In America, you can make mistakes, fail, and it doesn’t matter.

My brother in law posted this link to Facebook today. My initial reaction was aww about how different Japanese culture is from American. But then, the very last paragraph stuck out to me.

In America, you can make mistakes, fail, and it doesn’t matter. It is a fundamental feeling that to sometimes be incorrect is natural. In addition, rather than thinking about mistakes and failures, American’s have curiosity and say, “Let’s try anyway!”

There it is. That’s what describes Americans. It describes American attitudes towards life, business, and work.

The article describes Japanese thoughts about failure. Here they are:

In Japan, there is great fear of failure and mistakes in front of other people. It is better to do nothing and avoid being criticized than to taste the humiliation of failure. As a result, there are things we wanted to do, but did not, and often regret.

Rather stunning, isn’t it? It sure makes you realize how often we fail. We fail every day when we aren’t able to cross everything off of our to-do list. But that’s what  is so great about a week. There are 5 working days. So, we can try tomorrow.

Here’s to trying.

“Success is the ability to go from failure to failure without losing your enthusiasm” ― Winston Churchill

 

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GIUL Policy Calculations

Last summer a friend of mine went to work for an insurance company and since I needed life insurance, I said… hey, can you give me a quote for life insurance. The next thing I knew, they were attempting to sell me the following products: A Global Indexed Universal Life Insurance Policy (GIUL), Term with Return on Premium, a Variable Annuity for Roth IRA, and Disability Insurance. They also wanted to manage the rest of my investments. Seriously? All that I asked for was a quote on life insurance.

I explained that all I really wanted was simple term life insurance, but despite asking for this they proceeded to pitch me on all of these services which I didn’t need, and most of which are a horrible, horrible product. I say horrible, and that’s really how I feel.

I sent my friend a number of emails attempting to persuade him that they were a horrible product, but he was too far down the rabbit hole to see clearly, and I ended up not buying anything from them.

Here’s what I wrote to him about the GIUL policy:

GIUL Policy

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After really looking at this one, I’ve come to the conclusion that I don’t believe that I can afford this policy because it forces me to invest in the same way for a 30-50 year timespan. I think that I would rather have m

ore control over my investing choices. I’d rather be able to change my mind and invest in different sectors like real estate. It doesn’t appear that I would have th

at control here, but correct me if I’m wrong. Also, it’s like a forced savings plan, and it just feels unsafe in that I’d have to make that payment every month.

Since there’s basically no benefit for the first 7 to 10 years (except the life insurance death benefit which is an important benefit) I felt like the next 7 to 10 years are the ones I would like to have liquid assets (and, working on paying off house).

Assuming a term life policy only cost me $100 month during that period, I would be only down $24,000.

I took the last 20 years of the S&P 500 and it looks like it had an annual rate of 6.24% from Dec 31, 1992 through Jan 2, 2013. Investing $338.06 per month for those 20 years would have resulted in a return of approximately $162,692.37 which is more than the 20 year net surrender value of the GIUL policy. The GIUL policy has a surrender value of $149,307 (page 20) at 20 years (assuming 8.5% return). If I were to die 20 years from now, and carried a term policy at that time, I’d have the death benefit from a term policy + my investment return as well. I am having difficulty seeing why I wouldn’t want to do that. From the looks of it, by going with a GIUL I am running the risk of losing my additional investment if I were to die. But, I understand there’s the tax-free aspect… but not until I’m 70.

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From what I can understand about this policy, the death benefit would be all I would get if I were to die before an older age. If I am wrong about this, please correct me. That’s just not a good investment practice from my understanding. Why risk that? For less money, I can have a term life insurance policy that protects me, and then anything I invest I know I will have access to. Way more liquid. I’d much rather wake up 20 years from now having “invested the difference” and have a liquid nest egg than have it be tied up in an insurance policy. I do understand the loan lets me get access to that money, but there are some tax implications there that can’t be overlooked.

I also am having a hard time coming to terms with the idea that if I died within 7-10 years I am not further ahead than if I “invested the difference” (but, I can see that I’m further ahead if I lived to 70 or 80).

On the other hand, I can see the value in a forced investment approach. Will I really invest the difference?

Questions to ask your insurance salesperson: Is there a cap on how much I can earn on the investment? I also read somewhere that dividends earned by the S&P 500 aren’t paid out, is that true? What are my approximate fees? From reading an article, I get the idea that long-term it actually pays off admirably.

Ask yourself if it is wise to place a sizable percentage of your income for the next 30+ years into one investment method.

It might sound like I’m completely against the GIUL but I’m not, I just am having a difficult time accepting such a large monthly expense especially compared against the fact that I want to also fund my Roth IRA to the max ($5,500/year), pay off my house early, and grow my liquid nest egg over the next 10 years. If I had an extra large emergency fund laying around, I would feel a lot safer about a monthly “cost” like this and I’d probably be okay with the costs considering the rewards.

Looking at it further, if I were to die at 63 (age my mom died) after 30 years of investing in the GIUL policy I would have invested $152,444.88 over that time. The death benefit is $500k and the Net Surrender Value is $380,194. If we take the S&P 500 average over the last 30 years we get 8.120% return. After 30 years of investing $338.06 on a monthly basis I would end up with $507,944 which is more than the death benefit. Let’s guess over that period I would have paid out $36,000 for a 30-year term (might be low). Even taking half of the proceeds for taxes and fees, with a term-policy my wife would be left with a term-life death benefit and the “invest the difference” investment of maybe $250,000. I guess in summary the way I understand it, the GIUL looks like a really good deal if I don’t die.

Related articles:

Counting verbally or visually

I’m not sure what this exactly means for most of my readers, but I thought it was interesting:

I read somewhere that when asked to count in their minds, people count in one of two ways. It’s my understanding that the majority do so verbally, sounding out the words in their minds. But some people count visually, by visualising the numbers, picturing them scroll past on a tape, for example.

Those that verbalise couldn’t simultaneously do another verbal task, while the visualisers couldn’t do another visual task, suggesting that separate parts of the brain were involved, and occupied by counting.

From a discussion on Hacker News, here.

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How much time do American’s waste on the internet every day?

“I need to start feeling shame for time wasted on the Internet.”

I saw this in my Twitter feed this morning. It was a friend that posted it. My initial reaction to this was: “Wow, I wonder how much time I waste online.” I mean, do I actually get any value out of social networks? I’m sure that question has been asked a thousand times over.

So, what is my recommendation to this friend? My answer is: track your time religiously. Personally, I track all of my time using a timer-based app installed on my computer. On a constant basis I can see what I am doing, and it’s right in front of me.

Since I only earn revenue when I’m billing for my time, there’s a constant pressure to perform. Since I also work for myself, and don’t have someone I call a boss, I am accountable to myself. I have to keep myself in check, otherwise at the end of the month there’s no income to report.

So, that’s my recommendation. I track my time throughout the day, and I do track both my billable time, and my unbillable time. This helps me see how much time I did waste (and what percent was billable). My billable utilization is an incredibly useful tool in determining several factors:

  1. It helps me quote future jobs
  2. It helps me know what I will likely be able to produce next year based on hourly rates
  3. Helps me understand how much work I can get done in a month (useful for estimating)
  4. Keeps me motivated

I highly recommend tracking your time. If you need a time tracking system, check out this useful list of time tracking apps.

Republic Wireless Review

I’ve just signed up for Republic Wireless. This is a new company based in the United States that provides extremely affordable wireless phone service using a combination of WiFi and the Sprint network. Since it includes free roaming, and 5 GB of data transfer, it’s an amazing deal.

What’s even better, is you can sign up and get a 30-day money back guarantee. They provision your phone with a temporary phone number (you can port a number in at any time).

I just signed up for the $5 month plan for starters. What this gives me is unlimited phone calls as long as the phone is connected to a WiFi connection. I am going to port my office phone line over to Republic Wireless. Since I’m planning to have my voicemail and phone also ring on my Verizon Wireless phone number I’ll be saving some money.

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How am I saving money? Well, currently I’m paying $20 each month to Cox here in Phoenix just so they can forward my office phone number to a Google Voice phone number. Yeah, so I’m already spending $20 every single month for a stupid service. For some reason, I can’t port the number to Google Voice, but I can port the number over to Republic Wireless.

I ordered the Moto X phone ($299) with the service, so my initial cost was about $320 (includes a few taxes and the first month of service). After nineteen months, I’ll hit that magic break-even moment where I’ll be saving $15/month compared to my current situation with Cox. Since I’ve been paying Cox to forward this line for the last 7-8 years, it was an easy decision.

Oh, and did I mention there is no contract? I can cancel at any time. Here’s the link to the Moto X $299 No Contract from Republic Wireless.

I’ll post another review here once I’ve had a month to use the service. My phone should come within the next two weeks. I don’t know how long it will take to port the phone number, but probably not too long considering it only takes a few hours for other phone companies to do the same.

Side note: As a web designer, I was extremely pleased with the Republic Wireless site. Not only did they answer all of my questions, but the site was easy to use, and generally worked as expected. They even have some awesome forums for members who are wondering if there is good service in their area.

Update: I’ve had Republic Wireless for a few months now. It took about two months to get my phone number ported from Cox (Arizona) over to Republic Wireless. The issue was on the Cox end and not Republic Wireless.

Watching movies while you work on the computer

Occasionally instead of listening to music while I work, I’ll put on a movie. Either something I’ve seen before, or a new movie or TV show. Strangely enough, at times this can help me to concentrate on the task at hand — by giving me something to watch and listen to so I don’t browse the internet.

I’ve got to say, it’s a strange thing, but it keeps me focused to have something on to distract me. It’s as if half of my brain is bored with my task — maybe a mundane task — and just wants to be entertained.

While the rest of my brain works — on paperwork, design, or whatnot.

Tablet Employee Time Punch Clock

There are a lot of options for business use of time tracking, but an interesting one is the employee punch clock.

Many businesses rely on the old fashioned stamp based time punch clock. Moving to a newer tablet based system that is mounted to the wall in your lobby has several benefits, including:

  1. Automated calculations of clock in, and clock out times in a spreadsheet
  2. Detailed reporting
  3. Tablet can take photo of user during interaction points
  4. Save a lot of time during payroll processing
  5. No need to purchase time slips
  6. Thumbprint reader

There are software solutions for both Android and Apple tablets. This is a fairly new market, and lots of options exist.

 

The best loan customer is someone who has no passion whatsoever

This is a fascinating point from Scott Adams. I’m going to be thinking about this for a while.

But the most dangerous case of all is when successful people directly give advice. For example, you often hear them say that you should “follow your passion.” That sounds perfectly reasonable the first time you hear it. Passion will presumably give you high energy, high resistance to rejection and high determination. Passionate people are more persuasive, too. Those are all good things, right?

Here’s the counterargument: When I was a commercial loan officer for a large bank, my boss taught us that you should never make a loan to someone who is following his passion. For example, you don’t want to give money to a sports enthusiast who is starting a sports store to pursue his passion for all things sporty. That guy is a bad bet, passion and all. He’s in business for the wrong reason.

My boss, who had been a commercial lender for over 30 years, said that the best loan customer is someone who has no passion whatsoever, just a desire to work hard at something that looks good on a spreadsheet. Maybe the loan customer wants to start a dry-cleaning store or invest in a fast-food franchise—boring stuff. That’s the person you bet on. You want the grinder, not the guy who loves his job.

Read the article here.

Lego Calendar for Google Calendar

I don’t quite understand this entirely, but it appears a company has set up a bunch of legos that can be imported as calendar entries in Google Calendar. Quite interesting!

The system works by taking a picture with your smart phone, and then loading it into some software they custom coded that reads the grid and colors to create a calendar matrix. Then, they upload that to Google Calendar for you. The company has plans to make the code public.

lego-calendar

lego

The software is custom code written using openFrameworks and openCV to read contours of the Legos. The code looks for the three long boards, for each month, and then splits the entire image into little blocks for each day. The actual calendar was designed to be as machine readable as possible (hence the wee white strips between each day). The software then uses a known pattern on the left side of each month row to calibrate for each colour, that was so they can get around different cameras, white balances and light conditions.

Click here to read more.

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Charge hourly vs fixed cost

There are two excellent resources available for free that discuss whether you should charge hourly or fixed cost. The first is a free online book from Harvest called The Harvest Guide to Pricing. The second is an eBook from FreshBooks called Breaking the Time Barrier.

freshbooksThe book from Harvest can be broken down into the following topics: hourly, fixed-fee, retainer, and iteration. The Harvest book appears to be saying that a client-retainer model is the best option long-term if you’re going to be doing a lot of business with a single client, and frankly I agree. It resolves a lot of issues that can pop up with a client that is doing a significant amount of work on a monthly-and-ongoing basis.

The book states that:

Retainers give you more access to the client, more flexibility in what you produce, and allow you to (somewhat) get off the exhausting new business cycle. But they don’t always last forever, depending on the quality of the work or the clients’ revenues. You can’t get too comfortable or else you’ll under-deliver, and you need to have a diverse set of clients so that you’re not too reliant on any one retainer.

The book from FreshBooks is written in the style of The E-Myth, and is even endorsed by Michael Gerber. This book definitely endorses the idea of charging for value, not time.

Anyways, I just wanted to bring these two resources to your attention!

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Clockwork for Harvest

I must admit, if I had a newer iPad I would rush and get this Clockwork for Harvest app. It just looks cool! It’s an iPad app (free at the moment) for iPad that let’s you interact with Harvest (for time tracking).

As a person who makes a living as a UI designer (in Phoenix, AZ) I can see some fairly significant issues with this design, but it’s cool and I like how different it looks. It looks like a nicely designed form from the 60s made with letterpress.

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If you only track your time to a couple of projects, this would be a sweet way to track your time every day.

CEODesktop

FunctionFox

FunctionFox is the leading provider of time and project tracking software for small creative companies. TimeFox, its web-based timesheet and project management software, is the number one ranked time-tracking system in North America. Graphic design, advertising, communications, marketing, multimedia, public relations, and interactive firms all choose TimeFox as their web-based time and project management application. TimeFox is currently used by thousands of customers in Canada, the US, Europe, Asia, Australia and New Zealand. For more information visit: http://www.functionfox.com

1 minute overview: http://www.youtube.com/watch?v=DdOuHBS3n1

TimeFox-iPhoneTIMEFOX TIMESHEETS

  • Timesheet with Stopwatch Timer
  • Tasks with Editable Rates
  • Personal Calendar and Contacts
  • To-Do Lists with Email Alerts
  • Timelines with Milestones
  • Document Exchange
  • iPhone App & Mac Widget

PROJECT MANAGEMENT

  • Unlimited Clients & Projects
  • Project Calendar and Scheduling
  • Project Costs & Expense Tracking
  • Manage Estimates, Quotes, & Budgets
  • Instant Reporting for Tasks, Personnel, Productivity, Estimates and Expenses
  • Advanced Reporting Templates
  • QuickBooks for the PC Support
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Harvest Time Tracking Tips

Here’s a 5 minute long video from the folks at Harvest detailing some of the nuances of time tracking on the Harvest platform. Learn more about Harvest here.

I’ve been using Harvest since October, 2012, and love it! I create over 500 separate time entries every month by tracking my time religiously. I love tracking my time, and it makes me more productive. It’s like having a little boss over there telling me I should keep on task, and be productive.

I use the Mac desktop client, which you can learn about on the Harvest web site. A couple of interesting things to note about the Mac app:

  1. You can minimize it and track time exclusively from the menu bar at the top of the screen, if you want.
  2. I usually keep the window open, which gives me greater ability to start and stop timers, edit descriptions, and see the rest of my time entries for the day.
  3. Speaking of day: it gives you a whole-view of your day! So, at the end of the day, you can review all of your time entries and see exactly where your day went, and how many hours you worked.

Things I wish the Mac app did:

  • Displayed how much money I have earned that day. While it does show me the hours I have worked on that particular day, it doesn’t show me the revenue earned. That would be nice, although I can easily gather that information on the Harvest web app.
  • Remembered the last time entry description for each project category (I’ve written about this before).
  • Show me the gaps in my day. Currently, Harvest only shows me time entries, but doesn’t tell me that I missed a 15 minute block of time between two time entries.


And here is a quick video detailing their iPhone app, which works really well. I’ve used it a bunch of times to compliment the Mac App.

My favorite thing about Harvest is the desktop application for Mac. Ever since converting to using a Mac a little over two years ago I’ve longed for a native desktop application, and Harvest really delivers.

It did take me a little bit of time to get used to the differences in Harvest. I’ve emailed them with recommendations, and even posted some of them here, but I’ve gotten used to the way it works and it works great with my workflow.


Anyways, that’s my 5 minute review. I must say, if it wasn’t for the Mac app, I’d have looked at using a different system. It’s critical to my usage.

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Term Life Insurance with ROP: Is it worth it and why?

My financial advisor (at ING) recommended that I get a Term with ROP life insurance policy. So, I did the math and decided to share some details with you.

From what I can tell, I could simply get term life insurance without a ROP rider and invest the difference. Assuming even marginal returns, I would easily out perform the return on premium.

More importantly, if I were to die and the policy is paid out, my wife wouldn’t get the additional I’ve paid into the policy to get the return on premium rider. But, if I were to invest that money and buy term life insurance my wife would receive a policy payout in the event of my death plus the investment would be safe.

When you put it that way, it seems like a no brainer to not go with a ROP rider.

The objections a insurance product broker will raise will fall along these lines:

  • First, there is an expression in the insurance business: “buy the term and blow the difference.” The reason is that at the end of the day while most people will say, ‘I’ll get the cheapest policy and invest or save the rest,’ yet they will see that extra $100 or so and put it to a night out on the town or, put it towards some other expense (even an emergency expense like car repairs). It is a device for forced savings for those that may lack the time or discipline to manage where the excess ‘premium’ goes.
  • Some brokers will tell you that you would need to locate a fund that returns 5% to hedge inflation AND beat out the tax implication (either now, for a ROTH, or later, for a traditional investment). They’ll say that IF inflation is 60% after 25 years, 40% of premium still beats 0% on a traditional term policy.
  • They’ll tell you that this is a guaranteed return of every dollar put in, and, BEING A RETURN OF PREMIUM, it is not taxed at the end. Premiums or original cash value on life insurance policies is never taxed; you already payed it. The excess ‘premium’ you disciplined yourself to allocate elsewhere WILL be taxed, either at income or capital gains rates.
  • They’ll also tell you they’ve done the math better than you have, saying something like: “From our analysis, given your age (the likelihood that you’ll live to collect the RoP) and moderate risk tolerance (again you have to beat 5%), the RoP fits your plan.”

Don’t listen to any of this! At the end of the day, the only thing that matters is that a ROP rider adds about 40% to the cost of term life insurance and if you were to die during the term of your policy, you don’t get a single penny back. That’s why it’s a bad deal, because you lose the extra you’ve paid in to ROP. How else would the insurance company make money on this? They have to make money somewhere.

Follow the advice of numerous investors, and even Dave Ramsey himself when he says “buy term and invest the difference.”

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Is it worth it to get a GIUL Policy?

I was recently pitched on the value of a Global Indexed Universal Life Policy from ING. I came up with some math showing how it’s a really bad value in the shorter term (20-30 years). Obviously, these policies have potential for tax savings at the 70 year old mark (assuming an investor in their early 30s), however they lock you in to a single investment strategy over a very long period of time.

I was quoted $438.06 per month fee for the GIUL.

Contrast: I think I can get term life insurance for approximately $100/month.

I took the last 20 years of the S&P 500 and it looks like it had an annual rate of 6.24% from Dec 31, 1992 through Jan 2, 2013. Investing $338.06 per month for those 20 years would have resulted in a return of approximately $162,692.37 which is more than the 20 year net surrender value of the GIUL policy. The GIUL policy has a surrender value of $149,307 at 20 years (assuming 8.5% return).

Assuming a term life policy only cost me $100 month during that period, I would be only down $24,000. Plus, if I were to die 20 years from now, and carried a term policy at that time, I’d have the death benefit from that + my investment return as well. I am having difficulty seeing why I wouldn’t want to do that.

It’s very important to run the math on these! Instead, fund your Roth IRA to the max.

Here’s a great video that explains some of the short comings:

There are a ton of videos on YouTube where insurance salespeople will pitch life insurance, and provide various examples of why term-life insurance is a bad deal. Here’s one example showing a sales person attempting to show how to handle a customers objections.

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Dave Ramsey

I’ve been listening to Dave Ramsey’s radio show recently and have to say, I’m hooked. Sure, he’s been broadcasting since 1992, but why would I have listened then since I didn’t care about finances when I was a kid?

I know this isn’t about time tracking, but bear with me. Hours are money if you work for a living (and, who doesn’t?).

Listening to his show reminds me of talks I had with my mom when I was younger. We’d talk about everything under the sun, including financial topics. Dave Ramsey really teaches how to get out of debt, save for retirement, and pay off your house.

He has a thing he calls “Baby Steps,” and here’s the process:

Baby Step 1: $1,000 to start an Emergency Fund

Baby Step 2: Pay off all debt using the Debt Snowball

Baby Step 3: 3 to 6 months of expenses in savings

Baby Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement

Baby Step 5: College funding for children

Baby Step 6: Pay off home early

Baby Step 7: Build wealth and give!

Anyways, I wanted to share since this guy has some really terrific things to say about financial planning, and I’ve been watching it a lot recently.

One of my favorite quotes, which is almost his slogan is: “If you will live like no one else, later you can live like no one else.” ― Dave Ramsey

You can read some other quotations here.

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Harvest Mac App

I’ve been using the Harvest time tracking service for about 10 months now (since October), after switching to it from a desktop application for time tracking.

I have to say, I love it!

I primarily use the Mac App, which is featured in the video above. It interfaces with the web site (which I rarely use except to add projects, clients, and run reports).

A couple of things that I would recommend they improve:

1. An option to set the start time immediately after my previous entry. Use case: I stopped my previous time entry, and accidentally let 15 minutes go by before starting my time and now I want an easy way to set the start time to be immediately after my last time entry ended. See this screenshot.

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2. Show gaps in my day in a different color, and allow me to assign those to another entry. I’d like to be able to see where there are gaps in the time sheet entries from my day (either a new one, or the previous or next entries). For example, see this screenshot.

3. Have it so that it remembers my last description so I don’t have to re-type it if I want to only make a minor change. I’ve managed to figure this one out: Just click start on a previous entry, and then if you want to leave it alone, it will keep the time entry notes.

4. When entering time manually, allow me to enter the duration, not just the start/end times. Sure would be nice to be able to just enter “1 hr” rather than having to enter a specific start time and end time.

List of Time Tracking Apps: Our very own time tracking tools list

A lot of people probably are unaware that we maintain a list of time tracking applications. We realize that everybody tracks time for different reasons and a time tracking tool that works for one person might not be perfect for another.

That’s why we encourage you to check out TimeTrackingResources.com where we currently have links to over 50 time tracking apps — from software to web. We’ll be maintaining this list and adding new apps whenever we spot a new one. Thanks!

Note: Our list is often updated, and the latest update was on August 5, 2013.

An observation about time tracking software

When selecting a time tracking tool it is important to choose something that offers you both flexibility and is easy to use. If you’ve ever used Basecamp, Freshbooks, or Harvest to track your time you’ll be familiar with the fixed “Client > Project > Tasks” structure which you must follow. Time must fit into that a project and projects must be associated with a client.

But what if you want to track your non-billable time or don’t need a whole “project” just to track a few hours here and there? That’s where these tools break down. If you want to track time for trivial tasks like “Email” or “Writing Proposals” you’re out of luck.

Most time tracking tools make it difficult to calculate your billable efficiency — the percentage of your time that is billable compared to non-billable. If you track all of your time this is possible.