Screenwriting Tips: Finance 101 for Screenwriters
A well known and somewhat wacky NY stage actor friend of mine was irresponsible regarding the way he managed his money.
‘Wacky actor,’ I expect, strikes many as a redundancy.
His finances were handled by an old neighborhood pal whom he’d known since grade school. The kid had become an accountant. As his bookkeeper and manager, all of the actor’s fees were sent directly to him; likewise the bills. He also prepared and filed the actor’s taxes.
Each month the accountant paid the actor’s bills and doled out an allowance in cash, walking-around money sufficient to keep his client in cab fares (this was the pre-Uber era) and Sabrett sidewalk hot dogs (with onions in red sauce).
If the actor wanted to take a girlfriend to Puerto Rico for the weekend, the accountant would shoot him an additional two or three-thousand dollars to play the tables at the Caribe Hilton.
Everything went smoothly for a quarter century until, one day, the Internal Revenue Service contacted the actor directly to ask why he’d failed to file his taxes over the past six years. When he referred them to the accountant, they informed him that he was at the Rikers Island Correctional Facility awaiting arraignment for having looted his clients’ funds.
Not all the news was bad, however, the IRS reassured him. They told the actor that though he no longer owned his house (they now owned it) they would allow him to rent it back from them. It was part of a settlement lasting several years allowing the actor to pay his taxes and penalties in installments.
The last part of the settlement was the requirement that he attend the economics equivalent of traffic school: Personal Finance School.
Contrary to what he had expected, Finance School turned out to be pretty cool. The instructor was charming, poised, engaging. She gave him and his classmates useful advice.
The two most important rules were not sophisticated and canny accountancy strategies but principles that were wretchedly, glaringly mundane.
1) Upon writing a check, immediately do the math. This way the ledger always shows precisely how much – or how little – is in the account. It’s all too easy, she said, to delay making the subtraction, letting payments accumulate for even merely a brief while, relying on a loose guesstimate of what is in the account. This leads inevitably to thinking the balance is larger than it really is. Therein lies, of course, a recipe for bouncing checks wrecking one’s credit rating.
The other rule holds that 2) it’s fine to charge purchases to a credit card as long as you pay off the entire bill each month and never allow even merely a nickel to revolve.
This way your interest payment is zero.
Do you know what the credit card industry calls cardholders who pay off their bills in full each month?
Deadbeats.
To them the bad guy is not the cardholder who stiffs his creditors but he who regularly pays his bills in full.
There are rare times, the finance counselor preached, when a writer might legitimately borrow money. Revolving credit card debt and cash advances, she insisted, are not the way to do that.
The credit expert preached that should anyone ever find that he’s allowed even only one credit card charge to revolve, that is, if he has failed to pay off his monthly balance in its entirety, he should take the card in one hand, a pair of scissors in the other and, well, you can figure out the rest.
If you want others to treat you as a professional, you must treat yourself as a professional. Professional writers act responsibly regarding their finances. The main thing writers need is: time. That’s what money is for: to buy time to write.
