Wise Accounts Blog

In medieval times people would sell themselves as slaves to avoid poverty and dying of hunger.

Today people mortgage their lives for an ever so elusive lifestyle. All because of marketing propaganda which indoctrinates the weak that unless they have this, that and the other they are nobody on the status scales.

If the cost of housing and cars doubles every ten years while your purchasing power goes backwards because of inflation and competitive foreign labour something will snap.

In past generations people would save for 20 years to buy a house or a car or both. In that time they had plenty of time to decide whether they really wanted it, whether the sacrifice was worth it, whether they would indeed reach their goal or whether they should make other arrangements.

Today the popular wisdom is: I want it and I want it now. Here comes the age of credit; how to enslave your future for the glitter of the ephemeral.

Because all people can see are the monthly payments (never mind how many payments there are...) as long as it fits in the monthly budget - let's go and buy it!

This is the very thing that fans inflation because in a world where people pay cash for everything there is a limit to much people are willing to pay and can pay for everything from houses to cars and clothing, etc...

In a world where everybody has access to credit that limit is lifted. What then takes place is a race for greed on the part of suppliers who can charge more and more as long as the new model supersedes the current model because of (useless) new features. Furthermore appliances are designed to break down within five years when they could last twenty years - just avoid saturating the market.

People were told it's OK to buy on credit if what you buy increases in value - that is housing... yet in the last 5 years we have seen that there is a limit to this also. A housing bubble is about to burst or at least deflate like a lead balloon.

You have situations where the collateral value of an asset is less that the amount of the loan. If you borrowed to buy shares that calls for a margin call. In residential real estate the banks are feeling a bit fidgety. No wonder they are not using the cash recently printed by reserve banks to offer more loans but rebuild their balance sheet instead...

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A trademark of insanity is repeating the same things over and over again expecting a different (better?) result...

You are not going to get ahead financially until you have a good hard look at your spending habits. What percentage of your income disappears in rent? What proportion vanishes in food, transport, entertainment, etc... ?

Unless you know where you are starting from you will never pull yourself out of your situation - simply because you have no way to measure your progress - or worse detect if you are actually falling further behind...

This is where Wise Accounts can make a big difference. Tracking where your money disappears will put you in control because that knowledge will draw the line between what is essential from what is discretionary.

Another benefit of counting your dough is that it will give you confidence that saving up for a worthwhile goal is both achievable and rewarding. It all boils down to self-esteem. Once you feel good about yourself and just trust in your abilities you are empowering yourself to get where you want to be.

Seeing how your resources start to accumulate simply because you have set your mind to it can be a tremendous boost to your ego. It all comes down to a word most rebels love to hate: self-discipline.

If you are still reading on may I suggest to sign-up to Wise Accounts and get yourself underway. You don't need to enter everything since the start of the current financial year. You can do that later if you feel so inclined. It will be useful when you file your tax return.

The bare minimum you need is to enter your current bank balance, your regular income and outgoings (we call these recurring transactions) and immediately you can produce a cash flow forecast.

It will show that either you are spending less that you earn and at what rate - or that your situation is unsustainable and how long it will take you to go broke. Before you jump over a bridge though, just check that you haven't missed anything. As time goes by and you refine your system it will become more and more accurate and you will be able to see your face in the mirror - financially.

You've heard the saying: "little streams make big rivers" or "do not despise the day of small beginnings". One word of caution: do not brag about your new system until you know it works for you. There are plenty of jealous folks out there who don't want you to overtake them on the road to success. It is a path littered with a few casualties. When they see you powering along they might say to themselves: "If this guy can do it, why not me?"

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Have you ever waited at an intersection and found a business opportunity poster wrapped around the traffic light post and adorned with tear-off "call this number" tags?

What is the stigma about network marketers that they can't own up to disclosing the name of their parent company? Two reasons: they want to get a chance to see you face to face and run past you their presentation. This will hopefully address all objections before you get a chance to think of one. Secondly they are competing against other distributors peddling exactly the same product/opportunity. If they reveal the network's name they are basically wasting their marketing efforts. You will be sent to whichever distributor the head office directs you at the time.

Working from home is a bonus if you have to care for young children and they can have a nap during the day. Bookkeeping comes to mind assuming the business owner doesn't mind you accessing their bank account online. Most of the work will be data entry and bank reconciliation.

Being an artist/copywriter is another home business activity where you produce sales brochures, procedures manuals, technical manuals and other documentation.

Doing research for a legal or marketing firm is something you can do wherever you can connect to the internet. Ideally you would have worked for the company in the past so that they know you and trust you and now you work part-time from home - possibly to care for children or an elderly person.

Bosses have been reluctant to employ home operators because of lack of accountability and lack of communication. The convenience of having an employee at call to join-in for a client briefing meeting is lost and extra time is needed to document exactly what is required from the remote person.

That leaves us with those internet ventures where scores of untold customers will flock to your website and purchase whatever product or service you offer. Bear in mind that Amazon and EBay are already doing that. You would need some really compelling reason for people to come and find you and pull you out of cyber obscurity.

Home craft is another avenue. Are you good and fast at sewing or welding? You may produce a range of clothing or jewellery/accessories before China gets a chance to copy your designs.

What about creating comic strips, recording music, translating documents into a foreign language? Think of writing a book, a screenplay, a series of poems, etc... That would be enjoyable and fulfilling. The painful part is that you will have a hard time finding a publisher who is both honest and interested in your work. But remember the saying: "No pain, no gain."

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Debits and credits are a system of notation used in bookkeeping to determine how and where to record any financial transaction. In bookkeeping, instead of using additions '+' and subtraction '-' symbols, a transaction uses the symbol DR (Debit) or CR (Credit). In double-entry bookkeeping debit is used for asset and expense transactions and credit is used for liability, gain and equity transactions. For bank transactions, money received in is treated as a debit transaction and money paid out is treated as a credit transaction. Traditionally, transactions are recorded in two columns of numbers: debits in the left hand column and credits in the right hand column. Keeping the debits and credits in separate columns allows each to be recorded and totalled independently. Where the total of the debit value amounts is lower than the total of the credit value amounts, a balancing debit value is posted to that nominal ledger account. That nominal ledger account is now "balanced". An account can have either a credit value balance or a debit value balance but not both.

A debit can also be used to reduce the balance on a liability, gain and equity account. This has the effect of reducing a credit balance by the value of the debit transaction. The balance in a nominal that is normally expected to hold a debit balance may change from a debit balance to a credit balance.

A credit can also be used to reduce the balance on an asset or expense account. This has the effect of reducing a debit balance by the value of the credit transaction. The balance in a nominal that is normally expected to hold a credit balance may change from a credit balance to a debit balance.

In some cases such as fixed assets, all debit transactions will be recorded in one nominal account and all credit transactions will be recorded in a contra nominal account, with the exception when an asset is disposed of. The purchase of an asset will be recorded in a fixed asset account (debit transaction) and the depreciation of the fixed asset (credit transaction) will be recorded in a contra nominal ledger account, fixed asset depreciation.

Each transaction consists of debits and credits, and for every transaction they must be equal.

For Every Transaction: The Value of Debits = The Value of Credits

The extended accounting equation must also balance:
A + E = L + OE + R

(where A = Assets, E = Expenses, L = Liabilities,
OE = Owner's Equity and R = Revenues)

So Debit Accounts (A + E) = Credit Accounts (L + R + OE)

Debits are on the left and increase a debit account and reduce a credit account.

Credits are on the right and increase a credit account and decrease a debit account.

TYPE	DEBIT	CREDIT
Asset	+	-
Liability	-	+
Income	-	+
Expense	+	-
Equity	-	+

Therefore, if an Asset account is debited, the Asset amount (value) is increased. Same with an Expense account. If a Liability or an Income account is debited, the numerical figure will decrease, etc. If a particular account is credited, there must be a corresponding Debit in another account in order to balance the transaction.

As used in banking terminology, 'Debits" refer to withdrawals, not necessarily in the same context as discussed here.

So to wrap it all up you can remember all of this with the mnemonic phrase: "Accountants are credited for being afraid of negative numbers."

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If some marketers feel the need to stress that their gift to us is free then it implies that some gifts are not free - or at least have some strings attached...

In our consumer society where selfishness abounds we have totally lost touch with the significance of giving. You would remember: "Freely you have received, freely give" and also "It is more blessed to give than to receive".

Hoarding is motivated by fear of lack- thinking we won't have enough for ourselves - let alone to pass around...

In the past a monarch would bestow gifts to his subjects as a token of his good nature. Today well heeded people give gifts to those in power (who already have everything they need) in order to induce favours.

For some who have a pure heart giving is an expression of who they are. Giving of your substance in a way that people can never pay you back for the simple joy of seeing them enjoying your work is a satisfaction and a fulfilment that no money can buy.

In fact the next step is that as you show yourself to be a channel of quality and abundance people will make a path to your doorstep and commission you to do more for them this time in a commercial transaction.

You can think of artists who are a tremendous enablement for our senses letting the world benefit of their expression. One day they get called to do a masterpiece for a well-known event because their reputation goes ahead of them.

Not all givers are artists. You can think of volunteers who tirelessly give of themselves for a cause they believe in. One day they get called to take charge of the organisation they serve - simply because no-one else has demonstrated the passion and the knowledge they have.

You can think of multi-level marketing operatives who could have retired in their forties but continue tirelessly to build their network. Why? For the simple joy of building up people with a business opportunity of their own and see them reach financial independence.

Too good to be true? No this is a biblical principle. If you have the right motives and are found to be a channel to bless others God will see to it that your well never runs dry. In fact the amazing thing is that it works the same for those who know Christ and those who don't...

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