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So You Want To Be Rich?

November 30th, 2006 at 12:57 pm

Here's the question I get asked most often when people learn that I write about personal finance: "So how can I become rich?"

Here's the answer: "Do what you already know." That's the secret. Your already know everything you need to know to be rich. The problem is, even though you know, you probably aren't going to do it.

Let's be brutally honest. Anyone who is writing about personal finance will be writing about something that you already know (but probably aren't doing) 90% of the time. There will be a small chunk of knowledge here and a new service there that you may not have heard about, but for the most part, personal finance really is straight forward and easy to understand. You don't believe me? Here is the formula to get rich:

1. Start saving early
2. Spend a minimum of 10% less than you make.
3. Invest the money you don't spend.

That's it. No secret formulas or hidden gems. If you want to be rich, it's as simple as that. Of course, there is some tweaking that you have to do. You can't invest in any old thing, but even that isn't difficult to figure out and you already know where you should invest the money (401k with matching funds, Roth IRA and stock index funds being the most obvious - see, you knew that too).

In reality, I shouldn't have a job (and I would gladly look for another one if everyone would do what they already know they should do) helping people with their finances. Somehow I don't think I'll have to worry about changing professions in the future. While it is easy to understand how you become rich and you know what you should be doing to achieve that wealth, it most certainly isn't easy for a lot of people to actually follow what they know they should be doing.

I blame it all on the lottery attitude. If you aren't rich (or aren't moving in that direction), it's simply because you have decided to ignore what you already know in favor of pursuing easy money. The problem is that even though some people do get lucky and win the lottery, the odds are better that you will die from a flesh eating bacteria than you will striking it rich that way. You have decided to go after the quick buck because you aren't willing to put in the work that you know needs to be done. You may think you have a valid reason for this, but it's nothing more than an excuse.

So there you have the secret. Once again you know exactly what you need to do to become wealthy. Odds are that you are like the majority of people, you will once again ignore the obvious and see if there is an easier way, but I'm hoping since you are visiting this site that you are one of those that proves me wrong...

Save Before You Earn

November 28th, 2006 at 04:43 pm

Here is a simple question to ask yourself. If you were given the choice of earning an extra $115 a month or painlessly saving $100 a month, which would you choose? While the $115 more a month may appear to be more money, the financially savvy choice would be choosing the $100 in savings. In fact, the correct answer isn't even a close call.

Benjamin Franklin's famous saying "a penny saved is a penny earned" needs to be updated to the reality of today. The problem is that back when he made that statement, there weren't a lot of government agencies and programs claiming their share of your hard earned money. That is not the case today and why saving money is actually about twice as effective as earning money for your bottom line.

When you take into account all the costs associated with earning money, a dollar saved is actually worth $2 earned today. That means every $5 saved is $10 earned and every $100 saved is the same as $200 earned. It also means that saving any amount of money is 100% more efficient than earning that same amount.

What makes saving money so much more valuable than earning it? It comes from the fact that the money you save is from after tax dollars while the money you earn still hasn't had the taxes taken out. When you calculate the federal, state and local taxes your must pay in addition to social security and Medicare deductions, a large portion of every $1 your earn doesn't end up coming home with you. Add on the costs associated with work such as clothing and commuting and it ends up that you get to take home roughly $0.50 out of every $1.00 you earn. The money you save, however, has already had all those expenses taken out.

In addition, you need to take into account that saving money often takes much less time than earning it. Take, for example, the purchase of a new high definition TV. If you went down to your local appliance store on the day you decided to purchase a TV, it is likely that you would come home having paid full retail price. Simply spending an hour or two on the Internet or calling all the stores in your area to see if there were any sales or other discounts available to get the best price on the high definition TV would likely save you $200 or more. In this scenario, that hour on Internet or phone would be the same as earning $400 in you job...that's right, $400. If you make $10 an hour at your job, your hour on the phone was equivalent to working an extra 5 full days on an 8 hour shift. That is the power that taking the time to save can have.

Here is another perspective to consider. What would your answer be if your boss said, "I've been thinking a lot lately. You have been working really hard lately, but you come to work every day with that Starbucks coffee and it distracts everyone. So if you will simply make your own coffee and bring it to work in a thermos instead of buying it each day, I will give you a $2,400 bonus this year." Would you take the offer? You can because the amount you save would be equal to earning an extra $2,400 a year.

When you begin to view money in this light, taking a few hours to plot out ways to save money can result in a much higher return than getting a significant raise at work. If you are able to save $5 a day, you have done the equivalent of receiving a $300 a month raise or a $3,600 a year raise. Anyone can achieve $5 a day in saving with a little effort and with much less time and sweat than you would need to put in at your regular job.

Don't get me wrong. I am no way implying that you should not try to maximize your earnings. In fact, you should be attempting to do both your job and beginning a side business. But just because you're earning more doesn't mean that you should neglect any savings that you can painlessly achieve because those savings are worth twice as much as your earnings.

Small Business Idea Contest

November 19th, 2006 at 10:53 am

If you have a great small business idea that has been floating around in your head and you needed an excuse to write it down and organize it, that time has come.

There is a new contest called "Idea Wins: The Ultimate Challenge" that is searching for the most creative small-business idea in the US. The winner of the contest will receive rent free retail store space in New York for a year plus $100,000 seed money to get the small business going.

All you need to do to enter the contest is submit an application. Submissions will be judged on marketing approach, financial & logistic feasibility, originality and public interest. January 31 is the deadline for submitting the application and the finalists of the contest will be notified on February 9.

This is an excellent opportunity to get any small business idea you have organized and I highly encourage you to apply. The application process will help you think through your idea in more detail which will benefit you even if you don't win the challenge. Go for it and best of luck.

$75 Google Survey

November 11th, 2006 at 09:47 pm

This is a pretty easy $75 in the form of an American Express gift card if you are chosen. I just completed one and I thought others might be interested in participating in these surveys. Mine took about an hour.

You sign up and when they need you for a survey, they will email you with times. You reply back the times you're free and they will confirm the time and date plus attach a non disclosure form to send back. Not difficult at all and the survey is a pain-free hour.

You can sign-up for the surveys at Google

Skills Needed To Make Money On The Internet

November 9th, 2006 at 12:37 pm

Over the past week, this subject has come up in a number of different ways, but the central theme has been "is it really possible to make money on the Internet?" and "How can I make money on the Internet?" I'm a perfect example that it can be done because if I can do it, anyone can.

I possess no special skills and I'm no more talented than the next person. I'm not especially computer literate and although I know a lot about the subject matter I write about, it has all been self taught. So why is it that I have been able to make blogging and websites a full time job when many who have better skills and talent haven't been able to do so?

Here are the skills I think made it possible for me to make money on the Internet. I don't believe that making money is easy or simple (yes, some people get lucky and it is for them, just like there are lottery winners, but far more people that are making money simply appear to have been lucky. In reality, they worked their butts off for many long hours to get where they are). While this is probably not a typical list of traits and skills that are associated with making money, I don't think I would be where I am today without them:

Stubbornness: Being stubborn has helped me to keep going even when it seemed that nobody knew that we existed on the Internet. I think most people quit because the success doesn't come quickly or easy enough for them. It isn't easy money. It takes a lot of work and dedication just as it would take to make any business successful. Being stubborn and refusing to give up has helped me clear many hurdles that could have stopped me dead in my tracks.

Passion: I love what I do. Since creating something that makes money on the Internet is difficult, if I didn't love doing what I'm doing, I would never have had the stamina to keep going. Passion let me spend long hours working on the sites without realizing how much time I was actually spending because even with all those long hours, I still liked what I was doing above all the other choices I had.

Creativity: Working on the Internet will always pose some unexpected problems, so creativity has helped us to solve the numerous problems that have arisen along the way. The solution to problems often doesn't reveal itself right away. We have had to be willing to try new ideas and multiple failures until we hit on something that worked for what we were trying to accomplish. Being able to be creative and adapt has helped a lot in making everything work.

Self Motivation: Since I'm working for myself, being able to motivate myself to keep writing and putting effort into the project when it didn't always seem to be worthwhile to do so was essential. If I hadn't been able to find ways to keep myself motivated at all stages of growing the sites, these would not exist today. It wasn't always easy to keep going when it seemed there was no reward for the effort, but even during those times I found a way to motivate myself to keep producing material.

Vision: I don't think we ever had a grand vision of where this would all lead, but we have always had a vision of where we want to go. Instead of being at the bottom of a mountain and looking at the top and saying we wanted to get there, we were at the bottom and saw a step in front of us and formed a vision of how to climb up to the next step. As we grow I think we are beginning to look a wider, but that concentrated vision in the beginning was extremely helpful.

Time: We new we were in this for the long haul from the beginning. In fact, when we started there wasn't any platform out there for people to make money from content alone (adsense still didn't exist). It never entered our mind that we would make a lot of money quickly. We felt that if we could produce good quality content and information for people that eventually it would be of value for advertisers and figured it was going to be years down the road. Had we assumed that we were going to make money in a short period of time, we would have been highly disappointed and probably quit long ago.

Voice: I have brought my own voice into what I'm writing. While this may sound obvious, it has been hard. I'm not the best writer in the world and I would even dare to say that a good description of my writing style is "common" When I see other writers that put the words down so much more eloquently than I am able to do, I want to change my style. In the few attempts I've made, it has been disastrous because it simply isn't me. That is not to say that I don't incorporate things that I see other writers doing that I like, but when I do this I do it in my own style instead of trying to change mine to theirs.

Faith: Not faith in the spiritual sense, but that what we're creating is helpful to others. Although for a long time we weren't getting any feedback that this was the case, we had faith that what I was writing and Nate was building could help people positively in their lives. We had the faith that if I could accomplish this, then our time and effort would be rewarded in some way.

Help: We wouldn't be where we are today without a lot of help along the way. When we first started out, it was brutal trying to get the word out that we existed. Over time, however, we were able to find other people that were in the same situation as we were and we banded together to help each other sites as best we could. There were also some slightly bigger sites that could see our potential and drive and thankfully were willing to take a chance on us. We could have never done it on our own.

No Life: This is Nate's contribution to the list and to a great degree it is true. We gave up a lot of other things we could have been doing to place our effort into creating the sites. When I was working full time at another job, it was literally like doing two full time jobs at the same time. So in a sense, I did have no outside life for a period of time there.

As you can see, my list of what you need to be successful on the Internet doesn't match up well with most of the others you have probably read, but I think it is a realistic list of what got us to where we are today. For those that are looking for easy money, I'm sorry if my list disappoints. What I can say is that the skills listed above are ones that every person has within them and so it can be done if that is what you want to do. It's also a wonderful experience along the way and makes it that much more satisfying when you can say that it is your full time job.

Extra Xmas Cash - Light Installer

November 7th, 2006 at 07:31 pm

If you're looking to make some extra money this holiday season, consider being a Christmas Light Installer. I did this a couple of seasons as a high school student and have a friend that still does it as an extra money earner during the holiday season. He brings in a five figure income for the 2 month period now that he has a regular clientele list. I sat down and talked with him and here are some basics that he passed on about what the job entails and what you need to do to help make it a successful season.

The Work: A Christmas light installer puts up the holiday lights on houses for people. There are also opportunities to earn money taking them down, cleaning gutters and hauling off Christmas trees as add on income.

Equipment Needed: You will need a ladder, hooks to hang the lights on and tools to install the hooks (a battery operated drill comes in handy - you can also use nails and screws, but if you think you will be doing the house in future years hooks make it easier and look better) to hang the lights on. While you won't necessarily need the strands of lights (the homeowners may already have them), it's good to have a least a couple of strands on hand for quick sales (he uses the basic strands that can be picked up at any Costco store and sells them at 100% - 200% profit for those that need them).

What to Charge: You need to use your own judgement for the area where you will be doing this. He charges $50 - $100 per house for a basic light installation and installations rarely last more than an hour.

Marketing: This is probably the most important part of the process. You want to find an area where it appears that the the people living in the homes are the type that would like to place up holiday lights, but may not have the time to do it themselves. A good indication is if other homes in the area regularly place up Christmas lights.

You should start putting out fliers in the next few weeks (he begins in mid November) and basically leaves the flier at the doors of houses in the area where he expects to work. Handing these out should get you a few jobs.

Once you have a few, the best time to sell is while you are placing up the lights. Once he finishes a house, he walks around to the neighbors and says, "I just installed Christmas lights on the house over there, and since I'm in the area, I'm offering a discount if you'd like your lights installed today." This usually gets him one or two more jobs.

While there are businesses that do full out Christmas layouts for people, if you're first starting out you want to keep it basic and simple. Look for single story houses that can easily be accessed with a ladder or two story houses where all the light hanging areas can easily be accessed.

Add On Income: When talking to the people about placing up the lights, you should ask if they would also liked them removed for an extra $25 (or whatever you decided to charge). This gives you some extra income after the holiday season as well. If they don't want you to take them down, then you want to ask if the person wants their gutters cleaned (if the do want you to take the lights down, wait until that time when you have more time). You are going to be up there anyway and you can usually charge $100 or more depending on how dirty they are. If you come back to take down the lights, if you have a truck you can also ask if they would like their Christmas tree removed which you can also charge a fee for doing. These add on income earners can greatly increase your holiday take.

Just like any business, you will have to do legwork and spend time finding customers, but it can be a quite lucrative business for the holidays with little start up costs.

Bright Money Making Idea

April 1st, 2006 at 11:51 pm

I love coming across people that look at a situation and come up with a way to make extra money from it. Here is an 18 year old that will probably make a few hundred dollars this spring vacation by helping out people with a common problem:

Eighteen-year-old Evan Kelso is offering to change every digital clock in a customer's home or car after all of Indiana goes to daylight saving time this weekend for the first time in more than 30 years. His fee: $10.

Kelso, a senior at Bishop Luers High School, said he came up with the idea as Indiana lawmakers sniped about time zones and daylight-saving time. He said he and his father are always trying to think up new ways to make a little extra cash...
Entire Article

He is certainly thinking and it goes to show that there are lots of situations you can take advantage of to make a little extra money.