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In 2013, I hit my rock bottom. I was buried in student debt and living week to week. For as much dedication that I was putting into my 3 jobs I wasn’t feeling the satisfaction and pride in myself that should be included with working so hard. I cut out a lot of social activities with friends, and when I splurged or rewarded myself I always felt guilty. It feltlike I wasn’t living life for myself anymore. I felt trapped. When the depression and anxiety became too much, I decided to start working with financial advisors, attorneys, CPAs bankers and even financial gurus. I eventually decided to... READ MORE
Jennifer was an absolute pleasure to work with. I was in desperate need to get my budget back on track and she helped me with that AND MORE! And I realized how important budgeting and planning can be when you are self-employed and have irregular income. Jennifer is extremely knowledgeable and will get you in shape (financially, of course). I would highly recommend Jennifer to anyone looking to get their finances back to being fun and manageable! Thank you so much for your help and expertise!
I can’t thank her enough! Jennifer was great with helping with our budget, she put together a wonderful easy to follow plan with a spreadsheet I could follow. I don’t know what we would have done without her assistance, she was so kind and considerate, she made sure we understood everything we needed to do to help us get out of debt while putting money aside for savings and finally some travel. We will finally be able to take the honeymoon we never had by following the budget plan she assisted us in developing. THANK YOU AGAIN Jennifer!
Jen is amazing! She really knows her stuff and has been a tremendous help to me. I have learned so much from her expertise. I would highly recommend Xact Numbers for your financial coaching needs.
Jennifer has obtained an extensive education and experience base from which she provides guidance and accountability. By exploring the needs, desires and goals of her clients she helps them to put systems in place and to get there! I recommend Jennifer to help with simple budgets and complex financial strategies. Keep up the great work Jennifer!
Jennifer is very good at what she does. I'm not sure I have seen many people care so much about the people she is working with. And smart - let me tell you - she knows what it takes to save you money and make you money. Highly recommend her.
Jennifer is a wealth of information. She truly cares about her customers and their finances. I highly recommend Jennifer to anyone seeking a financial coach.
First, you need to know how much to even start with right? The best way to get an idea is to look at your bank statements over the past 3-6 months and add up EVERY single transaction that dealt with food. Now, many people will separate groceries from dining out, even Starbucks as it’s own category lol. That’s up to you. Once you add them all up, you’ll divide the total by the number of months and you’ll get an average. If you went on vacation one of those months or it was the holidays and you didn’t spend the normal amounts, then you may either skip those or use more months to get an average. Once you have this information, you may be surprised! A previous client (family of 3) had spent an average of $1300/month on food of which $300 of it was Starbucks! While some may think that’s ridiculous, some may think it’s not enough - it depends on whether you can afford it and if you believe that money shouldn’t be spent in other areas. Only you and your family can decide on that.
Once you have the average you’ve spent monthly, you now have a better idea of how much to budget for realistically. You don’t want to only budget $300 when you’ve been spending $900 per month; it’s less likely that you’ll stick to it. So what I’d suggest is to gradually decrease your budget from what you actually spend until you reach your goal (or a point that you feel comfortable - affordable yet enjoyable). So maybe the first month you budget $850, and decrease $25-50 each month until you reach your goal. This will help you not only stick to it, but not feel like you’re depriving yourself of foods you may really want.
There are some things you can do to stick to your food budget as well. Try to budget based on how frequent you go grocery shopping. For example, let’s say you get paid weekly and so you get groceries on a weekly basis, and you have a budget of $200 per week on groceries (dining out may be separate) instead of $800 for the month. If you focus on the smaller amount, you’re less likely to go over your budgeted amount for the whole month. Plus, depending on your spending habits, you may spend the entire $800 by the 20th of the month and then what are you going to do for the rest of the month? When you go to the grocery store, go with a list and do not deviate from it. If the kids are with you, gamify it in a way that they'll enjoy it when you stick to the list or budgeted amount. So if you have a budget of $150 for that trip to the store, maybe tell the kids they can each pick one snack IF they help you stay below $100.
Also, do not go to the store with your max budget in mind. There may be times when mid-week you need to grab milk or fruit, an ingredient you forgot about... choose a budget for the week but when you go for the majority of those groceries, spend a good amount less as well. Keep in mind that there will be months/weeks of higher purchases than others because of stocking up on paper towels, shampoo, toilet paper, etc. When you budget $800 (for example), and you only spend $700, then rollover the difference to the next week/month. If that difference starts to get bigger, then decrease your budget even a little more, but this way you'll have those more expensive or less frequent items budgeted for (on average).
When you’re determining your eating out budget, see how much it costs for you and your family to eat out at a place you typically eat. Based on that amount, how many times would you go per week, per month? This helps you be more aware of how often you truly can eat out. Again, this is based on your budget that works for you so if this means you eat out more often than cook at home and you can afford to do so, that’s totally up to you.
One more tip that has worked for several couples - your food budget should be for family meals (or cooked meals to take to work). So if you want to buy from the vending machine at work, or grab fast food during your break, have a separate budgeted item for this. My husband and I have a Personal Fund where we can spend it wherever we want and this is an example of what that can be used for. If one works outside of the home and the other does not, then you may want to discuss how that will work in your budget. Of course, there are many more ideas of how to stick to your budget of food, but I wanted to make sure you had some of the basics with additional ideas that you could implement immediately.
As there are many strategies out there, they all are correct - as long as you decide which works best for you and which one you are going to follow through with. So I’m going to explain some of the more common methods to have an idea of what options you have. Keep in mind that these can be used for both personal and/or business debts. Before you’re even able to determine which method is right for you, you’ll need to make a list of all debts and include the minimum payment (even if you’ve been paying more), the interest rate, current balance and total # months left to pay (if known). Now that you have that ready, let’s look to see what options we may have:
Debt Snowball - this is the most common one that you’ve probably heard of. This is when you list all of your debts in order from smallest balance to largest (no matter the other factors such as minimums or interest rates). You pay the minimum amount on all debts. However, when you have extra money to pay towards your debt, it gets thrown at the one at the top of this list (the smallest balance). Many times this helps you get motivated to continue with your strategy to pay off debt because it’s a quick win, especially if you have a small dollar amount that you end up paying off in a month or two. This will then keep you motivated to move onto the next smallest balanced debt. Not only will you continue to pay minimums on everything, but you’ll also add the minimum payment of the debt you just paid off onto the minimum payment of the 2nd debt, and so forth. This continues until you have paid off your debts.
Debt Avalance - while the debt snowball focuses on the current balance, the debt avalanche looks at the highest interest rate. You may have credit cards in the teens or even twenty’s in interest that are charging a lot in the long run (financially speaking). With this method, you list your debts highest interest rate to lowest and pay off in that order. Even though you’re using this method to help save money, you’ll still follow the steps of the debt snowball after you’ve paid off the first debt (rolling the minimum payment towards the next debt, etc).
I’m going to introduce another strategy for you to ponder as it may work better for you, especially if you are a business owner. Cash flow is very important. So another option is to list all your debts in the order of how many months are left to pay it off from lowest to highest. If you don’t know the answer, take the current balance and divide it by the minimum payment and enter that number. I know, you’re probably thinking what about the interest I’m being charged. While that is a factor in how much you’ll pay in the long run, this is a simple way to build more cash flow quicker (again depending on your numbers). As you pay off the first debt, that minimum payment you were spending still goes to the next debt, but may be more than if you started with the smallest balanced debt or the one with the highest interest rate.
Another way to keep your debt from increasing is to stop going into debt! If you feel like you’re in a rut and can never get out, you need to focus on your plan to pay it off, not add more debt to take care of the current situation. Now there may be a time that debt is okay, but if you’re reading to figure out for yourself how you need to take control, you’re probably not there yet. I went 4 years without a credit card so that I can build the habit of using my debit card if I wanted to buy something. While I now have credit cards, I use them responsibly (and that’s for another blog post). Sometimes life happens and you have a need that costs money (such as a car). There are always exceptions to the rule as long as you are responsible about those decisions and include your financial coach with the decision (if I had a coach when I made some of these purchases, it would have saved me a buttload lol). Also, keep in mind that the method you choose may change down the road as it may make more sense to you based on your situation. Not sure what will work best for you? That’s what I’m here for! Let me help you create your game plan to take control of your finances including the debt(s).
And one more thing… as you pay down your credit cards, the minimum due will decrease. Do NOT decrease that payment even if it’s not next on your list to pay off. If when you start this journey, your minimum payment is $47, then it’s always $47 until you pay it off.
Woohoo!! You are a business owner! While that’s wonderful (and hopefully you’re doing something you love), you still need to make sure that your personal money and your business money do NOT comingle. It doesn’t matter if you’re a sole proprietor, or an LLC, you need to have a checking/savings for your personal transactions and a DIFFERENT checking/savings for your business transactions. There are a few things you should know regarding why you need to do this as well as a few tips.
Use a different bank for your business than your personal. This way if you transfer funds (if the bank allows) it’s not immediate and therefore not as easy to mix the two. Plus, it makes things easier to know which is for business vs personal especially if both accounts use your personal info (ie, as a sole proprietor). Same thing if you were to use a credit card for all of your business expenses – make sure that only business expenses are for that card (even if it’s a personal credit card).
And did you know that you do NOT necessarily need a “business” bank account? Especially if you are a sole proprietor! As long as you know that the account is meant for business only, that can be your “business” bank account – only the bank will believe it’s for personal. And check with the banks/credit unions you want to work with. Make sure they do not charge you any fees or that you have an account where the fee is waived if you do something such as have paperless statements (you can always print them) or use your debt card X number of times in a month. If a minimum balance is required, make sure that you will never need to touch that amount, even for emergencies.
Pay yourself first! Make sure that you are paying yourself a paycheck even if not through a payroll services, but as owner’s draw. This means you’ll need to have a game plan of how much you’re going to pay yourself each week, month, however often you need to make it happen as long as it’s consistent. This will not only help you manage your personal spending plan better (you’ll know how much you get paid), but you’ll have a better idea of what to budget for your business – and that’s an entire topic in of itself.
When it comes time for taxes, there’s no question which transactions are for personal or business because you’ve already been keeping them separate. And if you are serious about growing your business, you should be tracking your spending along that way too (not only once a year for tax time). This will help you in many ways to be able to make better educated financial decisions about your business. If you’re not sure where to start, or which bank works best, feel free to send me and email and let’s start separating your bank accounts NOW!
Did you know that in the state of Texas, there are some services that are supposed to be charged sales tax too? Not just products. And to add to it, there are different rates depending on the type of service you provide and the location (or locations) of your business.
The best place to start is by going to your state’s comptroller’s website (for Texas – https://comptroller.texas.gov/taxes/sales/). Almost everything you need is on this page at the time of writing this blog. So how do you know whether you’re supposed to charge sales tax or not if you provide services? Here’s another publication they provide that may help you: https://comptroller.texas.gov/taxes/publications/96-259.php. Let’s take a look at a couple examples:
Photographers & Videographers – this is an example of a type of profession that is supposed to charge sales tax. If you use the link provided and select Taxable Labor – Photographers, Draftsmen, Artists, Tailors, etc, you’ll be able to read more details.
Tattoo Artists – by reading under Personal Services, you’ll see that services such as Dry Cleaning are taxable, however, tattooing is not.
Web Hosting – take a look under Data Processing Services and you’ll see that if you offer web hosting to your customers, you need to not only charge them sales tax, but at a discounted rate (“Twenty percent of the charge for data processing services is exempt from tax.”).
You also need to figure out at what rate should you be charging sales tax right? Go to https://mycpa.cpa.state.tx.us/atj/ and you’ll enter your business address. This is so cool, because it will tell you exactly what rate you charge based on your city and county in the state of Texas. Go ahead, try it! Now if you offer any Data Processing Services, as previously mentioned you are exempt from paying 20% of your sales tax rate. So if you have an address in Allen (Collin County), which pulls a rate of 8.25%, then 20% off would be 6.6% and that’s the tax rate you’d be charging your customers for those services. If you’re ever unsure of whether you should be charging sales tax for your services and at which rate, you can always call the Comptroller’s office and they can assist you as well (there just may be a wait depending on the number of calls coming through).
Once you determine whether you are supposed to be charging sales tax, you’ll need to apply for a sales tax permit (if you do offer taxable services and have not yet already applied). This tells the state that you are charging for taxable services and will be forwarding the money received for sales tax to your state (it’s their money, not yours). They do ask for some detailed information about your business such as your EIN/SSN, address, officers and their detailed information, etc. So you may need to take a look at the application to gather the data you need to begin the application. Or you can start the application and generally it will save where you left off if you have a login so you don’t lose the information already provided. Again, if you need assistance with the form, the Comptroller’s office can help (but only explain what the form is requesting as they do not have your business info).
Another thing that you need to be aware of in regards to Texas Sales Tax is if you are a reseller. Most Direct Sales companies fall into this category, and any business that purchases a service/item and resells it (whether passing through the fee or adding it to the services/items they’re providing to the customer). For example, if you purchase stock photos and either resell them to your customer to use for their marketing materials, or you include it with the service you’re providing such as building their website or creating content (ie, video, website), you are considered a reseller to the company you purchased the stock photos. There are two ways to handle sales tax as a reseller: 1) claim the tax you paid on the purchase when filing sales tax to decrease the amount of tax owed (in the state of Texas, the final recipient is who is responsible for paying the sales tax), or 2) you can submit to that vendor a resale certificate so that they do not charge you sales tax. The downside of option 1 is that you now have to track sales tax on purchases, and of option 2 is if you were to purchase something for your own business from that same vendor (who now does not charge you sales tax as a reseller), you have to pay sales tax when filing (another thing to track).
“But, I haven’t been charging sales tax and it looks like I’m supposed to. What do I do?!?” Well, just like the IRS, they can audit your business and if determined that you were supposed to be charging sales tax (or at least not paying the sales tax to the State Comptroller), require that you pay back X number of years. There was a client of ours who had a friend that was caught and they went back 4 years!! So this guy had to take the sales tax rate times his revenue of those taxable services, and that’s what he owed the State. When you start a business you need to do your research and although there’s not very much education out there for start-up entrepreneurs, the state says it’s your fault as the business owner for not knowing and will charge you penalties and interest. I will say that if that’s the reason you haven’t been filing a sales tax report (and paying any sales tax owed), they have a form you can request to waive any penalties or interest, but there is a max of how many periods you can use. It’s not guaranteed, but worth a shot, and you still have to pay back the sales tax owed. If you owe more than you can handle in one filing and payment for previous periods, they do have a form to request a payment plan and they may waive or discount some of the penalties and/or interest. For voluntarily stating you made the error, they are willing to work with you (and of course, we can assist you with that as well if needed). Hopefully you are not one of these people, but if so, it will be okay as long as you communicate with the State Comptroller and work out a plan.
So you’ve applied for your sales tax permit (or already have one), and have determined what rate you should be charging for which of your services. Now you need to be charging your customers the sales tax on top of your fees. So for example, if you charged $100 for a photo session as a photographer, and your office is in Allen, TX, then you’ll need to either charge $108.25 ($8.25 sales tax) to the customer or you can still charge $100 to the customer but keep in mind that $7.62 of it is sales tax (state that it’s tax inclusive). We recommend using a cloud-based accounting software such as Xero, but however you are tracking your income, you need to make sure you’re also tracking your sales tax. Not only do you need to track it for business purposes to know how much revenue you’ve made (not including the sales tax since that money gets paid to the state), but it also needs to be set aside in your bank account or budget so that you don’t “see” that as available funds. When you charge sales tax, that is NOT extra money for your business so don’t even factor it when making business financial decisions.
Have more questions about sales tax in Texas? You can call the State Comptroller’s office or feel free to email us and we can help lead you in the right direction.