Budgeting, expenses

6 Reasons to Get Out of Debt

Americans feel conflicted about their debt. About eight out of ten Americans have debts. Most people believe that debt is necessary but that they would rather not have it. Today, I will focus on the benefits of being debt-free. Reducing your debt can also help with some of these feelings.

  1. Free up your income. Not having debt payments each month, gives you opportunities to spend your money wherever you want. It also allows more freedom in the kind of work you do. Dave Ramsey posted, “My grandmother always said, ‘There’s a great place to go when you’re broke – to work.'” Debt compels you to work more and harder. If you’re debt free, you are “free” to change jobs, take time off, and enjoy your family more.
  2. Less risk. Many people are one paycheck away from losing everything. Budgeting can help with this. But, also, getting yourself out of debt helps. You’ve learned how to budget, live within your means and you have a savings cushion. Debt-free is a big cushion to get by for many months with smaller income.
  3. Less stress. #1 and #2 are great reasons and they also contribute to less stress. Debt creates stress. You worry about how you’re going to pay all your bills. When you have debt, sometimes, it is difficult to enjoy doing anything because you are worried about your debt. Getting rid of your debt releases a lot of stress. Then, you can spend time with your family, enjoying your work, and find new hobbies.
  4. Better relationships. Do you see the pattern of these reasons all building on the one before? When you don’t have debt, you can enjoy your family more. You can also enjoy all the activities that come with kids even though they are expensive. When you’re not worried about your debt, you know exactly how to pay for those expensive things that come up. I still require my kids to help pay for half of the activities they do once in high school. I think this better prepares them for life. My son plays football and he can’t have a regular job most of the year but he can do a couple of yard clean-ups every month to help pay his expenses.
  5. Helping others. I know that helping others helps you. Debt-free means you can help others. Even if you are still in debt, start finding ways to help others that don’t cost money. You can help people shovel snow, rake leaves, visit with family or friends. Once debt-free, you already know the benefits of helping others and will want to continue.
  6. Higher Self-Esteem and Confidence. I will give an example. One person goes into a dealership to buy a car not even sure of their credit score or how much they can afford. The second person goes into a dealership with cash to buy a car that they have been saving up for and know exactly which one they want and can afford. Buying a car is a high-stress situation but which of these two is more confident when they walk in the dealership? Which one gets the better car even if they spend the same amount? Buying a car is a great reason to be debt-free and easy to see the confidence it will bring to you.

These are only my top six reasons to be debt-free. But, knowing why it’s good and doing it are two different things. Start with a budget. If you can’t make your budget make sense, you should consider talking to a credit counselor. I offer free budgeting consultations. I do not consolidate your debt but I can help you make a budget that works for you. Erin Barbee erin@e3accountingsolutions.com

Budgeting, expenses, Tips

Late Fees are a Big Price to Pay

Today, I’d like to talk to you about paying late fees and other sneaky ways companies charge you big prices. Do not pay late fees. Make sure that as you’re paying down your debt, your first priority is always paying everything on time.

  • Many companies, raise your rate and charge a late fee. Make sure if this happens, you call and complain about the rate. You can also, depending on your history, ask them to waive the late fee. Occasionally, some companies will waive the late fee.
  • Regular late fees can really add up to a lot of money. Analyze how much you’ve paid in late fees this year. And, make a goal to start paying all of your bills on time and even a little early.

Paying late fees is similar to one step forward, two steps back. It is important to pay your bills on time every month.

Also, let’s talk about check cashing companies. I can’t believe these are still in business. Yet, they’re building a brand new one by my house. The interest rates on cashing post-dated checks are astronomical. And, they suck you in making it nearly impossible to pay it off the next month. So, you just stay in this cycle and continue to pay the high interest rates. Make a goal to get out of this debt first.

Don’t pay late fees and don’t pay check cashing fees. Your financial life will be better when you’re not sucked into these high interest fees and charges.

I can calculate how much these crazy fees and interest are costing you. Contact me for a budget coaching session. I can also e-mail you the loan calculator that helps you see how quickly you can pay off your current loans.

Budgeting, expenses, Tips

Starting a budget.

In a poll of New Year’s Resolutions for 2018, 37% of people said they would include saving more money this year. If that includes you, and you haven’t done anything now is the time to start. So, where is the best place to start?

  1. Start by looking at your expenses for the last two to three months. Make categories for different types of expenses. Open a google sheet or spreadsheet and start entering the amounts spent in each category. This will show you where you are spending your money.
  2. Calculate the total for each of your different categories. You can have a lot of categories or just a few.
  3. Evaluate which categories you could cut back on. Is it eating out, coffee in the morning, grocery store or just shopping in general? Planning to cut back is the first step in organizing your budget.
  4. Find a focus. Decide what your focus should be for your finances. Do you need to pay off debt, establish a savings account or start retirement savings? Focus on one area at a time. Take the cutbacks you calculated in step three, and put any extra money into your focus area.

When I am focused on debt, I like to make a chart that shows my progress month to month. If financial security is your goal, you should always start by making a measurable and attainable goal. I believe in working on your financial goals a little at a time. So, start by creating a plan.

I offer budget evaluation services for as little as $50. Contact me today to discuss your options.

Bookkeeping, expenses, income, taxes, Tips

Business Tax Organizer-Get Taxes Prepared

Do you have a business and need to claim the income and expenses on your return? I will file a Schedule C for you. If you already have a system of tracking your income, get me a copy of that. But, if you just keep your receipts, please fill out this form and the filing of the Schedule C will go quicker which will save you money on preparation.

The PDF Version is found at:


The Excel Version is found at:



expenses, taxes

Hobby Loss

If you don’t make a profit, the IRS can determine your business is a hobby. If this happens, you will not be allowed to use your loss from the hobby to offset other income. This is usually an unfavorable result, so here are the ways to keep this from happening.

If you make a profit three of the last five years, you are considered to be carrying on the business for a profit. The IRS prefers your business to make income every year. If you lose money sometimes you are allowed to use the loss to lessen the taxes you pay on your other income.

Even if you are losing money, the IRS will still allow you to claim the income as business income if you meet the following tests. As always, keep good,organized records and these will help you if you get audited.

– Does your time and effort indicate an intention to make a profit?
– Do you depend on income from the activity?
– When losses occur, is it due to circumstances beyond your control or in the start-up phase?
– Have you changed methods of operation to improve profitability?
– Do you or your advisers have the knowledge to carry on the activity as a successful business?
– Have you made a profit in similar activities in the past?
– Have you made a profit in some years?
– Can you expect to make a profit in the future?

Generally, you must be carrying on the activity expecting to make income. Bloggers need to be careful because the IRS will try to classify your business as a hobby if you are not making money. So, you should be carrying on as a business. If your expenses exceed your income, maybe you should look at your intentions and see if you are carrying on as a hobby. If this is the case, it is best to start classifying your income and expenses this way to avoid penalties and interest.

Hobby income is entered on line 21 of the 1040. Then, you can deduct hobby expenses on your Schedule A. If you don’t have other items that make itemizing greater than the standard deduction, then you won’t get to claim any of your hobby expenses. And, you won’t ever be able to claim more expenses than income if your activity is a hobby.

This year, the Tax Court sided with the owner of a hair salon that claimed business losses instead of hobby loss. (Delia, TC Memo 2016-71, 4/20/16) The owner never reported a profit in the eight years she was in business. The IRS determined it to be a hobby and didn’t allow her to take expenses except on the Schedule A. She went to court and won. The taxpayer had very meticulous records of all income and expenses. The Tax Court determined the taxpayer had carried on her activity with the objective of making a profit. They also determined that she had taken reasonable steps to grow the business. The salon was also not a source of personal pleasure or a hobby.

If your business is not making a profit, it is important to evaluate your motives. Keep good records, make efforts to make a profit and keep your personal expenses separate. These are the best tips for continuing to be able to claim all of your expenses even when they are greater than your income.

Every taxpayer has a unique situation. So, it is always a good idea to seek help from a tax adviser whenever you have questions.