02 Mar Ep. #114 Money March Pt. 1 – THREE NUMBERS YOU NEED TO KNOW!
Welcome to Money March 2022! If you’re interested in making money moves, you have to know where you stand. This is the first episode of a five part series and we are starting with the essentials. Today you’ll learn about the three numbers you need to know in order to frame your current financial snapshot. If you have money goals, you must start with a clear and honest picture of where you are now. You must start here… To get “there”!
Here’s what you’ll learn:
- The three numbers you NEED TO KNOW to get (and stay) on top of your finances
- What to include (and not include) when calculating your fixed expenses
- What AGI is, and how to find it on previous years tax returns
- The difference between good and bad debt
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Intro: Welcome to Words That Move Me, the podcast where movers and shakers, like you, get the information and inspiration you need to navigate your creative career with clarity and confidence. I am your host, Dana Wilson, and I move people. I am all about the tools and techniques that empower tomorrow’s leaders to make the work of their dreams and live a full life while doing it. So whether you’re new to the game or transitioning to your next echelon of greatness, you’re in the right place.
Dana: All right. Y’all it is March and I am Dana. And this is words that move me and you know what that means. It is time to put on your money hat. And if you do not already have a money hat, I suggest that you budget for one or make really good friends with Alyssa Dinka who gifted me my money hat, which actually has the words.
This is my money hat, um, embroidered on the front of it. It’s very cute. Anyways, thank you for the hat, Alyssa Dinka. Um, I will be wearing it for all of money. March money March, by the way, has five Wednesdays in it. So get into money March and get ready for some good, good green talk. We’re talking about money, all things money. So, um, oh, before we go any further, each of these episodes of money March each of these five episodes will be accompanied with an interactive PDF worksheet. Thanks to Riley Higgins. So you can be listening and accounting all at one time. Uh, you can find those PDFs for purchase in my online store at thedanawilson.com/shop. And if you are listening to this, um, after money March has completed, then you can scoop all of the money March worksheets in a bundle, the, a bundle, a little bundle of joy.
Um, at least I hope money can be a joyful topic for you. Okay, let’s do this. Oh, wait, let’s do wins. If you’re new to the podcast, we start every episode with wins. And today I am a, I actually have a money-related win today. I am celebrating that. Although it took longer than I planned. I have finally applied for fiscal sponsorship. Um, for my words, that move me community, my words that move me programs of which there are several now, including this podcast. Um, but I am thrilled about that. I have done a thing that I had never done before, and now I know how to do it, and I know how long it takes. Um, uh, well, it won’t take me near this long. Next time I do it because now I’m prepared. It’s so great. So that’s, what’s going well in my world. Officially fiscally sponsor applied, not approved yet. That’ll be a totally separate way. Now you go, what’s going well in your world.
Congratulations. I’m so glad you’re winning. You got this, keep it up, keep going, keep doing what you’re doing. You’re doing great. Speaking of doing great. Let’s talk about artists. Shall we let’s talk about creative human beings, dancers, choreographers, other creative types, working in art and entertainment. Um, I would like to begin this episode by pointing out that people who have full time, quote, unquote normal jobs, normies is what I like to call them. Um, not the jobs. The people, people with normal jobs are. I call them normies. It’s endearing. I promise. Um, anyways, normies get checks for roughly the same amount of money on regular basis from the same person or entity, you and I are special. And that we get paid on an irregular basis with irregular amounts from various people and entities. You, we, we are freaking special. So let’s treat ourselves like we’re special.
Let’s treat ourselves with care. And as you are doing this, this money work, let’s be care full and not rageful or spiteful or fearful. Um, let’s just be special, be careful. And here we go, we are doing, oh, one more thing. I am not a financial advisor. Uh, nor am I a fiduciary this is not tax advice work. This is my personal experience is what you’re listening to. Might as well be a bedtime story. Um, all right, today, our focus is three numbers. That’s it. We’re focusing on three numbers today. If you can walk out of money March knowing these three numbers and nothing else I’ll feel a sense of accomplishment. I mean, I think you will have missed a huge bundle of information because have I stressed yet? How intense money March is about to be? It’s about to be so great. Anyways, these three numbers are of paramount importance.
Um, I want you to know these three numbers, like, you know, the phone number of your home, where you grew up, like your childhood phone number, the one that you rehearsed and like practice dialing on the phone. That that’s how deeply I want you to know these numbers. I would consider that a big win. Okay. The first number is pretty self-explanatory. This number is your fixed expenses to, to calculate this number, simply add up your cable and internet charges, your car note, and gas, um, tuition or student loans, gym memberships, insurance, renter’s insurance, home insurance, car insurance, health insurance. Maybe you are a type that has life insurance already work. Um, add up all the insurance, add up your monthly subscriptions like Spotify or your Google drive iTunes or the app, apple, whatever. I don’t know. I know I have one of those, um, other streaming services like Amazon or Netflix, and Widom com if you are a part of the words that move me community, um, and of course your rent, mortgage utilities and food essential food that is not the special dining out food, but like, you know, the, the essentials, the groceries, the weekly, pretty much the numbers of the same type of food that is your fixed expenses.
Don’t you wish you had that worksheet now, because I just said a lot of items. And if you had that worksheet, they would all just have a little line next to them and you enter them and then you have whatever we’re moving on, because this is deep. The next number that I want you to remember and know intimately deeply is your average gross income. I want to add a little learning opportunity here. I used to always mix up gross and net. Um, so I created a way to remember the difference. Um, gross income is your total dollars in before taxes or healthcare or other deductions are taken out. I like to think of this number as being gross, like grossly large, you know, the way that dancers sometimes say that something is sick when it’s really good or nasty, when it’s really good, we use like a word that has a typically negative connotation to explain something that is actually really kind of awesome.
Um, so in this case, I think of gross as in yikes, sick, disgusting, nasty, dope, being good. The big number is the gross number. And then the net number is the number that is, that’s what you basically take home. And I imagine that take-home money is being in a net like a, carry it home in a fishing net, all my money in a net, which I would not recommend, um, not a great, uh, um, way to handle your money. I guess I digress right now. We’re not talking about your net income. We’re talking about your average gross income, um, tax forms use the acronym, H G I, which stands for adjusted gross income, which is calculated by adding, are you ready for this payments from your jobs investments, social security, pensions businesses, real estate farms also is on that list. I don’t know if any of you have a farm, but I secretly hope that you do.
Um, so all of those things I just mentioned, plus unemployment, all of that added together minus. Now there are some interesting deductions here. Um, you find your, uh, your adjusted gross income or your AGI by taking all those things I just mentioned. And then subtracting educator expenses, certain business expenses, deductible H S a contributions moving expenses for military deductible self-employment taxes, contributions to retirement plans or health insurance for self-employed people. That’s you, um, penalties on early withdrawals from savings, alimony, paid deductible, IRA contributions, student loan, interest, deductible, tuition, and fees, and up to $600 of charitable contributions. If you are taking the standard deduction, if you don’t want a professional tax preparer right now, I envy you because that was kind of a lot, just to figure out this one number, but anyways, there you have it, your AGI, the jobs, the money in minus these, the small handful of adjustments, not the, not the federal or state income taxes, not the health and pension stuff, but only the things I just listed.
Then you have your AGI. So what I would love for you to know is your average annual gross income, um, for the last three years. So you can find that if you are a solid tax paying citizen who keeps a, a record of your, um, tax returns, you can find your AGI on the form 10 40, uh, for the year 2021. That’s the line 11, but in previous years, I think it’s line 22. You’ll have to look carefully, but just kind of scan for the words, adjusted gross income, or you can also find it using, uh, the IRS get transcript online tool. So go give a Google to IRS, get transcript online, and you should be able to view your previous year’s AGI. Um, you can also just contact the IRS. Y’all I’m not going to lie. This has sort of been my default for the last couple of years, as I’ve been preparing, um, for tax season and trying to do so with enough time that I don’t feel additional pressure.
I like to talk to humans. I just like to have a human on the phone and everyone I’ve spoken to from the IRS has been quite helpful. So you can contact the IRS. Toll-free at 1 808 2 9 1 0 4 0, which I just realize is cool because we’re talking about the form 10 40, and those are the last four digits of the number. I don’t think that was deliberate. 1-800-829-1040, boom. Okay. So today I’m asking you to average your past three years AGI, because just like it is important for you to know how much you spend it is very important to know how much you make roughly on average. So do it great. Yes. One and two down. Oh man. The last one is a fun one. I promise debt. Yes. I want you to calculate to tally up all of your debt, including all those random IOUs, like, oh, we’ll pay half the gas or, um, I’ll buy you dinner for paying for my class today or whatever.
Like all of your debt get really scrupulous here. Also include credit card debt, outstanding mortgages and medical bills. Those are sneaky. Sometimes I forget about those. Um, and then I’d like to point out, uh, once you have that number, it’s important to remember and not cry, um, because not all debts are created equal and not all debts are bad. Uh, certain debts can actually make you look very good. They can make you look responsible and reliable in the eyes of lenders. Um, and this is a good thing. So being a person who pays off your student loans or your car payments regularly can look very good in the eyes of a bank. When you’re talking about a loan to buy a house or being a person who pays their mortgage on time, looks good in the eyes of a bank. When you’re trying to take out another loan to buy another house, you see where this is going, mortgages, student loans, even car payments.
If you make them like religiously, uh, are, are all really good debt, bad debt is pretty much everything else. Anything other than mortgage or student loan or a car note occasionally. Um, anything other than that, you’re going to want to get rid of as quickly as possible. Those are the ones you want to pay down fast, especially if they have high interest rates. Okay. So as you’re creating this list of debts, as you are kind of getting all of the things in one place, maybe maybe make a, uh, a stack like a two stack here, as we’re talking about debts, um, put them in one place and then put them in two places, a stack of good debts and then a stack of bad debts pay off the bad ones. First, you got this. Okay. Are you still with me? Are you excited about knowing these three numbers?
I think it’s pretty freaking cool actually to know these three numbers off the bat. I think that’s great if you’re still with me, if you’re, if you’re feeling capable and confident about learning or knowing these three numbers. Awesome. I have some extra credit for you for the first episode of money March, please, please pretty please make a list of received payments so far this year with the dates that you’ve received them commit to reviewing your income at least once per month and keep that list updated. Having an idea of how much has come in so far this year can give you, uh, um, you know, a S a solid place to jump from. If you’re interested in making money moves. I think it’s very important to know where you stand. So make a list of received payments so far commit to reviewing it and updating it once per month.
And then if you’re really overachiever, like modern Arnold from episode 1 0 8, if you are like mod, you can track your daily spending. And I mean, either write or type every cent that goes out, you could do this, you know, the old fashioned way with pen and paper, or you could do it with some sort of software. Um, I honestly, I think a money diary is a great idea. I personally use mint for my personal life stuff, and I use QuickBooks office for business. Um, but there are tons of other softwares that you can probably pretty easily compare and contrast, uh, to each other, to find what the best fit is for you. But I really do recommend if you are not already using a money tracking software or already keeping a pretty calculated list of your expenses, you ought to be doing that you ought to have really sounded like, like your, like your, your adult.
Speaker 0 00:17:50 Um, all right, lastly, be sure that you tune in next week so that you can learn how to draft a spending identity statement. I am borrowing this tool from my favorite. It is called the money book for freelancers part-timers and the self-employed. It is by Joseph D Agnes and Denise Kiernan. I hope I’m not botching those names. I hope I’m not botching my finances. Anyways. Um, this tool, the spending identity statement is truly one of my favorite things to do. I do it once per year, and it is a game changer. So mark your calendar next week, make sure that you, uh, know your three numbers when you come into next week’s episode. Because if you don’t, I’m going to ask you to go back and figure that out before we move forward. Um, and that is what I have for you today. My friends, three numbers, please, please know your fixed expenses. No, your average AGI for the last three years and know your debt, know how much you owe. All right, this is me signing off, but very amped for money March. Thank you all so much for being here. I will talk to you very soon. Bye.
Outro: This podcast was produced by me with the help of many; Music by Max Winnie, logo and brand design by Bree Reetz, and a big thanks to Riley Higgins, our executive assistant and editor, and also massive thanks to you. The mover, who is no stranger to taking action, I will not stand in the way of you taking action. I will not cannot stop you from downloading episodes or leaving a review and a rating. I cannot keep you from visiting thedanawilson.com to join our mailing list. I will not ban you from my online store for spending your hard earned money on the cool merch and awesome programs that await you there. And of course, if you want to talk with me, work with me and make moves with the rest of the words that move me community, I will 100% not stop you. Visit thedanawilson.com to become a member and get a peek at everything else I do that is not a weekly podcast. Keep it funky, everyone.