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Should we return to the gold standard?

by Wise Accounts on 22 Jun 2017 permalink
Buying and selling would not be possible if we didn't have a reference mechanism to trade goods and services against a token value.

Since biblical times gold was used for that very purpose. In 1968 in the US you had the assurance you could swap your dollars at the rate of $35 per ounce of gold.

Gold and silver coins were the common means of exchange all the way to the 20th century. It's only very recently that the Bretton-Woods accord was dismantled

Credit cards are so widespread because of the convenience of not carrying cash wherever you go plus the appeal of having a permanent unsecured line of credit.

It is such a boon for banks who collect their commission along the way that they absorb and manage all fraudulent transactions themselves.

With the advent of the internet the question arose as to how one could send money via email. The answer was PayPal.

It seems each time the integrity of money is at risk - convenience wins. If enough people jump in the pool then those who sit on the side line are missing out on all the fun (sorry, I meant profit).

For a web merchant the choice is bleak. Either you make the sale on EBay or the buyer will find a click away someone else who gladly will. And so the system gathers momentum.

The global economy has been a bonanza for exporters in Third World countries who can flood the market with cheap goods produced by enslaved labour. It also means that western democracies have forgotten how to make staple goods which are now deemed cheaper to import. Talk about sovereignty and financial independence.

Only ten years after the introduction of the euro, the Greek debt crisis has shown countries the dangers of relinquishing their national currency.

Things are so interconnected and leveraged that one hiccup in one place can cause havoc at the other end of the globe.

Nowhere on the face of the earth can you pretend you are immune to this turmoil.

You now see the emergence of Gold Buyers stands in every shopping centre. Obviously someone thinks it is important to buy gold from private holders.

When the monetary system collapses (not in my lifetime, thanks) what will you sell to buy your next meal? Your dog? Your wife? Your children? What about having some gold or silver in reserve hidden in a hollow...

Housing affordability

by Wise Accounts on 15 Jun 2017 permalink
Young adults are delaying leaving their parents home because it is their only option to save enough for a deposit on a dwelling of their own.

If your rent or mortgage repayment exceeds 30% of your household income that housing is deemed unaffordable.

Unfortunately real-estate unlike the stock market does not crash down to reality very often. Even though house prices are roughly double what they ought to be there is no sign of a drop any time soon. The government is guilty of adding to the trouble: interest rates keep rising and the first home buyer's grant was quickly absorbed by the market.

Who profits from the situation?

Realtors The more expensive the property - the higher the commission.

State government The more expensive the property - the higher the stamp duty.

Local councils The more expensive the property - the more rates they can levy.

Land owners By releasing housing land on a drip-feed you can keep the prices up just like OPEC manipulates the price of crude oil by reducing production.

Residents of leafy suburbs Banning medium density housing maintains the prices high by keeping out tenants, migrants and other undesirable citizens.

Sollicitors Conveyancing is kept complicated so that only a profession of experts can benefit from a service which does not provide real value to anybody.

Banks The higher the property value during the course of the loan - the higher the collateral is case of foreclosure.

Everybody loves the price of their property going up until they have to sell and buy to relocate. Then they realise that after taxes and commissions are paid they would be better off staying where they are. The price of their house has gone up indeed but so have the prices of all the other houses they would like to buy...

One strategy would be to engage in a scare tactic to motivate beachfront residents to sell up in panic because of rising sea levels and coastal erosion.

Another alternative would be not to live on land at all. Have you considered living on a yacht? Changing the view from your window as you travel from place to place. Too bad you can't get a job to suit the lifestyle unless you traffic in drugs or other illegal goods...

What about living in a motorhome? Camping is great for a holiday but as a permanent lifestyle you might want to see how you survive your first winter before you make such a move.

Have you lost your marbles?

by Wise Accounts on 08 Jun 2017 permalink
Not being able to account for how much you owe and how much your own is a disease that can be cured! Yes the reality of those figures is something you'd rather forget about - but that doesn't make the problem go away. A stiff drink isn't the solution either.

Little streams make big rivers. You may not consider yourself a numbers person but in this world and age everything revolves around money. So be courageous and build yourself a dashboard of where you stand financially.

Wise Accounts is the no-brainer online accounting system to enter your receipts and paychecks. Having this basic information in the system has some significant benefits. By knowing the frequency and the amount of your outgoings and of your income Wise Accounts can forecast your cash flow into the future.

Wouldn't it be nice to know ahead of time if you are heading up or down? Not only that but what about knowing right now how much tweaking in your spending would it take to bring you back to a balanced budget?

It maybe not be that hard to pull yourself out of that financial hole you're in. There is only one way to find out - do the figures! There is no need to be a hero and wait until you have to file for bankruptcy. There might still be something in your power to redress the situation.

As you build your financial records you will keep your finger on your financial pulse. You may have a spark of inspiration and find ways to re-finance things (oh no, not another credit card, thanks!). As you get your grey matter working on the subject you might come across a way to do more with less, to change your consumption, to sell something you don't need, to move to cheaper accommodation, to take on a second job, to burn the candle at both ends... (OK, there is a limit to all that pep talk. But you get the drift. Do nothing and nothing will happen.)

At the end of the day you have to take charge of your own life. The flip side is that coming on top of thinks will empower you to be in control but more importantly to be able to help and guide someone else through the same journey. Wouldn't that make everything worthwhile?

Too much month at the end of the money

by Wise Accounts on 01 Jun 2017 permalink
"Not enough money at the end of the month" has to do with living freely (carelessly?) not being able to say no to the many solicitations that come past our way. For some spending is a way to make oneself feel good - for others, they never have been taught how to care for their money in the first place.

"Why should I care about something I do not have?" that's precisely the point! Unless you keep tabs on the little money you have it will never grow. So I am going to spring on you another dirty word: budget. "Oh, no I hear." Well, you are budgeting all the time without knowing it.

For instance if you have an apple pie with 5 people around the table you may divide the pie first in half, and in turn each half into 3 pieces giving you a total of 6 pieces. Why 6 pieces instead of 5? That's budgeting in action. First it is much easier to divide a pie into an even number of slices. Second a latecomer may show up or you may want to offer your guests a second helping.

And that's my point right there. Don't just fly by the seat of your pants but set aside some extra for a rainy day. There are two ways to do a budget:

The static budget is to look at last year's figures, bump everything by 20% and hope for the best. That is obviously a cop-out. An improvement would be to tally all your expenses and prioritize them by order of importance. Obviously if you are faced with an empty bank account way before your next pay comes in then something has to give.

Can you go cold turkey on cigarettes, alcohol, new clothes, electronic gadgets or movies? Your lifestyle and your finances are inexorably linked. Setting goals and monitoring them might be the way to get you out of that hole.

The dynamic budget is a tool that Wise Accounts offers. It takes into account all your recurring transactions with the periods at which they come due. Wise Accounts then goes away and produces a cash flow forecast as a report or a graph to show you whether you are heading up or down with your bank balance 3 months, 6 months, 12 months from now.

Now get to work and start tweaking those expenses, run the report again and see the impact of a seemingly small change over time... you will be impressed! That will give you the motivation to hold your course through what may come. Because you have your mind set on some agreed outcome in the foreseeable future you have gained the justification and the resolve to stick to your plan. You know that the result is well worth it.

Follow the money, honey

by Wise Accounts on 25 May 2017 permalink
For the accounting profession there must be checks and balances to make sure people can't fudge the books. For the business proprietor the ability to correct mistakes and re-allocate monies to their proper accounts is paramount.

Wise Accounts takes the view that it is your money that you are accounting for and that you should have the freedom to revamp things the way you want them to look.

Sometimes it is not obvious to figure out the perfect chart of accounts to suit your business until you are 3 or 6 months down into the financial year. Does it mean you should make your ledger unintelligible by having rafts of correcting entries just to show a proper audit trail? Hogwash! Let the bean counters muck around with their arcane arts - while you the business owner only want to get things straight.

Besides as history has shown time and time again - if people want to cheat - it's not a bullet-proof accounting package that is going to keep them on the straight and narrow.

So there you have it - two incompatible requirements. The accountant on one hand wants to safeguard his expertise and show things the way the Tax Office wants to see them. You, the business proprietor on the other hand who wants a clear dashboard of where things are going and how fast...

That conflict of interest has many ramifications. The way you account for a business reflects your bias about that business. As a business owner you should not let someone else bully you on the way you want to look at your own figures for goodness sake!

Some tax rulings about depreciation are quite devoid of the reality of market resale value. You end-up carrying two sets of books. One to keep the taxman and the accountant happy and another to reflect to yourself and your trusted shareholders about the real value of the business as it stands.

With Wise Accounts you can do your own thing all year around and let the accountant reload it into MYOB to perform their accounting magic at year end. Everybody is happy!

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Debits and Credits Explained

by Wise Accounts on 27 Jun 2013 permalink
Debits and credits are a system of notation used in bookkeeping to determine how and where to record any financial transaction. In bookkeeping, instead of using additions '+' and subtraction '-' symbols, a transaction uses the symbol DR (Debit) or CR (Credit). In double-entry bookkeeping debit is used for asset and expense transactions and credit is used for liability, gain and equity transactions.

For bank transactions, money received in is treated as a debit transaction and money paid out is treated as a credit transaction. Traditionally, transactions are recorded in two columns of numbers: debits in the left hand column and credits in the right hand column. Keeping the debits and credits in separate columns allows each to be recorded and totalled independently. Where the total of the debit value amounts is lower than the total of the credit value amounts, a balancing debit value is posted to that nominal ledger account. That nominal ledger account is now "balanced". An account can have either a credit value balance or a debit value balance but not both.

A debit can also be used to reduce the balance on a liability, gain and equity account. This has the effect of reducing a credit balance by the value of the debit transaction. The balance in a nominal that is normally expected to hold a debit balance may change from a debit balance to a credit balance.

A credit can also be used to reduce the balance on an asset or expense account. This has the effect of reducing a debit balance by the value of the credit transaction. The balance in a nominal that is normally expected to hold a credit balance may change from a credit balance to a debit balance.

In some cases such as fixed assets, all debit transactions will be recorded in one nominal account and all credit transactions will be recorded in a contra nominal account, with the exception when an asset is disposed of. The purchase of an asset will be recorded in a fixed asset account (debit transaction) and the depreciation of the fixed asset (credit transaction) will be recorded in a contra nominal ledger account, fixed asset depreciation.

Each transaction consists of debits and credits, and for every transaction they must be equal.

For Every Transaction: The Value of Debits = The Value of Credits

The extended accounting equation must also balance:
A + E = L + OE + R

(where A = Assets, E = Expenses, L = Liabilities,
OE = Owner's Equity and R = Revenues)

So Debit Accounts (A + E) = Credit Accounts (L + R + OE)

Debits are on the left and increase a debit account and reduce a credit account.

Credits are on the right and increase a credit account and decrease a debit account.


Therefore, if an Asset account is debited, the Asset amount (value) is increased. Same with an Expense account. If a Liability or an Income account is debited, the numerical figure will decrease, etc. If a particular account is credited, there must be a corresponding Debit in another account in order to balance the transaction.

As used in banking terminology, 'Debits" refer to withdrawals, not necessarily in the same context as discussed here.

So to wrap it all up you can remember all of this with the mnemonic phrase: "Accountants are credited for being afraid of negative numbers."

Suzie Wilson says:
At last I get it! Thanks for that article...

Opening balances

by Wise Accounts on 01 Dec 2011 permalink
Why do some accounts start with zero and others don't? As you start a new accounting system you may indeed have not earned or spent a cent yet but it doesn't mean you are worth nothing.

Since you were not born overnight in a cabbage patch a new set of accounts has to reflect your personal worth. There are things that trail us from year to year and accounting is concerned with what we own and what we owe.

Sleeping on it does not make a debt disappear. If anything it costs you more in interest at best, at worst it can get the lender irate and claim all his money back all at once.

So we find there is a tight relationship between time and money. Knowing how much you spent or earned in of itself doesn't mean much. What's more interesting is how much you spent and earned within a given amount of time (a week, a month or a year) so that we can compare with the same period (last week, last month, last year) and see if things are improving or getting worse.

Accountants segregate those two types of accounts into two reports.

The profit & loss report shows earnings and expenses that get reset each time period.

The balance sheet shows what you own and what you owe. These things get passed on from period to period. You don't get off the hook with your borrowing if a new financial year starts. Likewise you'll be happy to know you don't loose your house or car just because a new financial year starts either!

So what is the best accounting period for you? If you are a wage earner then the period by which your income comes in is the obvious period to choose.

If you run a business and major regular outgoings fall due at regular intervals then that might be the time measure to use. You first have to clear off your expenses before you hit the profit zone. How soon in the period you can achieve that is a great motivator all by itself.

Is there a connection though between the two reports? Remember the first report was called profit & loss. (it should really be called profit OR loss - or just either PROFIT if you are gaining ahead or LOSS if you are falling behind).

If the first report is reset to zero at the start of each new period then the profit (or the loss) is passed on to your net worth (also called equity) into the second report (the balance sheet).

Uploading your data into wise accounts

by Wise Accounts on 24 Nov 2011 permalink
The bane of accounting programs is that one you used one your data is pretty much tied up to it. It is probably by design from the part of the software vendor to make sure you can't walk away from their product easily and use a competitor.

It shouldn't be that way and this article will explain how you can save yourself a lot of typing if you managed to save your data into a text file.

The quickest way to get you on your way is to reverse engineer what Wise Accounts does with the backup/reload (these menus appear once you have a paid subscription).

The idea is that if you use the backup file from the Smith&Co or John Citizen demo as a template you can reload your own data in one hit.

id name type memo recipient subject last year balance checkbal
4 Petrol 3 28726.40 5863

id p_date reconciled account checkno dissection comment amount
1 01 Jul 2009 0 6 0 Opening Balance 11327.5

There are only two tables to worry about: the accounts table and the postings table. Each field is separated by a TAB. (The Tab key is above the Caps Lock key on the left of your keyboard. Like a space it is an invisible character but some program can render it with a marker.) For the accounts table the only fields to worry about are the id (that's the account number), the name, the type (income, expense, bank account - they are listed in the types table - you can always change that later in Wise Accounts once you data has been uploaded.). Make sure you have the right number of TABs on each line otherwise you will get an error.

For the postings table the fields are id (an incremental counter), p_date (posting date), reconciled (0 = no, 1 = yes), account (the account number as per the accounts table above), checkno (leave it blank), dissection (leave it at 0), the comment (a good practice is to put the name of the matching double-entry account) and a signed amount. Simple isn't it?

If this is too daunting send us an email and we will try to do it for you.

If you are using MYOB there is a procedure to automate this.

Video Tutorials

by Wise Accounts on 10 May 2010 permalink

What about budgets?

by Visitor on 09 Mar 2010
How do you do budgets in Wise Accounts?

Wise Accounts says:
We use recurring transactions which map out your weekly, fortnightly, monthly or quarterly incomes and expenses. From there a cashflow report and graph are produced.

How do I import an MYOB file?

by Bert Falconier on 02 Mar 2010
I don't fancy messing around with spreadsheets just to use this service...

Wise Accounts says:
Easy: In MYOB go into the menu File|AcountantLink|Others|Ceedata and save the file to your PC. Then go into the Wise Accounts maintenance menu and click Ceedata import to upload that file. Also check out these tutorials.

cheque number

by Harold Wilson on 11 Feb 2010
I know that with electronic banking cheques are on the way out - but where do I record a cheque number when I post a transaction?

Wise Accounts says:
in the comment field

beware of web browsers that remember passwords

by visitor on 13 Jan 2010
If you intend to use this site from various locations don't rely on the browser to remember the password for you. That's the best way to lock yourself out because - guess what - since you don't enter the password anymore you will surely forget it... at the most inconvenient time!

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