Tag: wealth

how to make money without a job and why you should

 

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.

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

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 food 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!

This post originally appeared, in slightly modified form, as a guest post I wrote 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.

Photo Some rights reserved by stevendepolo

home before dark

Related to an earlier post about consulting, I had an interview with a ‘traditional employer’ back in the mid-2000s. I’d had a long standing consulting relationship with the company and was even offered a position with them about a year into working with them. Once every six months there would be a brief flurry of interest about bringing me on board as a regular, full-time employee. The last time this happened, when I received an offer, I wasn’t ready to join for many of the reasons I mentioned in my earlier post: I wasn’t willing to give up the flexibility or decent hours that I enjoyed. Another reason I didn’t share with them was my general state of mental exhaustion with audit and Sarbanes-Oxley. I just couldn’t bear doing that full-time forever, and hoped to start transitioning more to finance and systems.

So we went through another little series of feints at one point and I was left feeling a little queasy. A new group had been formed in the company to do work similar to my area of specialty, but probably a little more technical than my usual ‘big picture’ work. I interviewed with two women, both of whom were very pleasant. I had spoken with one of them before as a consultant, but she didn’t remember me and I didn’t bring it up. The other one I hadn’t met before, but she placed a great deal of trust on the recommendation from the woman I had reported to for the on-and-off couple of years I had worked with the company.

Both of the interviewees made cheerful - almost gloatingly so - references to how hard they were working and how much travel they were doing and how they worked weekends and late into the night. It made me a little bit sad and a little bit angry both at myself and at the culture I live in.

They were proud of spending so much time away from home. One of the women told me how important it was to get along with the team because you spend more time at work than you do with your family. True, perhaps. But I thought ‘how sad for her family.’ When did that sort of thought process become normal? I think it is important to get along with your coworkers, but the way in which it was presented made it seem like it was a choice, and that the choice should be to focus on your colleagues even at the expense of your family.

Corporate professionals aren’t really compensated fairly. I wonder how you would feel if you calculated how much a Fortune 500 company makes in profit per year and then think about what your share of that profit was. If they have a good year, does your gross go up? No. If they have a bad year, do you get laid off? Maybe. The upside goes to the executives and the downside goes to the employees. I think half of the corporate workforce would like to say “hey, if I work hard and I’m successful, I want to be paid more.” I guess you might argue that’s what promotions do, but there are definitely plateaus there. I took a huge leap when I went from staff to management but once I hit management it definitely was a declining rate of increase each year. I make a lot more as a consultant, and if I work long hours I get paid overtime. If I work less, I get paid less. If you’re a corporate employee on a salary, please do this exercise: keep track of when you arrive and leave at the office for a month, and then take your monthly salary and divide by hours worked. Include time spent at home checking email, too. It’s the only way to be honest with yourself about what your ‘true’ salary is.

Are people just really good at hiding their emotions? I saw dozens of people in the office churning away at their work, seemingly content. Maybe they were just hiding it better than I am, but I wondered when exactly I lost that burning desire to claw my way up the corporate ladder - and to do it cheerfully. I definitely had it – I worked long hours and played the political games with the best of them for most of my early career. But somewhere in there my will to sell my life to my employers just died. I view my work as a distraction from my life, rather than the other way around. Article after article that I read tells me that unless my work and my values and my goals align, I will be miserable. That may be true, but a significant component of that equation is simply the number of hours you spend on work you aren’t that interested in.

What is the effect on young families? I really dread the consequences of generation after generation of kids growing up in America seeing their parents once or twice a week on the weekends. One of my favorite quips is that no-one ever wishes on their deathbed that they had only spent a little more time in the office.

Does it matter if it ‘matters’? I have done my bit of mentoring and helping younger people become successful throughout my career, I guess. I have paid my taxes and earned enough to create a good home for my wife and kids, which took some effort after 2008. I don’t work for Halliburton or the Carlyle Group. One of the biggest disconnects I had with the big client I mentioned at the beginning of the article was my suspicion from my time working there that something was rotten in Denmark. My suspicions were borne out in 2008, of course; just read The Big Short: Inside the Doomsday Machine.

But I didn’t take the job offer, obviously, and after 7 years of consulting I still come home while it’s light out 99 out of 100 workdays. That may not be everything, but it’s something, and my hope is that for my kids it’s a big something.

the whole life sabbatical (part 3 of 3)


Creative Commons License photo credit: mistress_f

In part 1 of this three-part series I talked about walking away from various responsibilities in your life. In part 2 I talked about whether it would be easy to leave them. Now I’m going to bring it together with my thoughts on “walking away from it all.”Would it make you happier? In each area, it really depends on how happy you are now. Simply dropping a responsibility doesn’t make you happier. It can, however, free up enough time to allow you to pursue other activities that DO make you happy. I will argue this – almost no personal growth is possible without giving up something; without walking away from something else.

Work: For most people, this is the big one. I have a picture of a “workless” life and a picture of a “better work” life. I think most people say “oh, I couldn’t be happy without regular work, something to do, yada yada.” That’s not the case with me - I really get a lot of enjoyment out of learning and engaging in the regular business of day to day life. I’m not sure I need an avocation, per se. But I realize nobody is going to pay me to play with my kids all day every day, so I imagine “walking away from my work” ending up as walking into another job. I’d just like the hours to be flexible and more or less self-directed. But I do recognize this point: nobody will get a dream job, a dream career, the flexibility they’ve always desired without walking away from the one they have now. In order to achieve fulfillment in your work/career, you must be prepared to walk away from everything you have now.

Family: In the example I mentioned (should you take an infirm elderly relative into your home or support them by placing them in an elder care facility), it’s a tough choice people make all the time. My family has done so. You can’t ever abandon your family, but you do have to be able to let go and move on to develop other relationships. I see less of my brother than I did when I was younger and we lived together. I see less of my parents than I did when I lived at home. I even spend less time with my wife once we had a son, and now that we have a daughter, also, I have to spend less time with him. But each time when you take a little time away from someone, it doesn’t mean – or at least it doesn’t HAVE to mean – that you lose any of the strength of that relationship. In some ways it makes time you spend with those people even more intense, if you value them. By giving up time with one person you can grow your relationship with another – and it’s not a zero-sum game. I don’t love my brother or parents or wife or son any less as more people have been added to my family – if anything, it makes me appreciate everyone even more.

Finances: Walking away from your financial responsibilities is one of the best things you can do for yourself – unless you enjoy having a financial responsibility to your digital cable. Each time I’ve jettisoned a financial commitment it has not felt like a sacrifice – it’s felt like freedom. I have a long way to go, and some responsibilities are better than others: I don’t mind my mortgage because it allows me to keep my investments liquid and enjoy a pleasant home. But completing the lease on my car and buying the next one for cash, and ending that once-a-month reminder of money floating away was a source of huge satisfaction. Sometimes I think happiness can be defined more easily – on a financial basis – as the lack of things, rather than the possession of things. I will be wealthy, but I want that wealth to be expressed in a house and financial freedom and security for my family and travel and experiences, rather than in Wii’s.

Life: And finally, life. Can you walk away from your health? No. Can you walk away from other parts of your life? Yes: you can walk away from everything about your life that’s negative. How many people do you know who cling to failed relationships, or bad habits, or make themselves sick by living in unhealthy environments? Life is the one area you have to learn to walk away from. Don’t accept the idea that you have to have some misery in your life. Don’t accept “no pain, no gain.” There is gain without pain.

So what was I getting at with these posts? Too often I read about, and think about what I need to GET or ACQUIRE to achieve goals. Too often people think I NEED that to be happy, or I have an OBLIGATION to stay in this situation. Try not to think of life as a series of things you HAVE to do. These are not powerful words. Try to think of life as a series of experiences you WANT.

Identify what’s not working for you, and walk away from it – what are you waiting for, your next life?

is college worth it? (part 1)

guinea pig reading a book

Based on a few recent comments on some of my articles about careers (this one, for example), I started wondering about the difference in wealth between college graduates and skilled non-college graduates. A college graduate can usually expect to go into the professional world as a “white-collar” worker, earning substantially more than his non-college graduate peers. However, the college graduate - unless he is very athletically or academically gifted - will probably come out of college with at least some student loan debt. He will probably start earning money several years (4 or more) later than a non-college graduate.

So I decided to do a comparison of the two career paths, and see what those big choices meant for someone later down the road. Specifically I wondered if I could answer a few questions:

  1. Can the late start in saving by the college graduate be overcome through higher salaries?
  2. Does the lower earning potential of a non-college graduate mean that the non-college graduate will be required to “work until they die”?
  3. Who will be able to quit the rat race first?

I made a lot of assumptions and put together a spreadsheet to try to come up with answers to some of these questions. I’ll cover that in part 2. I ignored a few things - I didn’t worry about inflation, for example, since it would affect them both equally. You could argue this is wrong, because inflation moves at different rates in different parts of the country, commuting costs (gas, etc.) might expose one or the other to more inflationary pressures, etc. I skipped that. I also assume that both are highly disciplined savers, always saving 10% of their income and getting decent returns over time. If, of course, both started saving as soon as they start earning and never reduce that amount, they would be in the .000001% of the US population that does so.

My findings were a surprise and weren’t a surprise to me. The main point of the exercise was for me to challenge my own personal context (a concept Robert Kiyosaki talks about a LOT in his book “Retire Young, Retire Rich“). My context is that smart people go to college and get desk jobs. My context is that wealth is created through earning as much as possible. I am trying to challenge my own prejudices about what “building wealth” and “escaping the rat race” actually mean to me. It’s interesting, because I don’t have much exposure to people who don’t subscribe to the “go to college, earn money” credo; but fortunately I’m learning more about the opposite mindset and it’s interesting for me. It’s too late for me to undo my decision to go to college for 7+ years. There were alternatives - I could’ve started a business and educated myself. It’s not too late for me to learn something new.

Stay tuned!

(photo by GirlReporter)

4 quick steps to building wealth

1. Find something you can do well and (at least moderately) enjoy doing.*
2. Do it.**
3. Try to save some of the money you make doing it.***
4. Repeat steps 2 and 3.****

I think that may be it. What do you think?


Creative Commons License photo credit: woodleywonderworks

* Notice I didn’t use a phrase like “doing passionately” or “doing because you love it.” You don’t have to love it, but you have to enjoy doing it enough that it is not annoying to you. If you love helping people, maybe working as a nurse’s assistant is enjoyable. If you have a passion for music, maybe owning a record store would be fun. If you have a love of football, maybe being a sports writer is enough. You don’t have to be Brett Favre, always “having fun out there.”

**It helps, obviously, if you enjoy investment banking or building fantastic dot-com startups instead of making rag dolls for the neighborhood kids. However, I don’t think you can discount loving doing it. If you want to make rag dolls, figure out a way to get rich doing it. Launch a rag doll company, or write a how-to on the internet. Somebody got rich on Cabbage Patch Kids, after all.

***As I’ve pointed out before several times you’re always better off thinking of more ways to MAKE money than SPEND money. At the same time, UNLESS you are investing in your wealthbuilding (spending money to increase your skills or education or to grow a business, etc.) you’re better off spending no more than 99% of your income. The difference between spending 99% of your income and 101% of your income is the difference between getting richer and getting poorer, any way you look at it.

****I hope that the general theme of wealth and ‘becoming rich’ doesn’t always come off as a crass pursuit of one more dollar. I realize, for example, I might have made a lot more money continuing to claw up the corporate ladder, but I felt so drained and lifeless doing it that I had to quit (see step #1). I like the idea of doing something more-or-less enjoyable, while making money doing it. It may sound childish, but if you work hard at something that makes you miserable you have to wonder whether you’ll be able to continue doing it well enough to succeed. Something you like doing - even something you just TOLERATE doing - is a better option. If you become wealthy doing it, so much the better; life is easier when you have a little money in the bank.

why everyone should want to be wealthy

I wanna hold your hand

There are a million books written on the subject of money-making - at least. Most people, if they are sensible, want to acquire wealth. Wealth is freeing. Wealth gives you options. Even if you don’t want material goods for yourself or for your family, you could acquire wealth to benefit a charity or a cause. If you don’t want to acquire wealth, you may be perfectly happy and content with your lot, but you’re probably not a typical person. So be it.

I’ve often thought that one of the true benefits of being wealthy would not be just the ability to buy what I want, when I want it, but also to be charitable. I’ve struggled with charity throughout my life; I have given generously to some causes and withheld money for selfish reasons at other times. One of the advantages to being wealthy - to me, at least - would be the ability to give without any concern for amounts or timing.

So I think about wealth as a means not to buy the latest ‘thing’, but as something to improve lives. Mine, sure. My family’s, of course. My extended family’s, yep. Friends, my neighborhood, uh-huh. Even charities that benefit people who will barely register the fact that I helped. Why not? I won’t pretend that my first goal isn’t to make life as good as possible for me and mine, but I have hopes that someday I’ll be able to make a real impact on others - not just $25 a year to a charity’s administrative overhead spending.

Many people disparage the pursuit of the wealth as self-centered. “Greedy.” “Materialistic.” That may be. But if you become truly wealthy, don’t you have a far greater ability to help those in need? Shouldn’t every person who seeks to help others make their life’s pursuit the attainment of wealth?

How much wealth is necessary, or appropriate, or required is of course open for debate. I’ve often thought that no amount could be “too much.” I can think of an almost endless list of charities I could give to after I’ve provided for myself and my family. I would never think of getting rich as having been selfish; if you turn that wealth back around to the world at large, you could be far more effective than the preachiest poor guy on the planet.

I would never claim that I want money first for the benefit of others. I selfishly want to provide for my family (and myself) first, and others second. But I would like to be wealthy; I would like to have the ability to give freely to worth causes. Wealth is not just the route to the latest video game; it can also be the route to helping people who truly need that help.
photo credit: batega

Insufficient Education: Then and Now

Steve writes about the “31 Causes of Failure” included in Napoleon Hill’s seminal work on financial success, Think and Grow Rich. High on that list, holding down the #4 slot, is education. The discussion of education tends to center on keeping your mind active with constant learning activities, or on “continuing education,” which can amount to community college classes, seminars, or self-help books. There are many professions, nursing and teaching among them, that require some element of continuing education as a prerequisite for retaining a professional license. Accounting is another, and you can get a degree like Warner Pacific’s bachelors of accounting for adults as a great start before pursuing advanced degrees.

But there is also a case to be made for redefining insufficient education within the context of the economic changes that have swept this nation over the past decade. The last three years have seen a prolonged financial and employment downturn, but in both cases they are signs of trends that have been underway for some time. The offshoring of the U.S. manufacturing sector has been devastating to millions of wage earners and (former) homeowners. Nonskilled jobs have been followed to the developing nations by skilled positions including IT jobs, accounting and actuarial jobs, many other white collar support roles, even freelance writing: I am constantly underbid on writing gigs by people in Bangalore or some other exotic time zone.

It is not unreasonable to suggest that insufficient education today may be because a job for which a bachelor’s degree was sufficient a decade ago now requires a master’s degree. That may be due to the increasing complexity of some professions – civil engineering comes to mind – or it may mean that employers can be more selective in their baseline requirements for professional employees. The IT requirements for many jobs have shot up over the past ten years; today you can find graduate degree programs in nursing informatics and financial engineering – two examples of professional niches that didn’t exist for the last generation.

For someone who is currently unemployed, has gotten through college and put in several years of successful work experience based on those undergraduate studies, the suggestion that they lack sufficient education isn’t a fair statement. The education that many of us obtained prior to entering the work force simply isn’t applicable in today’s domestic economy or doesn’t meet newly established benchmarks for professional advancement. Fixing a situation like may require a more concerted effort than continuing education.

Today a wealth of online graduate degree programs designed for experienced and/or working professionals exists. Many are part time, for those of us who are still working; others are accelerated programs that can get you through a master’s program in a hurry. And today, most of them are offered by traditional universities that have expanded into distance learning. The morphing job market can be a frightening situation, especially for people who have embarked on a career track. Sometimes the best insurance for someone who has to change direction is an advanced degree to bolster those years of experience.

Article Source: Bob Hartzell is an in-house editor for Masters Degree Online.com. He writes about the current state of traditional and for-profit education including student loans, scholarships and distance learning.

how kids (can) make you poor

Raising a child can cost up to $250,000 - and that’s from a study done almost 20 years ago. That’s only the cost through high school - college is another problem entirely, unless you don’t plan on paying for your child’s education (and I don’t). Having a kid is expensive. Having a second is less expensive - hand-me-downs and shared costs can reduce the individual costs - but a larger family is going to cost a fortune. The simple fact is that you won’t become AS rich with kids.

I’ve seen the question of children play out a dozen different ways with friends and in my own life. My parents had kids (my brother and me) when they were barely out of their teenage years. I have friends who waited until they were almost 40 to have kids. One couple fervently and frequently insisted they would never have kids - and show no signs of changing their minds. In each case, the decision to have a child (or children) was deeply personal, and made for a number of reasons - but seldom considering the cost. The simple fact is that you’ll be better off financially without kids. Kids are expensive.

It’s a potentially sensitive topic … and most people don’t want to have that conversation. “Kids bring so much joy into your life!” “Kids are their own reward!” I’m biased - the cliches are all true. My son’s a supernova of energy, creative and amazingly verbal. My daughter’s charming and almost impossibly cheerful. They are joys. But to be realistic, I have to admit that because of them I will not be as wealthy as I could have been. I regret nothing, but I also understand that I’m going to have to work harder accumulating wealth than I would have without children.

So how do we plan to compensate? If you have kids, how can you avoid spending more than you need to? It’s not the nature of my blog to talk about ways to save money on Cheerios by buying the store brand - although you should. But I do have a few “big ideas”:

  1. I’m not paying for my kid’s PRIVATE college education. If Little Buddy or Pumpkin want to attend a private school, they’d better develop tennis skills or become world-class scholars. I’m not paying for Pumpkin to attend an Ivy. I’ll help, but if they can’t pay for a private college, they can go to a public university, just like Mama and Papa did. We did just fine.
  2. We will readjust our lives around their education early on, though. We moved to Florida to escape crappy public schools in Jersey, and made sure we landed in a school district considered one of the best in the state.
  3. I will strive to teach independence. This sounds stupid, but I have seen so many of my colleagues in corporate America talking about their mid-20 (or even mid-30) year old children living at home. I know I can talk big now, but I left home at 18 and my children will too. If they can’t afford a home, I’ll tell them to move to a cheaper locale. An unmarried 35-year-old living with their parents needs to experience life.
  4. We will resist consumerism. A couple of years ago, one of my neighbors bought one of those big car-battery powered cars - with a working FM radio - for their daughters. Little Buddy loved it. I was tempted to get him one. He didn’t, and doesn’t, need it. I have fallen victim again and again to the urge to buy toys. Sometimes it makes sense: I bought him a farm set that he plays with daily. Sometimes I fail: I have bought a half dozen balls (football, baseball, soccer) and he is utterly indifferent to all of them that don’t have Spiderman on them. But I see a sickness in most parents around me: the need to buy distractions. I struggle to remind myself that learning to pretend my wooden blocks were race cars taught me to IMAGINE things. My parents would have done me a disservice by buying me Leapfrog, or whatever the 70s equivalent was. Learning how to live with less - at least as far as toys - is a gift, not a burden.

But none of these cost-saving ideas can compensate for the fact that a childless couple (or a single person) will simply be much better off than a couple with kids. I won’t recommend one choice or the other, because it’s such a personal choice. But don’t let anyone tell you otherwise: in the short term, having kids is no big deal. You can afford formula, diapers, baby clothes. But in the long run, having kids will change your career choices, affect your ability to save and limit your choices about almost everything. Make sure you’re comfortable with the long-term cost before you take the leap.

try something new, and links

I’ve been working on something with my son. It’s “try something new”. I have made an effort to convince him that he should try something new, and if he likes it, great, if not, fine. I’m mostly applying this concept to food but it’s relevant to things like trying new sports or ideas or so on. I realized this morning - while I was talking to him about the concept of trying something new - that it should apply to all of us. None of us should ever settle for stopping learning, trying, tasting, etc. But it’s easy to do. I quit REALLY trying new things years ago. Hopefully I can shake myself out of that pattern soon…

Here are a few of my favorite reads this week:

A Frugal Daughter’s Guide to Back to School Shopping: Always interesting to get a different perspective - like a daughter’s, for example.

Should You Refinance Your Mortgage? Rates Are Low, But It Is Still a Tough Decision: I’m leaning towards doing a refi. I’ve got a good rate but the rates are so low now that the benefits to refinancing seem almost too good to believe.

To mini-retire or not to mini-retire? Escaping the Mundane: Great tips on how to break out from the “ordinary” life.

New UK Kindle a tax on literature?: Interesting take on the Kindle. My Dad LOVES his Kindle. I plan to get one soon - basically once the WiFi version hits $100.

7 Habits of Highly Frugal People: I’m working my way through this book for the second time (The 7 Habits of Highly Effective People). I didn’t like it so much the first time I went through but now I appreciate it more.

Why 99% Of Financial Advisors Should Be Shot Out Of A Cannon Need Extra Cash? There Are Only 4 Ways To Get It: The fours ways to make money are: * Start a business * Work more * Passive income * Spend less This is a great summary to clarify your thinking. Alternative income won’t just materialize. YOU have to DO something.

And a few more links that are worth reading:

wealth and intelligence


When most of us were younger, we were told to do well in school - make good grades, impress the teachers in order to get good recommendations, do extra credit. Scoring well on the ACT or SAT meant a lot. Proving that you were smarter than the average bear somehow indicated future success. Yet intelligence isn’t always a marker of success - at least success as measured by wealth. Wealth is not, of course, the only measure of success - far from it - but it is a measure accepted by our society as at least a general measure of overall success.

Intelligent people are often gripped by what I’d call (technically) “smart people stupids.” If you’re an intelligent person, it’s quite easy to imagine a variety of outcomes to any given set of circumstances. If A happens, then B or C or even D might occur. Wondering whether “slim chance event D” might occur can drive an intelligent person nuts - you might sit around wondering how you would deal with situation D; would reaction D.1.1 be appropriate, or D.1.2? How will this affect you 15 years from now?

Over the last ten years I’ve started to believe that intelligence - at least as far as the ability to imagine future events based on current circumstance - can be a crippling factor in the pursuit of wealth (and happiness). Someone who doesn’t have the ability to imagine positive outcome X may also be able to avoid thinking about negative outcome Y - and therefore be freed from worrying about the result of their actions. Worrying about the future is a heavy burden; not worrying about the future would be liberating for most of us.

I know people who don’t worry - like I do - about long-term wealth. They assume that they will have “made their nut” at some point - whenever they make it. Whether it’s the blissful ignorance of uncaring or fewer smarts I don’t know. I would assume that not worrying about the future is an overall net plus. It may put you into some pretty bad situations, but at least you won’t worry about the outcome.

I suspect that being intelligent and being wealthy will always be unrelated. Just because I can play the piano, for example, doesn’t make me smart or stupid. It just marks me as a good piano player. I don’t think wealth accumulation can be associated with intelligence for much the same reason - it’s a skill, just like musical ability, or sports ability, or the ability to learn and speak foreign languages. You can’t think your way into it - you have it or you don’t.

photo credit: swambo

(originally posted 3/09, in different form)

doesn’t anyone have a job, and links

One of the things that amazes me when I’m between projects is the sheer number of people out and about during the day. If you go to Costco or Bloom (a grocery store) during the day, there are a lot of people there. There are cars on the road. There are people out and about all day long, and I always wonder - are these people who don’t work, or who work irregular hours, or who work at home? How can there be so many people out and about from 9 to 5? I don’t mind, I’m just curious.

On to the links:

My New Career: Stealing Cars in Oakland: Fun signs of the decline of the American empire…

Amazon Prime 1 Year Free for Students and Others: Amazon Prime is a great deal - I’ve been a subscriber to the plan for the last 5 years. It all depends on the volume of your orders from amazon, of course, but if you order more than a few orders a year it’s a good deal.

Our Credit Card Rewards Surprises: As far as I’m concerned, the American Express Blue cash rewards card is the best card out there - we put almost all of our household expenses on that card.

The Joy—and Value Received—of Community College: Let me start by saying I know nothing about community colleges. I didn’t ever go to one, knew few who did and don’t pay any attention to them. All that having been said, I love the idea of community colleges and wish they were better promoted. Many professions - my own, accounting/auditing included - could probably be just as well served by community college grads as by four-year college grads. Why we don’t promote these institutions more is beyond me.

The Siren’s Call of Passive Income: An interesting take on the ethical implications of “passive income.”

It Doesn’t Matter What Your Position Is Right Now, You Can Do Better: Great advice: “What can you do, right now, to start improving your situation? That’s the only question that matters. ” Quite true.

Networking Tips to Help You Find a Job: “Make sure to follow through. If someone provides you with a referral, make sure that you follow through quickly.” This is a small thing, but it’s one of the least-followed pieces of advice in the job-seeking world. I’m not nearly as good as I’d like to be at following up; but I’m better than many people are. Don’t offer to follow through if you won’t. And if you offer, and DO follow through - people WILL appreciate it.

The preservation of wealth: “In fact, I doubt there’s a rich person in the world getting by with an index tracker, a savings account, and a wodge of Government bonds.” Probably true. I’m convinced that index funds, savings, etc. are the mark of a small, non-rich mind. That having been said, they are also the mark of an educated, non-poor mind. There’s a big gray area between rich and poor that can be quite comfortable for many of us.

99 thoughts on losing 100 pounds: Hey, that sounds familiar… hah.

And more:

Finances are Fun: 5 Ways to Encourage Your Child to Embrace the Spirit of Enterprise

We live in a capitalistic society. Many say this with a sigh and a shake of the head, but there are some upsides that shouldn’t be overlooked. If you start early enough, it is possible to rise to unfathomable heights of success. Unfortunately, it’s also possible to destroy your credit and your life quite early in the game by not having a clear conception of how to manage your finances.

kids in belfast

American young adults and children are notorious for their lack of financial know-how. In a society that practically forces you to get a credit card when you turn 18, this ignorance can be deadly. Here are five ways to teach your children how to excel in a competitive economy and to avoid the pitfalls along the way.

1. Teach the idea of financial self reliance early on.

There are times when everyone could use a helping hand, and there’s nothing wrong with that. With that said, there’s nothing wrong with teaching self reliance as a preferred choice. From a very young age, help your child differentiate between needs and wants. If the thing they’re asking for constitutes a “want”— assuming you can/will give it to them in the first place— set up a system where they can work to earn it. Even if “working for it” only means doing extra chores for a couple days, they’ve learned that work is necessary and beneficial.

2. Learning about compound interest is crucial.

When your child first learns about interest, start to talk to them about credit. Explain the pitfalls of taking out too much debt. At the same time, open up discussions concerning investment. Show them the potential for making money if they invest early in life. Compound interest can work for you, or against you. Teenagers are more likely to be interested in these discussions than younger children, so keep the conversations age-relevant.

3. Teach them about other financial perspectives.

Every society and individual family has a unique financial policy. Discussing other viewpoints allows your child to pinpoint the crucial financial questions that any functional philosophy seeks to answer. Here are some examples:

“Is private property a good thing?”
“Should we allow extreme divisions of wealth?”
“How much influence should governments/companies/individuals have in making financial policy.”

Accept that you might not agree with their answers. Keep any debate friendly and informative.

4. Encourage early attempts to start businesses.

When I was 8 years old, I started a business selling golf balls and cans of soda on the golf course next to my house. These early experiences taught me the basics of running a business. This knowledge was carried into my adult life, and inspired me to become a freelance writer.

You never know how far a child’s chosen small business will take them. A close friend in high schools started a lawn-mowing business. By the time he was 18 and had graduated high school, he was able to sell the business for 500K. Now, he manages a department of 100 people in a Fortune 500 company.

5. Allow your child to enjoy the fruits of their financial success, and, if applicable, controlled financial failure.

Saving for college is important, but don’t’ demand that your child put every penny they earn from a high school job into a savings account. Help them save a certain percentage, and allow them to spend the rest how they see fit. Never feeling rewarded for your work can foster an attitude of futility.

Finally, allow them to make manageable financial mistakes. If they don’t save ahead-of-time for a desired item, it’s “ok” to allow them to go without the item. Now is the time to make small mistakes so that larger, life altering, mistakes won’t be made down the line.

Bio: Alexis Bonari is a freelance writer and blog junkie. She is currently a resident blogger at onlinedegrees.org, researching areas of accredited online degrees. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

Photo by larbelaitz

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