Beating Broke

My Wife Quit Her Job: And Then There Were Two

September 6, 2011 By Shane Ede 12 Comments

It’s been a little while since I last updated you on my wife’s adventures in entrepreneurship. A long while, in fact. I think the last update was when they were looking for Business Insurance. That was almost a year ago, now. So much has happened in that time! How will I fit it all in!

I think I’ll hit the highlights. And, cover the most important change. One you’ll likely be able to guess if your familiar with the series, and you’ve read the title of this post. When my wife first started this business, it was with two other partners. Each of them brought their own specialties to the table, and made the business the success that it is. As the title implies, one of them recently left the company. This partner is technically still a owner as he hasn’t sold his shares in the company, but has stepped down from any active participation in the running of the company as an employee. Basically, he’s become a silent partner.

Without letting too many of the details slip, let’s just say that over the last year or so, he had grown unhappy with his role at the company and felt that leaving an active role in the company would solve those problems. Whether it will or not is up for debate. In any case, there was lots of discussion over how this was going to take place. Much of that discussion revolved around how the control of the company would evolve and change once he was gone. My wife and the other partner had some very valid concerns about the structure of the company, it’s board of directors, and it’s shareholders. In particular, there was some confusion on what rights the shareholders held.

As a part of any corporation, the shareholders are technically part owners in the company. It gets a lot more muddled when you’re a shareholder in a large corporation like Microsoft, or Apple, but in a small company where there are only three shareholders, it’s a bit easier to see. If there are X number of total shares issued, and Y is the number of shares a shareholder owns, then their ownership of the company is Y/X. In a situation like Apple, someone who owns 1 share owns 1/924,755,000th of the company. In the case of my wife’s company, each of the owners owns 100/300th of the company, or 1/3rd. Much like a larger corporation, my wife’s company is required to have an annual shareholders meeting where the board of directors are elected and other similar things are voted on. Generally, it will just be the election of the board. So, the more direct answer is that the third, now silent, partner has a 1/3rd say in who is elected to the board of directors. Should he disagree with the selections, he could vote against it, but wouldn’t be able to overcome the 2/3rd majority that the other two partners have. So, based on that, he really has no realistic say in how the company is run.

Another bit of contention is that fact that if the company were to pay a dividend to the shareholders, as they did this last year, that he would get 1/3rd of that dividend without having done any of the work that the other two partners had done. Unfortunately, that’s just the way it is. He still owns 1/3rd the outstanding shares, so he’s entitled to 1/3rd the dividend. There are several ways around this. The most obvious of which would be if he were to sell his shares to the remaining partners and completely exit from any involvement with the company. The other method would be to take the 2700 shares that the company is able to issue and give them to the remaining two partners as an annual bonus of some sort and in effect, dilute the third partners shares. Everyone involved feels this is a somewhat backhanded way to deal with it and it will likely not happen. Short of that, it would also be possible to increase the remaining partners salaries such that the issuing of a dividend would not be reasonable. This also isn’t a great solution as both the partners and the company would pay the higher payroll tax rate on the money rather than the dividend rate. In the end, it’s probably best that they just leave it as is, and merely acknowledge that the third partner put in a years worth of work and helped build the company so is entitled to that bit of ownership that he has.

I think there are a couple of very important lessons here. The first is that starting a business is no small thing. The people that you choose to partner with may not always be of the same mindset, and they may decide that the partnership isn’t working. You’ve got to be able to live with the consequences of joining into the partnership, especially if the partnership fails for any of the partners. The second lesson is that you’ve got to keep a level head when dealing with situations like this. It would have been easy for any of the three partners to overreact and cause it to be a much more difficult situation that it was. Playing nice isn’t just for the playground, folks.

Are there any other specifics that I haven’t covered in this or other posts in the series that you would like to hear about? I’ll share what I can.

photo credit: homesbythomas

My eBook/eReader Conversion

September 2, 2011 By Shane Ede 14 Comments

After Andrea’s wonderful post on Go Green Method to Save Money: eBooks, and the ensuing conversation that started in the comments, I though it might be nice to share my story in regards to ebooks and ereaders.

Where it begins.

I’ve been a reader for as long as I can remember. Some of my earliest memories of reading are of reading the Chronicles of Narnia series and the Hardy Boys series. All through my school years, I read voraciously. I made my way from shorter books up through goliath undertakings like just about anything by James Michener. Sadly, when I moved to college, I drifted away from reading. Most of my reading time was taken up by schoolwork and socialization. Later, while taking a break from college to pursue more nefarious things, I had a job which usually entailed a whole lot of doing nothing. To pass the time, I began reading again. The spark was back. Heck, I even read the 5th Harry Potter book in a day.

I eventually got a real job, finished my degree, and then got married and started having children. And, as I was pretty busy doing those things, my reading habits slipped off again. It wasn’t until we cancelled cable shortly after our first born came along that I got back into it. And, even then, it was not nearly with the same pace as I had before. Throughout all of this, I’ve carted around my books. Each time I wanted to read something new, I bought it rather than borrow it. Why? Call it OCD collecting. I’ve always fantasized about having this huge library in my house with wall-to-wall books. In short, I had an infatuation with books.

But, here’s the thing. Of all the hundreds of books I had (have), I’ve only reread less than 10 of them. So, I came to the realization that I was carting around all these books that I would never (probably) read again. Moreover, they were slowly taking over every bookshelf in the house, and even some of the floor space. When I came to this realization, I went through them all, and posed a large majority of them on PaperBackSwap. But, all that did, really, was to swap the clutter of books I had read with a clutter of books I hadn’t read. I’ve currently got well over 50 books on my “to read” shelf. For reference sake, I only read about 35-40 books a year. So, I’ve got close to a year and a half worth of books sitting, waiting to be read.

Through all of this, my desire to have less clutter in my space has led me to try to remove as much of it as possible. I had downloaded the kindle reader app for my blackberry phone, but I found it absolutely terrible to try and read anything on the little, itty-bitty screen. At that point, I decided that ereading just wasn’t for me. At the time, I would rather have the physical book in my hands than try and read on a little screen. Then, I upgraded my phone.

I traded in my blackberry for a new android based phone. It’s got a screen that’s roughly twice the size as the old blackberry had. A couple of books that I wanted to read were available only as ebooks. So, I gave the cell phone reading another try. On the larger screen, not only was it bearable, but I found that I liked it. And, now, several ebooks later, I’m a convert. An ereader has rocketed to the top of my wish list, although I haven’t decided whether it will be a kindle or a nook, or something else entirely.
photo credit: anieto2k

Evaluate the True Price of Dining Out to Save Money

August 31, 2011 By MelissaB 14 Comments

Our culture seems to be one that is centered around dining out. When you are younger, you meet friends at a restaurant for a night out and to chat. As you get older and have a family, you may go out to eat because time is short between working, raising a family, helping with homework, and doing housework, among other things. Some people are extreme and eat out for every meal because they do not like to cook or have not learned to cook. This is so commonplace in the American culture, that we don’t often question these expenses. Instead of just assuming that going out to eat or grabbing take out is a necessity, evaluate the cost of your restaurant purchase.

It has been a stressful day, and you would like nothing more than a night off from the kitchen. You decide to buy take out for your family of 4 and spend $25. True, you did buy yourself a night out of the kitchen by avoiding cooking and washing the dishes that you would use. Yet, ask yourself, would you have paid $25 to hire someone to come to your kitchen for an hour that night, make a meal and do the few dishes that you used? No? Well, that is essentially what you did by picking up take out.

I use this way of thinking frequently now to save myself from spending money eating out. My family ate out by habit until I started evaluating the true cost. I recently quit my job and have been doing freelance work from home. Several of my smaller jobs each pay $20 a month. Recently, I wanted to go out for sushi, which is a weakness not only of mine, but of my husband and kids. When our family of 5 goes out for sushi, it typically runs us $55 to $60. I asked myself if one meal of sushi was worth doing 3 additional small jobs to recoup the $60? Although the jobs do not take much time weekly, I would have to do the three jobs for a month to recoup the money spent on sushi. Was it worth it? No. We did not go out that night.

The idea of evaluating life energy for consumption is not new. It was the subject of the book, Your Money or Your Life by Joe Dominguez and Vicki Robins. The overall principal is to look at the amount of time and money it would take to recoup an expense. I try to use this in my life normally, but I find it especially effective when considering the often inflated price of dining out. Take the sushi dinner for $60—my family’s weekly grocery budget is $100. Is that one meal worth half a week’s groceries? Definitely not.

I am not saying we shouldn’t go out. My family still enjoys going out, but I am suggesting we should stop thinking of dining out as something routine and to be done daily or several times a week. Instead, think of dining out as a treat and something to be planned and enjoyed.

photo credit: dslrninja