Beating Broke

Personal Finance from the Broke Perspective

I Quit My Job: How I Did It; and You Can Too

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One of the first things that you, I, or anyone else will likely worry about when contemplating quitting our jobs is the financial aspect of doing so.  We’ll worry about whether we’ll be able to make enough money, on our own, to pay our bills.  We’ll worry about whether that income, if it is enough, will be steady.  We’ll worry about how we’ll make that money, and whether the income streams that we have are going to be robust enough to scale to a point where we can securely quit our jobs and work for ourselves.  I know they were things that were foremost on my mind when I was deciding whether I should quit my job or not.  In the end, I decided that it was time to let go of some of my fears and take the leap towards self-employment.  Taking that leap was not an easy thing to do.  Here’s how I was able to do it, and how you can too.

Get Your Finances in Order

Sounds simple, doesn’t it?  It’s not.  If it were, there would be a lot of personal finance bloggers who would be blogging about something else today, myself included.  Despite what some people believe, personal finance isn’t a simple thing to master.  I know I haven’t done it yet.  I’m a little bit further along the curve than some, and further behind than others.

When I first started blogging about personal finance, it was during a very dark time in my financial life.  My wife and I had been wondering if we were going to have to declare bankruptcy, and paying our bills each month was a juggling act.  Somewhere in that time period, I discovered other personal finance blogs, and through them, Dave Ramsey.  I ordered, and read Ramsey’s book, The Total Money Makeover.

It was the beginning of a financial turnaround for us.  Ramsey’s book Kathmandu , Nepal,Himalayas,Everestgave us the financial know-how and direction to turn our finances around.  With the help of that book, and the amazing community of personal finance blogs, our finances became something that was far less of a worry for us.  That was over five years ago now. If we hadn’t had that turnaround, and gotten our finances in order, there is no way that I would have been able to do what I did.  We have been aggressively paying down our debt and refusing new debt whenever possible.

When I Quit My Job

If you’re a regular reader here, you are familiar with the story leading up to the day I quit my job.  We had become a bit lax in our financial governance, were about to buy a new house, and were suffering from a severe case of lifestyle creep.  Our lifestyle had grown along with our incomes.  We still were attempting to pay down our debt, and we were still avoiding new debt in most places, but we could have been doing so much more than we were.  That’s our fault.  We got comfortable with our income, got comfortable with the luxuries that we had let creep into our lives, and we lost sight of our end goals.  The day that I decided to quit my job, we took all that back and started actively working towards our goals again.

In a way, quitting has been a blessing.  It’s given us a renewed perspective on what we need, how much we need, and what we can do without.  If you think you are going to quit your job or just want to quit your job, you can’t do it without having a firm grasp on your finances, and truly having them in order.

Cut Your Costs

Part of getting your finances in order, and a large part of being able to make it without the once steady income that you made at your job, is cutting your costs to a level that is sustainable, given your new income level.  I went from a mid-5-figure-a-year salary with steady paychecks every two weeks to a part-time job that I get 20 hours a week at and an inconsistent online income.  In the time since I quit, we’ve cut our costs dramatically. When I was still employed, we were spending nearly $6,000 a month.  That includes debt repayment but is still a pretty large number. Now, we’ve cut our costs by about $2,000.  If you had asked me in October of last year if we could do that, I would have said you were nuts. We found a way to do it and so can you.  It’s all a matter of motivation.  Do you have the motivation to cut costs so that you can give your dream the wings it needs?

Work Your Ass Off

Have your finances in order.  Cut all the costs you can.  None of that will amount to a hill of beans unless you are ready and willing to work your ass off.  It’s something that I still struggle with.  Every job you’ve ever had has conditioned you to expect to have someone telling you what you had to do.  Everywhere you’ve ever worked, you’ve had a supervisor looking over your shoulder giving you the tasks that you were to work on, setting your yearly goals for you, and keeping you motivated to do them with the threat of unemployment.  Once you quit your job, and decide to work for yourself, that all ends.  It sounds freeing, doesn’t it?  It is.  And, it isn’t.  You have to become your own supervisor.  Your only motivator is to make your choice valid and make enough money to live off of.  You aren’t going to get fired for spending 4 hours a day on Facebook anymore; You’re going to go broke.  Scary, no?

As scary as that may sound, it is freeing.  You’ll have the freedom to make the choice to work your ass off.  It’s something that, even now, almost 3 months later, I still struggle with.  There have been days where I haven’t done a damn thing.  And, I’ve regretted each one of them.  Each day spend screwing off has cost me potential money.  If I don’t get anything written for this site or any of my other sites, it’s one less article that you’ll enjoy reading (I hope), and one less well-written article to attract new readers and new advertisers.  Because of the long-lasting ability of any article that I write, the repercussions of a missed article can be exponential.  What you choose to do, may not be writing content for websites, but you’ll likely see the same trend.  And you’ll likely struggle to keep yourself on task without a supervisor.  I’m learning, and you will too, that you have to provide that supervisory oversight for your new venture.  It’s no longer a matter of keeping your job, but of keeping your bills paid, your heat on, and the foreclosure agent from your front door.  Work your ass off.

Have a Little Hope (And Faith)

None of what I’ve said is the most important part of this.  Without hope, you are destined to fail.  You have to have hope that you will succeed.  You have to have hope that you’ll overcome any mistakes you make.  You have to have hope that you will prevail and make your venture grow roots and blossom.  You have to have faith in yourself, that you can do the things you need to do to make your venture a success.  Without hope and faith, you will fail.  I can tell you, firsthand, that there are going to be days when both your hope and your faith will falter.  There will be days that you feel like you’ve started on the trail to scale Mt. Everest.  The air is getting thin, and all you want to do is, stop, turn around, and head back to the comfy, warm, job you had before.  But, like anyone who has attempted to climb that mountain, you have to keep climbing.  The trail may change directions from time to time, but the goal is the same.  Find ways to renew your hope through community, family, and friends.  I’m lucky enough to have a very supportive family, friends, and the community of personal finance bloggers to help me keep that hope and keep my faith.  You can find that too.

Get your finances in order, dramatically cut your costs, work your ass off, and keep your hope and faith alive.  Reach your summit.
photo credit: ilkerender

4 Tips for Anyone Looking to Create a Startup Business

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Starting your own business is an amazing way to make money and ensure your financial security as the years go by. If you are to succeed at doing this, however, you have to do it right from the beginning. This may set you down the right path and make it possible for you to scale up and enjoy the benefits of a well-planned business. Have a look at the four tips below to get an idea of how to go about setting up your startup the right way.

1. Get a Professional Website

With all businesses, you need a solid online presence, there’s no way you’re going to start a business of your own without a website. A basic website isn’t enough in this case. That’s because competition in the digital space has gotten more serious over time. With 38% of users reporting that they’ll stop engaging with a website if they find it to be unattractive, it’s clear to see the importance of ensuring that you have a great website. Find a professional and have them open a beautiful website for your business that’s also easy to navigate and you’ll be on the right path.

2. Secure Your Payment Options

Next, you need to make sure that everything to do with money is safe and secure, both your and your customer’s money. This means that you have to invest in a reliable payment system. With the various payment options available at the moment, you may also want to accept as many payment types as possible so you can offer your products or services to a wider market. One of these payment options is Bitcoin, which, along with more than 6,000 other cryptocurrencies, is powered by an open-source code called a blockchain. Ensure that the payment gateways you use are safe so that you don’t have to deal with any amount of risk.

3. Identify the Right Market

Remember to identify the market that you want to cater to from early on in your business. Doing this is going to help you figure out many other details of your business, including how to go about marketing to them. With approximately 167,290 people in Midtown, NYC in 2019, for instance, it’s obvious that any given population will have different preferences. That said, you may have to find marketing techniques that will appeal to as many people as possible and give you a chance to spread your net wide. After you start growing, you can think of specializing your offerings and catering to a niche market. This is the best way for you to grow your business and make more money since you’ll find out what works best and can stick to it.

4. Hire the Best Team

Finally, remember that it’s important to have people on your team who are as passionate and dedicated to your cause as you are. When you put together such a team, your startup will be a formidable force. This is because every facet of your business will be run efficiently. Clearly, it’s beneficial to spend time searching for the best fit for your startup as it will either make or break your efforts. Conduct candid interviews and offer potential hires the best that you can and you’re likely to be met with enthusiasm for the roles that you advertise right from the start.

These four tips should help anyone who’s looking forward to starting a business do it well. If you start your business on the right foundation, it may be easier to build it over time. Do thorough research and plan well so that nothing catches you by surprise. When you do this, you’re likely to enjoy the outcome, as will the team working with you!

Using Escrow Accounts and Financial Planning With Your Spouse

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An escrow account can sound foreign and complicated, especially when you’re trying to purchase a home. Some homebuyers have never even heard of an escrow account until they read through their closing documents. Dealing with it doesn’t have to be a headache, however.

This guide will not only detail what an escrow account is, how to use it, and when you can close it, but it will also go in depth about the pros and cons of having an escrow account and how to make financial goals using one with your spouse.

Finances can be a source of contention in the home, but it’s important to talk about and make sure you’re on the same page with your loved one. Doing so has a way of bringing you closer to your spouse and gives you a safe space to discuss sensitive topics.

Everything You Need to Know About Escrow Accounts

Escrow accounts are very useful for financial planning with your spouse. Below, we’ll define what an escrow account is, how to use it, when you can close it, and we’ll look at the pros and cons of this account.

What is an escrow account?

Whenever you and your spouse look to purchase a home or compare home insurance policies, keep in mind that you may be required to use an escrow account. It depends on the lender and insurance company that you work with.

What exactly is an escrow account? To put it simply, an escrow account is an account that is run by a third party and is used to complete transactions between you and another person. It is normally used for large settlements, but it can be used for small business deals as well.

How to Use Escrow Accounts

A prime example of how to use an escrow account is using it to buy a home. You can use the funds in the account to show the seller you’re serious about purchasing the home. Using this will encourage the seller to take the house off the market and help them be more inclined to make an agreement with you.

You can also use an escrow account to pay for property taxes and home insurance. A portion of the mortgage payment goes into this account and is used to pay for taxes and insurance at the end of the year.

These kinds of accounts, as stated above, can also be used for small business transactions like purchasing tires or even something as simple as grocery shopping.

When can I close my escrow account?

There’s really no good reason to close your escrow account unless it is a mortgage escrow account. If that’s the case, the only way to close that account is to make sure you have sufficient home equity. Having enough home equity means making sure you have been paying your property taxes and home insurance.

For other escrow accounts you would like to close, the process is as simple as calling the bank and having them close it for you. It’s a simple process because the account is more like a savings account in this instance.

The Pros and Cons of an Escrow Account

There are several pros and cons to having an escrow account. One pro is that this account provides a secure transaction between parties. Another is that you can pay for property taxes and home insurance monthly as opposed to annually.

This account greatly benefits the seller and the buyer with large settlements like purchasing a home. The seller has guaranteed funding and the buyer doesn’t have to pay out of pocket.

For every pro, there is a con. One disadvantage of having an escrow account is that you have to deal with higher monthly payments for your mortgage. Another is that you might end up paying more on taxes because the estimations are a little off. Escrow fees might also be higher than other services.

Whether purchasing something big or small, escrow accounts are perfect tools. You can use them for virtually anything. They’re also great for financial planning with your spouse.

Financial Planning With Your Spouse

Money can bring up a lot of emotions, especially in marriages. It’s good to talk about these things with your spouse and make sure you’re both on the same page. It’s even better to make financial goals together using your escrow account.

Talk about money in a private setting for both you and your spouse’s safety. Be open and honest about your spending habits, and don’t be judgemental or critical of yourself or your spouse.

Saving Responsibly

The first thing that should be discussed is saving responsibly. It can be easy to comfort spend and not think about spending your money wisely. In these unpredictable times, it makes sense that you would not want to save and put back.

Escrow accounts are perfect for saving responsibly because they can be used as designated savings accounts.

This pandemic has taught us that tomorrow isn’t promised. But that’s all the more reason to have self-control and save. If something happened to you, you need to be prepared and think about those you are leaving behind.

Set Financial Goals

Discuss financial goals with your spouse as well. You could talk about using your escrow account to put back and plan how much money you want to have at a certain date and time. Keeping goals specific, measurable, attainable, relevant, and time-based is a very effective way to reach them.

A perfect S.M.A.R.T. goal would be something like this: I am going to save $500 by August 30, 2021, and use my escrow account to save that money.

Create a Budget

Budgeting goes hand-in-hand with saving and setting financial goals, so it’s important to talk about. You want to set financial boundaries for yourself at the beginning of the month and keep track of where all your money is going.

It may seem tedious, but it’s a great team-building tool to do with your spouse. You can put aside money into your escrow account on the first of each month as well.

When you are educating yourself about finances and financial planning, you are placing yourself ahead of the curve. Many don’t take the time to learn and expand their knowledge, so kudos to you. Take what you’ve learned from this guide and share it with others.

 

Peyton Leonard writes and researches for the insurance comparison site, ExpertInsuranceReviews.com. Peyton is dedicated to helping others save money and be free from financial burdens.