Great financial advice for writers

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10 Responses to “Great financial advice for writers”

  1. Mark Jaquith says:

    Your income is half of what you think it is.

    Actually, when you are self-employed, your income is exactly what you think it is. If you’re employed, your income is more than your paycheck. This is not a trivial issue. It is vitally important for people to think of taxation as an expense, or else they have given the government ownership of their property and have underrepresented the value of their work. Slap some sense into the next person who gives you their income in “after-tax dollars.”

  2. fyngyrz says:

    Oy. Don’t put your money in Bank — that’s the last place you want it!

    Banks pay interest because they *use* your money. They use it to leverage loans from the fed up to 10x the amount you deposit (you put in $1,000, the bank can make fed-backed loans up to $10,000.) When these loans go sour (as they are now, country-wide, in real estate) *your* money is at risk if the bank fails. Also bad, the interest they pay you is nowhere NEAR the interest they charge the borrower; you enable what they do, and they hardly pay you back at all.

    Better places to put your money are (1) in retail if you can find time to manage it — retail tends to earn from 60% to 100% on investment, especially if you can set up a web enterprise. Retail, in this case, can mean your own product as a writer, once you’re popular. (2) Loaning money yourself. See prosper.com for a good example. Income here is far greater than a bank will provide, and you’re doing a lot more good, and you can choose what loans you fund. (3) private investments among friends, otherwise known as being an angel.

    Banks are not your friends. If you think they are, that scratchy feeling over your eyes is wool. A lot of wool.

  3. dculberson says:

    Dude, if you put all your money in “investments,” you cost yourself a ton of money in interest or fees when you go to pay for stuff.

    A good buffer should be in the bank. If it’s not in the bank, it’s not a buffer. It’s been spent.

    I don’t consider the bank my friend any more than I consider the grocery store my friend. But it’s a necessity, just like the bank.

  4. dculberson says:

    Oh, and: what about the FDIC? Do you not trust that? How many people have lost their bank account balances since the advent of the FDIC? Millions have lost their money due to investments. None that I know of have lost it when it was in an FDIC insured bank account.

  5. Jeff says:

    Although John Scalzi may haver written a good bit on it, you can read Very good bits on the subject of personal money management in the Wall Street Journal, on a daily basis. Or hire a pro. My advice is save as much as you can and, for the average investor, put your money into a combinatin of mutual funds and index funds. Structure a tax deferred college savings account for your kids as soon as you can.

  6. philipb says:

    I find that 30% is a good number for taxes (I’m married, have 2 children & a home office deduction). This generally leaves enough of a refund to max out an SEP retirement contribution (which is a no-brainer).

    Catch is, you have to deposit the money in the SEP as you file the taxes which means you need a little float to carry you until the refund check arrives.

  7. Paul D says:

    Another radical idea is to move somewhere where the mafia doesn’t demand half your earnings every year.

  8. Clay says:

    Whether you’re a writer, an engineer, a circus trapezist, or a TSA employee, the advice to try and save so you have a financial “buffer” is golden.

    Also, a handy rule that has served me well: Necessary exceptions aside (things you really do need right now), don’t buy anything for which you don’t already have cash in the bank. Know exactly how much your credit card tab is when you use it, and don’t tell yourself you’ll have the money when the bill comes, even if you know you will. Want that new TV or Prada bag? Don’t buy now and pay later. Save now and buy later.

    Treat your credit card like a debit card, and you shall know what personal fiscal responsibility tastes like.

  9. tim says:

    What is this ‘health insurance’ that you apparently need to pay for?

  10. Pyros says:

    Cory, hasn’t owning Boing Boing made you richer than Croesus? How much cash does this site generate every year?

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