Money Musing Marcia Glenn

Money Musing Marcia Glenn

Sunday Morning Musing with Coffee: Money (again).

I talked about MONEY (not the root of all evil) in a previous Sunday Musing however I want to come back to this very basic thought for not only the new peeps who did not originally read the other Musing but as a reminder for those who did.

Money. The reason we do this selling on Ebay and everywhere online. To support our families, to pay extra bills, to buy extra things for extra special people including ourselves. Some of us live on this money and some of us play on this money. All of us need this money or we would not put ourselves through this on a daily basis.

So after you have purchased the item for the perfect price and have listed and sold this item for another perfect price and now that you actually have the money in your hands (insert bank account, Paypal account) what do you DO with the money?

Spend it, duh…..well maybe not.

Each of us has their own agenda with this money. But all of us have some basic costs associated with this money and it is those costs and the final change left over after these costs that I want to remind you in this musing.

IMHO, you should have a budget, hell you should have many budgets but for this demonstration you should have an Ebay budget that you build and tally out of the sales, a budget that you stay on in your weekly/monthly/quarterly shopping excursions.

Lets talk about what happens to that money you have holding in your hands from your sale.

In our fantasy sale, we bought something for $10 and we sold it for $100. We shipped it for $9 (it was heavy) and we paid shipping. Now this is what happens.

Ebay wants their share. This is going to be 9% most of the time. Check Ebay for the fees chart but 9% is pretty standard for the categories that we all sell in normally. Ok gang that amount is $9.00 on our sale.

Leaving us $91.00.

Now Paypal wants their share which is 2.9% and .30 each transaction. On our original $100 that is $2.90 plus .30 or $3.20.

Leaving us $87.80.

Now we still have to pay for that shipping. Either it was taken out of our Paypal account with Ebay shipping or we prepaid at Stamps.com and all the other mailing sites. Either way that cost was $9.00. (If you charge for shipping you would have received more money. However you still have to buy the shipping somewhere each time.)

Now we have $78.80 left out of our original $100.00.

These are our fixed costs. There are also Ebay store costs from the basic store to the most expensive store. Take your store costs and divide it by the number of items in your store and this is the cost for that 1 item each month to sit and wait for a buyer. For me right now that cost is .03 a month. Piffle amount. But it is still a fee, buried in the way back of my mind.

Some of us have more items than allowed for free and for me that means I have an additional .10 per item per month for some of my items. While this is a minor cost (really minor, do you know how many .10 it takes to buy a decent coffee in this town??) this cost is always in the back of my mind adminst the other trivia I cannot seem to forget). For now we will just assume you do not pay any additional costs.

So we have spent $21.20 of our $100 to get this transaction completed.

21%.

Not including the original cost of the item.

Did you know this? Do you think of this when you sell the item? When you BOUGHT the item? Do you have 20% wrapped around your mind each time you pick something up, research it on your smart phone and make a decision whether to put it in your shopping cart or put it back on the shelf?

Cause you better.

In our fantasy sale at this moment we are not going to set aside any money for replacement costs, meaning you are eventually going to need to put aside money to start buying inventory to sell again. Some of you are so over extended in inventory it might be a year or more before you SHOULD buy again, a few people will need to go shopping within the month to replenish the inventory.

Either way, in the future or now, you will need to set aside money to buy again. For todays example, we are too heavily inventoried to even think of stepping into a thrift store so NO we are not going shopping and NO we are not putting any money aside from THIS sale to shop.

Ok, back to our sale. We now have $78 bucks to spend. Not $100. $78.

This is the amount we can spend on our bills we need this money for. Tuition, food, shelter, electricity, all the reasons we are doing this is the reason we need to spend this money right now.

But WAIT. (hehehe)

What about paper for the printer? What about ink for the printer? What about a new printer? Batteries for the camera? A new camera? Boxes, Packing Material, Tape. Pieces parts including mannequins, display hands, rings displays, bust displays? Magic Eraser? Paper Towels? Computer Monitor? New computer?

Look at YOUR life. Did you buy those batteries on sale at Costco along with the tape when it was on sale? Did you have the money to do this? Are you scrounging for packing supplies like I do? Do you have to buy them?

Look at your life. Are you going to need a computer/printer/camera/storage solutions in the future whether near or far? If you answer yes or even Maybe, then start putting away just a little bit from each sale, say 5%.

Into what I call a “tucked envelope”. When I was in college oh so many decades ago and I dealt in cash, I would “tuck” a bit of each salary from my 2 jobs into envelopes labeled “rent”, “utilities”, “gas for the car”, “food”. Then when the bills were due I would pay the bill out of the “tucked envelope”.

Get a tucked envelope system started even if it is just on paper and in your bank account. Call it savings, call it Fred, your choice.

Back to our story. Now our $78 and change is $73 and change after our 5% tuck. But when the printer finally gasps its last breath you just might have enough to buy a new one. Without crying.

Last point. You will be expected to pay taxes on this income no matter how small it is. The days are gone where the IRS does not know you are making money online. Old Ebay sellers, new Ebay sellers, we all have to pay taxes on this new income.

It would behoove you to know how much taxes, what to do to make your expenses help cover your income and how much you need to save each week/month to be able to pay the piper in April (extended until October 15th if you have to?.

Get a professional. Seriously. Get a professional tax person to help you. Don’t use your sister in law who took a course, don’t use your father who has “done your taxes for decades”, get a PROFESSIONAL.

Preferably a CPA. Preferably a tax CPA. Preferably a TAX CPA who specializes in Businesses. Preferably a tax CPA business dude or duddette who knows the online selling business.

They will save you money.

The biggest reason that businesses fail whether they are virtual like ours or brick and mortar is that the owner did not realize the money aspect of the business. They did not realize how to spend their money when they received their money.

If YOU do not know the financial side you will not succeed. If YOU are looking at the pile of bills at the end of the month and comparing it to the pile of money in your hands, well the lack of money in your hands and wondering where the heck it all went to….well…you are in trouble.

We do not want you in trouble. We want you to be richer than you were last month. More successful than you were last month. This is why we are all here in this room. To improve ourselves. To learn. To teach. All here will learn, all here will teach.

My spreadsheet that I do, entering every single sale every single time shows me the GROSS which is my income including shipping if it was International and the NET which is what money is left after all the fixed expenses of: 1. Cost of the item, Ebay Fees front and back, Paypal fees and Shipping. Insert Amazon/Etsy Fees if you sell on those sites.

Those numbers are added up automatically by the spreadsheet and I can see that the Gross and the Net differ by 38% on my sheet, different from the 21% earlier talked about because of the cost of the item.

I still think about 21% when I go shopping. When I do my research. I also think about the TIME that it will take me to list 10 items that will net me $5.00 each or 10 items that will net me $25 each. Which will cost more normally but if I save the little bit I would have spent on the cheaper item that will only give me $5 then I can afford to buy the item that will give me $25.

Basic final thought. When you see that $100, did you think “YEAH I have $100 to spend now on XX or did you think Yeah I now have $78 to spend?”

It is the difference from making it as a business or shutting down and going back to work for “others”.

Manage your money. I don’t care if you don’t like this idea, you MUST know what the amount of money is coming in, what the amount is going out and what you really have to spend from each sale.

Deal with this. Do not trust others to have your best interest as their interest or you just might meet any number of Hollywood celebrities who did this as your jail mate.

Remember you can sell their autograph on ebay when the time served is over. 

Great week all, enjoy the weather, get ready for Christmas. Football anything online? I am selling tee shirts from the sports teams lately and a Reyn Spooner shirt for $67 that I bought on Ebay 3 weeks prior for $13. Dallas Cowboys flip.

Key things to list this week: Halloween, Costumes, Party Supplies, Decorating items for the FALL, football, college football stuff. Coats. Jackets. Fall clothing. Golf shirts (cooler weather in the hot states means people will be out golfing all winter long and they will not be allowed on the course naked.

Flatware, Dinnerware for the holiday season. Just think of what you are going to be looking for in the next 90 days. That is your target market now.

Watch the cover of the “womens” magazines when you stand in the checkout line. If good ol’ Martha is pimping Pumpkins and decorating your fall holiday table, millions are listening. And Googling Ebay for “fall holiday table decorations”.

Enjoy your week!