PayPal Bookkeeping System Update

This is an update of the practice of using a PayPal Bookkeeping System as your core record keeping system.  If you want to read my original idea on the concept, please read my previous article titled “Using PayPal As A Simplified Bookkeeping System

PayPal

PayPal Bookkeeping System Experience Update

Okay, I’ve made my first credit card payment from my PayPal Account to my PayPal Extras Credit Card.  While that simple payment transaction was fine (although it does take up to 24 hrs to show up), I tried to download the credit card transactions for the accounting system I blogged about earlier.  While Paypal captures the payment to the credit card, the actual credit card transaction aren’t downloadable to an excel format (it will do PDF though).  This is a huge disappointment for me because I was hoping to export the entire year and merge it with the basic Paypal transactions.  This would have been much easier than it sounds, so much for simplicity.  I don’t have many outbound expenses though, so the PayPal Bookkeeping System that I wrote about still might be of benefit.

 

The PayPal VRS (Voice Response System aka voice-mail) Was A Monstrous Disappointment

A huge disappointment for me was the PayPal VRS (Voice Response System or phone-mail) system.  I had to punch in the same information into the phone over and over again, what a joke.  If you have a question that’s predictable then the system is fine, but if you have a question like I had (downloadable transaction) you fall through the system in bitter disappointment.  I have experience with such systems, and I have to say that this system is one of the worst systems that I’ve ever encountered for questions that don’t fit within their canned response.  My question somehow lead me to a connections with no feedback.  So no elevator music, not reoccurring “An Agent will be with you shortly” message that’s in a repeating loop that occurs every 2 minutes.  Nothing!  Just a connection the system with no option.

So knowing that somehow I found a bug in PayPal’s VRS system, I did what any sensible person would do… I hung up!  But unfortunately, only after waiting on the phone system way too long (what was it 15 or 10 minutes I wait in the PayPal twilight zone?).

Change in PayPal Bookkeeping Strategy

So what a frugal guy to do, that sees the beauty of simplifying his bookkeeping system as much as possible?

  1. Make my credit card transactions atomic.  Atomic means that I’ll pay a credit card transaction as soon as I see it in the credit card transactions listing. Once is that I could PayPal any transaction I use the credit card for each time I use the Credit card.  This gives me instance accountability.  So for example, if I buy something Jan 13, as soon as it shows up on my PayPal credit card, I could instantly pay it.  Then for the next credit card transaction, wait until that previously paid one clears.  A pain, but it would work, and work well for me since I don’t have many expense transactions.  This would make all my transactions so that they are represented one to one in PayPal, so the transactions would each be record in my PayPal system.  Then I would just save and print the PDF credit card statement that my PayPal Extras Credit Card provides.
  2. Create an Excel Macro that could strip out noise transactions.  This would further simplify the manipulation of the spreadsheet after the import is completed.  The Macro would categorize reoccurring expenses, and delete statements that have no value for the bookkeeping system.  Such macro purges would be PayPal statements that are in a “pending” state.  Of course I’d make a copy of the original exportation of the PayPal transaction in a separate sheet in the same excel workbook.
  3. Create a future project to automate this process.  I could code something if I have time.  Not sure if I will or not, but if I do, I’ll make it available to everybody.  At this point I doubt that I will try this, but maybe…
  4. Moving income from my Connected Bank To PayPal and then back out again.  Much like step 1, this might seem like a pain, but it’s actually quite easy and fast.  Mostly by moving money from my bank to my PayPal then back to my bank, will enable me to acknowledge income sources such as Google Adsense.  Might look crazy, but it’s actually quite simple to do.

After next year concludes (or even after a few months of solid activity), I should have a better grasp of the strengths and areas that can be improved upon.

I view my PayPal Bookkeeping System as an experiment in how much I can simplify or partially automate this process.  If I stick to just PayPal and PayPal Transactions for my business transactions, there is no reason that I shouldn’t be able to dramatically reduce the bookkeeping process.

Happy Holidays,

Don

Financial Year End Strategy

Well it’s almost the conclusion of a long, stressful year and now is the time for me to start on my “year end financial strategy and actions”.

This is the optimal time time of the year (mid December) that I find works for me and my financial year-end strategy and for starting my financial strategy for next year.  By starting to close my financial year end work now, I’m better able to plan my strategy and actions for financially attacking next year.  The idea is to wrap up all of my financial loose-ends for the current year and to place a clean setting for next year’s activities.

So what kind of Year End Financial Planning do I do?

Father Time

Closing Work for My Financial Year End

  1. My first step is to sell my stock losses in my regular brokerage account.  I try to offset as much of the capital gains and other incomes that I have realized so that my tax consequence is minimized as much as possible.  This is a tough one this year, because it might be better to wait until next year when the dividend tax rates are higher, to cash out of these losses (if you have any).  I have side income to take the losses against, so I’m better off taking the losses this year since I didn’t make any estimated payments in advance.  It is important to sell these losses now because it is the settling date of the actually stock trade which is important for tax purposes, and that can take a few days.
  2. Retirement Rebalancing (mostly my 401k) – I don’t always rebalance my portfolio at year end, but with the fiscal cliff coming up quickly, I’m considering the pros and cons of rebalancing now.
  3. I like to pay any bills outstanding online so that I start the new year as stress free as possible.  This enables me to drift a bit at the beginning of the year.  I don’t why, but I like to start the new year this way.
  4. Medical expenses need to be addressed if possible.  Actually, this is my downfall, my son had a serious wound earlier in the year, and if I was thinking better financially, I should have lumped in a lot of medical work that needed done, but since I was sick (vertigo), my mind wasn’t all there.  Kind of ironic actually, when I need the work done and it makes the most financial sense, my mind wasn’t working at that level so I missed the cost saving opportunity.
  5. Tax planning.  Yep, now is the time to think about where I could have improved my tax strategy for this past year, and to make a plan to improve on it next year.

I know that working on your financial year end work seems like it would totally suck, but actually think of it as a positive activity.  Doing it now enables you to create a plan for success instead of letting life give you want it wants.  Of course, even the best thought-out plans may vary from the goal, but not planning at all is the worst plan!

Happy Holidays,

Don

 

Blogging at Starbucks

It’s December and I’m in a Starbucks listening to Fiona Apple’s version of “Across the Universe” drinking a caramel brulee latte.  Life is good, but not great…

This is an odd move on a Friday night, there is only two other people in Starbucks and the traffic coming in is very light.  I think traffic is light because of the drive-thru and obviously because it’s Friday and there are better opportunities out there to do!  But it makes me unique on a Friday night and with a blog post to write, so on I type…

Usually by now, the snow is falling, especially by now!  But today it’s about 50 degrees (Fahrenheit) and quite honestly it’s a bit depressing.  I also long for other bloggers like myself to visit.  It’s hard being in a blogger in the Midwestern states.  I occasionally watch the traffic that visits my site and while I see a lot of visitors from New York and California, there are some states that I don’t see any traffic from.  While my state does have a few hits, they pale in comparison to the larger states.  I can honestly say I don’t know another financial blogger within 100 miles of where I live.

Now it might seem like I’m whining, but some time blogging is a lonely process while trying to write in the middle of nowhere…  In many ways I feel like like the proverbial lonely tree in the middle of a corn field.

Tree in Field

As much as I whine, it much better than is was 10 years ago!  With the social media that exists today, it’s easy to reach out and talk to people online and in the blogging community.  Now I just need to use those social sites more (like twitter, Facebook and whatever the latest medium is…).

Another nothing to do Friday in the sticks,

Have a great weekend,

Don

 

 

Back In Debt But It’s Different This Time

Well, I decided to break down and buy a new car (a 2010 Toyota Camry, not sexy but nice) for $15,500 so I’m back in debt but it’s different this time, really!

First let me say that I put down $5,500 on the car to make the amount that I’m in debt for equal to $10,000.  There are two reasons I wanted my debt to equal $10,000

  1. I honestly believe that I can make a better return in investments (even with a small increase in the amount that I might pay in taxes next year).
  2. I wanted a simple number for reporting on in this blog.  This was a minor factor, but still a factor all the same.

What you may or may not know is that I was debt free (including my mortgage) before buying this car.  And actually I think I blogged about how nice it would be to never be in debt again.

toyota camry 2010

So what changed my mind?

  1. With my excellent credit score (811 at the time of purchase), I was able to get an additional .5% of a percentage point off the interest rate for the loan.  I believe it made the rate something like 2.5% for the loan.
  2. I’m pretty sure with just a little effort, I can buy investments that can beat that 2.5% interest rate that I would have to pay on the loan.  With low-risk but optimistic investing and barring a market meltdown, I should be able to easily beat the 2.5% yield.
  3. I’m working on a strategy for three future car purchases spaced about 3 to 4 years apart.  This future purchases will include a replacement vehicle for my wife, and two cars for my kids.  Sounds like a lot, but most likely the two cars I buy for my kids will be used and the total of both will cost less than my wife’s replacement vehicle.
  4. If you are financially oriented (like me), sometimes taking on debt for other financial opportunities makes sense and can be the more prudent route.  This might sound a bit odd coming from a guy that paid off his house in about 11 years, but it’s all simple math.

Here’s the kicker, I could have bought my car outright from money that I had in my investments.  Actually, the money was even sitting in cash, so I wouldn’t have even had to incur any capital gains tax on any investments that would have been sold.

So if I had the 10k sitting around doing nothing… what am I going to do with it to make use of it instead of paying off my car?  Ah, that’s the question!  Currently, I’m leaning towards investing in a safe solid utility company that pays out a respectable dividend.  But in the mean time, it’s still sitting in cash.

After I find out the new tax rates on dividends, I’ll make a move at that point in time.  This entire process if evolving and will change dramatically in the next few months.  Stay tuned!

Bests,

Don