A Small Business Can Be Smaller Than You Think
by Mary Howard, RN
A small home business was my goal. Something I could do and stay at home with the kids. It had to be something we believed in, something our family could enjoy and something we could all participate in. We came up with a small family farm, but since we only have 5 acres, we opted for getting some fruit started and growing a big produce garden.
My Mother used to say that a thrifty wife can earn her keep just by staying at home, growing a big garden, canning or freezing everything you can and cooking from scratch. We decided to take this one step further and grow enough to share with friends and relatives and earn a little at the same time.
At the first of the year, tax time, I was feeling a bit down because I could see by the numbers we just weren’t making it on my husband’s salary, but what was getting us by was the extra projects we were doing. We started doing some homework and began to learn a little about investing. What we came up with is that if I could do something at home even if it only made a dollar a day and then invest that for our future it would be worth it to us.
I started taking that attitude to the store, and found by buying the store brand instead of a name brand and by not buying something or leaving off a personal item here and there, I could also save my dollar a day. It was an empowering feeling to me, that even though I stay at home I can still make a difference in our financial future.
My first goal was to make $4.00 a day, one dollar for each member of our family. If we invest a dollar each a day in retirement accounts and a dollar a day in Custodial Accounts for the kids, the money can be in an FDIC account, invested securely (like in bonds), and it can earn 5-7%. If invested in mutual funds, stock, or something less secure it can make between 0-14%. You have to decide what kind of risk you are willing to take.
By budgeting in other areas of your life, as well, you will be amazed what you can earn and save by doing things the old-fashioned, slow-paced-lifestyle way. For instance, I make some of our kid’s clothes, mend and refashion clothes. We take hand-me-downs and appreciate having them.
Another way to save is to avoid using credit cards. Avoiding paying interest on the things you buy will help you save money. Or, if you do use credit cards for travel etc, only use them if the money is already in your account. Then pay them off as soon as you receive the bill. That way you do not pay any interest or service charges. Choose a credit card that does not have service charges and don’t bother with the extra insurance, you are still covered if the card is stolen or lost. Beware of cards that advertise low interest rates but then break the billing cycle into 2 cycles each month but only bill once a month. With these you can still accrue interest even if you pay the whole bill on time.
Carefully go over your mortgage, sometimes it is to your advantage to refinance if you can get a percent lower interest rate. Also, if you refinance and get a lower payment, but continue to pay the same amount, you will pay your loan off faster than if you didn’t refinance. One of the best investments you can make is paying extra on your mortgage.
For example, if you have an $80,000 mortgage at 7.25% for 30 years and pay an extra $1,000 on it you will knock a whole year off the loan. That’s an estimated savings of $7,200! What investments are there that can earn you this kind of money?! It is not always financially sound to pay off your mortgage but certainly paying it down where it is more manageable is a big help.
Don’t take someone else’s word for it, do your own homework on your financial situation and you will be amazed at what you can do for yourself and how easy it can be to save money. Call it budget, if you like, but I sure like the old adage, “a penny saved is a penny earned.” In my way of thinking, a dollar saved is a dollar earned and can make the difference of having a secure future or not.
Mary Howard is a Registered Nurse, mother of two, and owns a small business.