickels and dimes, oh my!

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Seven-thirty in the morning and I’m beat. The pool has been backwashed, the unhappy pool cleaner set in motion (again!), the rug backing Cassie pee’d on in last night’s panic at the vacuum cleaner run through the washer and hung on the line, the regular laundry started, the ironing I haven’t done for the past three weeks set aside (to be ignored a while longer), the dog fed, me fed, the kitchen cleaned up, and the dog walked. Now to sit down to Quicken, figure out what to do with the $600 tax rebate that finally came dragging in, and decide how to handle the red ink in this month’s budget.

I’m beginning to think $1,500 just isn’t enough to cover my monthly costs above and beyond the utility, loan, and insurance payments. It seems like a generous amount: for heaven’s sake, it’s almost a whole paycheck! How can I not live on fifteen hundred bucks???This month, with two more days to go in the budget cycle, I’m $351.28 in the hole. Although I have that much in savings, it’s $1.28 more than I had budgeted to buy some much-needed clothes in this summer’s sales. So…guess I won’t be buying clothes. Again. My wardrobe is rags just now, with exactly no summer dresses or skirts. All I have to wear is Costco jeans, which make me look like a beer barrel on two legs, and I’m out of decent shirts to go with them.

I’ve thought the budget issue had to do with the heavy hits from Anna’s final illness, which added up to over $1,000. But that’s now in the past. This month’s cycle started anew, and I’ve had four unexpected dings:

Leslie’s, clean out pool filter: $87.54

  • Veterinarian: examine Cassie for limp: $95.30
  • Dry cleaner: clean dhurrie rug to remove ointments Anna rubbed into it: $15
  • Vet: X-ray Cassie’s leg after I stepped on her sore foot: $17
  • Apple: new operating system to deal with server migration: $69.82

That comes to $402.66 in extra hits. Though it sounds like a lot, it shouldn’t be enough to put me $350 in the hole. As a practical matter, the $1,500 budget normally has so much play I can buy as much as $300 in clothing or other indulgences without having to dip into savings. What that seems to suggest is instead of being “generous” by about $300 a month, my $1,500 living expenses budget now has only about $102 of play ($402 – $300). A year ago, if I’d had $402 in unplanned expenses, I’d be about a hundred bucks in the hole…not $350.

Evidently inflation in routine costs has increased my day-to-day expenses by somewhere around $300. Costco’s gas was down to $3.99/gallon last week. I paid almost $60 for a fill-up that used to cost about $35, and I’m already almost half-empty. Though I’ve been staying away from the university as much as possible, now that my dean is back in town, I really should show up to work more often. If I drove to campus every day, I would have to fill up at least once a week–possibly more than that. That’s $240 a month, up from $140. Grocery inflation? Doesn’t apply. In fact, my grocery bills have been falling because I’ve quit driving to stores whenever I need one or two things. In this budget cycle I spent $361 on groceries, a relatively modest amount for me, since that is the one area where I do indulge myself. During the same period in 2007, I spent $571 at grocery stores (though some of it went to making food for two large dogs). The hair stylist has jacked up his prices, so that this week’s haircut plus a ten-dollar tip came to $75…and he cut my hair so short I look like one of those eccentric old ladies who gets her hair shaved off so she doesn’t have to comb it.

Wait: there’s a $55 car maintenance bill; that would account for some of the overrun. So that brings extraordinary costs to $450.

Problem is, the extraordinary costs keep rolling in. Yesterday a bill for car registration showed up: $116.34. That comes off the top of next month’s billing cycle. Then Cassie pee’d on the other dhurrie rug last night, adding another spot to the place where she shat, which I never cleaned out adequately. So now that rug has to go to the cleaner. It’s old and was never a fancy, expensive number like the one I had to take to the specialty cleaner after Anna smeared antibiotic ointments all over it. So I’m unloading it on a cheaper dry-cleaning outfit, whose rep says they’ll do the job for $70. That’s $186 out of next month’s budget…before the budget cycle even begins.

This month’s $350 shortfall…where will it come from? I could use the tax rebate to cover it, but really, I wanted to put that into the Renovation Loan payoff fund. If it comes out of savings, then it seriously does mean no clothing purchases until the winter sales. Argh! I desperately need summer clothes. Since I look like a wacky old lady who gets her hair shaved off so she doesn’t have to comb it, I might as well go around in faded, worn-out rags anyway. Won’t make much difference

Uh oh. Waitminit here. Sometime back I entered a note in Quicken to the effect that there’s a surplus in the credit-card budget’s cookie jar. That’s the result of living under budget for several months and not transferring the surplus to pay down loan principal…it created a de facto emergency fund

Am I saved? Could this be true? Let us away to the credit union’s website…
* * *

HOLY mackerel!

There’s a surplus, all right. It’s nine hundred and seventy-six bucks! Lordie. I noted that at the beginning of the month and then forgot it, in the flurry over the website, the injured dog, hurting myself (when I fell on the pavement tripping over the dog), running late on a client’s job, and generally being too darn hot and too darn old.

Amazing grace! It’s a miracle. Maybe Lady Karma has decided to quit kicking me in the shins. Or at least, maybe this time She missed.
🙂

A step to improve the finances

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Mrs. Micah issued a challenge to readers and bloggers to describe one step, no matter how small, that they are taking to improve their financial situations. As a matter of fact, I’ve come up with something but haven’t had time to blog about it, what with the past week’s technoadventures.

Thanks to a reader’s comment, I figured out how I could pool my biweekly paychecks so as to “pay myself” on a bimonthly basis. This ensures that there always will be enough money in the account that dispenses payments, by EFT, to the utility companies, the Renovation Loan lender, the life insurance provider, and the long-term care insurer, and it allows me to fund the “piggy bank” account for credit-card charges once a month: on the first, rather than on whatever cockamamie date a paycheck arrives.

First, I funded a dormant checking account at the credit union with my state income tax refund of $1340, almost as much as one of my paychecks. I added another couple hundred bucks to bring this bankroll up to the amount of a single paycheck.

July’s first payday happened quite close to the first. I put that check in the newly grubstaked “pool” account. This brought the balance to the amount of one full month’s pay.

From that I funded the “piggy bank” account for the credit-card budget and the account that dispenses automatic payments-not with half of what is needed but in full, for the entire month.

Friday, July 18, was this month’s second payday. The credit union, apprised of my new scheme, automatically transferred the paycheck into the “pool” account. That brought the balance back up to the equivalent of one full month’s pay. On the 31st, I’ll make my regular transfers for savings from the “pool”: to the Renovation Loan repayment fund, to the property tax/homeowner’s insurance/car insurance fund, and to indulgence savings.

In Quicken, I renamed all my credit union accounts so my titles jibe with what the CU calls them at its online site, simplifying the books and cutting the likelihood of making an error.

Next time I’m at the credit union, I’ll arrange to have automatic transfers from the “pool” made on the 1st and the 31st. Ta DAAAA!!! No more fiddling with online transfers.

Everything except paying the credit card bills will be done automatically.

No more fiddling with Quicken and manual transfers. No more worrying about whether enough cash will hit the credit-card “piggy bank” to make the monthly budget. No more hating GDU’s ever-changing bimonthly pay schedule.

Now that’s what I call stress relief!

w00t! 18 grand materializes from the air!

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Lordie! Here I’ve been thinking I’d lost about $23,000 in the stock market…. Comes a statement from GDU’s Fidelity retirement plan-the first I’ve seen in a year. It turns out the balance the Fidelity rep gave me over the phone a few weeks ago was wrong. He only gave me the amount in the 401(a) plan. The fund also includes a 403(b) plan, which contains $18,465 more than the amount he said I had.

That means I’ve “only” lost about $4,535 to the bear.

Wow! I’ve never been so pleased with a loss in my life.

3 Comments left on iWeb site:

Mrs. Accountability

That’s wonderful!! Funny how the situation could cause such a paradigm shift

Friday, July 18, 2008 – 09:35 AM

Zhu

Wow, that is so cool!

I’m too chicken for stock market… I saved up a bit but I don’t like the idea of potentially losing money. I mean, I wouldn’t mind your kind of loss though

Friday, July 18, 2008 – 07:00 PM

Funny about Money

In fact, you lose money in the market and you gain it. Over time, you should make more than you lose, if you’ve diversified and invested carefully.

With mutual funds where you’re simply rolling all gains back into the fund by automatically purchasing new shares with gains or buying new shares each month with savings from your paycheck, when the market goes down you stand to earn MORE money, because you buy shares at deflated prices. As the market comes back up, your existing shares plus the shares you bought in the bargain basement make money.

This is most obvious in your 401(k) or 403(b), where you and your employer are plowing money into the funds every payday. It’s hair-raising to get a statement that shows the plan has lost more than you and your employer combined put into it over the quarter…until you realize the contributions are buying lots of shares at reduced prices. When the market comes back to normal, you feel mighty flush.

If next payday doesn’t come…

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Oh, but of COURSE our esteemed elected representatives will pass the state budget before the whole joint has to be shut down, right?

Right. Well, come July 3rd, we shall see.

While we wait, let’s consider an important question: Are you prepared if your employer can’t pay your next check? Are you prepared for a lay-off? Are you prepared to be canned outright? Not to harp on this issue (well, yes, to harp): emergency fund, emergency fund, EMERGENCY FUND!

There are only two ways to prepare yourself financially for hard times: one is to get out of debt as fast as you can, and the other, IMHO the most important, is to lay in enough money to tide you over a spell of unemployment or disability. I say building an emergency fund is more important than getting out of debt because you have to eat. If you quit paying credit card and student loan bills, all that will happen is your credit will tank and you’ll have nuisance bill collectors nagging you. If you quit paying on your car, it’ll be repossessed, but there’s always the bus, a bike, or Shank’s mare. If you quit paying your rent or mortgage, eventually you’ll be evicted, but it takes a long time to evict someone. But if you can’t buy food, you’ll starve before the landlord or the bank can toss you into the street.

In good times, the strategy should be to build the emergency fund and pay down principal, dividing snowflakes and snowballs between the two goals until you have at least six months’ worth of living expenses stashed in the bank. As the economic clouds roll in, focus on the emergency fund. Make your regular debt payments; quit charging on the cards, so as to avoid running up any more debt; but put all of your spare cash or sidestream income into accumulating enough cash to keep you going through a really bad stretch.

How much should you set aside for the proposed rainy day?

Opinions vary, from three months to a year or more. Personally, I think an emergency fund should cover at least six months of net pay. If you’re out of work, your income tax will drop to zilch, and so you ought not to need six months’ worth of gross pay.

That said, my emergency fund actually represents a year’s net income. In the first place, at my age I don’t have a snowball’s chance of getting a job comparable to the one I’m in. And in the second, it won’t be that long before I can collect full Social Security. I’m eligible for less-than-full SS right now, so if push came to shove, I could start collecting early. In effect, at age 62 Social Security itself becomes a kind of emergency fund for those of us who persist in doddering in to the office. For you younger pups, remember this rule of thumb: a laid-off executive can expect to spend a month searching for a new job for every year of job experience she or he has.

Alternative Emergency Funds

If saving extra cash is difficult or you don’t think you can stash enough before you’re likely to be laid off, here’s a secondary strategy: get check-bouncing protection from your bank or credit union. This is actually a line of credit. If you overdraw your account, the institution lends you the amount of the overdraft, protecting you from bounced check charges. The interest isn’t cheap. However, it’s less than a credit card costs and it could save you in a pinch. I have overdraft protection in the amount of one month’s net income.

Another strategy is to start developing other income streams now, while you’re still employed. If you have a hobby that can be monetized, start monetizing. If you have a skill you can ply as a side job, start finding customers now. If you’re thinking of starting a service business, consider whether you can begin offering the service in a small way, on a moonlight basis. While this income may not support you, it certainly will help, and often such work can be expanded to full-time equivalent when you can devote 40 or 60 hours a week to build it.

If you’re fairly confident you’re going to be laid off, then in addition to starting the job search right now, here are some things you can do to prepare:

  • Apply for credit now, since no one will lend you a dime while you’re unemployed. Get a line of credit at the bank; get another credit card. Don’t use either of these instruments, but have them at the ready in case they’re needed.
  • Pare back your spending. Streamline your budget so that you’re living much as you would if you were out of work. Put the savings into the emergency fund.
  • If you have a freezer, fill it with food.
  • If you don’t have a freezer, lay in extra nonperishable items such as beans, rice, flour, and canned goods. (Remember that whole-wheat flour must be refrigerated — it will go rancid if left for a long period at room temperature.) Clean out your refrigerator’s freezer and organize its contents so you can max out the space. Buy meat and frozen products to fill it up.
  • Plant a garden. Squash and tomatoes grow handsomely and cheaply in the summertime. If you live in a temperate climate, you can grow lettuce, kale, carrots, and beets during the summer. Least expensive strategy: grow from seeds. Learn how to can, preserve, or freeze vegetables and fruits.
  • Keep your gas tank full. At four or five bucks a gallon, it’s a lot better to buy gas while you’re earning than after you’re laid off.
  • Consider how you will get around with minimal use of your car. Know the bus routes, and if your area is safe for bicyclists, get a bike at a yard sale, thrift shop, or sheriff’s sale and fix it up so you can bicycle to nearby destinations.
  • On paper or on disk, prioritize your spending obligations. Write down the things you will need to spend on, in descending order from the most to the least important. Consider how you will cover these expenditures with the emergency funds or side income you already have in place.
  • Find out how to apply for unemployment benefits and food stamps, and see if you will be eligible for other forms of public assistance. Don’t get “proud” about this: you’ve paid for it with your taxes, and you get to use it when you need it.

None of us is ever fully prepared for an unplanned job loss. Expect to be psychologically stressed and possibly depressed, no matter how carefully you’ve laid plans and stashed emergency money. Knowing how you will feel (it doesn’t take much imagination), think in advance about morale-building activities to fill your suddenly free time. Scheduling a block of time for exercise will help your outlook a great deal, as will volunteering a few hours a week for a charitable cause. Also plan to attend meetings of trade groups or professional groups-join now, especially if you can get your employer to pay the dues. Regular exercise such as walking, running, or work-outs will protect your physical and psychological health, and activities that bring you into contact with people will raise your spirits and build business and job-searching contacts.

1 Comment left on iWeb site:

Anand Dhillon

Keeping an emergency fund is always a good idea. I also advise that people have multiple streams of income so that ifthey do lose their job, it’s not totally the end of the world.They take a lot of work to setup but extra streams can provide much needed financial security.

Thursday, July 3, 2008 – 10:27 AM