Financial Friday May 8, 2009

On Wednesday night, I attended a forum on financial management that was put on by one of my clients, Full Figure Theatre. Among the crowd were quite a few artists and actors, and they asked some good questions. I wanted to share with you some of the excellent tips and websites that I picked up.

I have always believed that I should try to have some kind of cash reserve–an emergency fund, or a savings account for a vacation or large purchase. But what I learned on Wednesday night is that having savings and debt at the same time is somewhat counterproductive. This is because you are paying high amounts of interest on your debt (maybe even up to 28% for some credit cards) and earning a very small amount of interest (maybe 2-3%) on your savings. By taking the money you have earmarked for savings and applying it to your debt, you can pay down your debt faster, and that saves you money in interest.

After your debt is cleared, set up special savings accounts, and give them names: “house,” “car,” “vacation.” Having a goal for your money will increase the odds that you won’t spend it on just anything.

Before you start this process, you need to know where your money is going. Even if you don’t have much money to spend, you might be shocked to see how much you are spending on certain things. This means tracking your spending every single day, every single penny. After you’ve done this for a few weeks, or, ideally, a month, you can start to create your spending plan.

Your spending plan needs to take into account your fixed epenses (rent/mortgage, phone, car insurance, etc), and your variable expenses, which are things like food, clothing, eating out, gifts, etc. And just know that if you overspend in one area, you don’t need to punish yourself. You may need to try to find that money somewhere else to make up for the shortfall, but it’s more about having knowlege around where your money is going, because that’s where the power is–you are controlling your money, not the other way around.

Here are some great websites I’ve discovered, or were suggested to me:

Billing Boss: This great, free tool, creates customizeable, trackable invoices. You upload your address and logo, put in the information, and it creates a professional looking invoice for  you. You can track if your client has opened it, and download the info into your accounting software. It is also PayPal enabled, so you can send the invoice and be paid all online.

CNN Debt Reduction Calculator: You put in all your debt information, credit cards, line of credit, loans, etc and their interest rates. It then calculates either how long it will take you to pay off your debt if you pay a certain amount each month, or it will calculate how much you need to pay each month in order to pay it off in a certain amount of time, say two years.

Piggy Pal: is an online money tracker. The advantage of having this information on a website is that you have access to it all the time, and can input information at work, at home, or via your smart phone.

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Mid-week Tim-… er, Tid-Bits April 29, 2009

I have a couple of things to share with you today, mid-week. No real theme, just some things that have come across my desk that I thought were worthy of sharing. So, hopefully you get something out of them…

1. Where Did I Spend it All?? A free financial forum for Women: If you are living in Vancouver, are female, and feel like you are affected by the recession, or you have money issues, you should check this out!

Full Figure Theatre is pleased to present Where Did I Spend It All?, an open and frank discussion on how women feel about wealth, assets, personal worth, and our relationship with money. Produced with the generous assistance of the Vancouver Public Library, the forum, which is free, will take place May 6, at 7 pm in the Alma Van Dusen and Peter Kay rooms at the Central Branch of the VPL
Hosted by Heath, the panel will also include: Lori Bamber (Freelance Writer), Melanie Buffel (Money Skills Facilitator), Karin Mizgala (Financial Educator), and Tracy Theemes (Financial Advisor).

More info: www.fullfiguretheatre.net

2. Mad Mimi Email Marketing: Any regular reader of my blog will hear me go on and on about two things: RENT and email marketing campaigns. I am single-handedly responsible for getting a bunch of Van Theatre companies to sign up for Constant Contact–I truly should be on a reward plan. While Constant Contact is certainly the industry leader, and it’s not-for-profit discount makes it attractive to theatre companies, it can be a tad, well, shall we say, busy? I prefer clean, simple graphics, so I often recommend IContact as an alternative. However, there’s now a new alternative to simple and clean: Mad Mimi. Check them out for yourself–prices are very reasonable, starting at $8/month.

3. Finally, I recently signed up for a PR Newsfeed, which I get daily, and it is rocking my world. This was an article that was highlighted in it  a couple of days ago. Published on  a blog called Conversation Agent, it’s called When is it a good idea to include Bloggers in your Media Outreach?, and here’s a sample:

I get my fair share of press releases every day – at the tune of 4-5 per day, in fact. The best word I can use to describe them by and large is unimpressive. “I think you’re fabulous” may seem like a good idea for a subject line, but if you cannot tell me why, as in what about my work makes you say that, you’re out.

That means you not only miss the mark on what I like to write about, you show lack of interest. It is clear I’m on a hit list, but there is no effort towards understanding why. The why is the reason your press release or pitch is going nowhere. Get that, and you will begin to have some success with bloggers’ outreach.

The best pitch is no pitch at all. The best pitch is in fact a conversation. One in which the writer can find a unique story to tell. One based on an ongoing relationship with someone who writes about a specific subject matter. If journalists and editors need to think about their readers, so do bloggers.

Do yourself a favor and read the rest.

Now, if you’ll excuse me, I have the strangest craving for TimBits…

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Managing your flow…. September 28, 2008

Originally published June 26, 2008, on The Next Stage)

A bunch of years ago, when Julia Cameron first published her book The Artist’s Way, I, like most other artists I knew, went out and bought a copy, and started working my way through it. I loved it; I was doing my exercises, my morning pages, my artist dates. And then I came to Chapter 6, and hit the wall. It took me seven months to get through “Recovering a Sense of Abundance.” Why? It was a chapter on money.

In a previous column, I talked about putting a value on your work. Sometimes, as artists, that’s hard to do—there is tons of competition out there, first off, always someone who’s willing to sell their stuff at a lower price to get the sale. Also, there is a kind of attitude in the world that, because we as artists get intrinsic value from our work, we don’t need to be compensated financially. Plus, it’s boring. And administrative. And not creative. Add to that the whole romantic notion of “the starving artist” (Moulin Rouge, anyone?), and no wonder we are often a mess when it comes to matters of money.

But if you want to feel like a professional and have others perceive you as such, you need to take some control of your cash flow. This month’s column is dedicated to some tips about just that.

1. You are a small business. If you are selling CDs, paintings, or working as a Production Assistant on a movie, you are self-employed. What that means is, your income taxes and CPP (Canada Pension Plan) payments don’t come off your cheque. If you bill the client for $1000, they give you a cheque (hopefully!) for $1000. It’s your responsibility to pay the taxes on that income. However, as a small business, you also get certain tax breaks (yay!—more on that later).

2. Set yourself up a separate bank account for your business transactions. Go for a credit union as opposed to one of the bigger banks, they will charge you less fees. Funnel all your business expenses and income though that account.

3. Taxes. It’s a good idea to take 20-25% of everything you earn and put it in a separate account from your regular business account. This money is earmarked for income taxes at the end of the year.

4. GST (Goods and Services Tax—5%): In Canada, you can make up to $30,000 in one year from your self-employment without having to charge your clients GST. However, once you hit that mark, you have to start. You can get a GST number from the Canada Revenue Agency. Many small businesses like to charge GST, despite the fact that they may not be at the $30,000 mark yet, and despite the added administration work of figuring it out (you get to write off all the GST you spend on your business), because it gives them the impression of being bigger than they are. You know, fake it till you make $30,000.

5. Set up a System Part 1. You can buy a small business software package like Simply Accounting or Quickbooks, or you can just use an Excel spreadsheet to track your income each month. You need to know two things: how much you have billed in any month (meaning, you send the invoices, but are still waiting for payment, like they owe you credit) and how much actual income you had that month (when people actually paid you and you cashed the cheque. Again, yay!). This spreadsheet, which shows both your income and expenses each month, is called a Cash Flow Statement. The goal is to keep it in the black, although this doesn’t always happen!

6. Expenses: When you go to file your income tax return at the end of the year, you can write off any expenses that are related to the cost of your doing business. For example, as an actor, you can write off headshots, acting classes, postage for mailing submissions, office supplies, books/plays, Casting Workbook, and even a portion of your rent, telephone, internet and car expenses. The list is extensive. Talk to someone at your local union office, or CARFAC (Canadian Artists Representation) if you are a visual artist, and they will often have a comprehensive list.

7. Set up a System Part 2: Part 1 was about tracking income, Part 2 is about tracking expenses. It is imperative to save your receipts for anything you think might be a business expense. Write on the receipt what it is related to, if it’s not obvious. Then clean out your wallet once a week or so, and dump all the receipts into a shoebox or a container someplace accessable. Once a month, go through the receipts, and enter them into your spreadsheet. You may want to break the spreadsheet down into categories, like Transportation, Meals & Entertainment, Books, Marketing, Bank Fees, etc. If you have a lot of expenses, you may need to do this more often than once a month.

8. Hire a professional. If you are totally lost with this stuff, or you are in a place where it is getting to be too much for you to handle yourself, you might want to hire a professional. An accountant can actually save you money, because they may know of hidden deductions that you were unaware of. A professional organizer can help you to create a system for your paperwork and for your computer.

Okay, so I’ll be the first to admit that all this talk of Cash Flow Statements and taxes and accounting is not the sexiest or most exciting topic in the world. However, getting a handle on your finances and setting up systems to deal with money can actually take a great deal of stress off, because you know exactly where you are financially, all the time. And that allows you more time to be creative, and to make a living at what you love to do. How awesome is that?

Finally, I’d like to give a plug to the Prosperous Artists blog and podcast. Dean and Rosh are based out of Michigan, and they have fantastic tips for the business side of being an artist. Coincidentally, the topic of their most current podcast is also cash flow.

So, until next time, here’s to bums in seats everywhere…

For a downloadable or streaming audio podcast of this article, click here.