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Invest Your Tax Refund Wisely

by Wise Accounts on 26 May 2016 permalink
Keeping your refund in the bank for a rainy day sounds like wisdom but it's bad for two reasons: first the interest paid on savings accounts is lousy, second because it is the obvious thing to do it does not challenge your gray matter.

There are times in life where you have to behave like a business person and this is one of those times. If you can be trusted in small things, you will be trusted in bigger things. This biblical truth can be taught to young and older adults alike. It means that you bear the responsibility for the stewardship of your resources.

The way you are going to discharge yourself of that responsibility will ultimately determine your future. It has to do with your values. People send their time and energy (meaning resources, aka money) around the issues that are dear to them.

Values are often out of your immediate reach and that is where goal setting comes to play. You don't stumble randomly by accident onto a goal - you strive hard to get there because whatever is a worthwhile endeavour will attract opposition.

Unlike time which has to be consumed in the now, money can be stored for a later day. Just like water flowing into and draining out of a pool, money goes in and out of your hands and it takes some scrutiny to figure out if you are better off (making a profit) or worse off (making a loss) at the end of the week, month or year...

One tool to keep this in check is the cash flow report. By collating all your regular expenses on one hand and all your earnings on the other hand you can project into the future what your bank balance might look like, a month, 6 months or a year from now.

Knowing what your saving ability is today will have an impact on how to invest your tax refund. Some investments will lock you in for a given period of time (six months, a year, 5 years...) Some investments take care of themselves while others require hands on supervision. The basic law is: the higher the return, the higher the risk.

The way you cope with risk depends on your age (ability to replace what was lost - whether you are working or not) and your level of involvement (sleep on it until redemption time, versus daily check of your stocks in the share market). If the stock market interests you check out Trading Pal an automated trading system which you can use to compare against your own performance.

How To Sort Out Your Out Of Money Experience

by Wise Accounts on 19 May 2016 permalink
Getting into unchartered waters with debt has a surreal feeling to it. Yet several millionaires will tell you they went broke before reaching the level of success where they are now. What can we learn from a financial crisis?

Risk is part of life. You can never protect yourself totally from some unexpected mishap. In essence it's not what happens to you that matters - it's the way you handle it. If you are in debt the honourable way is to set in motion a recovery plan so that you can repay the money you owe. If it means loosing your car or your home - so be it. There is one thing people can never take away from you: your self-esteem and your good ideas.

If you have lived on credit cards and mortgaged your future to keep up an unaffordable lifestyle then things have a way to catch up with you.

The most important thing is to forgive yourself. You took a risk. It backfired. Let it be so. You are all the wiser out of the experience. There are positive outcomes to a fall. What doesn't kill you will make you stronger.

Maybe you will be forced to take a sabbatical and check your values, the people and things that matter to you. Are you the breadwinner for your family? Do you feel you have left them down? Do they still look up to you? Are they prepared to tighten their belts with you or do they still live in utopia? Are they running away from a sinking ship? Some people have lost everything: wife, children, home, car, career and yet continue to praise God despite the adversity.

Success in life is to find something people need and give it to them. There must be something out there you are passionate about. You can't really put your finger to it but as you walk through the valley of the shadow of death you will fear no evil. Comfort will come from above. If that's all it takes for God to get your attention - so be it. Others have found their bearing nailed to a hospital bed, staring at the ceiling all day long. At least you have the freedom to move about (until the sheriff catches up with you...)

There are seasons in life. You can't expect to have an easy ride all the time. Money and riches can sprout wings and fly off. Invest your efforts on the things that will remain with you - like integrity, a good reputation, a caring attitude. Is there someone else worse than you that you can help in the meantime? Do to others as you would like it done onto you.

Count Your Money Before It's Gone

by Wise Accounts on 12 May 2016 permalink
Are you living in denial to the fact that you might have too much month at the end of the money? If you're not in the habit of driving your car until you stall on the highway with an empty tank - help is at hand!

Yes some recurring issues are more than annoying - but ignoring the problem will not make it go away. Furthermore, knowing exactly how far you are from the abyss might in fact be your saving grace. Better walking carefully with your eyes opened rather than falling into a ditch.

Introducing the concept of a cash flow forecast: As opposed to a budget where you arbitrarily decide what must happen financially next year, the cash flow forecast plays out into the future a list of earnings and expenses each at their appropriate due dates.

You can refine your juggling act by being able to pinpoint a shortfall into the future. You can avoid the wrath of banks and creditors by judiciously moving certain payments if possible.

Could you drive a cheaper car? Could you live in a more affordable suburb? Could you save on transport? Could you quit smoking? Like the proverbial glass of water you can see it as half empty or half full. If you lack imagination you cannot dream of where you would like to be, say next year. If things are bad now, they can get better in the future - only you hold the key to that. If nobody believes in you, you have to be the first one to believe in yourself!

You are embarking on a journey but as any traveller knows you will not reach your destination unless you know precisely where you are right now. You may not solve all you problems overnight (welcome to the real world!) but you might make just enough of a move each day to pull yourself out of that hole that wants to eat you alive.

Project your mind into the future. Imagine the powerful testimony you could have if you reach your goal and become qualified to help others too! Think of the people who depend on you if they are still around. If they have left you already consider the chances of reconciliation. Life is not a walk in the park. We need some achievers down here. There is a higher reason why you were allowed to fall into this situation. Pull yourself out to victory and show the way to other to follow through. That's what leaders are for!

Don't just wish for things. Make them happen. Wise Accounts is an online bookkeeping tool to manage your finances and forecast your cash flow while Goal Setter is another online tool to document and track your progress towards your goals. Take advantage of these resources.

The Dangers of Not Keeping a Budget

by Wise Accounts on 05 May 2016 permalink
You have heard the expression "spending like a drunken sailor". The fact is that freedom requires some virtue to be managed. For the rest of us we need to set boundaries. That is just what a budget does.

You have heard a couple at the shopping mall arguing "We can't afford this!" so then, how do you set what's in and what's out? It all depends on your goals.

Your goals will determine your priorities in life. In order to reach each milestone along the way you will need resources - time and money. What hasn't been planned is left for a better day. What has been planned is negotiated for the best price/quality.

The danger of not having a budget is that you are being tossed about like a cork on the ocean. Whatever clamours the loudest will get your attention. Advertising is aimed at those who do not have a budget and can get enticed to change direction. They are being influence by the fashion of the moment and believe the lie that to be successful, loved and respected they need to buy the item advertised to gain all its instant benefits...

Sound like a fairytale, huh? Sadly a whole industry on Madison Avenue feeds on that lack of discipline.

So how do you make a budget? You have to monitor your spending pattern for say a month or so. Take all the expenses that went through your credit card(s) and your bank account(s) and sort them out by category: food, clothing, petrol, transport, eating-out, entertainment (movies, sport fixtures), insurance, phone/internet, utilities, rent, etc... Some expenses show up only yearly or quarterly. Then divide the yearly total by 12 for a monthly figure.

Then assign some priorities: One for things you can't do without: food, rent, transport. Two for nice to have things but where there is room to trim down. Three for things that really matter to you, like an overseas trip, some further education, some share trading or business capital.

The moment of reckoning comes when you line-up all your anticipated expenses with your current income. You can bet there will be too much month left at the end of the money.

Something will have to give. But now instead of being pushed along by whatever shines the brightest you are led by the decisions you have made and the goals you have set out to reach. The freedom of doing as you please with your money is not a matter of what feels good - it's a matter of what lines up with your goals and your budget.

Don't just wish for things. Make them happen. Wise Accounts is an online bookkeeping tool to manage your finances while Goal Setter is another online tool to document and track your progress towards your goals. Take advantage of these resources.

The lighter side of accounting

by Wise Accounts on 28 Apr 2016 permalink
In a volatile market you want to make sure your liquid assets don't go down the drain.

My daughter wants to run a mud-cake business. When I enquired she said she wanted to become filthy rich!

My duck farm went bankrupt because I had too many bills.

A debt collector summons a customer about a one year old unpaid bill. "What have you got to say for yourself?" The customer sheepishly replies: "Happy birthday?"

Were you nervous about asking the paymaster for an advance on your wages? "No, I was calm and collected."

The deceased millionaire rewarded Santa by putting a Claus in his will.

The new accountant got fired because he thought Dun & Bradstreet was a downtown intersection!

Husband: "The bank rang me to say the new check account I opened for you is overdrawn!"
Wife: "Can't be - I still have another 24 blank checks in my book!"

Husband: "The check you wrote to the department store came back!"
Wife: "Great! What can we spend it on this time?"

A banker is considered a good artist when she can draw interest.

Bill: Australia is a land of untold wealth!
Tom: Why, have you been peeking at my tax return?

Bill: I made a bet with the guy who does our laundry and won a bundle.
Tom: I guess you're not hard pressed for cash!

Bill: I never worry about money!
Tom: Why not?
Bill: What's the point of worrying about something you don't have?

Bill: I plan to beat the inheritance tax!
Tom: How?
Bill: I'm going to die broke.

Wife: Let's go to sleep honey - it's late.
Husband: Sorry, I'll stay up a bit longer. I'm reading a mystery.
Wife: That looks like our tax return.
Husband: it is.

Jackie Paulson says:
We all need to laugh There are two guarantees in Life- DEATH TAXES

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Debits and Credits Explained

by Wise Accounts on 27 Jun 2013 permalink
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.


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."

Suzie Wilson says:
At last I get it! Thanks for that article...

Opening balances

by Wise Accounts on 01 Dec 2011 permalink
Why do some accounts start with zero and others don't? As you start a new accounting system you may indeed have not earned or spent a cent yet but it doesn't mean you are worth nothing.

Since you were not born overnight in a cabbage patch a new set of accounts has to reflect your personal worth. There are things that trail us from year to year and accounting is concerned with what we own and what we owe.

Sleeping on it does not make a debt disappear. If anything it costs you more in interest at best, at worst it can get the lender irate and claim all his money back all at once.

So we find there is a tight relationship between time and money. Knowing how much you spent or earned in of itself doesn't mean much. What's more interesting is how much you spent and earned within a given amount of time (a week, a month or a year) so that we can compare with the same period (last week, last month, last year) and see if things are improving or getting worse.

Accountants segregate those two types of accounts into two reports.

The profit & loss report shows earnings and expenses that get reset each time period.

The balance sheet shows what you own and what you owe. These things get passed on from period to period. You don't get off the hook with your borrowing if a new financial year starts. Likewise you'll be happy to know you don't loose your house or car just because a new financial year starts either!

So what is the best accounting period for you? If you are a wage earner then the period by which your income comes in is the obvious period to choose.

If you run a business and major regular outgoings fall due at regular intervals then that might be the time measure to use. You first have to clear off your expenses before you hit the profit zone. How soon in the period you can achieve that is a great motivator all by itself.

Is there a connection though between the two reports? Remember the first report was called profit & loss. (it should really be called profit OR loss - or just either PROFIT if you are gaining ahead or LOSS if you are falling behind).

If the first report is reset to zero at the start of each new period then the profit (or the loss) is passed on to your net worth (also called equity) into the second report (the balance sheet).

Uploading your data into wise accounts

by Wise Accounts on 24 Nov 2011 permalink
The bane of accounting programs is that one you used one your data is pretty much tied up to it. It is probably by design from the part of the software vendor to make sure you can't walk away from their product easily and use a competitor.

It shouldn't be that way and this article will explain how you can save yourself a lot of typing if you managed to save your data into a text file.

The quickest way to get you on your way is to reverse engineer what Wise Accounts does with the backup/reload (these menus appear once you have a paid subscription).

The idea is that if you use the backup file from the Smith&Co or John Citizen demo as a template you can reload your own data in one hit.

id name type memo recipient subject last year balance checkbal
4 Petrol 3 28726.40 5863

id p_date reconciled account checkno dissection comment amount
1 01 Jul 2009 0 6 0 Opening Balance 11327.5

There are only two tables to worry about: the accounts table and the postings table. Each field is separated by a TAB. (The Tab key is above the Caps Lock key on the left of your keyboard. Like a space it is an invisible character but some program can render it with a marker.) For the accounts table the only fields to worry about are the id (that's the account number), the name, the type (income, expense, bank account - they are listed in the types table - you can always change that later in Wise Accounts once you data has been uploaded.). Make sure you have the right number of TABs on each line otherwise you will get an error.

For the postings table the fields are id (an incremental counter), p_date (posting date), reconciled (0 = no, 1 = yes), account (the account number as per the accounts table above), checkno (leave it blank), dissection (leave it at 0), the comment (a good practice is to put the name of the matching double-entry account) and a signed amount. Simple isn't it?

If this is too daunting send us an email and we will try to do it for you.

If you are using MYOB there is a procedure to automate this.

Video Tutorials

by Wise Accounts on 10 May 2010 permalink

What about budgets?

by Visitor on 09 Mar 2010
How do you do budgets in Wise Accounts?

Wise Accounts says:
We use recurring transactions which map out your weekly, fortnightly, monthly or quarterly incomes and expenses. From there a cashflow report and graph are produced.

How do I import an MYOB file?

by Bert Falconier on 02 Mar 2010
I don't fancy messing around with spreadsheets just to use this service...

Wise Accounts says:
Easy: In MYOB go into the menu File|AcountantLink|Others|Ceedata and save the file to your PC. Then go into the Wise Accounts maintenance menu and click Ceedata import to upload that file. Also check out these tutorials.

cheque number

by Harold Wilson on 11 Feb 2010
I know that with electronic banking cheques are on the way out - but where do I record a cheque number when I post a transaction?

Wise Accounts says:
in the comment field

beware of web browsers that remember passwords

by visitor on 13 Jan 2010
If you intend to use this site from various locations don't rely on the browser to remember the password for you. That's the best way to lock yourself out because - guess what - since you don't enter the password anymore you will surely forget it... at the most inconvenient time!

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