I realize this is not the average guy’s or gal’s problem. But an acquaintance of mine recently regained control of his checkbook, after years of having an accountant pay his bills. Some high-income “creative” people do this — sports figures, actors, writers. (In Hollywood, it’s a status symbol.)
It’s also a little crazy, now that a computer can make the whole job so easy. But my friend only recently got into computers, only recently got the software to turn his Citibank account into the kind of account where he can now pay his bills on-line and take control of his life.
For years, all his bills would go to his accountant in New Jersey. And his paycheck would be direct-deposited into an account on which she had signing privileges. He never really looked at any of it. This is the joy of having someone else do it for you if you’re creative. And it cost him “only” 5% of his income — the standard fee for this service — which worked out to around $10,000 a year. Not being a deductible expense, that meant he had to earn nearly $20,000, before federal, state and city taxes, to pay for it.
After endless prodding, he finally did the uncreative thing. He terminated the accountant and started paying his own bills. Now that he’s set up with the computer, it couldn’t be more than an hour or two a month, tops — 25 hours a year to “earn” the extra $20,000 (pre-tax) she was costing him. Not bad: $800 an hour.
But it’s better than that, because in taking control of this himself he noticed some things his accountant hadn’t. For example, he noticed he’d been paying for a health club membership he hadn’t used in years. Oops. There was a couple thousand dollars down the drain.
Obviously, this is not a problem most of us have. But it does speak to the value of taking control of your own finances, running your eye down your own credit card bill to see if you’re still being charged for some $9.95-a-month service you long ago stopped using, let alone a $600-a-year health club membership.
Hey: it ain’t easy being creative!
Tomorrow: Borrowing Tip