Sunday, July 3, 2011

Freelancing 101

Last week, I received a call from a new freelancing film editor who must be the most prepared and organized person with whom I've ever have the privilege of speaking. I hope she becomes a client in the future. She began freelancing three months ago and wanted to know what she needed to be doing as a freelancer. Her enthusiasm warmed the cockles of my heart. So, as it's July already and I haven't posted for a month here are some important tips for new freelancers.

Pay quarterly estimated taxes. Your employer used to withhold taxes from your periodic salary payments. You are now responsible for paying your taxes instead of your employer with the added bonus that you are now responsible for all of your social security and medicare contributions; as a W2 employee your employer paid half of it. You need to pay quarterly estimated taxes based on your income less your business expenses. Also, if you're in New York, you must pay the MCTMT Commuter Tax.

Record keeping: keep all your receipts for business expenditure and copies of your invoices.

Get business cards. You're a true freelancer in the eyes of the Department of Labor if you are free to advertise your services to anyone. Get a website, put up ads and hand out your business card to everyone. This will distinguish you from an employee in the eyes of the law.

You should also consider starting up a business entity like an LLC or Corp in the future when you begin to make decent income.

Clients: the most important hurdle to cross when turning freelance is finding clients. Advertising and networking have never been easier now we have Facebook, Twitter, LinkedIn and other networking websites and groups but word of mouth is how most freelancers get their gigs.

Word of mouth also offers you some protection against unethical or roguish clients. If you and your client have mutual business contacts, that client is less likely to engage in bad behaviour than if he found you on Craigs List. I have direct experience with this; try to develop a community of clients who know and care about each other. Avoiding the scoundrels and bad paying, unscrupulous customers is par for the course.

Friday, June 3, 2011

Be A Contrarian

Be a contrarian investor of sorts.

Mortgage rates hit a new low this week and house prices are at their lowest in a decade or two, but still people are afraid to buy property. It's all but being handed to them on a plate, yet buyers are hesitant, behaving like abused animals who are now afraid of all investment.

I've been saying this all my life: although property is a serious commitment requiring patience and meticulous consideration it's the safest investment you can make. Buying my house, even at its slightly inflated price was the best purchase I've ever made because it's an investment I can control. If someone else manages your 401K, you're merely sitting on the sidelines watching it increase or decrease. You can buy property and immediately start making money on it. If I had bought that apartment in London instead of acquiring a pension, I would be a millionaire by now.

My pension is worth half of the original amount I invested, but my house is worth slightly more than the purchase price: a modest 6% after four years. I bought in an area popular with renters all year round. So, if I have trouble paying the mortgage I can rent it. I'm also able to grow food on my property. Of course, being a landlord is highly, and literally, taxing, so if you're not used to 24/7 job, then it's not for you!

Smart investments are very simple if you approach them as if you're literally at the market. Buy when the price is low and only sell when the price is high.

Don't follow the herd.

Wednesday, May 4, 2011

How To Get Out Of A Rut

It's easy to get stuck in a rut, especially when we have enormous financial commitments. Many of us are afraid to take a vacation or even lunch breaks. Some of us feel we can't leave our jobs because of hefty student debt. It's tempting to approach a certain age or milestone and greet it with a sigh: "well, this is it!"

It doesn't have to be, however. Even the slightest actions or chance meetings can trigger profound alterations in your life.



Even if it's for an hour, completely focus your attention on something different. When I need a jolt of mental refreshment, I visit my local book shop and buy a magazine on a subject about which I know barely anything: cars, cooking or sports. Delving into an alternative world for a brief period with a cup of tea can freshen your perspective considerably. (And you may find out why your brakes are squeaking or why your souffles never rise!) Stalking the stacks, browsing all the new titles gives a little relief from writer's block.

Take a walk somewhere you've never been before. Just exposing yourself to new architecture can be an inspiration.

Try preparing a meal you've never eaten before.

Look for another job or your dream job, even if you have no intention of taking it. You could go as far as attending a couple of interviews or just dig out your resume and update it with new qualifications and accomplishments like promotions. Having a resume ready in the top drawer is a powerful motivator. List your ten biggest strengths and weaknesses and compare the answers to those you gave in the interview you had for your current job.


It can be just as damaging to have goals that are too lofty. For example, if climbing Mount Everest is on your bucket list, you may not make it. If you have a list of goals, revise them, especially if you haven't reached one in a long time. Make sure they're a good mix of small, medium and large and then complete one this week. Goals are not only for the future; they are supposed to assist you not hinder you. You will feel much more rewarded if you can cross them off the list weekly or monthly instead of yearly.

If your goal is to starting exercising, begin right now with a brisk, fifteen minute walk. If you have to go to the store or visit a friend today, try a light jog to and fro.


Sign up for a class or learn a new language if you're feeling idle. In addition to meeting a new set of like-minded people, you will jump start your brain and add a new skill to your resume.

Find further activities that will stretch you. Take an advanced driving course to reduce your insurance. Join a writers' group or a hiking club. Redecorate a room in your home; organize a closet; cancel your cable and throw out your television set. Successful people don't go home every night to the television.

More important than any of this: if you have a passion now is the time to embrace it wholeheartedly. Whether it's jewelry-making, gardening, dress-making or cookery; whatever it is you need to make time for it. Without interests or passions life can be a very dull affair, so take a sick day if you have to and begin right now.

Saturday, April 16, 2011

Tax Time Observations

The tax filing deadline is on Monday 18th and in the last week or two I've been approached by friends and colleagues with last minute questions and emergencies which is why I haven't posted for three weeks. One conversation went like this:

Her: "So I need my 1099 from a customer, but I haven't received it yet."
Me: "Well, not everyone bothers to send out 1099s."
Her: "But I need to know how much I earned."
Me: "Just add up how much money went into your bank account."
Her: "I don't know how much money went into my bank account."
Me: "Well, you should go through your bank statements and add up the income."
Her: "I don't keep my bank statements."

And that was the end of that conversation because I was literally speechless. I was more concerned that she didn't keep her paperwork than surprised that she didn't know how much she earned.

In case this is you and you are keen to investigate how you might turn over a new leaf, please read on. I accept that many people aren't interested in the slightest about how much they earn; the aforementioned person didn't seem fazed that she had no idea what her tax liability might be one week before the filing deadline. I am also doggedly resigned to the fact that many busy people simply don't want to "bother with that stuff" but you may be missing out on deductions and credits that will relieve your tax burden if you can monitor your cash flow at least monthly.


1. An accountant is not just for tax time; he's for life.

A periodical meeting for an hour with your accountant will work wonders to keep him apprised of your workflow and finances. He will take valuable notes that will be more useful than you will ever know come tax time. Most accountants and bookkeepers complain that they do a highly responsible job, but are kept mostly in the dark by their clients. Let your accountant or bookkeeper into your life and business; strike up a relationship and he will think about your situation throughout the year and have suggestions for you at the most fundamental moments in your life. If you can't afford it, barter his invaluable attention for your services. Accountants are not scary, capitalist number crunchers to be feared: they like art, photography, music and books. They frequently procure services like advertising, marketing, editing and website maintenance which you can offer them in return. They like to take the occasional jaunt into the wilderness with their notepads. Invite them over to your office for coffee. They keep appraised of tax law and are there to help you.

2. Keep your paperwork.

Get a large recycling bag, or box if you have the space, and put all your paperwork in there. Get a receipt every time you buy something, even from your landlord and utilities. If you still wish to discard your paperwork even after I've told you that its important, please *do not* put it directly into the rubbish. Shred it first. This is where my and my clients' junk mail goes:

A huge percentage - something like 80% - of all American identify theft starts by someone going through your garbage. That's why identity theft hits people like a brick in the head; they were the most vulnerable victims: those who were essentially clueless about their finances anyway. Then they have to go about dealing with finding out who stole what they had no idea they owned before someone stole it!

3. Knowledge is power.

All successful business owners know this and so should you. If you don't know what freelance jobs are profitable and which are not, how do you know which clients to choose?

If you didn't realize you spent $1100 in Starbucks last year, then of course you're going to complain that you can't afford an accountant.

Good luck and please feel free to email with any problems or questions!

Monday, March 28, 2011

Know Your Net Worth

If you don't know what your net worth is, it's time to find out. Net worth is the total assets of you or your company minus your liabilities. (It's what you own, less what you owe.)

It's a very simple metric, but essential that you know it.

I'm offering my simple Quick & Easy Net Worth Statement to all those who care to comment on my blog in the next week. It's a simple fill-in excel spreadsheet that will take a few minutes to complete.

Into the spreadsheet's top section, you will enter your bank balances (checking, savings, investments, etc); then you will input the value of your assets like home or car in the middle section; then, in the final section you will enter all your credit card debt, mortgage, car loans and student loans.

The resulting figure at the bottom of the spreadsheet will either be a negative figure or a positive figure. If the figure at the bottom of your net worth statement is a negative number you owe more than you own and it's time to start looking at ways to attack your debts.

Monday, March 21, 2011

Employment Strategies

Friends of mine at Verso Books in Brooklyn are promoting one of their titles: Intern Nation, How To Earn Nothing And Learn Little In The Brave New Economy.

According to the author, Ross Perlin, "almost half of all internships are illegal under the Fair Labor Standards Act" and this "exploitation saves firms more than $600 million each year".

I'm tempted to believe his data. I've worked for many companies who use interns and, while it appears to be a good way to get a foot in the door, it has always been a wonder to me how they learn anything while they make coffee runs, photocopy, answer phones, pick up dry cleaning, walk dogs and deliver packages. New York operates on a much quicker pace than other cities too, so the humble New York intern must do everything very very quickly; how much then could they possibly learn just by being in the office?

Commenting on Verso Books' blog, Frances Fox Piven, "Distinguished" Professor of Political Science and Sociology at the Graduate Center, CUNY says: "Cloaked in the innocent idea of the intern, aggressive employers are using young people trying to get a foothold to weaken the leverage of existing workers, especially professionals. Ross Perlin gives us an account of another subterranean strategy to undermine working people in the US.”

While I believe that a young, inexperienced intern could hardly usurp a seasoned professional in the way that Piven describes, it's true that every year thousands of students emerge from college ready to work for free for many years. How can a graduate with hefty student debt compete with that?

Hardly any companies are hiring at the moment. Even if they were, they would have their pick of the best and many more who are willing to work for free. Employers appear to have the upper hand.

To the unemployed who have always relied on the comfort of a W2 salary, may I offer a complete reversal of strategy.

- Treat yourself as if you are a business and pursue a handful of part-time jobs. Employing someone is an expensive commitment: payroll taxes, unemployment insurance, worker's compensation, health care and disability insurance, are all things that frighten the modern business owner who is struggling to find customers. You can only succeed, wrongly or rightly, by putting yourself in their shoes and adapting to the economy.

- Join networking groups, get business cards and offer your services as a consultant. Business owners still need help and if they can hire freelancers or other business owners to help them it will be easier on their budget.

- Read non-fiction in your area of expertise and keep abreast of local news and blogs.

- Interest rates on savings have never been lower. There are plenty of business people with money out there who are looking to get a better rate on their savings than 2%. Put your side job or hobby to good use by writing a business plan and finding small loans for local entrepreneurs.

Sunday, March 13, 2011

Stock Market Strategy

What NOT to do
Subject of the week is the stock market. Whether stinking rich or moderately wealthy, nobody wants to invest in it at the moment. When it comes to money we have long memories and most of us got burned in the last five years, losing at least half if not all our investments. We are still licking our wounds.

The above graphic is a fine illustration of how you should not play the market, but unfortunately it's what a great many people do. They get greedy and buy when the market is going up and fearful and sell when the market declines.

The obvious strategy would be to *invert* the above graphic and repeat until rich.

When approached this week by a client for a suggestion of where to put his money, I recommended property. The bubble has burst and there are great deals out there in certain areas for those who are solvent. If I could get another mortgage, I would jump at the chance to buy a rental property with slow long-term gains. If I had an inheritance or tax refund this is where I would put it.

When shopping in the stock market, be frugal. See what's on sale and pick something that will still be valuable in years to come when you retire.

Sunday, March 6, 2011

Business Roundtable

A few statistics from the Office of Advocacy and the SBA: In 2009 there were 27.5 million businesses in the US of which 99% were small business. The latest available Census data show that there were 6.0 million firms with employees (employer firms) in 2007 and 21.4 million without employees in 2008. A small business is defined by the number of its workers: fewer than 500. Small businesses employ an astonishing half of all US workers. In 2009, 660,900 employer firms closed, which is a turnover of about 10%.

So you can safely ignore commonly repeated statistics like "80% of all businesses fail in the first five years" for these reasons and the fact that information on small businesses without employees is especially hard to obtain because they do not need to register with entities like the Department of Labor who assess the data.

The economy is still a challenge for small businesses, however. Finding new custom and income streams has never been more difficult in an age where thousands of new graduates emerge from college prepared to provide for free the same services that you offer.

The unemployment rate is now almost 8.9%.

Therefore, if you're presently a struggling small business owner thinking of closing your business to "get a proper job", the likelihood that your new employer will fail, leaving you unemployed, is almost the same as the likelihood that your own business will fail.

So stick with it.

- Remember why you started your business in the first place and imagine you're in that same place again. What would you change? 
- Think of a person you know who has succeeded in your particular business and figure out how they got there. 
- Think of all the best parts of each year you have been in business and list them; evaluate how you can replicate all those good times in one year and make that this year.

Saturday, February 26, 2011

Time Banks

Time Banks have taken a while to catch on, but now they're being run by the City of New York and the Freelancer's Union. This year Mayor Bloomberg started NYC Service, a time bank for New Yorkers.

Freelancer's Union calls it "mutual aid in the form of an alternative currency system"; it's basic bartering. Bartering is as old as trade itself, but it's becoming more popular than conventional currency in today's feeble economy.

Time Banks are good for the cash strapped and those on a budget, but you have to have a skill to offer. They work like this: you donate an hour of your time to someone else and that hour you "donated" can be stored in a database and used to "purchase" an hour of someone else's time.

At the Freelancer's Union they say that everyone's time is equal, but I don't agree. A doctor's time, for example, should be worth more than mine. He can slice me open and fondle my liver without killing me; I can consolidate his student loans or write him a nice short story. That's not an equitable exchange, especially when you consider how much it cost him to pay for medical training in a New York Ivy League university.

But say you were an accountant needing some work done on your house; you could reach an agreement with a like-minded contractor without quibbling over fees. Or say you needed to learn photoshop and could offer one hour of training in return? This type of bartering could keep everyone in the community employed.

Visit Time Banks here for more information.

Monday, February 21, 2011


Many of my clients are astounded when they ask to see a bank statement or bill and I effortlessly pluck it from the drawer. "Wow!" They gasp, and look at me as if I've just shown them my Nobel Prize for bookkeeping.  When a client calls me to ask me where their cheque book is and I direct them to it in 15 seconds, they seem incredibly grateful: "I just ask for it and there it is!" They say in wonderment, because to have an organized office is tremendously satisfying.

"Filing" has got to be one of the most repellent words in the English language and is right up there with "dieting" or "exercise". There's nothing worse than trudging into your office on a Monday morning and being greeted by a large pile. Of course, there are some clients, like writers and designers who spend their desk-life immersed in a sea of paper and claim to know where everything is. I have one client who tapes paperwork to the walls in his office and I completely understand: yes, it is like laying out your "in" box. If he tapes his American Express bill to the wall, he will be more likely to pay it. Makes sense! In fact, this is a lesson for those with a high credit card balance: tape your bill to the front door and glance at it before you leave the house to go shopping. But I digress.

Organization is the key to success. You might not have any money in the bank, but if your paperwork is organized and your filing is up-to-date you have complete control over your business or personal finances. If you are able to access your price list at a moment's notice, you can inform your customer exactly how much the job will cost while you're on the phone.

Think briefly about the enormous amount of paperwork required to show potential (mortgage) lenders or investors and if it takes you 30 minutes to retrieve and photocopy all of it, you're in a powerful position.

For your paperwork:

- open your mail as soon as it arrives;
- put unpaid bills in their own folder;
- if you don't have a filing cabinet, buy free standing concertina files;
- file all your business documents alphabetically;
- file everything by date "latest first" so your latest bills are more accessible;
- shred all unnecessary statements and paper: weed out the extraneous items to keep your files more easily managed.

If you are filing electronically:

- add a date to your document names (amex_060809.xls) so you know when you saved it;
- if many people make similar files in your business add your initials to your file before you forward it (jnu_amex_060809.xls) so the recipient can see who created the file (thanks PT);
- make desktop folders for all current items;
- file bills in folders by month.

It's such a small weekly chore, but like credit card debt, it piles up when we're not looking. And like dieting or exercise, you'll feel better afterwards.

More important, it's tax time and you have eight weeks until the IRS 2011 tax deadline of April 18th, 2011.

Start with your 2011 receipts and work from there.

Monday, February 14, 2011


I am an economist by chance, through the evolution of my career: 15 years' worth of business experience derived from a broad and diverse range of sources on two continents. I have worked as a photographer, writer, editor, producer and bookkeeper. Clients have included musicians, magazines, newspapers, artists, artisans, producers, directors, designers, architects, lawyers, investment managers, editors, marketing executives and eminent thinkers.

Last year, I set up my own business entity, Back of the Envelope LLC, an operation providing counseling in personal finance, bookkeeping, coaching and business services in London and New York City.

This blog will serve to provide weekly tips, tools and advice for readers and customers in tandem with my business. I seek to use my eclectic and extensive knowledge to empower you to take control of your finances regardless of your employment, status or background; improve your relationship with money through counseling and information in a nonjudgmental environment.  In terms of the individual: so many of the tools for successful personal finance are very simple, but the knowledge thereof seems to be out of reach for so many.

The fact is that we are all economists by chance and necessity because we must all balance our cheque book and monitor our cash flow and investments.

Basic bookkeeping is an unsophisticated discipline and orderly finances allow you to focus your attention on the fundamental aspects of your life and business.