Why Being Your Own Boss Can Be Kind Of…Lousy

self employment The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Self-employment…Unlimited income. Plenty of free time. No boss giving you a hard time. No co-workers sabotaging your career. Answering to no one. Taking a vacation anytime you want. Selling your business for a fortune and retiring rich – before you’re 50. It’s easy to see why millions of people would be absolutely delighted to be their own boss.

Or so they think.

Sorry to burst your bubble, but the opening description of self-employment is more the TV version. In the real world, being your own boss can be kind of…lousy. There’s more going on with being self-employed than most salaried folks think, and on deeper analysis, not everyone is cut out to be their own boss.

Here are just a few reasons why…


You Are Responsible for Everything

In a typical employment situations, you have a boss and multiple coworkers. When things get busy, or there are obstacles, there is a staff to fall back on. But when you’re your own boss, it’s all up to you.

Not only will it fall on your shoulders to deal with busy and stressful situations, but failure to adequately handle a crisis could hit you directly in your bank account.

The stakes are always higher when you’re self-employed. When you work for someone else, you could have a bad day, but by the end of the week you’ll still get paid. Self-employment means that a bad day can cost you a lot of money.

You will also need to be a serious multi-tasker, especially when your business is new. Where in a typical employment situation, you will be primarily responsible for one, two, or three primary functions, being your own boss means you’re responsible for every detail of your business. And even if you hire people to handle some of those details, it will fall on you to be the backup person in the event they are unable to complete a task, or if they do it wrong.


Cash Flow Is an Ongoing Problem

It’s a fundamental rule of self-employment that no cash flow = no business. For this reason, the majority of your time will be spent generating cash flow, unless you find a way to create automatic income streams. And in a highly competitive economy, that’s not nearly as easy as it sounds.

This means that you will have to be at least part salesman all the time. Though you will have multiple responsibilities in running your business, marketing and sales will always be your primary function. If you’re not comfortable with this reality, or with making it happen, your business will not last long.


You May Find Yourself Working More Hours Than Ever

Remember at the beginning I mentioned “plenty of free time” and “taking a vacation any time you want“? That’s what a lot of people believe the self-employed enjoy. The reality is usually much different.

It’s not at all unusual to work more hours being your own boss then you ever worked when you were employed by someone else. When you have a job, you can go home at five o’clock, or on a Friday afternoon, and enjoy your evening or weekend. As your own boss, evenings and weekends are often your work overflow time. That’s the time that you allocate to taking care of the many tasks that you simply didn’t have time for during regular business hours.


You Trade Having a Boss For Having Many Bosses

One of the biggest motivators for the would-be self-employed is not having a boss to answer to. While it’s true that you won’t have a single boss who will have something approaching absolute control over your career progress, usually you have multiple bosses. These are your clients and customers, and some of the larger ones can end up being something like the boss you hope to get away from.

The reason for this is that if you fail to satisfy your major clients, it could end up costing you money in the form of lost business. This is especially true if you are in the type of business where most or all of your income is being derived from a small number of large clients.


Then Why Be Self-Employed?

With all these negatives, why then would anyone ever want to become self-employed? Well, many are in fact drawn by the TV image that we talked about at the outset. The fantasy draws them in, and if they can’t deal with the harsh realities of self-employment, they’ll be out soon enough.

But if you have a solid grip on the realities of self-employment, you might take the plunge for one or more of the following reasons:

  • You’re fiercely independent, and you’re absolutely certain that you can do better working for yourself.
  • You have the capability to bring in business, even if you’re not using that skill in your current job.
  • The prospect of unlimited income excites you, though you are fully aware that it may take several years before you reach that level.
  • You realize that being your own boss will require that you work more hours than you would on a job, but you also appreciate that you will have greater control over your time even if you are working longer hours.
  • You have a burning desire to “build a better mousetrap” – that is, there is something you believe you can improve on, and you’re willing to make the effort.
  • Accomplishment means at least as much to you as money does.

Being your own boss definitely has its own virtues. You just have to be aware of the difficulties you will face before you reach the point where those virtues will provide the benefits that you hope they will. If you have a firm grasp of that, you’re probably ready to take a stab at being your own boss.

How about you all? What other obstacles to being your own boss can you think of? What other benefits do you see?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/gds-productions/6528081483

Do Credit Cards Really Help You Save?

credit card The following is a guest post by blog reader, Audrey Clark. Audrey is a freelance blogger covering a range of topics from careers and finance to travel and leisure, along with everything in-between. When not writing, she’s always on the lookout for her next adventure. Connect with Audrey on Twitter and Google+.

We all know that irresponsible use of credit cards can cost us hundreds or even tens of thousands of dollars in unnecessary debt. But used wisely, credit cards can actually help put money into your wallet. That’s right, credit cards can help you save money.

According to TransUnion, credit card companies are changing the way they do business in response to consumer concerns. While banks are obviously still in business to make a profit, even lenders know that consumers who go bankrupt because of overwhelming debt don’t make good repeat customers. If the new wave of benefit offers is any indication, credit card companies are more interested than ever in keeping their customers happy.

Cash-back, rebates, college-savings rewards, pay-back planners and loan consolidation are just a few of the carrots lenders are dangling in front of our noses. Not all of these enticements can actually save you money, but some can. The three easiest ways to make credit cards work for you are through rewards, expense tracking and consumer protection.



Also called “points” or “bonuses” rewards are an incentive program to encourage you to use your credit card. A certain percentage of your spending is paid back in the form of cash, points towards good, air miles or some other attractive prize. To take the best advantage of rewards you must do three simple things:

  1. Find a card that offers rewards you can actually use.
  2. Use your credit card to buy everyday goods you’d normally pay for with cash such as groceries or gasoline.
  3. Pay off the balance each month. Keeping a zero balance on your card is crucial if you want to save money.

For example, let’s say your credit card offers one percent cash back on all purchases. So you spend 100 dollars in groceries and earn one dollar. That’s not a phenomenal savings, but how much money do you spend in groceries every month? How much do you spend on gasoline? Depending on your habits, you could save hundreds per year by paying with a credit card instead of cash. But to realize those savings, you must pay the bill in full each month to avoid interest fees. And that should be easy to do–simply use the cash you would have used in the first place.

The cards you already have may not be the ones that offer the best benefits. Investigate the rewards your current credit cards offer against some of the more popular options on the market. Bankrate is a reliable and unbiased source for credit card information. When making comparisons, remember to consider these factors:

  • The interest rate
  • Annual fees
  • Deals that change too quickly
  • Cards with travel benefits probably won’t save you money if you rarely travel
  • Bonus or reward points save you money only if they can be used for goods you actually need, not luxuries
  • Cash-back plans offer the best potential for savings


Expense Tracking

You can’t cut unnecessary expenses of you don’t know what they are. As Debit Card Tracking explains, credit cards sometimes provide more thorough statements than banks. If you pay for everyday items with a credit card instead of cash it will be easy to see exactly what your expenditures are because it’s all right there on the credit card statement. While “living” on your credit card may not be the best practice, using your card to get a realistic view of how much you spend and where can be a great benefit when trying to tighten the budget.


Consumer Protection

Having a credit card stolen from you is a big inconvenience, but not as much as having cash go missing. Using a credit card instead of cash when you travel or need spending power for any reason provides protection against loss or theft. Stolen cash can’t be recovered, but stolen credit cards can be canceled without holding you accountable for fraudulent activity. And according to Creditnet, credit cards also save you money on defective purchases or purchases that fail to be delivered. Lenders will withhold payment until your transaction is satisfactory.

Credit cards really do help you save money if you use them correctly. Be smart with your cards and they can be a valuable asset in your long-term financial planning.

How about you all? Do you have a favorite rewards card that you’d recommend to others?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/consumerist/422358899/in/

First Time Home Buyers – Top 5 Thoughts to Avoid When Investing Into Real Estate

real estate The following is a guest post by Anna Suzdenkova. Anna resides in Toronto, where she works for a major financial institution, runs her own financial blog, Vostro Financial Help, and manages a summer driveway maintenance business. Currently, she’s writing her own personal blog on tips and tricks to better control your finances, stay aware of your path in life, and reach your financial goals sooner. She loves helping people stay out of the dark when it comes to personal finances. Enjoy! 

Purchasing a property is one of many people’s dreams. It is the biggest purchase many of us will make in our lives. The decision to buy a property isn’t an easy one. When it comes to deciding what is best suitable for you and your family, the options are numerous and there is a lot to consider. Location, schools, work distance, number of rooms etc are all basic considerations you should make before investing into real estate but which thoughts should you avoid? I hear people talk about real estate with fear and intimidation, as if the decision to buy is bigger than them and can potentially control their lives. What thoughts should you stay away from before diving into the real estate market?


1. Fear of Ownership – The Pressures of Being a Landlord

Being a landlord does have its share of responsibilities, but relative to being a tenant it’s not a significant difference. As a landlord you will be calling the shots on what needs repair, replacement and other maintenance decisions. The living conditions of your house will be in your hands. You’ve been making decisions all your life, what’s to stop you from making household decisions in your own home? There are many resources out there to help you with ownership including local classifieds, YouTube tutorials, online forums, friends and family etc. Being in charge doesn’t have to be difficult, it becomes easier when you know how to use your above resources when looking for answers.


2. Thinking Your Savings Account will be Depleted for the Downpayment

A few of my friends mentioned the reason they don’t want to purchase a condo or a house is because they won’t have any savings left and will have to start saving from zero. This is the biggest misconception when it comes to purchasing property. Meanwhile the same friends are buying the latest technology, cars and are depleting their savings in a slower way. Your downpayment isn’t depleting your savings account, you’re simply moving your money from a bank account into a real estate account, kind of like from one of your pockets to another. Your savings is still in your hands in the form of real estate, which means your money is being invested, likely at a much higher interest rate. Real estate price growth varies, depending on the state or province, regardless of the rate if you are investing long term the value of your property is bound to increase over time. In Toronto, Canada, the average price of a house increases by 8.9% over one year as of August 2014. This kind of rate of return cannot be found in a savings account.


3. You’re Unprepared for Unexpected Costs

Ownership comes with responsibilities. These include maintenance, repairs, utility price increases, property tax hikes etc. All these items the landlord would be responsible for. When something breaks unexpectedly, it would be up to the landlord to fix. For example, if the roof is leaking all of a sudden, of course there is home insurance which can cover some of the cost of the damages but it would be at the owner’s expense to replace the roof. These scenarios would have to be taken into consideration before purchasing property. A good way to prevent most of the unexpected expenses is to do a home inspection before closing the purchase. It’s also good to have emergency funds available so you can be better prepared. As a homeowner, these expenses are seldom and if they do come up, it’s usually something small such as a leaky faucet or a broken washing machine, which can be fixed for cheap throughout the local classifieds.


4. Wanting to Travel or “Enjoy Life” First

Why not do both? If you want to travel and explore the world, that’s great. Remember though, it’s easier to save money for a downpayment when you’re younger because you have less expenses and more discretionary income, so rather than spending money on extravagant trips consider downgrading the trips and saving the extra money for a downpayment. Once you’re moved out and on your own the bills come rolling in and so does the rent. Travelling is great, as a home owner I still travel, but I downgrade on the destination. I choose cheaper destination and always look for deals or last minute vacation discounts. I believe both travelling and owning property can be done simultaneously, the fancier destinations can wait until I am more established and have a higher income or even when I’m retired. Having a plan, managing your money wisely and having a travel account can help tremendously. Setting money aside, even $20 a month, for travelling will add up quickly and mean taking a vacation sooner.


5. I can’t Afford Buying A Property

We all have the same 24 hours as anyone else does, so how come some of us can manage to afford real estate and some of us can’t? The answer lies in three factors: income, existing debt and credit score. These are the top three things the bank looks at when reviewing your mortgage application. Some of us don’t earn enough to be able to afford a house, the solution is to downgrade to a townhouse or a condo, which can be more affordable. Some of us have a lot of existing debt which prevents us from acquiring more credit such as a mortgage. The solution to that is to consolidate all debt into one loan, make one monthly payment and attempt to pay off the debt faster. And some of us have a low credit score, which can be improved by paying bills on time, having less credit applications and not using credit cards too often to show we are not dependent on them. If you have a combination problem, such as having too much debt, low credit score and low income, attempt to change this around by seeking a higher paid job though a job agency, attaining a consolidation loan and making your payments on time. Everyone can afford a property in due time, whatever your financial situation is, the trick is to turn it around with solutions and steer onto the road of success.

How about you all? What helped you overcome any of the above thoughts regarding investing in real estate or home ownership?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/axiomestates/3200993224/in/

The Complete Guide To Helping My Teenager Find The Right Job

kids and money jobs job change children and money career change career The following post is by MPFJ staff writer Travis.  Travis is a customer blogger for Care One Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family.

Being the father of a fifteen and a half year old boy, there’s a lot of talk at my house about driver’s licenses, cars, and part-time jobs.

My wife and I mutually decided that we would be supportive of, and even encourage both of our kids to get a part-time job once they reach the appropriate age.  After all the financial lessons we have tried to teach them to this point, having a part time job and having to pay some actual bills such as their own car insurance as well as filling up the tank every now and then for the privilege of using a car just seems like the next natural progression in their financial education.

My son is becoming more and more interested in getting a job.  As his social life expands, so does his need for monetary funds.  While working out one day he started asking me questions about having a part time job as a high school student.  I was impressed with his thought process, his questions including the following:

  • How many hours a week would I expect to work?
  • How much would I get paid?
  • How often would I get paid?
  • How much in taxes would be taken out?

As our conversation progressed, I realized that I had stumbled upon a whole new subject matter that required my parenting and educational skills.  I answered all his questions as generically as I could, then I told him we needed to back up and start at the beginning.  There were a few things I wanted him to think about:


Age Requirement

My son does not turn 16 until January.  There are many businesses that will not hire someone until they are 16 years old.   We have to decide whether he wants to attempt to get a job now, or wait until he turns sixteen and he has more options for potential employers.


Type of Work

I wanted him to think about what kind of work he would like to do.   He has an interest in technology, so he expressed an interest in working at the Best Buy close by our house.    He also stated that he would prefer not to work fast food,  but would work at a Dairy Queen.  I think that has more to do with the fact that some of his friends already work there.

The point I was trying to drive home was it is not a good idea to apply just because a business is hiring.  If you don’t think you would enjoy the job, then he likely wouldn’t do his best and end up in a bad situation.


Shift Frequency

My son likes to hang out with his friends, and we also have very high expectations for his grades.  I wanted him to think about how many days a week he would be willing to work that would allow him to maintain these other aspects of his life.

I emphasized that he should not only expect to, but he should want to pick up weekend shifts.  It gives him the ability to get a long shift in without worrying about it conflicting with the school day and homework.


Shift Times

Some businesses open early, some are open late.  I told him that as a restaurant cook in high school, sometimes I would open the kitchen early on weekend mornings, or be the closer at night.   Again, being flexible and willing to work those extreme shifts on weekends would get him additional hours, and thus earn him additional money.

He did express an interest in late night shifts, but said he would prefer not to get up early on weekends.

“Dad, do I really get a choice with all of these things?” he asked.

I smiled as it was a perfect transition to what I wanted to about next.  An interview is traditionally thought of as an employer questioning and evaluating a potential employee.  However, it is important to remember that it is just as much an employee evaluating a potential employer.   I told him that an interview is his opportunity to gather information to decide if the job he is interviewing for is a good match for him.

Other questions he may want to ask during an interview may include:


Time Off

Things will come up when he needs to ensure he has certain days off.   He will need to find out the policy or procedure for employees to request time off.


Promotions / Pay Increases

When I was in high school I worked at a restaurant.  I started as a dishwasher, but was asked to train as a cook.  It was considered a promotion, and came with additional pay.   High school students may not have much of an opportunity for promotions and pay raises, but it does happen and is a good questions to ask of any potential employer.

I felt it was also important to tell him that even if he is offered a job, he can turn it down if he determined during the interview that it just wasn’t a good fit.

I also wanted to make sure he understood that this same job hunting process applies to not only looking for a part time job in high school, but can also be used when he’s looking for a full time job to start or further his career.

He nodded his head in understanding and asked, “So, can we pick up some applications?”

How about you all? Did you have any jobs while you were a teenager? What were they?

Do you think you will (or are) encouraging your children to find part-time work while they are in junior high or high school? Why or why not?

Share your experiences by commenting below! 

***Image courtesy of Stuart Miles at FreeDigitalPhotos.net

How To Keep Your Kids From Turning Into Rich Brats

kids and money financial planning children and money The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Have you ever stopped and really studied kids today? The typical kid demands money from his parents, avoids you because he is playing an important video game, and ignores all advice because he assumes you are old and know nothing. Kids today are brats. There is simply no sugar-coating it.

So, how can you keep your kids from becoming rich brats?

Do you have young children and are afraid that they will become ungrateful and disrespectful like the rest of today’s children? If you do nothing, then this fear will likely come true, but if you are intentional, your children could grow up to be resourceful, generous, and wise stewards of their money.


Step One: Start when they are young

The key to raising children is to start good habits when they are young. Instead of doing everything for them until the age of 10 and then suddenly imparting chores on them, teach them how to pick up their toys soon after they turn one. At this point, they might only be able to pick up one toy and put it away, but you must praise them for this and encourage them to pick up a greater ratio of their toys with each passing month. By the age of three, they should really understand how to clean up and play nicely with their things.

As you instruct them how to pick up after themselves early, you must also teach them about money at an early age. Now, obviously they won’t be able to balance the checkbook while they are still in diapers, but kids are learning about money every day whether you teach them or not. They see you at the store when you buy groceries and they notice your payment at the cash register. In order to give your children a better understanding of money early, I would encourage you to use cash instead of credit cards. Kids understand money, but credit card payments are a little more difficult to grasp.

Now that your kids understand the value of responsibility and the importance of money, begin combining the two. When your children are able, give them certain chores that merit a payment – something like drying the dishes or setting the table. Pay them immediately for their hard work so that they understand what they are being paid for.


Step Two: Show them what their money can buy

When your kids begin earning money, they will likely want to go out and buy some things. At this point, they might have only saved up $5, and they really want to buy a brand new video game (which costs $60). As hard as it may be, take them to the mall with you and bring them into the store. Show them the cost of the video game they want and let them know that the video game simply costs too much for them to buy. If there are discounted games in a bin, bring them over to it and show them what their money can afford to buy. If they do not want any of these games, then teach them their two options: (1) wait and save up the money for the new game, or (2) purchase only what they can afford at the moment.

By allowing your kids to earn money through chores and by not giving into their wants (by simply buying the game for them), your kids will certainly not turn into rich spoiled brats. Instead, they will turn into hard working young adults. If your kid really values that video game enough, he will go back home and immediately come up with a list of things he can do to earn more money. Then, once he works hard enough and finally has the funds to purchase the game, either of two things will happen: (1) he will decide not to buy the game because he has worked too hard to spend his money on something so frivolous, or (2) he will purchase the game and take excellent care of it! No longer will he leave that game out on the floor or kick it around in anger. He will carefully place it back in the box, put it on its appropriate shelf, and make it last forever.

How about you all? Do you have any more advice on how to keep your kids from becoming rich brats?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/stevegatto/362852690/in/