Merry Christmas! Happy Holidays! Happy Solstice! Happy Hanukkah! Joyous Kwanzaa! Yuletide Greetings! Joyeux Noël! Feliz Navidad! Season’s Greetings! Happy New Year! Joy! Celebrate! Be Merry! And most of all, wishing all of you who read this a new year full of peace and joy!
I’m sitting here between Christmas and New Year’s Day contemplating the future. To paraphrase Game of Thrones, “Change is Coming”.
As many of you know, we decided to start investing in real estate as a buffer to the ups and downs of my chosen industry, Oil and Gas Exploration. I was able to make it through some of those ups and downs in the past, maybe by luck, or because what I was working on was important. At one point, I did take a demotion and worked in the field (offshore, on the rigs, for about a year, but was able to move out of that role and on to greater things.
Which brings us to current times. Things have dipped again.
I usually take the last two to three weeks of the year off since I usually don’t use all of my vacation throughout the year. I was sitting at home and my supervisor called and asked if I was at the office. Since I wasn’t, he asked if I could come in. This told me that something was up because his office is over 100 miles away and if he is at my office, then it must be my turn.
And it was, but with a twist. I was offered a choice between an early retirement package or a rotational position working in Houston.
My darling wife and I contemplated the choices for a couple of days. Ultimately, we decided that it would be best to take the position in Houston. While we would be OK with me not working for a while, ultimately, it was our need of medical insurance that swayed our decision. Speaking of medical insurance, my next article will cover my experience in trying to get a quote for it and the fraud potential inherent in the Louisiana Medicaid Program.
Working a rotational job in Houston would mean finding a place to stay when working and time away from the family, but it also would mean that for two weeks out of every four, I would be off of work and free to do as I please.
This should allow for catching up on projects around the house and more opportunity to generate passive income.
The down side is that I will not be in town for some of the Bayou Real Estate Investor Networking meetings. I will continue to organize them, but will have to rely on other members to host when I cannot attend.
Additionally, if any of you live in or around North Houston / Humble / Kingwood and know of decent rentals at a good price, please contact me!
And, as always, let me know what you think in the comments. Ask questions, tell your story.
If you like my posts, please share them with others and subscribe to this blog.
Actual Numbers. Blanks are where numbers were not needed.
Today’s topic is about reviewing your insurance coverages and ensuring that you are properly covered at the best rate. It also touches on customer service and some things that caused me to look for a change.
Isn’t it crazy that it is December already? The end of the year, the end of the decade. Here at the Galliano household we are busy buying Christmas gifts for the family and coordinating our schedules for band concerts, choir concerts, and a birthday.
It is also about paying year-end bills…we have property taxes on our rentals, but that is covered easily by the rent. We also have property taxes on our residence and another property. We can’t do a whole lot about what we are paying on those taxes.
Then there is insurance. Since we paid off our mortgage years ago, we have to purchase homeowners’ insurance outright. AND, since we originally moved into our house right before Christmas, our insurance comes due at Christmas time.
On top of that, our auto insurance is due on 02-Jan-2019. So that totals up to a lot of bills at the end of the year.
The current (as of this writing) agency we use has been providing me with insurance for around 20 years. But I am not happy with them. Over the last four to five years, my “agent of record” has changed at least four times. And the only way I find out about it is if I call with a question. On top of that, when the renewal notices came in this year, they totaled to a little over $6000! I asked for a quote at a lower home value, because the company we are covered with has an auto-escalate policy and increases the coverage value every year, thus increasing the premium. The renewal value was for $291,000. My home is probably worth about $250,000 on a good day.
I also asked for an increased deductible, increasing the deductible from $1000 to $5000. They couldn’t do that. They could only do two percent. So I asked the agent to quote me for coverage on a more accurate home value. Two to three days later, I get a quote for a home value of $232,000. Yes, it was $1000 or so cheaper than the renewal quote, but it was not for the home value that I requested. Because of this, my search for a new provider began.
One of my fraternity brothers offered to give us quotes. In going through that process, we were able to get the coverage we wanted at much lower rates. Between the home and auto coverage, it only cost us $3,744, for a savings of $2,347 between the two. That is almost $200 per month of savings! That will cover a trip to Disneyworld for Mardi Gras! LOL
Tips for Insurance
Below are some tips for getting the most for the least when dealing with insurance:
Review your policies annually to ensure accurate coverage – Make sure you aren’t paying for a home value above the replacement cost of your home
Try to pay your policy in a lump sum – Some providers will give you a discount for paying in full
It pays to shop prices every once in a while
Ensure you have a good relationship with your agent – Find an agency that provides you with a single point of contact and will notify you of any changes
Your home value is not your home replacement value
Depending on the age of your vehicle, you may not need comprehensive and collision insurance
Be in a financial position to be able to pay your policies lump sum
And, as always, let me know what you think in the comments. Ask questions, tell your story.
If you like my articles, please share them with others and subscribe to this site.
Today, we are going to continue where the last article left off. We are going to go over the lessons learned from my experience buying a business with partners. I will list them out with short descriptions. There is no particular order to the list. Any names mentioned other than my own have been changed to protect the innocent…
Lessons
Learned
Partners (The Team) –Our team consisted of four partners. Bob and Carl are the majority investors and took out an SBA loan to acquire the business. John and I are minority partners and not party to the SBA loan. Because Carl, John, and I all have full-time jobs and at the time Bob did not, the plan was that Bob would learn and operate the business until we could afford to put someone else running the business, leaving Bob to pursue his personal interests. See my last article for how that all turned out.
Recommendations:
Be transparent about
individual drivers. Becoming your own boss and becoming wealthy eventually
become competing interests for an entrepreneur.
Professional respect
is critical. Tolerance is listening to every idea quietly. Professional respect
is availability, transparency, punctuality, and preparedness.
Autonomy must be
earned, never assumed in a partnership.
Bad habits are hard
to break in others.
Operating Agreement/Bylaws – Depending on whether you have a Limited Liability Company (LLC) or a Corporation (Co), you should have either an operating agreement or bylaws to govern how the business will be run. In our case, since we had a corporation, we had bylaws. We deliberated on what to include in these bylaws to ensure smooth operations, but did not go far enough. They did not spell out the duties of each partner & role, because we thought that all of us being adults, we would do what was needed to be successful. What we realized was that we each viewed the word through a very personalized lens and what seems obvious to one, (or two, or even three), is not obvious to everyone and if the fourth person feels strongly enough about it, they just will not go along unless forced to. And even then, although begrudgingly agreeing in discussion, they will still fight and obstruct the wishes and decisions of the group. If we had, as a group, decided on the duties for each role and assigned responsibilities for each role to each member of the group, then documented it in the bylaws, it would have made things a lot clearer.
Recommendations:
The operating agreement or bylaws should also include a
defined exit strategy that everyone has agreed to and is committed to
following. It should have defined triggers that initiate the exit strategy.
These triggers should be something that the partners can easily monitor and
measure against.
It should also be spelled out how to handle decisions and
requests. In our case, decisions initially required unanimous board approval.
We amended the bylaws later to only require a two-thirds majority due to the
one partner asking for a solution to a problem, but not liking the board
recommendations, then never implementing the solutions.
Due Diligence – Nowhere near enough due diligence was done on this business or partners. We did not understand enough about how either operated. The revenue the company was making included the previous owner doing work on weekend “off-book” to get jobs out & keep expenses down. It also relied heavily on promotion via owner visits with distributors and their personal relationship. We had no relationships.
Additionally, having a partner who tells the group he agrees
with the intention of not taking any profits for three years, but assigns
himself a $100,000 per year salary and in the first week of operation directly
violates the ground rules we set up for operating the business. We, (the other
three partners), realized that the fourth partner had pursued the investment
deal to set himself up with a kingdom where he was king. #AvoidDat
Recommendations:
Know how the business operates prior to purchase.
Calculate how much revenue you need to make to break even.
Have a budget that takes into account ALL costs to operate.
Unless you are laundering money for drug cartels, whatever
starting capital you have isn’t enough.
That much isn’t enough, either.
Planning to grow? Triple the previous statement.
Financials –While we started out with modest working capital, we had no understanding of our run rate, break-even point, or runway length. In other words, we did not know how much it cost us to operate, how much we needed to make to break even, or how long we could operate with the amount of working capital we had. We eventually figured those things out, but not until it was too late. Also, another point to make, as referenced in a previous article, you have to pay attention to Cash Flow to stay on top of your business finances. We utilized the accrual method of accounting, but did not regularly look at the cash flow reports. Because of this, we would account for interest paid on our loan from the Income Statement (P & L), but did not account for principle repayment in any of our break-even or forecasting exercises until almost two years into the business.
Recommendations:
The person managing the business needs to have a fundamental
understanding of basic accounting and business / financial principals. This is
a KEY point and will lead to many headaches if not followed.
Know your costs to operate, to the penny! AND, make sure you
include labor!
Cash is King! When you run out of working capital, that is
pretty much the end of the business.
Gross margins should be higher than thirty percent. If not,
this will lead to a death spiral for the company.
Sales – The business we purchased operates, (soon to be preterite or past-tense?), conducted sales via a convoluted structure. The products are sold via distributors to building supply centers for builders. So if an end user wants to use our product, they get their builder to point them to their preferred building supply store, where they can look at brochures or in some instances, floor models to decide on what they would like. They then request a quote. That request comes to our operation, is processed, and returned to the building supply store salesperson. That salesperson has limited information on the product nor incentive to sell it.
From our end, we pay a commission to a sales agent to
promote our products to the distributors, who in turn make them available in
building supply stores. This is too far removed from the end buyers and in my
opinion, not an effective spend.
Recommendations:
Agencies DO NOT replace effective sales people! Agencies
represent a large portfolio of products and do not focus on pushing your
product(s) 24/7.
It doesn’t matter what your product is if you and your team
cannot sell the product(s). No sales = No revenue = No profit = bankrupt
company.
It does not matter how much you cut costs or control
spending if you and your team cannot sell the product(s). (See equation above)
Operations / Efficiency – Prior to closing the deal on the business, since Bob was going ot be operating it, we requested that Bob create a budget and document processes for what the business would need to run. He never gave us a budget, nor processes, even after being in the business for a couple of years. His initial excuse was that he had to be working IN the business to understand how the business operated (for processes) and that we, as the board, should be giving him a budget that he could spend. These were two more missed #RedFlags in our journey that should have told us to run, not walk, to the nearest exit. As of today, there are still no documented processes. We kind of have an idea what our budget is through reviewing financials, but we don’t trust the numbers because they are constantly being adjusted. So, we only have an idea, and nothing from Bob. Ultimately, there are still a lot of inefficiencies in the way the business is being run.
Recommendations:
Inefficiency is
expensive and cripples or kills a company. From the start, focus on efficiency
of process, capital, communication, and decision-making.
Be deliberate and
realistic about growth rate. In projections and practice. Year over year
revenue and product volume increases have to be realistic and managed to avoid unmet
expectations and quality issues. It’s nice to have targets, but remember that
you need sales to support targets (see Sales section below). And it is much
easier to have a customer wait for quality than to apologize for a sparkly
piece of crap.
Product Management –This business has about eight main products with practically infinite levels of customization, not counting special-order material types. Every order is a custom order with many options to choose from. There are forty-five different options to choose from when requesting a quote. This leads to decision fatigue and indecision in customers. Ultimately, our quote/win ratio was very low. We suspect that most customers that requested a quote had already decided on something else by the time they received the quote back. Additionally, “Bob” was continuously wanting to add new products to the portfolio because they were the latest hot thing selling.
Recommendations:
Have IP, a unique desirable product, or both. If you have
neither, shoot it in the head, kill the deal, pull the plug, or whatever
euphemism you want to think in. Unless your goal is to be your own boss, then
feel free to limp along for eternity (or until your cash runs out).
Keep or reduce your product line to your top sellers. Based on the Pareto Principle, roughly 80% of your business should come from your top 20% of sales. (Just a note, it will not be exact. This is a rough guideline) So, find out what products make up the majority of your revenue if you already have a large portfolio of products and focus on selling those products. If you only have a few products, keep this idea in mind before adding new products. Which leads to the next one…
Before adding a new product to the portfolio, always write
up a business case and do sales/cost impact projections. In fact, this should
also be done for any request or change to a product or portfolio.
Product customization is less important that total customer
buying experience. If you make it easy for your customer to buy your product,
you will have more sales.
22-Nov-2019
As of right now, the business is still operating. I do not
know how much longer that will be the case. It continues to limp along, hanging
by a thread.
Stay tuned for further updates…
And, as always, let me know what you think in the comments. Ask questions, tell your story.
If you like my posts, please share them with others and
subscribe to this blog.
Wow, it has been a while since I’ve written anything here.
Things have been busy, to say the least, between my regular job and family. My
oldest started high school marching band as a freshman and her schedule is
brutal! (Translation: Lots of after-school practice, football games, and
marching competitions).
Today we are going to talk about when things don’t go right
in a business, from a finance perspective based on a business I am involved in.
The names have been changed to protect the innocent.
Business History
In March of 2017, a group of former colleagues, with me as a
minor investor, purchased a door manufacturing business. At this point, none of
us had ever been involved in that industry, but we thought that between the
four of us, we could figure everything out and grow the business.
Prior to the purchase, we examined the prior owner’s books
and he seemed to be making decent revenue and profit. We tried to analyze Cost
of Goods Sold (COGS) and Expenses to get a good handle on what our potential
revenue could be.
Because three of us were working full time jobs, the fourth partner, we’ll call him Bob, was going to run the business initially, until we could grow the business enough to hire someone to manage it.
We attempted to get Bob to put together a pro forma operating expense projection, but he kept claiming “he would not be able to accomplish this until he was actually working IN the business and understood everything”. RED FLAG #1 (In hindsight, this should have shut down the deal for us.)
Once we purchased the business, Bob assigned himself a $100,000 per year salary because that was what he “needed” to survive on. We, the other investors, had not begun to understand the business’s key financial benchmarks at this point, so let it slide. RED FLAG #2
After six months or so of this, we begin to realize that our working capital was steadily draining. In addition to Bob arguing against every suggestion the board, (other three investors), would make to improve things, agreeing to implement the suggestions, then never acting on them. We slowly started to realize that even though we all agreed at our initial gathering that this was an investment to grow and either sell it for a profit or, after three years of profit reinvestment, provide cash flow and dividends, Bob was acting as if he was setting up Bob’s Kingdom. He wanted to run the business exactly as the previous owner had run things. RED FLAG #3
We made changes. First, we reduced the salary to $50,000, a
figure more in line with the position. Then we removed him as President. We
attempted to replace him with a salesman we brought on and moved Bob into the
sales role, but since Bob was still involved and also trained the salesman, he
was set up to fail. Bob did not teach him everything and did not say anything
when things slipped through the cracks until after we noticed a couple of
months down the line.
Current Status
The business continues to limp along. We have not put any
more capital into it. Bob occasionally takes out small invoice-secured loans
when the bank account gets too low. He is working at another job and has the
lead employee mostly running the business.
We other investors have mostly given up on expending more
than just a nominal effort to expand the business since no advice given is
followed. We came up with plans and strategies on how to streamline the
business and improve revenue, and presented them as a means to grow the
business, but they didn’t sit well with King Bob, so they went nowhere.
The best I can hope for is that I can harvest some capital
gains from other investments when this business eventually fails so I can
offset the losses on my taxes.
In a future post, I plan to lay out the lessons learned from
this experience and hopefully it will help you, the reader, to avoid some of
our mistakes.
Post in the comments about your things that didn’t go right.
And, as always, let me know what you think in the comments.
Ask questions, tell your story.
If you like my posts, please share them with
others and subscribe to this blog.
Do you ever get to a point where you are feeling overwhelmed
with everything going on in your life? The constant demand from work, the
building up of lots of meaningless little things that put you in a funk? Or
what about a sudden realization that things in your life that you took for
granted are no longer a sure thing?
Well, that has been me for the last few months. I believe it started with my health. As I talked about in a previous post, I was diagnosed with thyroid cancer. And luckily, it was the easily treatable, slow growing kind. Simple solution. Remove the thyroid gland, check for any other abnormalities near it, and carry on.
Or at least so I thought. The surgery was quick and without
complications. No abnormalities observed in the surrounding tissues, most
likely due to such an early diagnosis. When the pathology came back saying that
there was a third tumor growing on the other side of my thyroid gland, my
endocrinologist decided to ablate me with radioactive iodine. This would kill
the remaining thyroid cells and virtually eliminate any chance of thyroid
cancer coming back.
Because he suspected that we might have to go that route, he
did not start me on replacement thyroid hormone medications, choosing to wait
until a decision was made on the radioactive iodine (RAI). I felt fine right up
until I did the RAI. This was approximately 6 weeks post-surgery, which is also
just about the length of time that thyroid hormones live in your body. What
that means is that I had little to no energy and mostly just sat around.
I was able to start the meds a couple of days after the RAI
and I began to feel better. Over the next few weeks the doctor ramped up the
dosages, trying to get my hormone numbers in line. And it worked/is working.
BUT, I have nowhere near the endurance I used to. I normally get up around
05:00, give or take. But by 17:00 – 18:00 in the day, I had no more energy. Now
I am able to last to about 20:00, then it is sit or lay around and nothing
strenuous.
So that was bad enough, but on top of that, my glucose
levels have begun to go a little haywire. I can have normal numbers throughout
the day (120 – 150) & low levels at night (45 – 68), then wake up in the
morning to levels at 245 -280.
The doctor thinks that it may stabilize once we balance my
thyroid hormone levels. It also may be related to a medication change made a few
months ago.
In addition to the medical issues, there has been a lot of
stress at work, which probably magnifies all of my medical issues.
With all of this going on, I did not feel like doing much of
anything extra-curricular. I had a realization that this was my new normal.
There would be no more “go, go, go” and rest on the weekends.
I was depressed.
Now I don’t claim to have a solution for depression, I am
only relating what I am observing.
We took the kids to see Weird Al Yankovic in concert in New
Orleans, that seemed to help. And this week, I had to travel to Dallas to
present at a workshop for a different group in the company for my job. While
there, I had dinner with a buddy I hadn’t seen in twenty-plus years. IT was
good to catch up with him. On top of that, I started to listen to music a
little more. My aural diet has been mostly podcasts and audiobooks for the last
three or four years, so music is a refreshing change, in addition to being
therapy for my soul.
So, what I suggest to you, dear reader, is that if you find
yourself in a similar situation, don’t wait to do some self-therapy…find what
feeds your soul. Take Care of Yourself.
Do you have single family or small multi-family rental properties and need to insure them? Are you a flipper in need of a rehab policy? Visit National Real Estate Insurance Group. Great rates. Coverages you need. Commercial Liability. Monthly Payments, No Financing. Add/Remove Properties as Needed.
And, as always, let me know what you think in the comments.
Ask questions, tell your story.
If you like my posts, please share them with others and
subscribe to this blog.
Today I am going to do a review of Stessa, an online rental
property accounting platform.
But first, a disclaimer:
***This review may contain affiliate links that compensate me for user
registrations of this product.***
As I have detailed in a previous article, I started using Stessa
last year to track accounting for our rental portfolio. Previously, we used
Google Sheets, tracking rental income and expenses for each property on
different tabs. This would involve me going in to the first property’s income
tab, entering the collected rent, then checking all of my receipts and accounts
to verify I hadn’t missed any expenses and adding them to the expense tab for
that property. I set up expense categories and put in a section to summarize
the expenses by category and by month. While not ideal, it insured that someone
at my CPA’s office was not classifying an expense in the wrong category or for
the wrong property. It was not hard to do, just more a matter of remembering to
do it.
Around the middle of 2018, I started seeing advertisements for a product called Stessa on Facebook. As per my SOP, I ignored them, other than taking note of the name. A few weeks after first seeing the ads, I heard an advertisement for it on The Bigger Pockets Podcast. This was more effective, as they pointed out how it was free for rental property owners and individual investors and involved some automation to keep track of your accounting. They also pointed out how the product was developed by real estate investors for real estate investors and the name was “assets” spelled backwards.
I went to the web
site and registered for it. I was able to set up our properties and import
bank & credit card histories to the transactions section, allowing me to
categorize each expenditure. It took maybe 10 minutes to set up two properties.
And, once numbers had been entered, the dashboard populated with portfolio
metrics. Way nicer than my spreadsheets!
Features
Individual tracking for each property:
Property Profile
Header – Address, Acquisition Date, and Cost.
Property Details
– (Year built, neighborhood, parish [county, for those of you outside
Louisiana], number of units, bedrooms, bathrooms, square footage, and lot size,
all pulled from Zillow, based on the address.)
Valuation – Provides
for multiple options: Custom Valuation, Zillow Zestimate (automatically polled,
user choice to update property valuation), Gross Rent Multiplier, or Capitalization
Rate.
Rent Roll – Allows
entry of Bed/Baths, Square Feet, Tenant names, Rent, Market Rent, Deposit,
Move-in Date, Lease Expiration Date, and notes.
Property Notes
section – Freeform note space for property.
Monthly Expenses –
Allows for Pro-Forma expense entry and pulls in categorized expenses from the
Transactions section to show actuals compared to Pro-Forma.
Neighborhood –
Shows location on a Google map, with a Walk Score and a Bike Score for the
property.
Assessments –
Pulls in assessed value and property tax amount (I’m assuming from Zillow), and
allows you to add missing assessment/tax details.
Capital Expenses –
Allows for entry of Date, Description, & Amount of Capital Expenditure.
Loan-to-Value –
Shows a chart with LTV percent, Property Value, Debt (principal balance), and
number of loans.
Mortgage – Details
the Lender, Principal Balance, Payment Amount, and Interest Rate.
Insurance –
Displays the Carrier, Premium, Policy Number, and Renewal Date.
Transactions:
As I mentioned above, Stessa
allows you to link bank accounts and credit cards to the Transactions ledger.
It lets you initially import all transactions and gives you the option to
review them to either categorize each one correctly or, in my case, the credit
card I use also has personal charges, so it it allows me to delete those
transactions.
Stessa does not store your credentials on their servers and
use bank-level encryption to secure the transfer of information. It also does
not allow changes to your bank or credit card accounts. It only pulls a copy of
your transaction information.
The Transaction Ledger Menu allows you to review new
transactions, view ALL PROPERTIES transactions, view individual property
transactions, or add a new property.
The main Transaction Ledger display shows all transactions, filtered,
based on the menu selection. It additionally allows you to search by keyword
and/or filter by Date, Category, Amount, or Account.
There is also an export function, allowing you to export
filtered transactions to a *.csv file.
You can manually import *csv and *.qif files from accounting
software, in addition to adding individual transactions by hand, such as
mileage.
Reporting – Reporting is one of the reasons I was interested
in trying out Stessa in the first place. It provides you with standard reports
such as Income Statements, Cash Flow, and Capital Expenditures, with options to
select a date range, property/portfolio, monthly breakout, and whether or not to
show Category Details. The report is downloaded as an Excel file, allowing you
to customize the report title and report formatting, if needed.
The other reporting option I have mentioned before is the
Tax Package. This contains everything needed to hand off to your CPA at tax
time. And it sure makes it easier on me!
The dashboard is the main page you see when logging in on a
computer. It allows you to show the total portfolio or to select individual
properties.
It contains the following sections:
Portfolio Value – Options to see Market or Purchase Value.
Asset Return – Either Appreciation or Levered returns.
Occupancy – Detailed in percent.
Income
Cash Flow
Unit Count
Property Count
Debt – Total
Net Cash Flow – A chart detailed by month & Category
Location – Google map showing all properties in Portfolio
View or a single property in Property View
Compare Properties – Rental Income, Market Value, and Square
Feet. Available in Portfolio View only
Property Highlights – Property picture from Google Street
View, Income, Expenses, LTV, and Occupancy. Available in Property View Only
Summary
I think that Stessa is a great automation tool for rental property accounting. It’s free, cuts down on time spent doing bookkeeping, and makes tax time easier. On top of that, their user support is outstanding! Early on, I identified a couple of bugs and they were fixed within a couple of days. Amazing!
If you are interested in trying out Stessa for your rental properties, please click on the link below:
Do you have cable and/or cable services like phone, tv plus premium channels, and internet? Does it seem like the cost keeps going up? ME TOO! LOL
Read on to see what we did to reduce our costs for these services.
Initial Setup
Our entertainment setup consisted of two Tivos, (1-Premiere
model capable of cable & OTA Reception, 1-Roamio model-cable reception only),
four TVs, (1-LR, 3-BR), two digital signal adapters for the Kids’ bedrooms, two
Firesticks (LR & MBR), VoIP phone from the cable provider, mid-tier cable
TV package with no premium channels, (up to) 150 MB/s internet connection, a
family Netflix subscription (allowing simultaneous logins), Prime Video
(complimentary with Prime account), and a promotional Hulu account for
$0.99/month for a year. Our cable, phone, and internet were all with Comcast.
Our bill has gone up & down depending on what
promotional package we would renegotiate for, but that involved going to the
cable company office, in person, and asking for it, usually after waiting in
line for a while. That was aggravating enough, but the bill would continuously
increase, outside of the changes to promotional status.
We don’t watch a lot of TV. Just a few shows. And we never
watch them live. We have too much other stuff going on. I started to evaluate
our habits after our total bill came off of promotional status, raising the
cost from approximately $137/month to $165/month. Then, for no reason, it went
up to $174/month.
It turns out that most of the shows we watch are either only on a streaming service or show up on Hulu. It should be acceptable to only use streaming services. We decided to get an antenna to pick up local stations. We figured it would be hit-or-miss, because we live between 40-50 miles from the regular broadcast network towers. BUT, if we could get some channels, we could still get news during a storm if the internet goes down.
I discussed the idea with my wife and we decided to get an
antenna and try it out. I researched antennas and almost bought a couple of
different expensive ones, (amplified, slick advertising, etc.), but decided to
start at a lower price point, always having the option to escalate, if needed.
I settled on the GE
Pro Outdoor/Attic Mount Antenna. It claimed to have a range that would
allow us to receive the stations we wanted.
When it arrived, I connected it to the TV in the living room,
(with the antenna sitting on my couch) and scanned for channels. It was able to
pick up around 33 channels!
I then mounted it up in the attic and connected the living
room TV to it, resulting in 38 – 42 stations coming in, depending on the
weather.
I added a signal booster / splitter that would allow me to
connect the other three TVs to the antenna. I was able to hook them up and get
the same channels, so all was well.
The Tivo Premiere is able to receive Over The Air (OTA) signals to the tuner, so we set it up to record all of our broadcast network shows and we can use the Tivo Roamio in our bedroom to watch the recordings via network transfer between the Tivos.
We additionally got Firesticks for each of the kids’ TVs,
allowing them to access Netflix & Hulu on their TVs.
Because we were still using the “Triple-Play Gateway”
modem-router-access point, it would continue to cost us an additional $13/month
in device rental fees. I didn’t like that. Time for more research!
I found a cable modem, (MOTOROLA
24×8 Cable Modem, Model MB7621) that would continue to provide us with the
same speeds we were getting with the Comcast gateway, but it was only a
one-time cost of approximate $70, as opposed to the monthly charge for the
device rental. I got it, hooked it up and was able to configure it online in
less than 10 minutes.
Our plan was to keep the internet. During my research, I
called Comcast and asked about the internet charges, because their website said
normal charges for internet were $71-$80/month, and was told that the price
would indeed be $80/month.
Now that all of the hardware was replaced, I went to the
Comcast office to return all of the equipment. The guy behind the counter said “OK,
we can set you up with a promotional rate of $54.95/month for internet only, at
the current speed you have.” Bingo! This is the same promotional rate they are
offering to new subscribers for twelve months! I was ecstatic!
Cost Reductions
Before
Monthly recurring costs were $174 for TV, phone &
internet = $2,088/year
After
Monthly recurring costs are $55 = $660/year
One-time costs were approximately $240 for the antenna,
splitter/booster, 2 Firesticks, and a cable modem.
Net Savings of $1,188 in the first year (495% ROI) and
continuing savings of $1,428 per year going forward.
Have you or are you thinking about cutting the cord? Let me
know in the comments.
And, as always, let me know what you think in the comments.
Ask questions, tell your story.
If you like my posts, please share them with others and
subscribe to this blog.
This week we are going to go over
some myths regarding taxes for small businesses. I get a newsletter from our CPA
each month that covers tax-related topics. The articles are written by other
people and I am assuming his website subscribes to these articles from a
service.
I found the topic of this one
interesting, so I searched for the title on the web and found the original
author. Here
is the original article, by Juanita Farmer, CPA, of Germantown, Maryland.
There are a lot of myths &
misconceptions around what you can and can’t benefit from with regards to taxes
in the US. Below we are going to cover seven of the most common ones.
***DISCLAIMER
– I am not a CPA and DO NOT Offer tax advice over the internet or otherwise.
Please consult with your CPA for tax advice. This article is for informational
purposes only***
Business start-up costs are the costs incurred prior to the
business actually beginning operation. They range from advertising and travel
to surveys and training. Organizational costs such as these fall under capital
expenditures.
Just like you can amortize depreciation of equipment, when
you start a business, you can amortize some business start-up costs.
You can deduct up to $5000 of business start-up costs and up
to $5000 of organizational costs. For start-up or organizational costs that
exceed $50,000, the $5000 deduction is reduced. The remaining balance must be
amortized.
Overpaying Taxes Makes
You Audit-Proof
From a business perspective, the IRS is only worried about
if your documentation matches your deductions and that your deductions are
legal and legitimate. Properly document expenses and follow the advice of a
good tax accountant to “Audit-Proof” your business.
You Can Take More
Deductions for an Incorporated Business
You don’t need an Incorporated Business to deduct business
expenses. Plus, depending on the corporate entity, you may have more tax and
tax filing burden.
Home Offices are an Audit
Flag
Home offices used to be a common audit flag, but with so many
people now utilizing home offices, the IRS issued a a simplified home office
deduction that is easy to claim, with proper recordkeeping.
No Business Expenses are
Deductible If You Don’t Take a Home Office Deduction
All business expenses such as travel, business supplies,
equipment depreciation, etc. Are deductible, regardless of if you take a home
office deduction or not.
Filing an Extension
Delays Your Tax Payment Due Date By 6 Months
Regardless of whether you file for an extension or not, if
you owe any taxes, payment is due on the original due date, typically around
April 15. All an extension does is allow you a six month extension to this deadline to turn in all
of your paperwork/documentation.
Part-Time Business Owners Can’t Have Self-Employed Pension Plans
Even if you are working a full-time job with 401k benefits
and you start a small business, you can
still set up a SEP-IRA for that small business
A few months ago, I ran across an ad for a free rental property accounting web application on Facebook. I didn’t think much of it and continued on about my merry way. Then I started hearing ads for the same company on the Bigger Pockets Podcast. So, I decided to check out Stessa for myself.
I like it! Stessa is simple to use and allows you to output
your financial data to hand over to your CPA at tax time. As a perk, the team
at Stessa put together a free Rental Property Tax Guide. I liked it so much
that I have partnered with Stessa to share that Tax Guide with my readers.
I recently connected with someone on LinkedIn who is a Life
Coach for High-Performing Remote Workers. As part of his getting to know me
messages, he asked if I listened to any good podcasts lately. That got me
thinking about the regular influence on my thinking of the podcasts I listen
to. The more I thought about it, the better the idea to turn it into an article
listing what I am listening to and why.
Doggcatcher for Android
Downcast for iOS
A little background on my interest in podcasts:
I have listened to podcasts for almost 12 years. Up until
the start of this year, I always had a long commute. Whether a 200+ mile daily
round trip to Lafayette, Louisiana or a 1,000+ mile round trip driving to
Houston, Tx every other week, I had a lot of highway time on my hands. Podcasts
allowed me to be entertained and informed, in addition to allowing me to
utilize “dead” time for learning.
The Bigger Pockets Podcast helped me to learn a great deal
about real estate investing. I have the Bigger Pockets website listed as a
resource on this site, but the podcast is an additional tool to learn about
REI. Each week, the podcast interviews guests, most real estate investors,
sometimes famous authors who provide useful tips for investing, business, and
personal improvement, and every once in a while, they will do an occasional
webinar-type podcast to educate listeners on a particular topic.
I especially like the investor interviews to get tips, tricks,
and strategies that may help me in our REI business.
Tim Ferriss, author of numerous books on increasing
performance (4-hour Workweek, Tools of Titans, Tribe of Mentors, etc.),
conducts long-form interviews with high-performers across various domains. Even
when interviewing guests who have been on EVERY medium you can think of, you
always learn things no one else has ever asked. Tim listens to guests’ answers
and responds to the answers with deeper questions. He also does extensive
research on guests and does not rely on canned press release questions.
I generally like to listen to his interviews because the
people he does interview are “Doing It”. They don’t have a theory, they are not
selling snake oil, they have done/do whatever they are recommending to increase
performance.
DH Unplugged is an unscripted conversation about markets
between investment advisor Andrew Horowitz and pundit John C. Dvorak.
I like DH Unplugged because they discuss what is going on in
the markets and aren’t trying to sell you anything. In fact, they frequently
point out how most “Money” shows on cable news channels are always “BUY, BUY,
BUY” no matter what is going on.
Rich Dad Radio is an interview podcast featuring Robert
Kyosaki, author of Rich Dad, Poor Dad, and his wife, Kim Kiyosaki, author of
Rich Woman. The interviews are mainly related to money and economics, (in a
broad way), and generally promote Rich Dad, Poor Dad Principles.
In addition to interesting information from guests, it’s fun
to listen to Robert interpret the guests’ statements into Rich Dad principles.
The James Altucher Show is another long-form interview
podcast, similar to the Tim Ferriss Show, that delves into what makes high
performers “tick”. Where Ferriss delves into tools, self-talk, and motivation,
Altucher focuses a little more on the path to peak performance, teasing out the
development of “micro-skills”. Altucher’s overarching thesis on micro-skills is
that high performers build up a toolbox of them that help them to succeed. Like
Ferriss, Altucher goes far deeper in his interviews than you normally see in
regular media.
Because of the depth of detail and wide range of topics covered
in each interview, I really enjoy Altucher’s show.
Akimbo is a podcast put out by author and marketing guru
Seth Godin. This podcast is a combination of self help and career advice for
entrepreneurs. You don’t have to be an entrepreneur to benefit from the topics
& advice given, either.
I enjoy the perspectives, suggestions, and tips provided by
Godin in this show. I don’t necessarily subscribe to all of his philosophies,
but that is OK. It is good to hear different perspectives from your own to
allow a balanced understanding of the world.
The Private Lender Podcast is a combination of interviews,
case histories, and education with regards to the utilization of private
lending in real estate investing.
I like learning about the details of the non-financial
industry financing.
I actually met Keith Baker, the host, and have become
friends with him. He’s a cool and funny guy. Oh, and he LOVES the band Rush!
As the name indicates, BPMS is another podcast from the
group at Bigger Pockets, focusing on F.I.R.E. (Financial Independence, Retire
Early). The podcast is in an interview format, covering guests’ stories, tips,
and tricks for becoming financially independent.
I like listening to the BPMS to better plan my own “retirement”.
It has also led me to resources that allowed me to recognize that I could
retire right now and be comfortable from a financial perspective.
I hope this provides you with some insight into resources to
use for personal and financial improvement in your life!
And, as always, let me know what you think in the comments.
Ask questions, tell your story.
If you like my posts, please share them with others and
subscribe to this blog.
