November 19th, 2008 — Diversification, Income Streams, Money, Personal Finance
Every single one of us would be thrilled to have more money coming into our homes every month. If you’re relying on one or two paychecks as the primary earnings for your income, you can relate that it’s pretty tough to get ahead. Everyday expenses chip away at our standard incomes and unless you manage to get a big promotion, chances are you’re going to be treading water for a long time to come.
How about, instead of just your regular paycheck, you were able to have several different income streams every month? That sounds pretty good, right? The main problem for many people is that they don’t have enough money to make new money. That old adage is more true than ever and if you don’t happen to be independently wealthy, it can seem as though you’re never going to break that cycle of living paycheck to paycheck and get ahead.
However, there is a very smart way that absolutely everyone can use to start making more money. While most of us are familiar with how debt works, it has gained a pretty bad reputation. We tend to look at debt as though it is an evil thing, and something that should be avoided at all costs. While this is true to some extent, especially if you are using your debt in the wrong way, there is a form of debt that is actually quite beneficial.
Good debt is debt that you leverage to create something. Bad debt is money you spend on credit for things that are completely useless. Let’s look at this way. You can go into debt to invest in a business or a stock, and then have it return your original investment ten fold, or you can go into debt to buy a flat screen television that is never going to do anything more than provide entertainment and collect dust. This is the main difference between bad and good debt.
Debt, when managed properly, is the key for many of us that want to make more money. Even the richest people on earth had to start somewhere. The best stories of the self made entrepreneurs always include the part where they had to get a loan, either from the bank or a friend, to invest in something they believed in. Years later that debt paid off big time in the form of millions of dollars. This exact same technique will work for anyone, provided you make smart investments and don’t overextend yourself initially.
To recap, debt is not necessarily the root of all evils, unless it is improperly managed. If you’re using debt to buy things you really don’t need, then yes, it’s going to be a problem if you overspend. However, if you are leveraging that debt into investments and opportunities that will create new streams of income, you are getting the benefits that so many entrepreneurs have already reaped to get where they are today.
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November 11th, 2008 — Personal Finance
Getting married is stressful and emotional, but when it comes to handling finances, things can get really scary. You’ll be combining two incomes in most cases and many people get the impression that they can start spending twice as much. This usually leads to double the expenses and a lot of heartache. If you’re just starting out on your path of wedded bliss, there are a few tips that will help you use these first few years to create a solid income for your future.
1. Business is business.
Too many relationships end up spoiled due to money problems. The best way to approach this is to understand that business is business. Your money should never be handled emotionally. Think of it this way – you are dealing with two banks. The manager at the first bank is sobbing and pulling out his hair. The manager at the second bank is calm and collected. Who are you going to trust more? Find a way to separate your finances and financial discussions from the rest of your life and create a zone where no emotion can enter. They’re cold hard numbers and they won’t appreciate your outpouring of emotion anyway.
2. Start thinking about your future right now.
You may be lost in the throes of wedded bliss, but now is the time to start planning for the rest of your lives. You need to develop multiple streams of income that will make it easier to save for your retirement and achieve your financial goals. Set up a path on paper of where you want your finances to be in 5, 10, 15 and 20 years. Set up definitive goals and then take the steps to make those goals happen. Chances are, neither one of your jobs are going to cut it.
In today’s economy, multiple streams of income are vital if you want to get ahead. This usually means making smart investments, purchasing property that will bring in returns and finding new ways of making your money work for you. If you don’t have the money to invest now, consider taking out a small loan to get started. This is a powerful method known as debt leveraging and it is used by millionaires throughout the world.
3. Avoid the Bad Debt Trap.
Leveraged debt is good debt. Overspending on things you don’t need is bad debt. Learn to separate the two and train yourself to stop before purchasing something you don’t need. Ask yourself – should I spend $5k on a new television or $5k on some stock that is going to pay be back four times over? This makes it a lot easier to get your priorities on the right path.
Too many couples end up trapped in the endless cycle of bad debt. Consider taking a course together that discusses debt leverage and learn more about it as a married couple. You’ll have more time to bond and you’ll be learning techniques that will carry you through the rest of your lives together.
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August 1st, 2008 — Book Review, Income Streams, Personal Finance
This was an absolutely fascinating read and its one of the few books that we truly recommend, especially to those with families. The main premise of the book is that our current system of having to have two incomes to make ends meet is what is driving individual family economic meltdowns. How can more money end up being a bad thing?
Warren, who is a professor of economics at Harvard, and her daughter Amelia, a business consultant, present a very strong case, backed up by numerous statistics that show we really are in trouble as a society, but it’s not our fault. Instead of falling back into the old line of complaining that American’s are overspending and dripping in debt, the two show that it’s not that at all.
According to the Warrens, it is what we’re spending that second income on that is the problem. The main case in the book is that the push to send our children to good schools has led to an incredible jump in real estate prices, especially near the best schools. In order to get into those schools, hefty tuitions must be paid. This system is perpetuating itself and creating a problem that many families cannot break away from.
Who wants to send their kid to a bad school, right? They claim that in the past, Mom was the financial “safety net,” where as now, most of her salary is going towards inflated house payments, car payments, and school tuitions, instead of into savings or investments as it should be.
With 80% of Americans living paycheck to paycheck right now, this book raises some very valid concerns. Unfortunately, there really is not a solution, barring sending your kids to public schools as avoiding pricey neighborhoods. However, if more families did that, it would free up more disposable income that could be spent freely.
We would have liked to have seen the book focus more on having “Mom” work on developing passive streams of income that would replace the need for that second salary, but overall, we found that the book was a refreshing and thought provoking read. If you are one of the millions of families that is struggling to make ends meet on two salaries, it is well worth the read.
It is rare to find a personal finance book that doesn’t encourage over-frugality, or get rich quick schemes that never work. We found this book to be hard hitting, filled with all the right facts (that were verifiable) and certainly well worth the time spent reading it. It may just open your mind up to some new ideas and help you develop a plan to break free of that trap, start creating a more passive stream of income and figure out how to get your family’s finances back on the right track. All of this boils into a lot less stress and financial hardship and that is something every one of us can use.
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July 11th, 2008 — Personal Finance
One my favorite themes is multiple income streams… One way to add incomes streams without increasing your workload is to combine a hobby with a way of making money (like a website)… In the post I would like to highlight several websites that are doing just that…
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— A boating and fishing enthusiast site with extensive marina, lake, and river information with a goal of eventually covering the entire West Coast. Also has pictures of big fish which is always a favorite of mine. In addition, SFBoater readers can win $50 Amazon gift cards by entering and winning the monthly Trophy Catch Jackpot where readers are paid for fish stories.
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— A DIY enthusiast site with growing number of DIY tips and tricks. One of my favorite tips is to use stailness steel contact paper to cover kitchen appliances.
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— A golfing enthusiast site with extensive golf course reviews, golf book reviews, and general golf tips.
These are but 3 examples in what is surely a very long this of hobbies for which this same technique could be applied. My only advise… Make sure you have a passion for your chosen hobby blog. Writing regular posts becomes very tedious if you do not LOVE the subject matter.
It is a good thing I like making money…
Combining a hobby with a website is by no means the only way to turn a hobby into an income stream…
Ask the readers… What hobbies would like to build into an income stream? How would you create that income stream?
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