Entries from July 2008 ↓
July 27th, 2008 — Money, Personal Finance, Wealth, roundup
Welcome to a new edition of Sunday Money Madness where another portion of the financial blogosphere is illuminated. I found these stories to be worth while and interesting and they should make great weekend reading if you haven’t read them yet.
Thanks to the carnivals this week for including Rich Credit.
Be safe and have a great Sunday all.
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July 23rd, 2008 — Diversification, Income Streams, Leverage, Personal Finance, passive income
Right now, more than 80% of households in the United States live on a paycheck to paycheck basis. This means that a lost job could result in financial disaster for a large chunk of the population. Once you get into the trap of relying so heavily on one paycheck, it can be pretty hard to break free from that cycle. There are ways however to reduce your reliance on that paycheck and get other streams of income rolling in.
Whenever we get a job, we get excited about that paycheck and the temptation is there to get a nicer car, or a nicer house or just to spend more than we should. Before we know it, we’re stretching our limits. If you get a raise, the same thing usually happens. Instead of taking that money and using it to make more, we simply throw it out the door on things that we don’t really need.
We’re not saying that you have to live your life like a Spartan – far from it. However, you should never rely solely on one income to meet your needs. This is a recipe for disaster, and for thousands of Americans, this can be the risk of ending up homeless. So, how do you break free from this cycle and open up more streams of income?
The easiest answer is to get a second job so that you have more income coming in each month. The only problem is that most of us are spread so thin that it is just not feasible to try to work more. You can try starting your own little side business, but again, if you don’t have a lot of time, this can be more trouble than it is worth.
The second choice is to find a way to create passive streams of income. This is money that you don’t have to “work” for. In essence, you’re not doing anything, but you still have money coming in. Examples of passive income include investments, interest payments and dividends. You make that initial investment and then sit back to watch the money roll in.
This is the most ideal means of making more money to reduce your reliance on your paycheck. However, there are times when you may not have enough cash to create a new income stream. In this situation, you can try what is called leveraging debt. This means getting a loan that will be used for an investment to create more income.
Now, we do not recommend leveraging debt on risky investments, this is just a bad idea. It is best to start small, with something that you feel comfortable will have a good rate of return. This may mean a high interest bearing savings account or something similar that has less risk than a stock.
Whatever you decide to do, the important thing is to stop relying on that paycheck. Once you do get more income coming in, don’t fall into that same trap of overspending again. Put it aside, or use it to invest in new income streams.
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July 21st, 2008 — Budget, Money, Personal Finance, Standard of Living
Right now, it has never been more important to manage your bills and get your finances under control. The economy is going through a particularly rough patch, food and gas prices are going up and it can be pretty hard to make your paycheck stretch each month. If you’re finding it difficult to keep up, now is the time to start making some changes before you get in over your head.
Most people really don’t realize how much they spend every single month. The vast majority of Americans do spend more than they make, and many of these expenditures are for non-essentials. There is one very important thing that everyone should do to determine whether or not they over spending. For a period of one month, keep a log of absolutely everything you buy or pay, from that pack of gum to the bills you pay.
At the end of the month, add up everything to see just how much you spent. Chances are you may be pretty surprised at just how much is going out the door. If you are spending more than you are making, or if you are not putting anything in a savings account or investments, you need to figure out how to cut some of your costs.
Go through your month’s log and split everything up into two columns. The first column should be your essentials, such as rent, utilities, car payment, insurance, phone and groceries - but not eating out. Total all of this column to see how much you have to spend every month.
Now put everything else in the second column and total this one up as well. This will be the amount where you can start cutting some expenses. Go through the list one more time and check off the things you don’t think that you can do without. Put these in a third column. Everything else should be examined in that second column and reevaluated. For example, if you are spending $100 every month eating out, you can easily cut this in half and put $50 aside.
All of these little expenses add up quickly and before long, we’re overspending without even realizing it. Once you have everything divided up into three columns you can determine what kind of budget you want to work with. Your goal should be to put as much money aside as possible.
Once you free up some of that cash, you’ll need to work on creating more income so that you don’t have to live quite so frugally. Consider using this to create another stream of income through an investment or opportunity. This can help free up more money that can be spent on non essentials, or that income can go back into another income stream. If you don’t have any available cash to do this, consider leveraging a loan to create an income stream to take the pressure off of your paycheck. This can really make a difference in how much money you have coming in every month.
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July 20th, 2008 — Personal Finance, roundup
Sunday Money Madness is back again this week with more great mid-afternoon reads. Don’t miss out on:
Once again, thanks to those blog carnivals that had us this week.
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July 17th, 2008 — Budget, Income Streams, Personal Finance, bad debt
When you’re trying to save for the future and still manage to eat, it can be tough to find that right balance. We all need to plan ahead and having a savings account really is essential. This can be a cushion or that “rainy day” money that you need, and it is never too late to start putting away money towards your retirement. However, a lot of us can get bogged down when it comes to handling our own finances and it is all too easy to be like the grasshopper in Aesop’s Fables and put it off until tomorrow.
You can’t put off saving for your future until tomorrow, because there is a good chance you’ll keep putting it off until you wake up one day and it’s too late. However, there are a few easy tips that you can use to start saving for your future today. It may be a little tough at times, but like anything, practice makes perfect. The more you practice saving, the easier it gets. Eventually, managing your money will come naturally.
Let’s start off with setting a budget and finding which expenses are not necessary. Add up everything you spend over the course of a month. Put all of your necessary expenses, such as groceries, rent, utilities and phone into one column. Now, put everything else in the other. You may be surprised at just how much you are spending every single month. If you have credit cards, it’s very easy to spend more than you’re making. This sets you up to enter a bad debt spiral that will eventually get out of control.
Now, let’s take a look at everything in the second column. Add up how much you spend on things such as partying or shopping. These are items that should be the first to go. Sure, you don’t want to become a recluse, but when you get tempted to go out and spend a bunch of money ask yourself – will I still be able to wear this shirt when I’m broke at 65? Do I want to work until I’m 80 simply because I want to go have a few drinks?
It’s a bit extreme, but these little spending habits can end up giving you that result. Find ways to do things a lot more cheaply and you’ll end up saving a few hundred dollars every month. Put that money into an interest bearing savings account and we guarantee, by the end of the year, you’ll be amazed at how much money you were able to put aside.
Next, you’ll need to focus on ways to create more money than just your standard income. 80% of all Americans live paycheck to paycheck. This means that one lost job can result in becoming homeless. To break that cycle, you need to create multiple streams of income so that you’re not relying on that one source of income to meet your needs. This is the key towards planning for your future.
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July 10th, 2008 — Income Streams, Money, P2P Lending, Personal Finance, passive income
In the past, creating multiple streams of income required a lot of footwork and there were few passive stream opportunities available. However, thanks to the Internet, it has never been easier to create multiple streams of income online and many are passive! Let’s go into a few ideas that you can use to start your own income streams right now.
1. Blogging –
This is far from passive, but if you’ve got something to say, you can make money at it. It has never been easier to create a solid stream of income that can bring in a few hundred dollars a month or even more. Programs like Google AdSense can easily bring in that much and you never have to lift a finger (other than writing and networking like a madman). While there will be some expense involved, especially for marketing your new blog, it is minimal and much less than you would pay for other opportunities.
And why stop at one blog? If you’ve got a lot of interests, you’re just full of untapped potential. Start a blog for each one and take the time to build up your audience. You can easily turn than few hundred dollars into a few thousand dollars a month. For some people, that may be more than they make at their full time jobs.
Your opportunities don’t stop with advertising. You can join affiliate programs, set up your own products or keep branching out. The sky really is the limit when it comes to this type of income stream; however, passive it is not.
2. Peer to Peer Lending –
This is an interesting and potentially great way to make money online. Depending on your particular lending strategy it can even be fairly passive. There are numerous peer to peer lending sites that are seeking lenders and investors. You don’t need to be a bank – all you need is some cash and the stomach to take a little risk. Be sure to follow my tips at Making extra money with peer-to-peer lending.
3. Informational Products -
If you’ve got an idea or expertise in an area that is popular, write an ebook and start selling it online. You’ll never really have to do much work after it’s written and marketing costs are usually quite low. Your book will just keep bringing in money month after month. What is more – you’ll be building up an audience for future books to make even more money.
If you don’t want to write your own, there are numerous pre-written ebooks on every subject under the sun. You can purchase the resale rights and start making money right away. This is perfect if you want a nice little stream of passive supplemental income. Just remember to keep offering new books so that your market doesn’t stagnate.
4. Bonus Tip -
Combine tips 1 and 3… By adding an eBook to your blog you can potentially super charge your readership growth. Here are 2 examples of blogs trying to do just that… SF Boater with the free eBook Fishing in California, and Handyman Fix Home Repair with the free eBook The DIY Handbook.
These are just four ideas that can start bringing in income right now. There are countless others that are just as easy to implement. If you want to start making more money, the web is the first place to start.
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July 6th, 2008 — Personal Finance, roundup
Sunday Money Madness is your guide to the rest of the blogosphere on personal finance.
I also want to thank those that have featured Rich Credit in Blog Carnivals recently.
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