Thursday, July 5, 2018

Cash Management for Writers

(Irrelevant picture but at least the copyright is mine!) 

I'd be lying if I told you that being a full-time writer is all wine and roses and endless days of blissful creativity - especially at the start.

It's rarely that for most. If you look at the lives of the great writers throughout history, they invariably grew familiar with the pain of rejection, the fear of failure, and often the gnawing ache of poverty.

These days poverty is a relative term. If you have a computer and an Internet connection, you're by no means poor, no matter how you may feel.

Recently I spent some time in Luxor, Egypt. There I met many people who thought regularly going without food for a few days was normal; people who thought you were unimaginably rich if you could afford to catch a plane; people who dreamed of one day owning a mobile phone.

These people were by no means peasants, they were town dwellers with jobs and apartments who, despite living without electricity, managed to be smart, clean, multi-lingual and law-abiding.   

Until fairly recently, the idea of writing for a living was out of the question for most. Until the advent of mass communications, the only way to write full time was to either have a rich benefactor, have tenure at a university, or to be a monk! The idea that a full-time income could be made from writing is really only something that's become common since the 1950s - actually since the proliferation of TV, movies, newsprint, radio and now, of course, the Internet.

These days your success as a writer is inevitable if you stick with it.

No matter how bad things seem, your situation will get better with persistence.

Knowing how to deal with little money, at least at first, is important.

First of all, stop worrying about the bills. Easier said than done I know. But the fact is there's no such thing as debtor's prison anymore - and you're not going to be put behind bars for credit card debt, bank overdrafts, or even unpaid utility bills.

Punishment these days is meted out through lack of credit which, if you're poor, seems unfair but is actually the best thing for you. When you owe lots of money, the last thing you want is to have to pay back even more.

Here's how I made it through some lean times at the beginning of my creative career.

Twenty years ago I accepted that I was hopelessly in debt and I was going to have to take responsibility for the fact I was crap with money. I bought all the wrong things, spent way too much on hedonistic activities and never seemed to earn enough to pay back what I owed.

But I realized too that I was not unique. Most people live with permanent debt - and the financial institutions want you to live this way because that's how they make a profit. If everyone was rich and had enough money to buy things outright and never get into debt, the whole of Western civilization would collapse - as it almost did during the recent global economic crisis because too much debt was going unpaid.

When I was poor I deliberately changed the way I thought about bills by making a slight shift in my word use. I picked the word "creditors" to describe those I owed money. It's a nice-sounding word: it sounds positive, not one that fills you with foreboding.

Then I made a list of all the outstanding bills, debts, credit card balances, mortgage repayments, etc.  I was stunned and sickened when I added it all up.

Then I listed the debts in order of importance. This is something you have to decide for yourself. The most demanding creditor is not always the most urgent. Utility bills are normally the most pressing - to keep power flowing into the house.

Cell charges not so crucial because you don't really need a phone and getting cut off will probably help you in the long run. Lawyers, doctors and other freelance professionals can charge obscenely large fees but courts are not always sympathetic to their pleas for payment. And often, by the time things get into collection, the urgency is usually over. You just get black marks against your credit – which you should see as a good thing because it will stop you from borrowing even more. 

When I'd written up my list, I decided which bill I was going to pay next, when I had some money. If it was a large bill, I would part pay it: sometimes half, sometimes a tenth. It's hard for someone to sue you - or pass the debt on to collection - if you're making small part payments.

A judge will throw a case out of court if you're paying a creditor even the tiniest amount per week. In most jurisdictions the same is true of rent and mortgages. If you pay a little - and inform the creditor in writing of your intentions, there's really not much they can do in the short term. You're trying - and that's all a court could enforce anyway.

This tactic is not for the impatient. Though I barely had enough to eat and drink for about a month at one point, paying a bit back all the time felt enormously liberating.

Two years later all the debts were gone and I had learned one thing very well: if you don't spend more than you earn, you'll always be better off!

I could write a book about debt management and financial prosperity. Perhaps I will, even though many have been written already! I recommend you read some if you're not very good with money, or if you believe you don't have enough to live on.

It's often the case that simply taking the time to properly manage your finances - like a business - will make you feel more prosperous.

After all, most businesses operate utilizing far more debt than many of us can comprehend. There's apparently no shame in a corporation using billions of dollars of borrowed money to increase its profits so, when you go a little too far into the red, just think of yourself as doing the same.

But remember to keep working and taking writing jobs to bring more money in.

Keep Writing!

Rob Parnell
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