Money Talks - We listen             Money Talks, LLC
Newsletter January 2010
Susan Hammitt, AFC, CDFA
511 SW 10th Ave., Suite 805
Portland, Oregon 97205
Phone: 503-233-8142 Email:
Tax Time: Focus on Personal Finance 
My regular clients know this drill.  By now  tax records are together and ready for preparation. Either you are ready to deliver the information to a professional preparer or begin doing your taxes yourself.  Remember, this is an opportunity to review 2009 financial realities.  By now you should have:
  1. Gone through all financial documents and properly disposed of unnecessary paper.
  2. Evaluated all sources of income and determined how it compares to expectations.
  3. Figured out where your money went.  If more that 5 or 10% is in the black hole "uncategorized" you know it's time to get a better grip on your allocations; particularly if you under-funded anything of significance.
Next, have at least the first draft of taxes done no later than February 15th.  If you are receiving a refund think about how the money will be used.  If you owe more than you planned, give yourself some time to check for errors, consult a qualified professional, and decide how to pay the extra.
Before you file taxes make sure you can explain every line item on both your Federal and State returns.  It's important to know how you are taxed as well as how much you are taxed.  One of my favorite questions is, "How much to you pay in Federal and State taxes?"  It's always surprising to me that few people can accurately answer.  
Tax season offers a real opportunity to take charge of personal finances. Close out the old year and Make a Plan That Works For You in 2010.  
Budget and Cash Flow:

The foundation of every financial plan
Every financial plan begins with income and expenses.  If the information is faulty the plan will never create bedrock security.  Too often financial advisors begin with the assumption that clients have an accurate understanding of their income and expenses. Most people know how much they pay for rent or mortgage and can list their fixed obligations, car payments and other loans.  However, they cannot sit down and generate an accurate income and expense report that includes non-discretionary variable expenses and discretionary expenses.   
Income and expense management is the first and most essential skill for Personal Financial Sustainability.  Like any skill, cash flow management requires practice.  
Test your skill with this exercise:
Without looking at any documentation list sources of income for last year. Include all sources, gifts, windfalls, and side jobs.   
Next create a list of expense categories for the same period. General categories are just fine. Housing, Utilities, Education, Car/Transportation, Food, Clothing, Entertainment; whatever is appropriate. This is not an exercise intended to analyze spending behaviors; simply to test financial awareness.
Do not use black hole categories; cash and credit card spending. Those are not expense categories. Cash and credit cards are method of payment.  
Include special categories for extraordinary expenses; any expense significant enough to merit its own category;  medical expenses, travel, charitable giving, hobbies.  
After making your best effort determine your skill level in personal financial awareness.  Unhappy with the results?  Try doing the exercise at the end of each month until you know where your money goes...
Once this skill is mastered you will be ready for the next step in achieving Personal Financial Sustainability.

Self Employment:

Finding Your Niche and Cultivating Opportunism

In his book, Outliers, The Story of Success, Malcolm Gladwell provides evidence that successful people are not necessarily the smartest, they are just smart enough.  Success or failure does not pivot on one event, but a combination of events.  More important than natural ability or intelligence is dedication to, practice, practice, and practice.


Survival for the entrepreneur in changing economic times hinges on key attributes: agility, focus, hard work, and opportunism. 


Looking back or counting on a rebound of the way things used to be, will not work.  Unless a small business found a niche in the downturn, chances are it will be difficult to re-emerge with the same business model used in the old economy.  Consider:


Agility: When something is not working, prepare to switch gears with agility.


Focus: Invest time and energy on education. Focused entrepreneurs continue to work (albeit sometimes without pay) through down times.  Visit the Federal Student Aid website ( and look for grants or other funding options to upgrade or refocus skills. 


Hard Work: If you can't find the exact work you have been doing, look for a related match.  Consider apprenticeships in a progressive industry that may be interesting.


Opportunism: Remain open to new ideas and new skills, heighten awareness of trends and changes, remain engaged and be prepared to give things a try; opportunism at its best!


 Successful entrepreneurs are like surfers:

In the Water, In Shape, and Ready To Ride the Wave! 


Susan Hammitt
Money Talks, LLC
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