A Major Money Mistake

Piggy Bank with Bandage on Face on Dramatic Gradated Background.

When I was working for a small company years ago, the extremely reliable woman who cut our paychecks missed the Big Day — a Friday. As it became evident she would be a no-show, one of my co-workers revealed she was upset. “I wrote out and mailed checks for all my bills last night because I thought I was going to get paid today. Now they’ll all bounce.”

I didn’t understand why anyone would write a check for money that wasn’t in the bank and I still don’t today. Yet over the years, I’ve discovered that many writers make similar mistakes.

Publishing contracts list payouts and give a timeline as to when they are to occur. However, things go wrong. Often. With just about every publisher. Sometimes the editor forgets to tell Accounting to release the funds. Sometimes the person who cuts the checks is out sick. Or maybe the Big Boss who authorizes checks of a certain size has left for a month-long missions trip. Or a publisher has a cash flow problem and can’t make your payment.

I’m not saying it’s wonderful and right for funds to be delayed but there are so many things that can go wrong in the process that it’s wise to plan on a late payment. The biggest money mistake a writer can make is to sit down with a contract and say, “Okay, I’ll be receiving $5,000 on July 1 because that’s what my contract says.”

When this happens and there is a delay, sometimes I get frantic communication from authors. Of course, authors are always justified in asking about delayed payments and my job is to investigate. But sometimes I discover the urgency is triggered by a purchase or other financial commitment the author has made based on promised money, not money that is already in the bank. Of course, emergencies happen that can cause debt, but I don’t recommend buying a luxury item until the money is in hand.

Your turn:

What is your favorite way to save money?

What is the worst money management mistake you or a friend have made?

19 Responses to A Major Money Mistake

  1. Rachel Muller January 16, 2014 at 4:41 am #

    I love it when you explain these things to us! 🙂 Growing up in a family who lived on very, very little I learned money management at a young age. I started working when I was 13 years old and always managed my own money. I learned from other’s mistakes and vowed to never let those problems happen to me.

    But then you get older and get a Credit Card. How dangerous and powerful those little plastic cards can be! Essentially, using a credit card is the same as writing out your bills before you have the cash as you mentioned above. You’re simply spending before you earn or spending more than you’re making. I’d say that was a harder lesson for me to learn! 🙂

    Thank you and have a great day!

    • Tamela Hancock Murray January 16, 2014 at 7:11 am #

      Absolutely, Rachel! Credit cards can feel like free money because you don’t see the dollars leaving you wallet. I like the image of “writing out your bills before you have the cash” to pay them.

  2. Jackie Layton January 16, 2014 at 4:54 am #

    I have two big ways to save money. I prepare most of our meals at home. Not only does it save money, it’s healthier. I also buy a few nice clothes that last me years. I don’t buy the trendiest outfits, I try to go for classics that will stand the test of time. I’ve discovered this also helps me not go to the mall as often which removes me from temptation.

    Have a great day!

    • Tamela Hancock Murray January 16, 2014 at 7:12 am #

      Jackie, I cook at home a lot, too, and when you do, you also realize quickly how salty most restaurant food is. And shopping for entertainment is very expensive!

  3. Lynette Eason January 16, 2014 at 7:45 am #

    Tamela, GREAT advice! We ALWAYS wait until not only is the money deposited, but the check CLEARED. You never know when something might go wrong and the check you’ve been paid actually bounces. LOL. I’ve never had that happen with a publishing house, though, so let me just make that clear. Ha. I love the Dave Ramsey envelope system. When used right, it’s an amazing the tool.

  4. Nancy B. Kennedy January 16, 2014 at 8:42 am #

    I am convinced that the greatest favor I can do for my child is to make sure he has no college debt. The young adult who is saddled with loans has a crippling strike against him before he even enters the workforce… if he can enter the workforce at all. Young couples who marry can be sunk by a double load of debt, especially if one leaves the workforce to stay at home with children. We save as much as we can to this end, and also to fund our retirement, so that we don’t become another financial burden on our child. This means that our cars are old and our house is liveable and pleasant, but not at all up to date. Yes, I get struck by house envy at friends’ homes — what I wouldn’t give for a finished basement! — but I am resolved to stay the course because it is the right one for us.

  5. Jeanne Takenaka January 16, 2014 at 8:49 am #

    Good advice, Tamela. I, too grew up with little. My parents still gave us opportunities to earn money, though. But my sisters and I had to work for it. I learned the value of a dollar pretty fast after spending all my money on candy once. 🙂

    How I save now? Like Jackie, we cook almost all our meals at home. Going out to eat is a special occasion, not a convenience. I try to live within our food budget, but we have restricted diets in our family, which makes it tricky. I also only go shopping when I have a need. It’s too easy to “lust” after nice clothes that I don’t really need. 🙂 I keep track of some aspects of our budget, and I feel like it holds me accountable to my husband. This is a good incentive not to spend on frivolities we don’t need and can’t really afford. 🙂

    I got myself into a mess of debt in college after getting a credit card. It helped pay my plane fare home on holidays, bought me a few new outfits, gas for my car, and a whole lot of stress. We have a credit card now, that we pay off in its entirety when we get the bill.

    • Jackie Layton January 16, 2014 at 2:19 pm #

      Hi Jeanne,

      We’ve learned to pay off our credit card bills each month also, and we try to only use one that gives points for the money we spend. The points eventually add up to a check in the mail, but that takes a long time. 🙂

      • Jeanne Takenaka January 16, 2014 at 4:51 pm #

        We do that too, Jackie. So helpful….when the points have added up. 🙂

      • Carol Moncado January 16, 2014 at 4:55 pm #

        We did put most of our Disney trip on one [rather than use all of our cash up front].

        It was an Amazon card… Spending those points was fun ;).

  6. Laura Christianson January 16, 2014 at 8:50 am #

    Thank you for addressing this issue, Tamela. I work with several publishers, and while most of them pay me promptly every time, there are a few that don’t. One time, I had to wait seven months for a large check due to an accounting glitch on their end.

    I try to keep a $5,000-$10,000 cushion in my bank account at all times, to cover those times when clients don’t pay promptly.

    For those writers who have spouses who work, I recommend that you live on one income only. That means living frugally in the ways other commenters have already mentioned. That way, if one of you gets laid off or not paid or is unable to work for some reason, you are still able to cover living expenses.

  7. Angie Dicken January 16, 2014 at 9:11 am #

    Good to know these things, Tamela! We have an amt of money of to our savings as soon as we get paid, so we don’t dip into that for monthly things. It’s nice to know that if things were wacky one month, we have a backup savings account! I agree with Laura–we have always lived on one income even when I worked. 🙂

    • Angie Dicken January 16, 2014 at 9:12 am #

      Sorry for all the typos! Silly iPhone.:)

  8. Stephen M. Miller January 16, 2014 at 9:29 am #

    One thing I discovered is that my agent, Steve Laube, prefers to handle all the money questions with the publisher.

    I had a pretty good relationship with one publisher in particular, and I had met most of the staff that handled my books and processed the checks. So I didn’t hesitate to shoot an email to the appropriate person when the check was a week or two late.

    Steve kindly let me know that this is something he prefers to do. It’s fine with me. Makes my life easier. Steve’s, too, probably.

  9. Carol Moncado January 16, 2014 at 9:34 am #

    I never understood that either [though I have been guilty of it a time or two :/]. We’ve also used the Dave Ramsey system for nearly a decade now. It doesn’t always work perfectly with real life but…

    We have odd paycheck schedules for my main job and hubby’s second job [same place]. We go 2 months [right before Christmas to Feb. 20] between paychecks and then about 6-7 weeks from May 23ish to July 5 and again from August 5 [or so] to September 20. We plan for those things but that doesn’t always mean we have anything but Ramen to eat the second week of February ;).

    We also eat at home most of the time, but the increase in prices the last few years [coupled with very small raises] is making buying good food harder and harder :(. We don’t go on vacations [last year’s Disney trip not withstanding] and our kids aren’t in a million activities [6th grader is in MS Band, all do swim stuff in the summer]. All of that saves money. The closest thing I usually get to a vacation is ACFW or a kidless staycation. One of these days, hopefully it’ll pay off. We got caught in the credit card trap not long after we first got married and worked hard to get out of it. We don’t want to get back in.

    I think, whenever I do have contracts, that I may have things I plan to do with it [like “pay off part of the car” or whathaveyou] but not time specific.

  10. Catherine Hackman January 16, 2014 at 12:06 pm #

    I am glad for this inspiration to spend as little as possible and live within a budget. It helps me to know that I am not the only one with a nice but not up to date house and nice but not new clothes. I saw several people mention Dave Ramsey. I’ve done the class twice–the second time with my 17 year old daughter. He has a lot of good advice.

  11. Ron Estrada January 16, 2014 at 5:19 pm #

    My best way to save money is the “24 Hour Rule.” Before making a major purchase (anything over $100), I wait one day to see if I still “need” it.

    My worst money management mistake…only one? Let’s see. Buying new cars is a big one. You really save a ton buying used. And just using credit cards. If you can’t buy it with cash, then don’t.

  12. Linda Rodante January 17, 2014 at 1:49 pm #

    Tamela, you are so right about writing checks without money being in the bank. As a former bank employee, I have seen the sad result of this too many times. But, on the other hand, I’m so glad you wrote this article, because, as a business person, I would expect the monies to be in my account on the appropriate date unless I was notified in advance. Your article just gave me a heads-up in this area of publishing. Thank you!

  13. Emme Gannon January 17, 2014 at 5:33 pm #

    When my husband and I started our business over twenty-five years ago, we took to heart the advice of a friend who was a successful businessman. He said, “Never mess around with payday.” For us, employee payday was another way to honor God and the employees He gave us. If an employee ever “forgot” to inform the company of a payment due, they would not be doing their job. “Do unto others . . . .”

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