A Lesson In Auditing

Accounts payable.  Every first year audit dweeb's dream come true *sarcasm.  Nothing better than auditing cash.  LOL.  I crack myself up just writing these lies.

AP is money that a company owes to vendors or services for whom they have purchased something but not yet paid at the end of the year.  The risk with AP is completeness since it's a liability and most companies will want to understate their liabilities (rare example is smoothing income, making it seem they did not make as much money as they did right away by overstating your AP).

So newbies always got the joy of testing AP.  They'd make a selection of large payments made from the check register after year-end and ask for documentation which could be the invoice, the receiving warehouse packing documents (to see when it was actually received if an item) and sometimes even the PO (but really, who cares about the order information unless you're also testing that some control ensures all the info matches from cradle to grave).  Service invoices are the easiest - you just check to see when the service was for and if it was before year-end, it should have been a liability even though they paid for it after the year-end date.  If it was after year-end, it shouldn't have been.  Items are a bit trickier.  For example, a company may have ordered a new printer on December 20th, 2011 and received the item on December 22nd, 2011... but the payment terms are 30 days, so the invoice was dated December 20th and would not be paid until January 2012, BUT it is an item you own as of December 22nd as it's yours.  The auditor would pick then say - have you included this in your AP total and have to ask for a painfully detailed listing of what makes up the AP total and make sure this item was on there.  It could also have been accrued for separately but that accrual listing would also have to add to the AP listing to be the AP amount on the financials.  Fun stuff right?  SO MUCH!

Well, cash wasn't any better, except cash taught me about the Controller's website (at least in California) where you could see if anyone owed you money.  This means their AP got so old because you never deposited some rebate or money you got a check for, and then they gave it to the state.

I forget about this website often - but it's fun to go back and check it frequently.  If you don't live in California, you should check to see if there's a similar website for your state.  I check it whenever I remember and always find money I haven't deposited (lost in mail, lost at home, etc.).  I just recently found over $400 for my parents that they forgot to deposit from rebates.  And if you're wondering how this all came about - I was telling my brother about how AP works for a company since he found a very old check from a company he used to work for that he had not yet deposited and was not sure if it was still valid.  Yeah, it doesn't work the same with personal checks.  If you lost it.. your bad!

CA Unclaimed Property Search

Excel Geek

I have had an infatuation with Excel since I first learned how to use it in 2002.  Over time, as my skills became refined, and I became more comfortable with the shortcuts and potential that excel offered me, I fell in love.  Even when Excel changed (new versions and then re-learning shortcuts on the mac versus the PC), and our relationship became a challenge to maintain, I endured.  Persevered.  Held on.  For better or for worse.

And for the record, I am still constantly amazed by what Excel can do for me.

Budget.  Organize.  Sort.  Group.  Wrap Text  Copy and Paste.  Transpose.

So I thought I'd share some of the wonders of Excel and offer a basic budget template for a family.  I included tithing at the top which is how we Momos prioritize and budget.  The spreadsheet is pretty self explanatory, but I also included commentary to help guide users along.  Like any template, you can modify it and use it as you please.  Have fun like I do!

download budget template here

Money Money Money.... M-O-N-E-Y!!

I'm no financial expert, but I do know a few things to kickstart your savings especially if you are a new family or have just started a new job.  We went to a financial planning meeting with the Yans while we were in Seattle (so much fun, more on that later maybe) and I learned that being a CPA and having worked in the accounting industry for seven years actually paid off a bit... because it turns out I know more than I thought I did!  

So here are three simple ways to make sure your family is on the right track to being financially secure.

1. Pay off all consumer debt - this means you don't just pay the minimum every time you get your credit card bill.  The plus is that if you're ever late on a payment (say you forgot, went on vacation, etc.) it's an easy call to the 1-800 number asking them to please reverse your late fee since you always pay in full on time but had this one time exception (and it works for more than one time - I think I've used it up to three times ont he same card before). If they say no, ask to speak to their supervisor.  It has never failed me thus far in life and I've had credit cards since 2000.
2. Start saving! - Even if this means putting aside $100, $20, or $5 a month, put aside money you will not touch.  If your company offers a 401k, DO IT, especially if they match - and if they match, contribute however much they match.  When I was single, I always maxed out on my 401k contributions to whatever they matched.  Don't even stop to think about it because it's free money.  401k is money that is put in for you and not taxed (it's taxed when you take it out, there is a penalty if you take it out earlier but you can normally borrow your own money for first time home purchases and some other stuff). If you have a kid, get a 529 College Savings Plan for them, it's money you can put aside (limits are same as that of estate tax which is $13,000 per person, $26,000 if married) for your child to use for school (anything related, even the purchase of a car used to drive to school and probably even flight tickets, books, tuition, room and board, computer, etc.) and the best part is if you take the money out for something unrelated to education stuff, it's at the income tax rate of the kid (if no job, usually small) and an unfortunate 10% early withdrawal penalty unless the beneficiary got a scholarship, died, or became disabled.  If you don't have a 401k, or even a kid to start a 529, you can start little with a Roth IRA (individual retirement account) which has limits once your income gets higher (for details, see this), but it's post-tax money that is not taxable when withdrawn (normally, I'm sure there are minor exceptions that I won't dwell on).  Of course, create a combination that works for you.  I did 401k until I quit the Firm and our income was significantly reduced.  Knowing we'd have to live off of savings for a few months before Andy's residency began, I never enrolled in my current company's 401k.  It just made sense at the time.  That said, I went seven years prior to that contributing at the max amount that was matched (and some years after I got a raise, I contributed even more because what I didn't see in my paycheck, I never spent).  
3.  Know your spending habits - You should normally have three months worth of living expenses in your checking account to be on the safe side, but you can't do that unless you know how much your family usually spends in a month.  If you don't want to track it in a meticulously detailed way like myself, at least know your fixed costs (for us, tithing, rent, utilities, phone, cable, etc.) and roughly how much you spend on other semi-fixed items like food, gas, entertainment, etc.  This helps to arm you with an understanding of what exactly spending $100 on that bike you really want, or $75 on those cute pair of jeans you really want, means for your short and long-term savings goals and encourages you to look for deals that are truly meaningful and necessary.  

Those are some simple rules I've lived by that have helped me along the way.  When it comes to spending habits, I know I always think.. oh how much I've saved by getting this cheaper version, but lately, it's been.. but do I really need that because if I don't.. I'm actually saving way more by NOT getting it, even if it is on sale.  My home might not always be the cutest.  My clothes might not always be the trendiest.  My shoes might not be the newest.  My idea of fine dining might just be Claim Jumper.  My idea of splurging might just be dinner and a movie.  But heck, my retirement plan (thus far) sure looks quite nice!    

Do You Know?

How much do you spend on gas each month?

Groceries?

Entertainment?

Dining out?

Shopping?

Most people know how much they spend on rent (fixed), utilities, cell phones, insurance, loan repayments, tithing, and cable/internet.... but past that, much is not meticulously analyzed.  Unless you're me that is.  Or probably my accountant buddies.  

Gas - $400
Groceries - $400
Entertainment - < $10 (our entertainment is mostly RedBox with exceptions of when people come to visit us or sporting events)
Dining Out - $150
Shopping - $200

And here's the scary part, we're pretty frugal.  Last night, I had an epiphany while I was sitting at the Dodger Game admiring this view.

Los Angeles is an expensive city to live in. As much as local residents boast of all its amazing benefits, the weather, the things to do, and the people to see... it all adds up.  Though I'm deeply saddened by the approaching prospect of moving to Spokane, into the bitter cold where much of my time will be spent in doors, it's not much of a difference from my current lifestyle as as working mom.  Moreover, with my parents living in the suburbs of Los Angeles, every trip back to visit will now include everything fun about LA (which our current budget does not allow nor do my frugal ways).  This means trips to Disneyland, Universal (Harry Potter world will be coming soon!), the westside, hoity toity trips to dine at fancy places read about in magazines and seen on reality television via the cable we will have in Spokane!, lots of shopping at all the major nearby outlets and large outdoor and high-end malls, and a lot of Chinese food crammed into every other meal.  That means LA will be much more fun once we're only coming to visit on vacation versus living here and seeing the tab add up.

I am pretty dang psyched about that.  Having been around the San Gabriel Valley my whole life, gone to college just forty minutes east of LA and having worked in downtown and everywhere from the Valley to the Westside to the South Bay to the Inland Empire, I simply hope I don't forget the freeways and how they all intermingle as we make our way around when we come back to visit in the future.  Oh how fun it will be!

Tax Time!

I love tax season.. the time of year when everyone calls me with questions I am unable to answer.  Yes, I am a certified public accountant.  No, that means nothing.  You'd probably be better off googling your question than asking me.  But here's what I can tell you... get ready to do your taxes!  Here's what I've got organized so I can do them soon...

1) W-2s - this is that form you get for any wages you've received during the tax year
2) Charitable Contributions - save all the evidence of how much you've donated.  I tithe to the Church and get a nice print out, but I also save any money I donate to friends doing runs or growing mustaches in November.
3) Interest Forms - For any bank where you save money, get the INT-1099 forms, you can normally get it online if you have a registered account, it makes it way easier.  The same goes for any school or auto loans you are paying back as well!
4) Education Stuff - I was so excited when I married Andy and he gave me some education credits.  I don't know enough to tell you what they are, but Turbo Tax will help me out!
5) Medical Stuff - I doubt I will have any medical deductions but I saved all my bills from Jordan's birth (he cost over $2k, how much was your kid?)  Oh, and I think we used some of our HSA so there's a form for that tucked away somewhere...

Lucky for us, we don't have any investments besides a couple of mutual funds and an IRA that I haven't contributed to lately.  That makes all the gain and loss rules a lot simpler! Can you tell I'm a wee bit excited to Turbo Tax our return this year?!  Much of it also has to do with the fact that I'm hoping for a huge return based on having a child in 2011 (2010 was a great huge return year after getting married to a student).  I remember my tax classes in college and Professor Taylor telling us we should get married on December 31st and also have a child on December 31st.  More bang for your buck!  HAHAHA.  Unlike rent or bills that might be pro-rated, you get the benefit for the ENTIRE year regardless of when you became one or added to your growing family.

Here's to the accounting nerd in me.  Stoked for tax season.  Especially since this is year number two I am NOT working busy season for audit.  To my friends still in busy season, the grass is definitely greener over here right now.

Nothing Scarier...

There's nothing financially more scary than an e-mail from your bank informing you of your "insufficient funds." How terribly appropriate for them to do it on Halloween of all days.

The last time I got an insufficient funds notice was in college when I knew very little about how a checking account worked and spent a little too much on clothes textbooks. It was a good learning opportunity and helped me grow into the fiscally conscious person I am today. Until today that is.

Shocked and offended by the obvious error on the bank's part, I quickly logged into my account and noticed... we have $200 in our checkings account. Oops. Big oops. I guess I forgot that the money had stopped coming in while the expenses were still being incurred. We are still racking up about $2,500 worth of consumer debt through our Costco American Express card each month, $1,500 in monthly rent and utilities, about $300 for every one of Andy's many flights for interviews and did I mention we are still paying for hospital bills around $1-2,000 and benefits incurred during my unpaid leave for the last two and a half months? I have never been more excited to receive a paycheck as I will starting November.

And I've learned not to overlook the small things and that I should have signed up for overdraft protection earlier - because at Wells Fargo, there is no fee to sign-up, just an automatic $12.50 you will be hit with (instead of $25) and an automatic transfer from your savings which we had enough money in, just did not think to transfer ahead of time. At this point, it's embarassing that we erred as such, but hopefully my mistake is a lesson to you to monitor your account (in detail, not just in aggregate) closely each month. Lesson learned (as always), but also - one should never give up and take any fee (even if it's your fault) without a fight. I called and got half of the fee reversed as if I had overdraft protection this entire time.

*sigh. I should have known. I didn't. I was too busy making homemade Halloween costumes and playing with my adorable son. Oopsie Daisy.

Mint Has Not Just Been A Herb For A While Now...

So you know how a lot of girls blog about their really cute crafts or delicious recipes? I've been pondering what I can give back to the blogosphere lately and it's not my lack of crafting abilities or cooking expertise... nor would my attempts to sew or cook healthy entertain anyone. But I do know a bit about managing the family's finances and so I decided... why not blog a bit about that? This way.. I have it for my kids in the future and along the way, if someone actually heeds some of my financial advice... hip hip hooray.

So today.. I want to promote Mint.com. If you haven’t already heard of mint.com, you are in for an herbal treatment! This fast growing website is the premiere place to consolidate all of your finances and provide you with a real time analysis on your actual cash flow (assets minus liabilities... or what you have in cash minus what you owe in credit card bills, loans, etc.). But wait, it doesn’t stop there (do I sound like an as seen on television infomercial?... well, it’s that great my friends), it also categorizes your transactions, makes suggestions for further savings based on your spending trends and allows you to set and monitor monthly budgets. And for the super anal retentive and slightly obsessive compulsive like myself, you can export all of your transactions into an excel worksheet and further sort, analyze and budget for the future (just categorize it all in Mint before exporting).

The website is simple and secure and requires a no fee registration in order to get started. (Found this blog post with pictures and step by step Mint preview if you're curious) The only thing that will hold you back is all your accounts be it loans, a checking account or savings, must already have an online account registered with a username and password that you can recall (otherwise, say hello to the click on forgot my password and wait for that automatic e-mail to come through, or spend some time registering, trust me, it’s worth the time investment).

On a side note, one tip I learned when I began setting up all my accounts was to keep my password simple yet complex – simple being something I could easily remember, made complicated with some caps locks, numbers and a different prefix or suffix for every single password you own (I have found that men tend to use the same password EVERYWHERE... remember when I mentioned it here?), thereby allowing yourself security in case one password does get hacked.

Know your trends people. Do you know how much you spend a month on gas, groceries and dining out? What are your largest monthly expenses? For us, it's rent... followed by groceries and then gas and I can also tell you our groceries come in around $350-400 and gas is roughly $250 (before the van... yes, I am a mini-van mom now.. but I have not figured out that trend as it's only been a month so far). I know if we're out of town visiting family, that we will save and have more room to spend on dining out or entertainment. I also know the impact of residency interviews (estimated at around $10K) will dip into our savings a bit but that if we cut back on some of the more variable expenses (like dining out, shopping and fun baby stuff that's want, not need...), our fixed costs won't hurt as much.

It's our family goal to make it to 10-20-70 and always pay off our consumer debt (think credit card bills) in full (because those finance charges will get you!) With that said, we will always tithe 10%, try to save 20% and hopefully only spend 70%. We might not be able to make it there this year or for a few more years... but we're trying and along the way, Mint is helping us.

I'm glad Mint isn't just an herb, but insight into our financial well-being. Makes fiscal sense to me!