Real Estate on the Internet: Tips for Sellers

In a fast moving world, hours have turn into minutes. The work of months can be done today in week. We are able to pay bills, wash clothes, communicate with people, and cook just by the simple pressing of a button. With real estate, it is not different. Many deals are also closed online.

Most people willing to buy something first search a product online, even if they want to buy it personally. The advantage of this is that they get a general idea of how much it is going to cost and what are the main options. In the case of property search, it is not different. Web portals offering property search are cropping up everywhere. If you are a seller, you should be representing in the most of them.


Getting exposure is a necessary condition to stay on business. Potential clients – for flats, office, or commercial space, it does not matter – are short listing sellers through this means. Newspaper ads were the standard option, but if you as a seller want to avoid them at all, do it. The internet works for selling real estate.


Internet is cost effective; it has a higher return on investment (ROI) than other mediums. It gives you plenty of space to present your property. Not matter what you want to show: pictures, a short movie, floor plans, location maps, or a textual description – the internet gives you this possibility. Your ads will have a longer shell life on a web page than on a local newspaper. Buyer from around the country can see your property. In addition, in the case you are selling some property in upscale places like New York or Miami, consider than wealthy buyer from abroad are also interested in taking a look at this properties.


There are still a couple of tips that I can give you to sell better. First, do not overprice you property. Profit is okay, but do not drive away prospective clients overpricing you real estate. Keeping an unsold property is no business. Second, try to make a first good impression. Take your clients to an apartment or office at the best time of the day and keep everything tidy. Third, if you do not know the legal details, involve a property dealer, keep in mind that he or she should have a real estate agent license. Fourth, avoid hurried deal. Any buyer can smell that you are in a hurry and take advantage of your haste.

Real Estate Marketing Online: Tips for Beginners

If you want to start working as a realtor agent, there are some points you should consider. I’ll tell you about eight tips to be a better fit into the real estate marketing business. Of course, you should know more, but it is probably enough to get you a better footing. These ways will help you get the first leads that can turn into sales.

  1. Buy an appropriate domain. I mean a domain with a name of some hot city on it (Miami, New York, Seattle) and some real estate concept on it: office space, beach houses, countryside, and views. Of course, the keywords should have some relation with the clients you are targeting.


  1. Take a look at SEO (search engine optimization). Study as long as you understand the basic concepts. Do the marketing yourself. Some internet marketing ‘experts’; will offer you a lot of services promising incredible results. Follow the do-it-yourself approach because in this case, you want to be active in business and SEO is a central part of this business. Outsourcing makes no sense in this case.


  1. Make a list of real estate forums. Read them regularly and post any tips that you may know. You will have to cover all aspects: legal problems, agents, finance, mortgage, home improving, etc.


  1. Learn something about making web pages. Even if someone else will do the detail work for you, you will have to know what you want. It is a nice idea to have a database describing properties (with pictures, video, floor plan, maps) and a blog where you can explain the advantages of doing business with you.


  1. Never copy anything from other sites. Be a whitehead professional. You want to enter the field to stay, so start delivering some service of quality.


  1. If you have some money or already earned some money as realtor agent, invest it in an IDX solution (i.e. an Internet Data Exchange). It allows you gathering data of many homes, offices and other real estate properties for sale.


  1. Develop a strict follow up client relationship. Know who called or emailed you. Callers are mostly better buyers. Understand their needs and take care of your clients. Sometimes people start making calls 12 months before making a purchase, so be patient.


  1. Know your properties. Don’t just present real estate, know what is around it: schools, neighborhoods, areas of interest around it.

Real Estate Marketing Tips for Home Sellers and Investors

Implementing real estate marketing strategies is a necessary element of selling properties. It is nearly impossible for buyers to locate realty for sale without some sort of marketing plan in place. Whether trying to sell a private residence, commercial real estate or vacant land, marketing is the key to success.

The first step of real estate marketing is creating a plan. Realty marketing plans allow sellers and investors to establish their target market and recognize needs and buying habits of potential clients.


Retired couples seeking vacation property will have different needs than a newly married couple. Buyers of residential properties will have different needs than real estate investors purchasing commercial property. In order to sell realty it is crucial to know as much information about potential buyers as possible.


A common mistake amongst realty sellers is they focus on their own abilities or successes of their company. An important rule of thumb for any type of marketing is to remove you from the equation. While clients might feel more secure knowing you have 30 years experience or have closed multi-million dollar real estate deals, they really want to know how you can solve their problem or help them obtain what they desire.


Real estate marketing materials should focus on solving problems and overcoming challenges. Begin by composing a list of common problems buyers might face. Once potential problems have been acknowledged, compose a list of how your service solves each problem.


These could include educating buyers about first time home buyer programs or available financing options for buyers that have filed mortgage bankruptcy or previously lost a home to foreclosure. Sellers can build relationships and establish trust by solving problems through real estate marketing materials.


It is also important for sellers and investors to develop follow-up marketing strategies. Few people make important financial decisions based on information provided through a marketing letter or presented on a website.


Once real estate leads are located, sellers should plan on contacting perspective clients at least seven times. Doing so places your marketing message in front of them and generates confidence in the services offered.


Finally, real estate marketing plans should acknowledge various options available to sellers and investors. These might include creating a real estate website; utilizing internet marketing to locate and follow-up with potential buyers; sending out postcards, letters or flyers; advertising via signage, billboards, park benches, or Classifieds ads in real estate publications or local newspapers.


Real estate marketing requires long-term commitment unless you are only selling one property and fortunate enough to quickly locate a buyer. Technology constantly changes, allowing sellers and investors to reach a broad audience.


If you are not technologically savvy or do not possess a flair for words, hire professionals to develop real estate marketing materials. While hiring others can initially cost money, having professionals design marketing collateral can save money in the long run.


The Internet provides a wealth of realty marketing advice. Join real estate clubs, investor forums, or social networks to meet other realty professionals. Ask questions and engage with members to discover additional tricks of the trade. Taking time to network with others can help you find the resources and buyers you need.

5 Small Business Tax Tips to Save Money and Reduce Stress

The following small business tax tips will go a long way in reducing the stress resulting from Uncle Sam’s demands upon your income. Two things cause stress when it comes to taxes. The first is being unprepared when it’s time to organize your paperwork. The second comes when the tax bill is higher than you expected. Three tips will focus on the first issue while the last two tax tips will provide ideas for saving through better write-offs and deductions.

Set up a Good Record Keeping System


There’s nothing worse than having April 15th creeping up on you, finally finding the motivation to get your tax records together and then discovering that once again, your tax records are stuffed inside a shoebox. You open the box and all your receipts and statements fall on the floor in a disorganized mess. Worse, you realize you didn’t bother to save most of your receipts last year.


Save yourself this headache next year by making a commitment to create yourself a quality tax record keeping system immediately. It doesn’t need to be anything complicated.


One simple way to do this is to label twelve folders in your filing cabinet with the names of each month. Place each receipt or statement into the correct month and at tax time you’ll only need to organize each month a bit. It will still be a mess, but it’s a more organized mess. Additionally, you now have a place for receipts, meaning you’re likely to save them.


Review and Organize Once a Month


This is a better way to utilize the previous small business tax tip. If you’ll take a few minutes once a month to review last month’s folder, you’ll save yourself an immense amount of time during tax season. Yes, this takes discipline, but it’s well worth it.


At the end of each month, simply organize your records in chronological order inside your monthly folder. Make an accounting of each area you made purchases in. For example, write down items such as postage, rent, utilities, insurance, gas, mileage, Internet fees, etc. Simply add up the monthly totals for each deductible category and make a note of it.


Can you imagine at tax time already having each month organized and itemized? All you need to do at that point is add up twelve months worth of totals for each category and your expenses are done.


Consider a Credit Card with a Year End Expense Printout


A business credit card that tallies up all your yearly expenses and sends it to you at the end of the year is a wonderful time saver. If you make sure to use this card for all business expenses during the year, your year-end credit card statement has every category broken down and itemized for you.


Arrange Your Business Into an S Corporation


Many professionals offering small business tax tips do an injustice to owners when they neglect to tell them about the benefits of an S corporation. Additionally, many people advise using a C corporation. While you need to consult a qualified tax attorney regarding the proper entity for your business, a C corporation is usually best for a company that sees itself growing quite large and one day going public. Unfortunately, most seminar and Internet advice results in small business owners utilizing a C corporation.


An S corporation is usually the correct way to go for the small business owner. One S corporation tactic that will have you smiling brightly every April is calling some of your personal income “dividends”, rather than “income”. If your accountant or tax attorney hasn’t talked to you about the difference between an S corporation and a C corporation, you may want to find a different person for further small business tax tips.


Invest in Real Estate


While this isn’t for everyone, buying real estate investments will do wonders on your quest for tax savings and may possibly be the most important of all small business tax tips.


Buy and hold real estate allows for you to deduct the mortgage interest that your tenants are actually paying off for you. You also receive additional write-offs for management fees, repairs, utilities, etc. When you factor in the depreciation Uncle Sam allows you to take on your buildings, you can offset your income for substantial tax savings through the purchase of real estate.


If this area is new for you, consider going to a local real estate investment club or seminar to learn more about the wonderful tax benefits real estate can bring you.


By following the above small business tax tips, you should be able to not only avoid the stress involved with your taxes from an organizational outlook, but also reduce the tax bill you’ve become accustomed to paying over the years.

Best Ways to Make a Million Dollars Without Stocks and Real Estate

Want to be a millionaire? Forget about real estate and stocks. There are other ways to get rich.

Run for Vice President


Sarah Palin’s new book, “Going Rogue”, was on the top of the best seller list at the end of November. The Huffington Post website reported that she received an advance of $1.25 million on the book. “Going Rogue” is an autobiography of Palin’s life from the time that her parents moved to Alaska from Idaho when she was one year old to the present.


By being tapped as John McCain’s running mate in the 2008, she gained worldwide fame as the second woman vice-presidential candidate in history. Palin’s intrigue and interesting family has made her famous and she was vetted by HarperCollins to write her story.


Win the Lottery


Most financial advisors and bloggers would cringe at the idea of winning a million dollars in the lottery. Money spent on the lottery should be invested into more secure investments which actually pay dividends.


But who can resist the momentary thrill of imagining that you won the lottery. If you don’t gamble too much, then the lottery is harmless diversion from the dreariness of going to work every day. And you just might win!


Write a Book about Getting Rich


Rhonda Byrnes, the author of “The Secret”, the bestselling book and DVD published in 2006, was down and out in late 2004. She was trying to get over some tragic events in her life when she started work on “The Secret”, which shows how to use the law of attraction to make your life better.


Rhonda Byrnes’ book was a best seller of over two years and she has made $1 million many times over. Another millionaire who writes about how to get rich is Robert Kiyosaki, author of “Rich Dad, Poor Dad”.


According to Wikipedia, Robert Kiyosaki has written 15 books which have sold over 26 million copies! The main theme of all the book is: How to Get Rich. There is a link to writing about getting rich and actually creating personal wealth.


Invent the Right Website


The founders of Craigslist, Facebook and Twitter have hit the big time. All you have to do to make a million dollars is to invent the web application that no one can live without and you will quickly have $1 million or more.


Some other websites we can’t live without that were invented by one or two people are: Google, Ebay, and Zappos.


If you need some inspiration to make a million dollars, just remember what Victor Hugo said: “Inspiration and genius–one and the same.”

How to Succeed at Real Estate: Making Serious Money

No matter how flexible the seller is, the property is useless to you if the value of it does not support what you are considering buying. For example, there is no point in paying $200,000 for a house in a neighborhood that has houses that sell in the average price range of $60,000-$70,000. The chances of making money in a deal like that where you are paying that much over the typical market value of a piece is very slim.

A business exists solely for the purpose of making money; without making money and being profitable there is no way that, a business will succeed much beyond the infancy stage. My goal is to help you make the most informed decisions possible so that you start the real estate market a step ahead of others who are having to do their own research instead of reading my guide that has all of these tips and suggestions.


Property has several different ways of determining value, different aspects of the value effect the value differently however. Objective and subjective factors both play into effect in the value of the property. Objective factors include how many bedrooms, how much square footage is livable, how many bays the garage has, how many bathrooms, and other factors.


Objective factors directly influence how much you can get from the property in return for what you put into it. Other than the building specifications, that help effect the value of a house, the condition of the property is in is also quite important. A house in poor condition is not worth nearly as much as a house that has been kept in tiptop shape over the years. Water damage, termites and ancient windows can all add up to big remodeling expenses that must be factored into the price of the property to determine how well the value holds up.


Subjective factors tend to be tied closer to the color of the paint, the style of the house and other highly personal things about the property. Some people may discover they only buy houses in which the driveway is on the left, and they dislike those that have right sided driveways. These are all subjective factors; however, it is not the complete list of subjective factors.


There are several methods to use to determine the value of property. These methods are Market Sales Approach, Reproduction Cost Approach, and finally the Net Income Approach. While these sound very complicated and scary, calm down and take comfort in the fact that it is technical terms and not as bad as it could be.


Market Sales Approach is used to determine the value of property based upon comparing it to other pieces of property that have sold in the area that are similar in size and location. For example, this method would state that if 5 houses all in the same neighborhood have been sold within the last few months and all sold for approximately $60,000 that were the same size in square footage and comparable in design and building materials that the property we are considering buying should be worth approximately the same thing. Obviously, such factors as condition of paint, appearance of the yard and other small details can make a huge difference in the actual asking price. Nevertheless, this should give you a guide to go with to help make the informed decisions of a smart investor.


However, if you are looking at purchasing a multi-family unit, this becomes a bit more complicated. To determine the value then, you would have to base the value off of either the selling price per unit, in which the total price of the property is divided by the number of units and then compared to other multi-family units sold recently, or by basing the value based upon square footage of the property. This is obtained by dividing the price of the property by the number of square feet in the property, and then comparing it to other multi-unit properties.


Seemed quite complicated at first, however as you can see it is really quite simple. To use this method you must be willing to put some effort and research into your local real estate market to make an informed decision. Next method to look at is a bit more complicated and does take quite a lot of research and attention to detail. Enter…drum roll please… Reproduction Cost Approach.


As I am sure you can guess, this method focuses on determining the value of property based upon what it would cost to you guess it reproduce it. This means find a comparable piece of property that is empty, as well as determine based off building materials and square footage how much it would cost to completely “clone” the existing property. Once you have arrived at the price to reproduce the property, you need to take some away to account for wear and tear that exists in the course of a lifetime for property, scuffed floors, a small dent in the siding etc. This is not your Reproduction Cost Approach. As you can see this method is much more complicated than the Market Sales Approach. Proceeding on to the final method, we arrive to Net Income Approach.


Net Income Approach simply takes into account the amount of income the property can generate for you. For example, if you have a house that rents for $600 a month, that is $7200 a year. Most investors are looking at a 10% return rate on their investments. This means that for a house of this standard, you do not want to pay more than $72,000 or else your return rate will be lower. As you can see, this method of determining value is of little use to the average homeowner who is purchasing a home for their personal use. However, it is very important to the investor who is looking to make money.


In the next installment, we will cover Cash Flow Analysis, and how to determine if a potential piece of property is good to invest in based upon this analysis. Cash Flow Analysis are very important reports that can tell you a lot about how your investments are doing, and as such important documents deserve their own separate lesson or installment on them. Remember, keep making those calls and taking notes. Now that you have the methods to determine the value of property, you can seriously look at some of the properties you have decided to look at to see if they are financially feasible.

Earn Back Your Retirement Money with Real Estate

Are you a real estate investor? Would you like to learn some little-known secrets to increase your purchasing power using your retirement account? We are all well aware that stocks have tumbled drastically in the last several months, leaving investors with the option of real estate investing to fund their IRAs. If you like the thought of using tax-deferred money to buy property, then the first thing you need to do is find an IRA advisor that does real estate investment. Steer clear of banks and brokerage firms, which are more traditional and conservative with their investments. Instead, find real estate mavericks and learn their tricks. One way you can find such people is by utilizing the Internet. Search for “self-directed IRA” and you will find a plethora of help out there. You will need a custodian to direct your investments, unless you want to control it yourself. You will have to pay a fee for their expertise, of course. They will guide you in which types of land or property to invest in, purchase it with your money, and perhaps even manage the property.

Obviously, in this economy, few people have the available funds to invest in property. One option is to buy an interest in the property along with friends or family members. However, keep in mind that the IRA does not allow investment property to be regarded as “homesteaded property” or office space. You will not get those tax breaks. The penalties for breaking these laws are steep and should be avoided at all costs.


Remember that you may not put your current home into the IRA – you must have your custodian buy it and put it into a trust. Be aware that property bills must be paid from that IRA account, so be sure to keep it well funded. Income generated from the property will also go into that account, and if you sell, any proceeds from the sale will stay in the account. In addition, you may personally contribute cash into your account – up to $4,000 per year for an individual, and up to $40,000 per year for a SEP-IRA (used for a self-employed individual).


Once you reach the age of 59 ½, you may take out your money penalty-free. You can arrange to have the custodian sell the homes for you and give you the money, or keep the properties in the IRA for several more years. You will need to pay income taxes on the property, unless it was held in a Roth IRA (which is pre-taxed money).


The great thing about real estate is that anyone can learn the field, and you don’t need a degree to do it. In America, people are entitled to land ownership! If you read Section 408 of the IRS Code, you will see that there is great flexibility in allowing individuals to invest in land and properties.

The Top Three Ways to Raise Your Credit Score Without Losing Your Sanity

A critical part of your success as a real estate investor is your ability to obtain the financing you need to fund your real estate activities, so it’s imperative that your credit score be as high as possible. Regardless of what your score is right now, it can almost always be higher. Here are three powerful ways to quickly boost your credit score and increase the likelihood that you’ll always be able to get your loan applications approved, without losing your sanity:

Pay Your Bills on time – The most important thing you can do to increase your credit score is to pay your bills on-time. Your FICO score is an up-to-date snapshot of your creditworthiness, so it changes almost daily. Today’s late payment may not seem like a big deal, but it can have a dramatic impact on your ability to get loan approvals when you need them.


By making it a practice to always pay your bills on-time, you are setting yourself up for continued financial success. Good credit isn’t an accident that just happens. It takes work, effort, and attention to detail. Make the commitment TODAY that from now on you will ALWAYS pay your bills on or before their due-date. Nobody’s perfect, but by putting on-time bill payment at the very top of your financial agenda you will steadily see your credit score increase. A few points can save – or cost – you a small fortune in late fees and missed investing opportunities.


Spice Up Your Credit Life – It’s been said that variety is the spice of life, and the same is true of your credit mix. While it’s great that you have a credit card or two in your wallet, it’s more important that you have – and utilize – a variety of different kinds of credit.


Most of us have at least one mortgage loan, but it’s also important that you utilize installment and revolving credit accounts. An example of an installment loan would be your auto loan. You have a fixed number of payments over a specific period of time in order to pay off that loan. With revolving credit, the balance can go up or down each month depending on how it is utilized. For instance, a credit card is a prime example of revolving credit. One month you might not have a balance at all; the following month could see several thousand dollars in new charges. Mix things up and make sure you use different types of credit regularly for best results.


Find the Credit Accounts You Like – and Keep Them – Some people like to play musical chairs with their credit accounts. We all know someone like this; you may even be one of them. While shopping, they see a sudden opportunity to save 10% off their purchases simply for applying for a credit account.


Unless you have every intention of opening and using a credit account, save your time and your credit score. When you open credit accounts that you don’t use – only to close them a month or two later – your credit score will actually drop. So settle on the credit accounts you’re going to have – and then keep them.


This doesn’t mean you should never take advantage of that great zero percent financing offer you got in the mail. What it does mean, however, is that if you’re going to take advantage of an offer like this, utilize it – and then keep the card for the long haul. The longer you’ve had a credit account, the greater the impact on your credit score. Rather than close a credit card account with a seven year track record of on-time payments in order to save a few dollars in interest charges, keep that account open. It’s doing you a lot of good.


These may seem like simple steps, but they can have a profound impact on your credit score – and the size of your investing portfolio. Put this simple three step process into effect today and watch your real estate investing career grow by leaps and bounds!

Foreclosure: Understanding the Process So You Can Find a Solution

You became a real estate investor because you saw unbridled opportunity and the chance to see all of your dreams come true. However, the current economic situation may have thrown you off-track. If you’ve fallen behind with mortgage payments, it’s imperative that you know and understand the foreclosure process so you can seek an effective solution that will allow you to emerge from this crisis a smarter investor. Then you can take the necessary steps to protect yourself – and your investments. Years from now you can tell your off-spring how you weathered the most severe financial storm in history. First you need to learn the foreclosure process so you can find a solution for success.

Missed payment #1 – Up to this point in your real estate investing career you may have always been able to make all payments on-time, but bad things really can happen to good people. At this point, your lender probably won’t be too concerned. They’ll normally send you a friendly reminder notice in the mail. The smartest thing you can do is to call them as soon as it becomes obvious that you’re going to miss your payment due date.


Missed payment #2 – Now your lender is probably beginning to worry a little bit. They’ll probably pick up their phone to discuss your account and find out when you plan on getting caught up. You should be proactive by reaching out to them to discuss your financial situation and trying to devise a solution that will get you current as soon as possible.


Missed payment #3 – At this point your friendly mortgage lender will likely give way to the not-so-friendly collections department. Depending on the state in which you live, you’ll receive a “Demand Letter” or a “Notice to Accelerate” in the mail. The letter will explain very clearly and directly what steps your lender intends to take if you don’t quickly get current with your payments. Normally this letter will mention the dreaded “F” word – foreclosure. You will be given a date (usually 30 days) by which you will need to either pay all past-due payments or make other arrangements that are satisfactory to your lender.


Missed payment #4 – Your mortgage situation is getting critical at this point. You’re about to run out of time before your lender decides that you aren’t likely to reinstate your loan. Once the 30 day demand letter time frame has passed, your lender can legally foreclose at any time of their choosing. At this point your delinquent account will usually be referred to their attorneys – and you will begin incurring large attorney’s fees.


Sheriff’s Sale – If you don’t act quickly to remedy your mortgage delinquency, your lender’s attorney will schedule a Sheriff’s Sale or Trustee’s Sale (depending upon whether you live in a judicial or non-judicial state). Much of what happens from this point forward will depend upon the state in which your property is located. You will be noticed of the pending sale of your property in one of several ways:


  • A sale notice delivered by mail


  • A notice found taped to the front door of your property


  • A notice of sale published in one of your local newspapers


This is one of your final opportunities to rescue yourself from your financial situation before being forced to move. Once the sale date comes and goes you will have to move.


Redemption Period – After your property has been sold it may be possible for you to reclaim your property, but it won’t be easy – or cheap. Not only will you be required to pay the entire outstanding loan balance of your mortgage, you’ll also be required to pay all collection costs, fees, and the significant attorney’s fees. Your ability to redeem your property will depend upon the state in which the property is located, so the allowable time frames will vary considerably. You can learn more about state-specific procedures at


Foreclosure is serious business, and the process can vary considerably, depending upon your lender’s policies, state law, and how intent your lender is on taking the steps necessary to reclaim possession of your property.


Protect your credit, your options, and your reputation by contacting your lender immediately and working diligently to create a foreclosure solution that is acceptable to your lender. Your lender is in the business of making loans. While they don’t want your property, they’re not afraid to take it back in order to protect their financial interests.


Don’t let a temporary financial setback destroy your real estate investing career. Be smart, weigh your options, and create a solution that will get you back on track as soon as possible.

Real Estate Infomercials Exposed Part 2

The article will guide you step-by-step on how to start your financial budget. If you already have over $5,000+ in Investment Money put back, you can skip past this article. However, since the intention of this article is to be able to help everyone, I’m starting at the beginning. Also, there are a variety of sub-topics covered in this article that may be beneficial to you even if you do already have enough to begin investing. To be successful at anything in your life you have to be committed and informed. Investing in Real Estate (or anything else) is no different.

Creating and sticking to a budget is the most fundamental act that an investor can do. A budget forms a basic chart of your income and expenses. It can also be used to track and monitor bill payments. Budgets give you a visual idea of what you can do with your money using it as a guide to better manage your money. To get yourself going in the right direction, however, you’ll need to make sacrifices. If you work hard and sacrifice now, then you have the opportunity to be your own boss, retire early, and enjoy life as you should! The following Step-By-Step guide will get you to where you want to be.


A Budget is a fundamental guide…


The first thing you have to do is grab a piece of paper and something to write with. Creating a budget may seem like a pain at first, but as you learn to manage your money you’ll start to enjoy updating your budget. If you’ve every balanced a check book, then you already have a basic understanding of Budgets. If you’re following my guide from the beginning, then you shouldn’t have a clue. Below is a layout of how you can create a Budget Report. Converting it to a text file on your computer (if available) is a very nice option as you then only have to change the values and not have to recreate the whole template every time.


The first section is just a header:


Budget Report


Last Updated – 09/01/06


This next part you shouldn’t have to worry about for the time being. However, its purpose is to track a “Cushion” in your checking account. NSF fees can be nasty and getting them reversed if it wasn’t your fault can be a pain. So it’s better to have a “Cushion” to help protect your account from those fees. Ideally, you’d maintain a minimum of $100 in this cushion. This is also a form of ‘Sub-Accounting’ where you’re breaking the balance in your account down into additional sub-accounts even though such accounts don’t actually exist. This allows you to go ahead and subtract other values out of your total balance so you don’t accidentally forget to take them out at the end:


Main Checking Account Cushion Balance: $ 0.00


The following part will vary depending on how you get paid. However, if you don’t get paid weekly, it’s still advisable to have a weekly budget balance so you don’t run out of money between paychecks. Your weeks should always start with the day you get paid. Remember to always pay on your bills when you get paid. Take the total bill and divide it by the times you get paid in a month. This is how much you will pay on each bill when you get paid. The below assumes you get paid weekly which would be 4 paycheck per month. Round deposits down to the nearest $5 and round deductions up to the nearest $5:


Current Weekly Budget Balance – 09/01/06

Always include the date for each week for cross-checking.


+$150.00 – Deposit

In this case, the deposit is a pay-check (assuming roughly minimum wage) of $154.50.


-$ 5.00 – Phone

assuming a $19 phone bill. 20 divided by 4 = 5 dollars/wk.


-$ 15.00 – Cable

assuming a $56 cable bill. 60 divided by 4 = 15 dollars/wk.


-$ 40.00 – Power

assuming a $157 power bill. 160 divided by 4 = 40 dollars/wk.


-$ 50.00 – Car

assuming a $196 Car/Insurance bill. 200 divided by 4 = 50 dollars/wk


-$ 40.00 – Misc.

assuming $159 in other expenses (such as gas, food, and rent). 160 divided by 4 = 40 dollars/wk.




$ 0.00 – Balance


In the above case, we indeed up with a balance of zero which will be common in the beginning. In actuality, we had ~$7.75 left over that we lost track of due to rounding. This is magically whisked away into our Account Cushion. If you don’t have a checking account yet (and you shouldn’t if you’re following the guide), then you’ll simply notice this as extra money in your pocket at the end of the week. Chances are you’ll use it because the MISC. assumption wasn’t very realistic (especially if you’re not receiving any government aid). The above doesn’t even include rent on a place to live on your own. So you can see how living on minimum wage isn’t even feasible. Naturally you could do away with the cable, but that’s still not going to add up to a rent payment. The important lesson to be learned here is that if the amount of money that you bring in each paycheck is less then the total value of bill payments, then you need to sacrifice one of your bills. In the above case it would by Cable and Phone, if nothing else, just to give you a positive cash flow. If you break-even and don’t generate a positive cash flow, then you’ll never get ahead. If you’re generating a negative cash flow, then you’re heading toward the stress and anxiety of ultimately having to go through bankruptcy and damaging any chance of investing in anything for the next 7+ years at minimum.


From here, you should add a Payment History. This lets you track each payment and how much balance remains after each payment. This is a break down of the sub-accounts listed above. When possible, you should always pay more on your bill to create a Cushion in case you get sick and come up short one week. The last thing you want is to interrupt your positive cash flow. Paying ‘up’ on your bills become even more advantageous when dealing with loans as you can reduce your total debt-over-time by applying additional payments to the principal and there-by reducing that which interest is calculated from. We’ll get more into that later.


Moving Forward


For now you should start trying to build a Cushion. You’ll want to build at least $225 before continuing to the next article. Next, we’ll open a bank account (both Checking and Savings), take out your first small loan, and start your credit.


Article III will cover opening a bank account and starting your credit…

Proudly powered by WordPress
Theme: Esquire by Matthew Buchanan.