Common Business Startup Expenses

Common Business Startup Expenses

If you’re thinking about starting a new business, side hustle, or grind, you’ve got to know what you’re getting into. Every business will incur startup expenses in the beginning and you can’t just expect that customer sales will keep fuel your fire.

The Difference Between Selecting Credit vs. Debit at Checkout

Self-check, Fast Lane, or Register 4? Insert or Swipe? Credit or Debit? All of these questions play a role in our shopping experiences each day. We don’t think about them much but as times change and technology continues to advance we will continuously be faced with new payment options and methods as consumers. This week I’d like to reflect on how these split second decisions can affect our shopping experience and what you should know about the consequences of each decision.

Breaking Down the Options

There are three questions I mentioned above that aren’t just rhetorical. The first deals with time. Do you want to put in the effort yourself, bag your own groceries, and possibly save time in the long run? Or do you want someone to do that work for you while you stand in line behind people with full carts? What is your time worth and what are you trying to get out of the shopping experience?

The second deals with security. Many large retailers have updated their systems with the chip technology (reference the Target and Home Depot credit card hacks a few years ago). Chip technology? You know, that annoying new process, where you insert your card at checkout instead of swiping it? Unfortunately there are also quite a few retailers where chip technology isn't setup yet. Luckily this doesn’t have much impact on consumers, minus those awkward moments where you swiped instead of inserted your card, or vice versa.

The third and final question from above affects your security, your future spending, and your time. Credit or Debit? Which are you supposed to choose? You probably have both types of cards in your wallet, possibly with the intention to use each for certain purposes. Or maybe you only have a debit card, but you know the machines and the cashiers still ask you how you wish to use your card. What's really the difference? Let me explain.

Credit vs. Debit

The major difference between choosing credit vs. debit is how the money is taken out of your account. A debit card is linked directly to your bank account; therefore, as soon as you make a purchase it is only a matter of hours before the charge is deducted from your account. When you pay with a credit card you decide when you wish to make the actual payment on your card, usually when your bill comes due in a few weeks. MasterCard explains it in the following way: "When you use a debit card ... the transaction is completed in real time ... you authorize the purchase ... and the money is immediately transferred from your bank account. With a credit card, or using a debit card as credit, it's an offline transaction." The difference is that an offline transaction on a debit card means that the funds are not transferred for up to 2-3 days which gives customers time to confirm that the balance is present in one's account. In addition, once you enter your PIN number for a debit card transaction, all of your banking information is available for someone to steal and use.

Prevention of Overcharge Fees

If your card information is compromised, and you paid with a debit card at checkout, there is a high possibility that you could be looking at significant insufficient funds fees. According to an article posted by CNN "under federal law, your personal liability for fraudulent charges on a credit card can't exceed $50. But if a fraudster uses your debit card, you could be liable for $500 or more." In addition to the fees you may need to pay, it could take longer to receive credit for the money that you did not authorize to be spent if your debit card is the one compromised. CNN goes on to say "If a crook uses your debit card, not only can they drain your account, but it can take up to two weeks for the bank to investigate the fraudulent charges and reimburse your account." But, "if someone uses your credit card, the charge is often credited back to your account immediately after it's reported.” The use of a credit card gives you ample time to check your statement charges and determine if each transaction was made by you prior to owing the money on questionable charges. You have more time to report the fraud and need less time to make up for it.

What if I Don't Have a Credit Card?

As a general rule, when given the option, try to sign instead of providing your PIN number at registers and ATMs, and if a machine looks questionable, do not use it! Use ATMs only from reputable banks to avoid the risk of third party theft. Additionally, scan your account activity on a regular basis and report any unauthorized to your bank right away so that you have ample time to take action and protect yourself from any future problems! Finally, if you must use the debit option, try to keep as little cash as possible in your checking account. This may help mitigate how much cash may be stolen from your account in the event fraud does occur.

Have an experience or story to share about your debit or credit card being compromised? Or maybe you have additional tips & tricks you’d like to share. Feel free to post them below!

Why You NEED a Budget

I have a client I met about 5 years ago, and at that time she was broke. Worse then that, she was in a bad relationship, and without her other half she would not have been able to pay her bills.

The first thing I noticed when we met to talk about her finances, aside from her lack of funds, was that she had no budget or system to create one. So we put one together.


The budget was simple. We started by setting up a spreadsheet (think Google Sheets) using her weekly paycheck amount and her average weekly grocery and gas bill. Then came her average monthly expenses: cellphone, TV & Internet, mortgage payment (which included escrowed expenses for property taxes and insurance), car insurance, and utility bills. She went through her bank statements to get actual amounts so we knew we had real information to work with. What good is a budget if the amounts aren’t accurate?

It turns out she was earning barely enough to cover her necessary expenses.

and Wants...

Then we covered the less critical expenses such as dining out, movies, clothes (for her and her two school-aged children), and pet expenses for her dog. Forget vacations, she hadn't traveled in years and knew it wasn't in the cards. But she did admit to buying herself new clothes about once a month (the kids more so when they needed them). She also had a relatively healthy dog that only needed an annual visit to the vet so his expense was minimal (aside from food which was also negligible).

Once we added her wants and needs into her budget, it was clear she could not afford everything on her own. However, with the extra support of her not-so-great boyfriend, she could more than afford her current lifestyle.

But she wanted out of the relationship.

Small Potatoes

After we put it all together, I was able to step in and do what I do best; analyze. The first thing to go was her monthly habit of clothes shopping. We agreed she would need new clothes from time to time, but not every month. By cutting this monthly habit she was able to save money and also became more aware of seasonal sales to get really good deals (Black Friday anyone?).

Dining out and going to the movies were also off the table. For the cost of taking her kids to the movies every month, she could sign up for Hulu and Netflix and have endless content choices for less. She also cut her TV package down to internet-only because she now had Hulu and Netflix for TV & movies. Some might argue the lack of content choices so we added a few bucks per month for a weekly visit to her nearby Redbox.

Big Ticket Items

Despite these cutbacks, we still hadn't made the progress she needed. So next, we reviewed her insurance policies. Guess what? She hadn't thought to combine her home & auto policy. As soon as she did (and changed insurers) she started seeing big savings.

Where it gets better is on the mortgage. She had been paying pre-recession interest rates (think 6.5%) but during our meeting (circa 2011), rates were at about 3%. We worked with a local bank to refinance her mortgage and dropped her payment hundreds per month. We even cut the mortgage from a 30-year term to 15-year term and the payment was still less with the added benefit that her house would be paid-off much faster.

Make It Happen

Not soon after her mortgage was refinanced she was able to give Mr. Not-so-Wonderful the boot. Even without him she was able to pay her bills and save a little for emergencies. The greatest part of this experience was that she was able to declare her personal and financial independence by changing some of her habits implementing a budget. Today she is doing very well; she has established college funds for both of her children and has built up a nice emergency fund. She has even been able to re-introduce some of her wants back into her lifestyle and is less stressed out about finances because she now uses a budget to plan.

What are some methods you use to budget and stay in the habit of budgeting? Add them in the comments section.