There is something wonderfully attractive about a jewelry box or, better still, a Louboutin shoe box full of cash. Especially if your work is producing more cash every day.
And yet, well, some escorts have trouble paying their rent at the end of the month. A lot of escorts have no savings and a lousy credit score. Even more either fail to file income tax or file without claiming the deductions they are entitled to. All that cash somehow evaporates.
There are a lot of reasons why and, frankly, there is not much advice I can give about addictions, sponging boyfriends or living beyond your means. But there are some good habits which can ensure that your hard work translates into legitimate, above ground, assets, credit and tax paid money. These habits are not painless; but they can make a huge difference at the end of the month and a bigger difference at the end of the year.
Habit #1: Think of yourself as being in business. Your dates are the services you sell. Whether you are a courtesan charging thousands an hour for your time or a service provider selling your time at what the market will bear, the reality is you are in business.
If you take that seriously for a moment you'll notice the difference between a professional and an amateur: a professional charges for her services and recognizes that not all the money she makes is profit. An amateur is paid and the money she receives looks like a gift.
Habit #2: A professional understands that when she has $1000 in her purse for a day's work she needs to pay attention to what her net earnings are. It is a vital concept. "Net" earnings are what is left over after you have taken care of the expenses you have to incur to make the money. Obvious expenses include the cost of advertising, the cost of a working space, the cost of outfits, shoes, hair, makeup, sex toys, condoms, candles and anything else you have spent to make the money.
Be brutal. Every expense means just that. Do you have a cell phone used for work? Computer? Website? Photographer? Lawyer? Laundry? New sheets? These are all expenses.
Habit #3: Invest. It takes money to make money and when you spend money on your expenses you are investing in your business. The habit is to really look for things to spend money on which will increase your earnings.
Upgrading your working space, buying new outfits, buying a "feature" post are all things which can raise your rates and/or get you more business.
Habit #4: Think of your expenses as an investment. Uncle Sam through the IRS will. Believe it or not, as well as outfits used for escorting, shoes, hair and make-up, a boob job – where it can be shown to increase income – may be a depreciable asset for tax purposes. (No, really, "Chesty Love" established the precedent back in 1986. No, not kidding.)
Yes, in many jurisdictions escorting may have legal issues; but in all jurisdictions, not filing your taxes is a huge legal issue. However, once you realize you are going to have to file taxes, keeping your receipts for all business related expenses makes a lot of sense.
Habit #5: Have a system. Even if your system is nothing more than a big envelope where you put your business expense receipts knowing where they are is a step forward. So is keeping a running record of how much money you have made. (A bank account will make this easy.)
Habit #6: Have a story. Whether escorting is legal in your jurisdiction, there are many stigmas which still attach to sex work. You are under no obligation to disclose the precise nature of your business. So, have a story. You are a "consultant", "party planner" – great stories but where does the cash come from? You are an "independent dealer in a) vintage fashion, b) books and magazines, c) mid-century modern furniture". You are a professional "downsizer" helping people dispose of the stuff they accumulate over a lifetime.
It is not a bad idea for this story to be true. I'll get to "day job" below, but it is wise to have one.
Habit #7: Make Bank. Having a bunch of cash in a shoebox is lovely, but it is risky – theft, boyfriend, buying your own champagne – and it doesn't do a thing for your financial reputation. First order of business: get a bank account with a debit card and computer banking. Initially you will just need one bank account but down the road you may want another for straight savings and investment.
Habit #8: Build your financial profile. Making a decent sized deposit once or twice a week, even if you take most of the money out via your debit card later that day, will build your financial reputation. So will paying your bills using computer banking. Small, regular transactions will give the bank the data points it needs to begin to see you as a desirable customer.
If possible, find a smaller bank where there are still tellers and possibly even an actual manager who will see you. Yes, bank machines are wonderfully convenient but more for taking money out than making deposits.
Habit #9: Mix your income. Having cash is not illegal, but just try to deposit $20,000 cash all in one go. You would think you were robbing the bank rather than putting money in. You want to be paid, and cash is easiest. However, accepting credit and debit cards gives your clients more options and you deposits which are not cash. (Check out Square for an easy way to accept credit cards using your smart phone.)
Where you are accepting bookings from out of town use PayPal to take a deposit/booking fee.
Remember that you should try to ensure that your services look entirely innocent on your client's credit card statement. "Hot Kitty Inc." will raise red flags, "HK Consulting" will be much less obvious.
As well, look to vary the amounts deposited and the amounts charged on credit cards. Satisfying as it is to have 10 dates at $300 if every sale is $300 it can trigger the bank to look more closely. A mix of credit card charges, even if you have to give a client a Thursday afternoon 10% off special is preferred.
The point is to have a mix of cash, PayPal money and credit card receipts hitting your account.
Habit #10: Pay your tax. As a self employed person you are responsible for paying your own taxes. It is tempting to do this the day before taxes are due. Tempting and dangerous. If you make $50,000 gross and your net taxable income (after legitimate expenses) is $35,000 your federal tax for that year will be on the order of $4500 plus state tax plus social security plus other taxes. Call it $6000 for sake of argument. $500 a month. Coming up with $6000 at tax time is tough if not impossible.
Habit #10: Pay Forward. Let's say you have had a decent week and have $3000 in cash come Monday morning. What to do? First off put it all the money into your bank account. Second, and this is hard, pay tax. If your monthly tax "nut" looks like $500 pay the $125 weekly amount but, and this is even harder, pay another $125 forward. Third, sit at your computer and pay some bills: phone, cable, heat, electicity. Using computer payment means you can pay a part of the bill each week and be up to date or even ahead of the game. If you have a credit card, pay that down as quickly as possible to avoid interest charges.
The good news – at least about paying tax forward, is that if you overpay, at the end of the year, you get a tax refund which is a form of saving.
Habit #11: Save 15% of after tax money. If you take your $3000 cash and deduct the tax paid of $125 you have $3875, 10% is about $400, 15% is $600…save it. Initially just keep it in your bank account but when you have a couple of thousand saved look for, first, a pure savings account and second, a tax advantaged investment account.
Building a regular savings habit is the difference between scrambling every month and having nothing at the end of the year and having a nest egg which is growing every month.
Habit #12: Get and pay for advice. There are thousands of "financial advisers" out there. Some will help you with taxes, some will recommend investments, some will try to sell you insurance. What you need is a fee for service pro. Not when you are just starting, but when you see your first $10,000 in your savings account start asking around. Your bank manager is one good place to start (but remember he wants to sell you his bank's products.)
Habit #13: Have a Day Job – a real day job but one which is very flexible. The best sorts of day jobs are entirely divorced from the escort world. Buying and selling online, "picking" vintage clothes, becoming a downsizing specialist, organizing garage sales, doing web design or writing or modeling. The point is to have an income stream that will pay you in cheques and which is entirely above board. Your day job does not have to pay much, it just has to provide you with a great cover story.
The other reason you need a day job is that escorting is not forever and a six year gap in your resume looks terrible to employers. Better to be able to say you ran a "downsizing business" than to draw a blank.
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With a bit of discipline a girl selling $3,000 a week in services can save $2,400 a month and nearly $30,000 a year. And she'd still have over $8,000 a month to live on.
But, I should warn you, once you start saving it gets to be a habit. Putting away $2400 a month is great, but by saving rather than spending $350 more a week you would be saving close to $4000 or nearly $50,000 a year. Well invested the saved income from a few years in the business can give a girl a real nest egg for life.