Katie: Welcome back to the BusinessMakers Overtime Show. We're here and we are diving right into a variety of budget related and financial planning topics, which is really quite timely right now. So Esther I am excited to hear a conversation you had recently with a fellow named Dan Bender, who apparently knows a whole lot about these things.

Esther: He does, he is actually the senior vice president at Johnston and Bender and Company, which is a wealth management firm. And he is so smart, he knows so much about wealth management. I actually can not wait for you guys to hear what he has to say.

Katie: Alright, well let's take a listen.

Esther: This may seem like a simple question, but bear with me, because I'm a layman. What exactly is wealth management?

Dan: Wealth management means looking at all the different disciplines that one might have. For instance, a lot of our clients come to us with fantastic advisors. They've got a great insurance person, a fantastic CPA. They might have an investment person they work with. What we see differently and what wealth Management is all about, is really putting all of those things together. We think the difference between having done things okay, and having done things as well as we possibly could is dramatic. When we make decisions and our clients make decisions, they basically affect all of the different areas. So if I'm going to make a decision for a client on the investment side, it's certainly going to impact his long-term income taxability and also his estate planning down the road.

Esther: Absolutely. What if you don't have a lot of wealth? Just me, I'm straight out of college or something and I have been working for a while, have a great job, and I make a good living for myself. I'm a single person. What would I do? Would I be a client or would I be someone who should use wealth management at all?

Dan: Well, I think so. There is no better time to start than when you're young to make things more efficient to have more assets to accumulate and to look at all the different scenarios. So starting when you're young, I think, is absolutely key. I would say there is a number of things you can do when you're just starting out that can make things a lot more efficient. One of the things is very simple, quite frankly. Interest rates, quite frankly, are extremely low right now. If you have a house, I would suggest if you haven't done so already, to look at possibly refinancing that house at today's low interest rates. Today, we have 30-year loans at 5 percent. If you have a 15-year, and you can make the payments on a 15-year note, it's down to 4 ½ percent. Now if you look back in history, this, right now, is probably one of the lowest rates that we had in a long, long time.

Esther: It seems like a daunting task, to be honest. How should you actually get started? What's the first thing that you should do if you're thinking about management?

Dan: It's important to try to sit down and see where you're at. In other words, pull all the information that you have. Most of us have a lot of documents out there, and quite frankly, a lot of us have a hard time finding those at any one time, but to gather those up and take a look at – do you have a will? Something as simple as do you have a will; do you have powers of attorney that will allow someone to make decisions for you in the event that you're incapacitated? Those are very, very important. And if you have young children, absolutely you need to have those kinds of documents.

So the first thing you need to do is taking an inventory of what exactly it is that you have and then start to look at ways to make things work better, making decisions that might affect one or two of those disciplines that I mentioned earlier, and make sure that when you do that, you can run, let's say, what if scenarios and cash flow analysis that can allow you to make a better decision because you're doing it on paper. You can come back and say, "Well, what if I did this type of qualified account in my business or what if I did a different type?" Well, you can do those kinds of analysis without actually pulling the trigger on them. You can do them on paper, calculate the tax deductions, calculate the long-term effect, and then make, hopefully, better decisions.

Esther: I wanted to ask you now about the Roth Conversion. What exactly is that?

Dan: Well, actually, we're getting a lot of interest in that right now. This is something that, in 2006, it actually was the 2006 Reconciliation Act that was passed. They are making it available for almost anybody who has an IRA to convert their regular traditional IRA to a Roth IRA. Previously, there was an income limit on that. In other words, you couldn't have made, between your spouse and you, over $100,000.00 to be able to take advantage of that. So it kind of took a lot of the people that we work with out of play to be able to convert to that Roth IRA. But now, going forward, it's gonna be a permanent waiver of that income limit. So on an annual basis going forward, and starting in January 2010, that's gonna be an opportunity for us to convert from a regular IRA to a Roth IRA.

Esther: And what is a Roth IRA?

Dan: Well, a Roth IRA is an IRA that normally when you put the money in, you do not get a tax deduction. In other words, it's an after-tax contribution. But the really great thing about it is it grows tax-free and, ultimately, when you pull it out, there are no taxes on it. There's never a required minimum distribution and the best part, and this is where I'm using it for a lot of my clients, for estate planning purposes, is if you pass that on to the next generation, you have an asset that is growing tax-free, that's providing income for your children.

Esther: Unbelievable. I've never heard of this.

Dan: Well, the devil is really in the details, as we say here in the office, and there's a lot of complexities to it, and, quite frankly, we spend probably an hour and a half in a seminar describing all the different nuances to it, but the bottom line is, to get professional help, talk to your CPA or your financial advisor, who's very familiar with this, and look at it, because it is an opportunity that I think you need to take a look at if you're at that 59 ½ or retirement age, because you can really do a lot of things. We, quite frankly, think that taxes are gonna do probably nothing but go up because of the current deficit. So if that's the case, it would be great to have an asset going forward that have no taxes attached to it.

Katie: Well Esther that was a really great interview, defiantly actionable and rather inspiring even for my own finances, I love it.

Esther: Absolutly, he really gave us some good tactical information and some things we can actually do. As opposed to things that are totally above our heads and we can't really understand and can't do ourselfs. And actually your interview with Karen Walrond, she is with Chookooloonks Media, this is a company that she founded, she was originally this big shot lawyer. Left that world and now she is a very successful blogger and photographer. She has so much to say about budgeting and about running your small business with savy and success, and she is doing all the right things.

Katie: Having come from corporate-corporate and now, you're striking out on your own.  You've really found yourself.  These things are just flowing into your queue.  But what tips do you have for somebody that's maybe just made that transition, or is still in the early years of a business?  This solo gig that they are so passionate about.  Do you have any handy things that you and your family have learned. 

Karen: I always tell people I'm really awful with money.  And it's not like... I'm not in debt.  I don't have any debt, or anything else like that.  But I always feel like... you know, I have friends that... well, before everything crashed, that "well, I've got this and this portfolio".  I'm just not a person that does that.  I'm not in debt, which is good, other than our home.  What I found is because money kind of frightens me, I'm sort of worried about taxes and worried about all this other stuff.  One of the first things I did, when I struck out on my own was that I met with an accountant.  I just said, I have no idea what to do here.  Right?  One part, I think, of striking out on your own is, know your strengths and know your weaknesses.  For me, money was a weakness.  Just because I don't know taxes and the whole... how do I set myself up, what kind of business should I set up.

She was great.  She kind of gave me some advice.  But one of the things that I loved, and I'm really happy about is she told me, if you're really going to work from home, which I wanted to do, and you really want to start this sort of sole proprietorship, the first thing you need to do is set up a separate bank account and have a separate credit card or debit card from the bank account.  Set up a business, set up a DBA.  Have an address.  So I have an address, actually a post office box -- like a mailbox.  And I only use that credit card for work-related stuff.  Frankly, at tax time I am not going to sit there and figure out what kind of deduction this is and everything else like that.  But it's all together.  I never worry about, was this meal a personal meal, because if it's a professional meal at the time I'll pull out that credit card.  And I just use it for that and we can figure out what kind deduction that is.  So that was very helpful for me.  And the other thing is, for example whenmy family's short on cash and I need to put some money from my business account into my personal account to help pay the mortgage or whatever else -- because all my earnings also going to the business account, right?

Karen: So I separate it.  For example, all my checks go to the separate business account.  Then if I need money, I transfer that money to my personal account.  So I could always tell money that goes out that I use personally, but this was income in.  It really separates it for me.  That I think is a really very smart thing to do, is just to separate it out.  Don't worry about, well it's a personal expense because... if I'm buying camera equipment for my stuff, I know which card to use.  And I always do that.  If I have camera equipment and I don't have enough money in my business account, but I know it's going to be a business expense, I will transfer money first from my personal account to my business, and then use my business card.  So that's just something that I do so I'm very very clear what expenses were business and what were personal.

Katie: Okay.  It's such a simple concept, but I can't imagine at tax time how many hours...

Karen: Right.  And I just go into my bank, because it's a debit card and I just print it all out.  I can go through and go, this was office supplies, this was... because I can go through and see what money was spent. And I would not necessarily have done that had I not talked to her.  So that was the first thing that I would've done.  You know, you just have to tighten your belt.  One of the things we talked about, this book... another thing that was really helpful for me was a friend of mine had her own business recommended a book called "The Boss of You".

Katie: "The Boss of You".

Karen: "The Boss of You".  It's written by two women, Lauren Bacon and Emira Mears.  It says it's "everything a woman needs needs to know to start, run, and to maintain her own business", although frankly I think it's for anybody.  I don't think it's necessarily a woman thing at all.  What I really loved about this book... just like most business books it kind of gives you ideas of how to make a budget for your business and that sort of thing.  But what this does that a lot of books don't do is it also talks about the emotions behind starting your own business.  Like, it's month one and you're probably euphoric because you've got this great idea and stuff like that; okay, it's month three and money isn't coming in like you want, so you're probably getting a little depressed, work through it.  And it was really cool to kind of go through and go, "yeah, that's about how I feel.  Okay, then I'm on track."  Even though I'm depressed and stuff like that.  And this is what you should do to tweak.  It was really kind of a great book to go through and help you through the emotional side as well.  I think that's probably why they say it's for women, because it talks about emotion.  But honestly, there's nothing in here that's about genders at all.  It was a really great book to kind of help guide me through not just the technical aspects of starting a business, but what the emotional ups and downs of starting a business are, as well.  So I strongly recommend that book.

Katie: Wonderful.  Well, Karen, thank you so much for chatting on the ups and downs and adventures you've gone through going from big-time corporate to big time you.

Karen: Big-time me.

Katie: You're striking out on your own.  Chookooloonks!

Karen: That's me!  Thank you so much, it's been so much fun.  It's been a lot of fun.

Katie: Wonderful.  So, we've been talking to Karen Walrond, who you can find online chookooloonks.com.  Be sure to be looking out for her upcoming book, called "The Beauty of Different: Observations of a Confident Misfit."  I love it.

Karen: That's me, absolutely.

Esther: Man what a great interview. She is just awesome.

Katie: Yea she is a powerful, intelligent and rather feisty women, a combination that I love.

Esther: Yea she is awesome. And now it is time for another Business Survival Tip with Carl Kleimann.

Carl: Hello Business Owners this is Carl Kleimann with another Business Survival Tip from Odyssey One Source. We recently talked about steps you should take in order to hire the best employees. So now that you have improved your hiring practices, how do you keep those employees performing at their peak? One essential ingredient in this recipe for success is to conduct regularly scheduled performance evaluations. Whether you have one manager or ten managers, make sure that they adhere to a standardized review format and time schedule.

Failure to do so could result in pay discrimination and possibly even morale problems over time. Take care to grade each employee’s performance against expectations that have been clearly communicated to them. Don’t penalize employees for your failure to properly set expectations. Use the review process to set future expectations since those tend to change over time. Be fair and more importantly, be candid. Avoid the temptation to give glowing marks where they are not warranted. By the same token, give praise where it is deserved.

And finally, give each employee the opportunity to question and comment on the grade that you give them. This may provide insight into communication and other problems within your organization. I am Carl Kleimann and this has been another Business Survival Tip from Odyssey One Source, ranked as the number one Professional Employer Organization for 2 years running by the Black Book of Outsourcing. For more information on this and other useful tips for employers, visit odysseyonesource.com.

Esther: You're listening to the BusinessMakers Overtime Show, heard here and online at thebusinessmakers.com. So stay tuned for segment three.