Financial Planning
July 18, 2008
I had my first appointment with my new financial counselor this morning. She’s “whore friendly” to put in terms used by a friend of mine. By that I mean that I can be honest with her about what I do and how I earn my money. I had one in Florida, but since these folks have to be licensed to practice in each state, I had to find one to use here in California. I found this one through another woman who used to work here in San Francisco.
I have always been one to save and invest the money I make. While I was dancing, I’d see other dancers just blow every bit of money they made each night on all kinds of frivolous shit - clothing, games, electronics, cars, drugs, you name it. You could literally gauge the maturity level of the women by what they did with their money. And I know people who “live for today” and just don’t bother to put anything away for a rainy day, or some unexpected expense. I could just never do that - I always want to have access to money if I need it. That savings ethic was instilled in me by my parents, I suppose. Thanks mom and dad! Maybe someday I’ll tell you how I earn it. 
So I carried my love of saving money into my dancing. I used what I made to pay for the usual living expenses, as well as school expenses (UM’s tuition was about $32K a year, not including books!). With the balance, I invested some, saved some, and of course paid my taxes and whatnot. When I left Florida, I had more in my savings account than many people earn in an entire year. That’s what I’ve been living on up to this point.
Now that I am working in a field where I’ll be earning substantially more than I was before, I want to make sure I make wise financial decisions, not only for the present, but for the future as well. And though I think I am intelligent enough to understand what I need to be doing, it is a good idea to have someone to bounce those ideas off of, and to validate the financial plans that I make for myself. My goal is to have some money available to live on and to achieve some personal business goals I have once I obtain my graduate degree (more on that at a later date).
The biggest concern for me is paying taxes. Since I am self-employed, I have to pay my income taxes quarterly (state and federal), along with “self-employment” taxes (Medicare and Social Security). So when I get paid, I put aside a specific amount of what I make (40%) to pay that. I have a special bank account I use just for that, in fact, to keep me from dipping into that pot of money unnecessarily. If there’s anything left at the end of the year when my final return and payment is due, then I take it out and put it in my savings account or use it to buy myself a treat (if I’ve been good! lol).
A *lot* of dancers and prostitutes don’t pay their taxes at all. And that is one thing that gets a lot of sex workers in trouble, especially prostitutes. Even if you’re never convicted of prostitution, the federal government will come after you for tax evasion, which itself carries a pretty stiff penalty. The IRS doesn’t care how you earn your money, even if is obtained illegally; you still have to pay taxes on it. Plus, this gives me a “work history” with my tax returns so that I can account for these years as being employed, both for future employment and for collecting Social Security benefits when I am older (assuming, of course, that social security is still around at that point). I list my line of work as “Sex Therapist.”
I am also starting up another 401K to put some money aside for the future. I already have one from my days as a dancer, but because of the way I am earning this money, I am starting another one. Since what I am doing is considered by some to be illegal, I have to worry about the government seizing the “proceeds” from that illegal activity. That includes money, of course. If they can even remotely connect the money in my 401K to my work in an illegal activity, then they can seize it. If I just started adding this money into my existing 401K, they could seize all of the new money plus anything I had in there to begin with. So, I have to keep them separate for the time being. I will put no less than 10% of what I make into this account.
I also want to invest some of my money, and I am examining several options for how I want to go about doing that. There are several ways that have the potential for earning good money for me, and I just need some time to analyze them and figure out what sounds like something I believe in and whatnot.
Charitable giving is another area I have always put some of my money. I firmly believe in helping others in any way I can, especially as it relates to women and reproductive rights. For example, in Florida, from the day I first started working, I have been sending money anonymously to organizations like Planned Parenthood and two women’s shelters in Broward County that help rape victims and victims of domestic abuse. I plan to continue that as well here, but I’ll also be sending money to organizations that support sex workers’ rights and those that help get sex workers wanting out of the business out of it. I have a target of 5% of what I bring in for this. Sadly, if things come up short in any given month, this is where the first cuts come from. But at least I’m trying to be faithful about that.
The balance of what I make is split between personal savings and a checking account I use to pay for living expenses, and all of the other little expenditures that make up daily life. If I have the money in my checking account to pay my tuition and book costs when school starts, I’ll use it. Otherwise, that comes out of the savings account.
So my financial planning budget looks something like:
40% - Taxes
10% - 401K
5% - Investments
5% - Charitable Giving
10% - Savings
30% - Living Expenses
So, as of right now, I am on target to make a minimum of $14K this month given the appointments I’ve had, plus what I have scheduled (and I still have days open, so it may be higher). This will give me about $4,200 to pay for living expenses for next month, and I think I can do that. Many of the expenses I outlined in my original budgeting plan are considerably lower than I had anticipated, so this figure seems to be reasonable at this point. My gas costs have been practically nil because I haven’t gone anywhere except the beach, grocery shopping, and clubbing a couple of nights. I need to get out more.
Anyway, I am a firm believer in managing your money wisely. Like I said earlier, I’ve seen plenty of people just spend, spend, spend and not have anything left to show for their hard work. To me it is even sadder when someone who makes as much money as I do (or have the potential to, at any rate) doesn’t have any money put away for a rainy day, more so than those who live on much tighter budgets. Dancers and most sex workers not on the street make incredible money (relatively speaking) in many cases. And for most of us it just isn’t a viable option to remain in the work as a career, so it is incumbent upon us to save where we can, in my opinion. I suppose perhaps if I didn’t have a goal in mind it’d be easier to waste money. Who knows?
I am still working on Part II of Anni’s adventure in slutdom, and a story about my night out last Sunday. I promise to get those finished and up on the blog as soon as I can. I have appointments for the next three nights, so my weekend promises to be somewhat busy. I hope all of you folks have a happy, safe and productive weekend as well. 
Comments
23 Responses to “Financial Planning”
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Damn I need you to help me with my spending. The Mexican in me really doesn’t like saving. Much more, “Oooh pretty! I want it!”
Alexa,
It’s so impressive to see you take such firm control of your destiny. It makes me so proud to know that you have these goals and plans for yourself and that this has never simply been about ‘lifestyle’ or living in the ‘now’ for you.
Good work hon.
xoxo,
nina
Oh yes… Anni… whatever happened to that little slut??
It’s so funny that you’d post this; I was just thinking yesterday all of the trouble you would be in NOT for how you earned the money, but for not paying taxes on it.
You might consider incorporating, there are a number of advantages tax-wise for you. In addition, instead of a 401k you might want to consider using a SEP-IRA; you can put away up to 25% of your income up to 200k per year — much better than the 401k. You’d want to check with your advisor on the ERISA issues of illegal acts proceeds and IRAs/401k plans but you’ve already thought about that.
I find it very funny that I was just thinking of this yesterday, and here today you’ve posted your solutions.
Very nicely done.
Miss Lyna,
Damn I need you to help me with my spending. The Mexican in me really doesn’t like saving. Much more, “Oooh pretty! I want it!”
I don’t know why, but I was never one to see something pretty and just have to get it. I see pretty stuff all the time, of course, but just no drive to buy it. I wish I knew why that was.
Henry,
I appreciate you thinking of me.
You might consider incorporating, there are a number of advantages tax-wise for you.
There are some advantages, yes. But the fees, administrative paperwork, business licenses, etc. all kind of make that a less than worthwhile proposition (not to mention the invitation of additional governmental scrutiny). If had some personal assets here that needed to be shielded for one reason or another, then that would be a viable option for me.
My 401K is actually a SEP-401K. The IRA option had a few more limits built into it in terms of how much you could contribute and there are some slightly better tax advantages with the 401K (deduction-wise). There’s less administrative hassle with the IRA, but I have them managing my 401K, so I don’t deal with any of that at all.
I find it very funny that I was just thinking of this yesterday, and here today you’ve posted your solutions.
I’d say it must’ve been your vibes that made me think of it, but I set the appointment up two weeks ago.
Thanks you for your suggestions.
Goddess,
It makes me so proud to know that you have these goals and plans for yourself and that this has never simply been about ‘lifestyle’ or living in the ‘now’ for you.
Thank you.
Anni’s been in a stasis for a bit, but she’s coming out to play shortly.
I’m like that too.
I’m obsessive about saving my money…
I don’t have much to say.
Save wisely!
<3 sc
I should learn from you because I am one of those who live for today, lol Then again I have never earned any myself…
As far as gas goes, you live in a city that has one of the best public transit systems in the nation. I hope you’re using it. Yes, it’s pretty daunting when you first get there, but once you get a little experience with it, you should hardly ever have to drive.
If you’re interested, I know a professional dominatrix in the Haight who is (or was) working on a degree in accounting. She doesn’t really share a lot of personal information, so I can’t say for sure exactly what she was studying, but it was something accounting-related. At any rate, she’s definitely got a good head on her shoulders and I suspect has been handing her money pretty well. Plus, I know she’s very friendly and supportive with other sex workers. If you want, I could put you in touch with her. I can’t say for sure she’d have any advice for you, but it couldn’t hurt to ask.
Hi Alexa,
I usually don’t have much of value to say in response to your other posts besides the usual “Stay safe” and “Congrats!” that you certainly deserve.
This time though, I’ve got to express my concern - 40% for taxes?! I assume you’re just putting extra aside just in case, but from my personal experience as an entrepreneur that seems entirely too much.
A quick Google search confirms this - the federal self-employment tax is 15.2% (http://www.irs.gov/businesses/small/article/0,,id=98846,00.html#2) and the state self-employment tax for California is 9.3% (http://www.ftb.ca.gov/forms/catxrate_exmpt07.shtml) for the 2007 tax season.
Regardless, you’re wise to set it aside; it certainly doesn’t hurt to keep more cash around, especially if you don’t need it. It would just do more good to you somewhere earning interest instead of in a checking/savings account, and with your increased earnings, that extra ~15% you’re stashing may go a long way in a year.
I also agree with not incorporating - the amount of paperwork required is horrendous, since you’re supposed to hold annual shareholder meetings and the like (at least for a C Corp). Besides, the entire point of incorporation is for limited liability and I think we’re both pretty safe in assuming you’re not going to get sued for your practice.
I’m really proud of you for not being a spendful consumer in addition to all of your other attractive traits. I’m glad you’re teaching others and being a good role model… ;) You are indeed an extraordinary person and I wish there were more like you in the world. Rock on and stay safe!
Han,
This time though, I’ve got to express my concern - 40% for taxes?! I assume you’re just putting extra aside just in case, but from my personal experience as an entrepreneur that seems entirely too much.
…- the federal self-employment tax is 15.2% …and the state self-employment tax for California is 9.3% … for the 2007 tax season.
You’re forgetting the all important federal income tax, my friend. The SET is over and above the FIT and replaces what I’d be paying for Medicare and Social Security if I worked for a company (along with the portion that company would be paying).
Historically, my taxes have averaged between 35 and 40% of what I bring home (as a dancer).
You are indeed an extraordinary person and I wish there were more like you in the world.
Thank you, sir.
Scott,
As far as gas goes, you live in a city that has one of the best public transit systems in the nation. I hope you’re using it.
I actually haven’t, but that’s largely because I haven’t had the need to. I’ve taken a small number of trips to the beach or the grocery store and that’s about it.
If you want, I could put you in touch with her. I can’t say for sure she’d have any advice for you, but it couldn’t hurt to ask.
Thank you for the offer, but I don’t think it’ll be necessary. I am comfortable with the woman I am working with now, and she works for a reputable firm, so I think I’ll be okay with her.
Thanks, though.
Alexa,
Considering the sensitive and, potentially felonious nature of your occupation, have you and your financial advisor discussed an offshore holding account?
Stephen
Stephen,
Considering the sensitive and, potentially felonious nature of your occupation, have you and your financial advisor discussed an offshore holding account?
That is very hard to do these days with all of the Patriot Act tracking of financial transactions. Besides that, it is not my intent to circumvent the tax laws or anything like that.
Hey hey hey!
Good job planning it all out. I have no money or reason to do that at this point but I can only hope that when i’m your age i’ll have the smarts to do it. You make me proud <3
Where’s the “come visit Keeley” portion?
Suckage.
Alexa,
You are wise, sexy, and attractive. What a combo! You’re great to plan long term.
On financial matters you are absolutely right about 40% (US and CA taxes mount up) and no corporation.
Two minor ideas: First, on the tax return call yourself a “physical therapist”. Second, look into health insurance and “long term disability” insurance in case you are ever in an accident or similar and laid up for a while (not in a position you would find enjoyable or profitable).
Also, in terms of investments get good basic funds with a Vanguard account and avoid sleazy financial advisers with their own profit motive on where they place your money.
Work hard, play hard, and save hard.
Enjoy every moment.
Keeley,
Where’s the “come visit Keeley” portion?
Maybe that can come out of the leftovers from my tax savings account.
Lee,
First, on the tax return call yourself a “physical therapist”.
What advantage would that have over listing myself as a “sex therapist?” I do like the more generic “physical therapist,” though.
Second, look into health insurance and “long term disability” insurance in case you are ever in an accident or similar and laid up for a while
I actually do have health/dental/vision insurance, but not long-term disability. Hmm.
Thank you for the ideas.
Listing a more generic term keeps the red flags at bay. A tax return is not your calling card.
Smart woman - Al Capone got taken down for taxes, of all things! As always, your planning and intellect are commendable. All that beauty and brains too, *sigh*
Keep on rocking…
VI (form. B-dog ;)
I disagree about the corporation naysayers; the paperwork is minimal; I presume you will have a CPA do your taxes anyhow. The cost is marginal; perhaps an extra two grand a year between the California minimum tax and the fees to do the books and tax returns.
One advantage of an S-corporation, from a purely business point of view, is a clear separation of your business affairs from your personal affairs. Separate bank accounts, separate general ledger, etc etc.
S-corporations are audited far less often than schedule C filers, as well.
There are a number of tax deductions that are easier to justify if you use a corporation.
The “annual meetings” and “minutes” etc. take around 20 minutes a year; not to mention that you could hold your annual meeting say, in Hawaii. ;)
In the end, it prolly won’t amount to a hill of beans.
Oh, while I’m on it — do NOT hold yourself out as a “physical therapist” in California — that is a licensed profession and claiming to be one could land you in more trouble than doing what you’re doing lol. Instead, I think you should just call yourself a “Personal Assistant” and leave it at that. ;)
PS. was thinking about whether deductions related to the production of illegal income were allowed; apparently IRS is agin it on public policy grounds but the courts have generally allowed them. Something to think about:
http://en.wikipedia.org/wiki/Public_Policy_Limitation_on_Deduction_for_Business_Expenses
Henry,
do NOT hold yourself out as a “physical therapist” in California — that is a licensed profession and claiming to be one could land you in more trouble than doing what you’re doing lol. Instead, I think you should just call yourself a “Personal Assistant” and leave it at that.
That’s an excellent point.
apparently IRS is agin it on public policy grounds but the courts have generally allowed them.
That is what I’ve been told in the past, yes. The IRS doesn’t get into the particulars unless you’re audited, so the chances of it even becoming an problem for me are pretty slim. If the new charter amendment passes in town this Fall, it won’t matter much anyway, I don’t think.
Thank you for your help, btw.