Beating Broke

Personal Finance from the Broke Perspective

Taking Financial Ownership

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I was reading a story somewhere where a person was being interviewed about their debt.  In the interview, the person was speaking about how they had this credit card debt and how they just couldn’t get out from under it because of all the interest, fees, and other ways that the credit card company throws on the heap each month.  They went on to talk about how they were in fear of having their car and house repossessed because they were falling behind.  With each new problem, they were quick to point out the things that were keeping them back and causing their slide into bankruptcy.

Something occurred to me, then.  They were taking no ownership in their finances.  No matter what the financial woe was, it was always someone elses fault.  The credit card companies were tacking on interest and fees.  The bank was adding late charges onto their car loan and mortgages.  Not once did they take any ownership of their situation.  Not once did they say, “we shouldn’t have charged so much on the credit cards”, or “we bought more house than we could afford”. The blame was always on the other guy.

Saving is for wimps! I have a plan for affordable housing.If there’s one thing I’ve learned in my journey towards beating broke, it’s that it’s all my fault.  I signed that credit slip.  I signed that mortgage.  I signed the loan papers.  Yes, some of the credit card companies have interest rates and policies that border on predatory.  Yes, the banks will allow you to borrow right up to a point where you’re living paycheck to paycheck.  But, I signed on the dotted line.  Along the way, I discovered all of that, and I took financial ownership.  And, in doing so, I took control.

Through financial ownership, I have control over where my money goes.  I have control over which debt gets paid off first.  I have control of how tightly the purse-strings are held.  And, most importantly, I have control of my financial future.  A future that I plan to make as financially independent as possible.  Not at the whim and mercy of any bank, but a future where I can plan to buy things, and save money towards retirement.

My journey isn’t over, but I am beating broke.  I’m taking financial ownership and making my future one that is free from broke.

I want you be able to say the same thing.  It’s one of my goals for this site to help you beat broke.  Beating broke is the first step in your financial journey towards a life free from concerns over where next months bills are coming from.  You can do it.  But, you’ve got to take financial ownership.  You got yourself in the situation you’re in, and only you can get yourself out.  Do it today.  Accept that you are the only one that can take ownership of your financial situation, and you are the only one with the power to fix it.  Take that step.

photo credit: woodleywonderworks

Car Trouble Part 5: Finale

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It’s been a couple of months since I last updated this series.  You can go back and read the preceding 4 parts if you like. (part 1 | part 2 | part 3 | part 4)  The basic summary is this.  One of our cars blew it’s timing belt and royally messed up the inside of the engine.  We decided to rebuild the engine, and amongst all that fun, we bought another car and were left with a third car that we really, really, didn’t need any longer.  When I ended part 4, I enthusiastically wrote that we might soon be done with the whole fiasco.  Boy was that wishful thinking.  Here’s how it all wrapped up.

The folks that had looked at it and were excited about buying it couldn’t.  Terrible credit would be my guess.  (All the more reason to brush up on improving your credit score.)  In any case, we never heard back from them.  According to the research I’d done, the car was worth about $4100, and we had it listed at what we thought was a fair price of $3500.  Not a premium, but what we thought was enough of a discount to make it attractive.  Unfortunately, that wasn’t necessarily true.

HDR chevyWe got plenty of calls by just parking the car in a well traffic-ed lot and even a few offers.  The best of them was $2800.  We just weren’t ready to let it go for that price.  We owned the car, so we weren’t paying a dime to keep it, besides registration, and insurance. Registration is fixed, and the car was older.  We’ve been around the insurance bit before and made sure to get a good insurance quote comparison.  So, neither is very expensive.  So we had the numbers on our side to hold on to it and not let it go for a ridiculous amount.  The best, in a funny-ha-ha sense, offer we got was to trade the car for two snowmobiles.  It probably wasn’t a terrible deal, but what am I going to do with two snowmobiles?

So, the car sat.  And sat.  And sat.  For four months, it sat.  And, to be completely honest, I was ready to get rid of it.  It was just one more thing that was floating around out there that needed to be finished off.  So, I expanded the net.  I posted the car on a couple of free internet classifieds sites.  A couple of weeks later, I got a couple of phone calls.  And, some wheeling and dealing later, some folks came down and bought the car for their daughter in college.

We ended up taking $3000 for it.  Much less than we would have liked, but our desire to get it off of our books overrode our desire to get that extra bit of money out of it.  We could have probably held out for the larger amount and maybe gotten it if we had wanted to hold on to the car for a longer period of time.  We were on the verge of a storage issue though.  Whether we like it or not, it’s going to eventually snow, and then it would have to be moved from where it was parked and brought back home.  Where we would have to move it as often as it snowed so that the plows could come through to plow the road.  Inconvenient to say the least.

We’re glad to have it gone.  We’ll use the money from it to pay off the loan we had to take to pay for the rebuilding of the engine on the other car.  That’ll take care of that payment and get us back on track with our debt repayment.  Even with our less than aggressive plan that we’ll be going back to, the numbers look good.  We’ll be debt free with the exception of Mortgage and student loans sometime in 2013.  Two years seems like a long time, but considering we started this journey over 5 years ago, it’s just a drop in the bucket.

Here’s to hoping that wraps up the car trouble for the immediate future!

photo credit: Brian Johhnson

My Wife Quit Her Job: And Then There Were Two

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It’s been a little while since I last updated you on my wife’s adventures in entrepreneurship.  A long while, in fact.  I think the last update was when they were looking for Business Insurance.  That was almost a year ago, now.  So much has happened in that time!  How will I fit it all in!

I think I’ll hit the highlights.  And, cover the most important change.  One you’ll likely be able to guess if your familiar with the series, and you’ve read the title of this post. When my wife first started this business, it was with two other partners.  Each of them brought their own specialties to the table, and made the business the success that it is.  As the title implies, one of them recently left the company.  This partner is technically still a owner as he hasn’t sold his shares in the company, but has stepped down from any active participation in the running of the company as an employee.  Basically, he’s become a silent partner.

Without letting too many of the details slip, let’s just say that over the last year or so, he had grown unhappy with his role at the company and felt that leaving an active role in the company would solve those problems.  Whether it will or not is up for debate.  In any case, there was lots of discussion over how this was going to take place.  Much of that discussion revolved around how the control of the company would evolve and change once he was gone.  My wife and the other partner had some very valid concerns about the structure of the company, it’s board of directors, and it’s shareholders.  In particular, there was some confusion on what rights the shareholders held.

As a part of any corporation, the shareholders are technically part owners in the company.  It gets a lot more muddled when you’re a shareholder in a large corporation like Microsoft, or Apple, but in a small company where there are only three shareholders, it’s a bit easier to see.  If there are X number of total shares issued, and Y is the number of shares a shareholder owns, then their ownership of the company is Y/X.  In a situation like Apple, someone who owns 1 share owns 1/924,755,000th of the company.  In the case of my wife’s company, each of the owners owns 100/300th of the company, or 1/3rd.  Much like a larger corporation, my wife’s company is required to have an annual shareholders meeting where the board of directors are elected and other similar things are voted on.  Generally, it will just be the election of the board.  So, the more direct answer is that the third, now silent, partner has a 1/3rd say in who is elected to the board of directors.  Should he disagree with the selections, he could vote against it, but wouldn’t be able to overcome the 2/3rd majority that the other two partners have.  So, based on that, he really has no realistic say in how the company is run.

What is it that makes a good Real Estate Agent Great?Another bit of contention is that fact that if the company were to pay a dividend to the shareholders, as they did this last year, that he would get 1/3rd of that dividend without having done any of the work that the other two partners had done.  Unfortunately, that’s just the way it is.  He still owns 1/3rd the outstanding shares, so he’s entitled to 1/3rd the dividend.  There are several ways around this.  The most obvious of which would be if he were to sell his shares to the remaining partners and completely exit from any involvement with the company.  The other method would be to take the 2700 shares that the company is able to issue and give them to the remaining two partners as an annual bonus of some sort and in effect, dilute the third partners shares.  Everyone involved feels this is a somewhat backhanded way to deal with it and it will likely not happen.  Short of that, it would also be possible to increase the remaining partners salaries such that the issuing of a dividend would not be reasonable.  This also isn’t a great solution as both the partners and the company would pay the higher payroll tax rate on the money rather than the dividend rate.  In the end, it’s probably best that they just leave it as is, and merely acknowledge that the third partner put in a years worth of work and helped build the company so is entitled to that bit of ownership that he has.

I think there are a couple of very important lessons here.  The first is that starting a business is no small thing.  The people that you choose to partner with may not always be of the same mindset, and they may decide that the partnership isn’t working.  You’ve got to be able to live with the consequences of joining into the partnership, especially if the partnership fails for any of the partners.  The second lesson is that you’ve got to keep a level head when dealing with situations like this.  It would have been easy for any of the three partners to overreact and cause it to be a much more difficult situation that it was.  Playing nice isn’t just for the playground, folks.

Are there any other specifics that I haven’t covered in this or other posts in the series that you would like to hear about? I’ll share what I can.

photo credit: homesbythomas