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This post originally appeared at Millionaire Mommy Next Door.  If you haven’t visited her blog yet, you really should.  She’s someone who “made it” - she’s achieved financial freedom and she’s willing to share the who-what- when-where-why-how’s.   I love her blog, and you will too.

A while ago I had an epiphany.  We were visiting my brother and his family, who live in a house with a fenced-in backyard and a pleasant detached home - quite different from our townhouse. I told Bubelah that this would be a great way to live: to have a fenced-in backyard where toddlers could play without us having to worry about them dashing out in the street. I declared that this should be one of our goals: to move out of our townhouse in the next few years and find a house with a yard that we could fix up into a children’s paradise. We would live simply, quietly in the country. This seemed to me to be a fine goal, and she agreed.

Fast forward a few days. I was again talking to my wife about the times we spent on the town in Manhattan while dating years ago. I lived in the heart of Manhattan, right off Central Park near Columbus Circle. She was living in Queens. While we were dating (and then afterwards while engaged) we spent a lot of time exploring Manhattan: a different ethnic restaurant every night, zipping to a bar or a lounge on weekends, hanging out with friends, taking in the sights and so on.  I was completely comfortable with a dirty martini in hand, dressed head-to-toe in black.  We stayed out late, listened to thumpin’ club music and generally lived the lifestyle of the young and unconcerned in the Greatest City on Earth.  We really enjoyed that lifestyle, too.

I told my wife that my goal was to somehow manage to move our family (the two of us plus our son and daughter) back to Manhattan and enjoy all of the culture that living in the heart of New York could offer. We would be a new urban family, enjoying a small apartment in a high-rise centrally located in Manhattan. Central Park for picnics with our kids, Broadway plays for us while the nanny watched the tykes at night. The luxurious lifestyle of the carelessly wealthy in New York. A dream, but why not? It’s a goal, and a good one.

At this point my wife turned to me and said, “Just a few days ago you were saying your goal was to live in the country with a yard! Now you want to live in Manhattan! Which is it?” Sheepishly I had to agree that it really depended on when you spoke to me. The theme song from “Green Acres” rattled around in my head.

Because of my inconsistency, and because of reading blogs like Millionaire Mommy Next Door, I now understand that I need to write down goals. I am good at keeping a to-do list and living within my means. My wife is a stay-at-home mother, and we spend less than we earn (although I’m always trying to earn more than I spend).  At the same time we’re still putting away plenty of money towards retirement and eating a fairly expensive organic and natural diet. The problem is that often I have a feeling that while we’re comfortable where we are now, I am not moving quickly enough to being free financially. While we are saving and carefully keeping emergency funds, I am certainly not in the position to consider quitting my consulting work now, or any time in the next 20 years at this rate. So how would writing down my goals help?

Writing things down inevitably makes them more concrete in your mind. Try keeping a notebook in your pocket 24 hours a day. Any time you have a thought - a to-do item, grocery shopping items, even if you hear a song you want to look up on the internet later on - write it down. You’ll find that this makes your memory stronger, not weaker. Review your list frequently. That will reinforce your memory even more. So if this works for “remember to buy eggs” why wouldn’t it work for “make every action aim towards financial freedom, living in a beautiful home in the country where I can pursue my writing?”  Every time I flip open my Moleskine I’m confronted by my ten-year goals.  And yes, I’m confronted - that’s the right word, meaning that they get up in my face and challenge me.

As you can see from my example, I can’t even remember my goals from one day to the next. I have realized from this little mistake, and a dozen others, that my confident claim “I don’t need to write goals down” is not confident, but silly. Writing goals down is a critical first step, not a pointless exercise. I have been dismissive of it because it seemed just a little too easy to be necessary. I liken it to skipping the instructions on a bottle of shampoo. We laugh at “rinse, lather, repeat” because we’ve seen that, done that. But for someone who’s never seen shampoo before, those would be helpful instructions.  Writing things down almost always serves a purpose.

So if you haven’t clearly defined your goals, written them down and begun a habit of reviewing them daily, you won’t have the reinforcement that you need to make them a reality. Dreams are fun and enjoyable, but putting your dreams onto paper (or into a Google Doc or a treasure map or whatever method works for you) is the real first step towards creating a real, workable path to achieve your goals.

Popularity: 3% [?]

“It is better to have a permanent income than to be fascinating.” - Oscar Wilde

The following post originally appeared, in slightly modified form, on Lazy Man and Money. He’s all about alternative income, of course, which is the subject of this post, so his blog is a great place to brainstorm.

Spend less than you earn is the wrong way to think! Your time will be much better spent thinking of more ways to make money than it will be thinking of ways to save money. Chances are good if you read this blog that you’ve already given some thought to alternative income, but let’s back up. Everyone has a primary source of income. Usually it is a traditional job - an employer who asks them to show up from 9 am to 5 pm, file a TPS report and pay an ungodly amount of taxes for the privilege of being laid off in a restructuring when the company misses earnings estimates by $0.01. Income can also come from self-employment, a small business, unemployment checks, a pension, or hundreds of other primary sources. Alternative income - which is sometimes referred to, incorrectly, as passive income - can come from rental properties, royalties, investments or other sources. All of these sources could also be primary income to someone but usually these are income streams that people receive in addition to their primary income. To be truly rich one thing is certain: for every ’stream’ of income you have, you should have an alternative. Alternative income is the key to wealth.

Most people have a single source of income. They work for employer Megacorp or Wal-Market and receive a paycheck. Some people may have a trickle of investment income, or occasionally sell something on eBay and then give up after a few sales, but a large number of people consider catching up on the final season of NBC’s beloved quirky comedy “The Office” a better use of their time than trying to earn more money after a tiring day in the office. Their goal is to get by on minimum work, minimum income and maximum “down-time.” Alternative income seems like a lot of extra work to these people, and extra work isn’t what anyone wants.

However, there are many advantages to finding alternative income, not the least of which is being able to get rid of your primary income stream. Having alternative streams of income means that no one stream can direct your life. Do you think you could tell your boss you were going to quit at the end of the month if your wage is your only source of income? Not unless you had an offer letter from your next ex-boss ready. But what if you had 15 streams of income? What if no single stream accounted for more than 10% of your total income? You could do a constant analysis and drop underperformers. You could drop streams that were inefficient, or frankly just made you blue. This is why being a consultant is better than being an employee, and why owning a business is better than being a consultant, and why creating content is better than owning a business - ease of adding and dropping income sources. Consultants and businesses and especially content creators can have more than one ‘employer’ at a time. No one ‘employer’ becomes critical for putting Domino’s on the table.

There are two more advantages to alternative income besides diversification of income sources. First of all is the expansion of skills. Creating an income stream from a website you create or eBay sales or a small business is a completely different skill set than being a financial analyst, for example. Not better, not worse, but different. Even blogging about financial analysis is a different skill set than being a financial analyst. Every time you create a new revenue stream, you are expanding your skill set. You are learning something new, and making it that much more likely that you’ll be able to add further income streams.

This leads to the greatest advantage of alternative income streams of all. This is the viral nature of alternative income. For the first 10-12 years of my working life, I never thought there was any point in worrying about income past my wages and a quarterly trickle of dividends from my stock holdings. The truth is that when you start thinking about creating alternative income you’ll find out that something funny happens. Your ideas will snowball. That first idea will spawn two more, and they’ll each create two more. You’ll get excited the first time you make a few dollars that didn’t come from your employer. You’ll see opportunities everywhere and even though many won’t work out, some will. The one that does will give you a lead to another stream. That stream will inspire you to create another. You won’t be content to sit back and wait for your corporate payroll department to mail you that never-changing check every two weeks. You’ll want more, and by wanting more you’ll find more. Once you understand that alternative income is the only way to real, long-lasting wealth every idea you have could be the start of something amazing.

So even if you come up with an idea for generating an extra $10 a month, don’t sneer at it. That $10 a month idea may someday serve as the basis for a $100 per month idea. That $100 stream may help you gain the skills and experience you need to have for a whole new stream that generates $1000 per month. If you see where this is going, you see the possibilities. Keep an eye out - you never know when you’ll come up with the next small idea that could turn out big!

Popularity: 9% [?]

When my post on wealth ideas lost to I’ve Paid For This Twice Already in FMF’s March Madness Tournament, I started thinking about snowflaking. Snowflaking is a spinoff of the “snowball” debt elimination concept invented by Dave Ramsey but the snowflaking version of this concept has really been popularized by Paid Twice. In a nutshell, it’s making every attempt to generate income, however small, to apply to your consumer debt. The idea is that even tiny payments on principal make a disproportionate difference to the overall total amount paid when you consider interest.

But since I have no non-mortgage debt, and my mortgage is at a very low rate of interest, I’m not focused on debt repayment. Yet the concept can be tweaked and twisted and all of the sudden it makes great sense in my life and for my (multi-)million dollar journey. I’ll call this concept, for lack of a better word, wealthstreaming. And yes, I know it doesn’t make much sense, but I like the way it sounds.

I had one big stream of income until recently - my consulting work. I have other streams, too - interest, dividends, some web-based income, some (very minor) income from miscellaneous sources like commissions for landing new business. I like to think of all of these as faucets pouring into the same sink - the water’s coming through different sources but ending up going through the same drain (my family’s expenses) and the goal is to make the water pour through in such quantities that the drain can’t process it all and the sink overflows. Neat, huh?

So until recently the consulting income was a heavy stream. Now that I’m problogging for a while, that stream will trickle off (residual income comes in after the work’s completed). Some other income will hopefully pick up a bit - web-based income, referral income (bonuses from new work or recruiting other consultants) and even some other side businesses that I might work on (an e-book is in the works)! I have been doing quite a bit of studying of the coaching profession as well. My goal is to have the streams get heavier and heavier until they match the force of the consulting income stream, because then I can turn that faucet off, and not just for a trial run - for good.

The beauty of some of the streams is that I tapped someone else’s water line. Those dividends? No more work goes into generating those. I made the money, invested it, and now those companies just give me a check once a quarter. I like those streams. A lot. In fact, I want as many of those streams as possible.

Other faucets need to be kept open by my effort. The web income won’t flow unless I keep working on it. Referrals take a lot of work. Those streams are nice; not as nice as the streams from someone else’s line, but more fun and easier to generate than the one-hour-of-work-for-one-hour-of-pay consulting stream.

I try to learn new skills so I can widen the faucets or clean them up - or best of all, I can add another faucet to the sink. I’m picking up web design, slowly - hey, there’s a potential future stream! I am learning about investing in non-stock-market investments - ah, maybe rental income in the future? It’s hard work to develop the skills to add new faucets, but if you have 50 faucets all giving you a trickle it’s easier to maintain than one overstressed faucet creating a bottleneck because there are only so many hours in a day.

So that’s my idea - wealthstreaming, for lack of a better moniker. Adding tiny stream of income after tiny stream and seeing which one flows fastest. Not just concentrating on the big streams, but looking for the little streams that take no effort to maintain. What’s nice about the idea is that since I don’t have a grand idea - I’m still brainstorming the next Facebook or the next Digg - I can work on increasing my income today and not worrying about hitting a million dollar jackpot. I’ll just keep opening faucets until the sink spills over and I have more water than I need - because then I can share the water with my extended family, my friends and others.

Popularity: 5% [?]

Oh, young mind, how we envy you! The world is your oyster, and who doesn’t like oysters? Here you are, venturing out into the world. Freedom, independence, adventure are all just around the corner! Mom’s not there to do the laundry anymore, but who cares! Nobody will yell at you when you sleep til 2pm on a Tuesday. Nobody will be waiting to make sure you do your homework instead of watching Sucker Free Countdown. Bliss.

Unfortunately, the boogeyman is out there too. You have to generate some income to pay for the things you took for granted in your home. Yes, of course, the luxuries of shoes, Wiis, ironically detached rock band t-shirts and overpriced notebook computers used primarily for Facebook, but also items you didn’t realize were so horribly expensive while Pops was paying for them - milk, cell phone bills, iTune downloads.

So here are 10 things to remember for the new graduate, about to head off to college.

1. You need to hit the ground running. If you have scholarships and grants, great. You’re already ahead of 90% of the US student population who finance their education with loans. Don’t blow it - make keeping those scholarships and grants your #1 priority, even if it means giving up the Alpha Beta Delta Wednesday mid-afternoon Beer Bash.
2. Please don’t think life is going to be easy majoring in Spanish (for example) and graduating with $50,000 in student loans. Go ahead and do it if you want to - there is something to be said for following your dreams - but I’d think strongly about making some good connections and giving some hard thought to how you’re going to use that Spanish degree, considering about 30% of the US speaks it better than you even after 4 years of study.
3. Party, but not too hard. There is a fine line between making friends, enjoying life and gaining experiences, and lying in the toilet stall with your shirt covered in puke at 3 am in the morning.
4. Spend a lot of time on the Internet learning useful skills - make a blog, set up an online store, learn website design, etc. Do not spend a lot of time playing vampire tag or sending movie messages on Facebook.
5. Don’t play video games. I’m serious. I see this as an immediate and massive threat to your development rivaled only by television. Get out and interact with people - you will never have such free time and so many people ready and willing to sit around and just talk about anything you want! Trust me, you’ll have plenty of time to play video games when you are older.
6. Join organizations. Hanging out with your friends in college is great. But join organizations that will force you to meet people you otherwise might not meet. Join intramural sports. Join interest clubs. Get out and participate. Don’t just hang with your friends in the dorm. And don’t stop joining even after you finish college. There are a lot of interesting ways to meet people that don’t involve a keyboard and an IM account.
7. If a class looks interesting, take it. I was a mathematics major and most of my “extra” courses were Russian, German and linguistics courses. But at the same time I threw in courses on “leisure and pop culture” (about the groupies who follow the Dead, George Jones, Jimmy Buffet, etc.) and economics (because I find economics fascinating). Mix it up. You will find out what you love and hate, and that’s useful to know.
8. Get a credit card now. I know that’s odd advice considering how much trouble people have, but get a credit card and start building a credit history. AND PAY THE WHOLE BALANCE EACH MONTH! I know many people who are in debt today will say “easier said than done,” but learn to pay the whole balance each month. I did. Friends of mine did. It can be done, just like quitting eating junk food. Now is the time to set your habits in regards to money. If you can’t pay off the full balance one month, freeze the card in a block of ice or cut it up. When you pay it off, lesson learned (right?), you can start using it again.
9. Don’t buy any furniture or appliances that you can live without. You will have plenty of time to buy a blender when you have a home. As a college student, you need a bed, a chair, a desk, a microwave or a hot plate, and a fridge. Stop. Don’t buy anything else. Scavenge. Spend your money on decent food for your health, or to have extra money saved up. I scavenged bits and pieces of stereo equipment people put away for my stereo. I had an old black and white TV. I knew that all of the furniture was going to be abused beyond belief (I lived in a fraternity). Nothing I owned in college stayed with me past my first year as a working man, so I’m glad I didn’t spend anything on anything, practically.
10. Live life to the fullest! Think about this: you are at the apex of human development. You are living in an age when change has become exponential rather than incremental. You have won the “birth lottery” by being born in the West in the late 20th century - by attending college you are amongst the best educated, most privileged and luckiest people to live on this planet in human history. DO NOT WASTE THIS TIME! Have fun, play hard, study hard, meet people, spend hours talking about life or love or hopes or politics or whatever you want. But most importantly, be aware that you are in a position that 6 billion people around the globe would die to be in. Seize that opportunity and squeeze it ’til you shake out every last drop.

Yay, graduates!

Popularity: 6% [?]

I like to think of myself as being a step past the normal employee grind, but I still get up most days and schlep to my client’s office. Sure, I take off when I feel like it and work moderately flexible hours, but I do the lunchpail shuffle. I do know that there are changes that I’ve made over the past couple of years that have made a big difference in my daily life, and my Life, capital L. These changes make the day better and make me more productive - and, invevitably, have made me a little bit richer, too. They didn’t cost anything and didn’t take any great effort. Give them a shot:

1. Get up early. If you are an early riser, the early hours of the day are probably your most productive. If you are not an early riser, you should become one. If you wake up 30 minutes before tumbling out the door you will be less likely to exercise, eat well, prepare a lunch or simply become alert before leaving. Set your alarm clock back 5 minutes before you go to sleep tonight, and do that every night for the next month. You will be amazed how much productive time this will add to your day.
2. Stop smoking. I am not sure this needs much explanation, but if you are a smoker you are wasting money with that morning smoke-and-joe. I won’t even touch on the health implications; you’re wasting time and money, all for the sake of a stimulant you don’t need.
3. Stop eating junk food. Eat protein the morning. Forget low-fat/low-carb/vegetarian/slow food etc.; the simple fact is that you will be perkier in the morning if you eat protein rather than carbs. Eating protein in the morning keeps you energized longer, makes you more productive and probably will make you eat less for lunch, too. Eat eggs for breakfast, or egg whites. No bagels, young Jedi.
4. Exercise. Exercising gives you more energy, makes you happier, increases your stamina and if done correctly even makes you more creative. Running is a great way to brainstorm; leave the iPod at home.
5. Groom. Spend some money on hair care products or hair cuts or razors or whatever you use to groom. Some people will tell you spending money on that type of stuff is not frugal. True, it is not; but you will not get ahead in this world if you don’t keep a presentable appearance. Think even rock stars roll out of bed looking appropriately rumpled?
6. Hygiene. Like #2, this one explains itself. Nobody likes to be around people who smell. Wipe when wiping is needed. Spend a little extra on high-quality deodorants.
7. Stand up straight. Confidence projects itself through your posture. If you slump and slouch and avoid eye contact throughout the day, you not only project an insecure, pathetic appearance to others, you feed your own brain an unhealthy diet of intimidated glances at your shoes. I make this mistake myself, sometimes, but try it. When walking in public, keep your shoulders thrown back, your back straight and your chin in the air. Walk like you own the sidewalk, and soon you will.
8. Smile. As in #7, project happiness and you’ll make people happy around you. There is nothing quite as startling as a smile from a stranger these days. Don’t be creepy about it, but stop scowling. Put a smile in your eyes if not on your face, and you’ll see a change in people around you.
9. Read/listen. If you commute to work - and chances are you do - make sure you make good use of that time. I know listening to the wacky Morning Zoo on X-Rock 103.6 may be the highlight of your day, but try to make use of that time. If you commute 40 minutes each way to work (the average US commute time) you spend approximately 9,800 minutes (163 hours commuting) each year. I spend almost 720 hours commuting per year! You can read a lot of books if you take public transportation, or listen to a lot of audio books on any subject (if you drive or take public transportation). Don’t give that time over to phone pranks and Rhianna.
10. Eat lunch with humans. I know the frugal approach is to avoid the office lunch, or the “wasted time” with colleagues in the cafeteria - but even if you have to bring lunch for everyone once in a while to tempt them to stay in the company cafeteria, do it. Don’t spend lunch reading a book or gobbling a PBnJ at your desk. Get up and take a break for a few seconds!
11. Take breaks. I have a terrible habit of “getting in the zone” at work and sitting without moving for hours, IMing and emailing and preparing documents. It’s a bad idea. Stand up once every 10 minutes. Yes, 10 minutes. Stand up when you take a phone call. Get a small cup for your water so you have to walk back and forth to the water cooler constantly. Breath. You are not chained to your desk.
12. Leave early. Trust me. If you are working for an employer and complete what is expected of you for that day. Do not chit chat. Do not check your emails one last time - my guess is that unless the corporate servers are impounded by the FBI, your emails will be there tomorrow. “Forget” your Blackberry on your office desk as you leave for the day. Leave 5 minutes before you normally do each day. Nobody will fire you, I promise. Think anybody at Bear Stearns is keeping their job because they turned out the lights every night? No. Take that time in the evening for YOU, and building YOUR wealth.
13. Do errands on the way home. Don’t wait until the weekend to run by the drugstore for shampoo (although you probably should be buying it from amazon or drugstore unless you’re clipping coupons). Get it on the way home. You’re already out. Save your free days for life - or better yet, for building wealth - not errands.
14. Take off your shoes, wash your hands and shower when you get home. If you are like me and ride the New York subways, you probably have 8,000 different emissions and fluids and various unpleasant emanations on your hands and the bottom of your shoes when you get home. Take them off at the door, then go shower. You reduce the chance of spreading illness throughout the house by staying clean.
15. Go to sleep early. Unless you have a thriving 24 hour business that requires your input at 1 am, chances are good that there is nothing “live” requiring your attention at that time. Go to sleep and get up earlier - you are more productive early in the morning than you are late at night. Let your evenings be for your family and for more positive productive activity - thinking, writing, making phone calls and reading.

photo credit: Saveena (AKA LHDugger)

Popularity: 5% [?]