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FAILURE I wasted over $100,000 last year.

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TreyAllDay

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The year before I started my business I managed to save up $12,000 for my launch. This was HUGE for me and I lived off of it for nearly 8 months after leaving my job.

Year 2 (last year) I had massive growth and started paying myself, went on 3 good vacations with friends, and lived without a care, not paying attention to how much was coming in or out.

Just got my T4 and realized I had paid myself nearly $90,000 (60k Net)! And honestly, I didn't save a penny of it or purchase any assets - how could that possibly happen? I am going to take a look tonight but I'm positive it will boil down to my three vacations, restaurants, and just generally not paying attention and wasting money. My expenses each month for living are less than $1000, and my car and phone are company expenses.

Honestly, have no clue how this could happen. Just cut up my platinum credit cards and taking control of this now.

So I suppose - a lesson? Once you start making good money - continue to live the same.
 

NMdad

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Indeed. I actually like the envelope system for budgeting & managing spending--it's super concrete & tangible, and simple. Plus, you end up feeling abundance with the actual cash money in the envelopes, even though you're budgeting (which can often create feelings of deprivation).

It's like pre-deciding what you want to do with your money instead of just p*ssing it away on miscellaneous stuff.
 

minivanman

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We have our money in envelopes. I actually do this with my main business too. If people give me cash, it goes straight in an envelope to keep track of. I have $425 here on my desk that needs to be logged in right now. If any personal or business comes out of which ever envelope, it is logged as coming out and what for. We've been known to do this sometimes and then stop in our personal life but I always do it with my main business. The goal for the year was to do it in our personal life and so far, we've been pretty good about it..... but don't be down on yourself if you slip-up because even for someone that has money, it can be tough. We found that just doing the envelope system wasn't good enough, we have to log things as we spend or else we don't know what the hell we bought.
 

Roli

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Honestly, have no clue how this could happen. Just cut up my platinum credit cards

The first part of the sentence says you don't know how this happened, the second half says you do.

Unless you are using personal credit cards to build up air miles or some other value points, and you pay that shit off immediately, don't use them ever again.

Just took a look at your site by the way, nice, you'll be back.
 

RazorCut

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The year before I started my business I managed to save up $12,000 for my launch. This was HUGE for me and I lived off of it for nearly 8 months after leaving my job.

Sounds like the fact you were living frugally for some time meant you needed to let off some steam. I don't blame you. Living a vanilla life sucks. I'm sure the taste of the living the good life will spur you on to earning a lot more.

The important thing here is that you recognised you can't continue to live like that (at least until you double your earning) so need to rein in the spending and concentrate on expanding your empire.

I'm in favour of having several savings accounts and have auto payments into them monthly.

Your salary goes from your business account into your current account say on the 1st. On the 3rd your auto transfers go from your current account into your savings accounts and you live off the rest for the month. What you don't see you can't spend (if you don't abuse your credit cards).
 

scott wisniewsk

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No credit cards for me not diligent enough to stay on top of . I just use my debit card right out of my business account . No bills to pay no worry's , If I don't have it can't get it maybe next month. I know that I pass up aal the card rewards ,but it works for me.
 

TreyAllDay

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Thank you @NMdad and @minivanman for the idea on the envelope system. I am going to give this a try - I love the idea.

@Roli yes the card was just a convenience thing as my girlfriend keeps my debit card for emergencies and I have two cards with a $30,000 limit combined. So easy to lose track and with the business making so much it's easy to be like "whatever, there's money coming in". I am still making money, just ashamed I spent so much on nonsense.

@RazorCut Yes - the frugality kind of killed me. Honestly being able to spend without even thinking about the consequence, going to whatever restaurant or buying whatever clothes without thinking about it is a bit surreal and addictive.

I think overall - this isn't a huge deal to me, just disappointed in myself because I've been doing so great business wise and this slipped completely under the radar.
 

Walter Hay

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It should be noted that the same can happen with business expenses, not only personal spending.

I have seen businesses start up, flourish, and fail because the business operator so much enjoyed the great business income, that spending on overheads was excessive, and little thought was given to cost control for even everyday business purposes.

One that sticks in my mind was a friend who was an accountant (of all people). He began well, got some good clients, including me.

When I first visited his office it was in an old house, but the decor was adequate, and it had not stopped him from gaining a growing clientele.

On my next visit, the scene was totally different, with expensive furniture and a look of luxury. New top brand office equipment was everywhere.

He lasted another year before being obliged to sell out.

Meanwhile, my business, running on a shoestring budget, went from strength to strength for 20 years, including through a deep recession, until I sold it because government regulations were becoming onerous.

The merchant bank executives, when they decided to buy the business at 4X annual profit were not put off by seeing the primitive conditions.

Walter
 
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NMdad

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The merchant bank executives, when they decided to buy the business at 4X annual profit were not put off by seeing the primitive conditions.
Something like a tarpaper shack, but with a big safe in the back filled with bags of cash, and a money-printing machine? :)
 

Walter Hay

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Something like a tarpaper shack, but with a big safe in the back filled with bags of cash, and a money-printing machine? :)
That's not far off the mark.

It was a tin shed with an aggregate floor, not concrete. Cleaning up spills was not a problem. It saved a lot of time to just let them soak in.

The shed was not snake-proof, so at times I had to stand perfectly still while a highly venomous creature made its way through.

The primary mixing equipment was a home made propeller powered by an old electric motor, plus a wooden paddle, hand powered.

A sophisticated manufacturing facility outside in the yard was a 55 gallon drum sitting on cement blocks, with a large gas ring underneath. Same wooden paddle.

Full drums were shifted using a front end loader on an old tractor.

I enjoyed running that business and when I sold the business and formulas, not the property or equipment, for several million (in today's money), it proved that a highly profitable business can be run without spending a lot of money on capital equipment, and the appearance need not deter big buyers.

Walter
 

TreyAllDay

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That's not far off the mark.

It was a tin shed with an aggregate floor, not concrete. Cleaning up spills was not a problem. It saved a lot of time to just let them soak in.

The shed was not snake-proof, so at times I had to stand perfectly still while a highly venomous creature made its way through.

The primary mixing equipment was a home made propeller powered by an old electric motor, plus a wooden paddle, hand powered.

A sophisticated manufacturing facility outside in the yard was a 55 gallon drum sitting on cement blocks, with a large gas ring underneath. Same wooden paddle.

Full drums were shifted using a front end loader on an old tractor.

I enjoyed running that business and when I sold the business and formulas, not the property or equipment, for several million (in today's money), it proved that a highly profitable business can be run without spending a lot of money on capital equipment, and the appearance need not deter big buyers.

Walter

How big of a team did you have? Several million? Quite impressive...

I was just reading about this today - and TBH lots of entrepreneur advice blogs always seem to make it sound like you can't get to a few million evaluation without a large team, resources, and investing a shit ton of money.
 

Walter Hay

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How big of a team did you have? Several million? Quite impressive...

I was just reading about this today - and TBH lots of entrepreneur advice blogs always seem to make it sound like you can't get to a few million evaluation without a large team, resources, and investing a shit ton of money.
After 14 years in business I employed one employee. He stayed with me for another 6 years.

A competitor that chased very high volume, very low margin business and loved luxury in his personal and business life lasted only a short while.

Walter
 

MitchM

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I know the feeling man. I've been looking over all of my expenses over the past two weeks and am sickened lol (not actually funny, but gotta laugh, right?).

I spent about 30k outside of my mandatory expenses and it's biting my a$$ big time. I was so ashamed that I was hesitant to let an account look :rofl:

Never again.

Never. Again.
 

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