Anywired

Anywired Readers: I’m Returning to My Roots - Will You Come With Me?

Skellie — Wed, 29 Apr 2009 13:06:57 +0000

Important note: to keep receiving new posts from Anywired, please subscribe to the feed for Skelliewag instead. I am moving future posts there (it’s my oldest blog and the one I’m best known for). There, I will be posting more often than ever before on self-employment and entrepreneurship (go check it out). To repeat: this blog is not closing down but instead merging with Skelliewag. Same topics, same style - more often!

I’m returning to my roots, and if you enjoy Anywired, I hope you’ll come with me.

Start with the most recent post, which I think you’re gonna like:

Find Your ‘Flow’ and the Money Will Follow

How come?

As you might have noticed, my blogging activity has picked up lately after a period of dormancy. I’ve launched back into both blogs and redesigned them, and intended to update each blog three times a week. Then I discovered two things:

1. It is really, really hard to write 6 long posts per week. Some bloggers can do it without breaking a sweat, but I’m no Leo Babauta circa 2007 (and I think Leo eventually discovered it was really hard too). I decided to settle on two new posts each week, or maybe two on one blog and one on the other. I can manage this much writing, but then I realized that…

2. People who blog and use social media are often really interested in self-employment and entrepreneurship. And self-employed people and entrepreneurs are often really interested in blogging and social media. A lot of the content I post on Anywired would be thoroughly enjoyed by Skelliewag readers, and vice versa. All in all, I suspect that both blogs are read by the same sorts of people - creative people who want happiness, flow, freedom and self-determination. It no longer makes sense to me to split this group of readers down the middle.

I know some of you reading this follow both blogs. Firstly, thank you - you’re awesome and I would love you to introduce yourself when you’ve got a spare moment. Secondly, this should make things more manageable for you. One blog is easier than two to keep up with!

What does this mean?

When I first created Skelliewag in 2007 I was full of energy for blogging, cranking out five long posts per week. From now my aim is to write 3 - 4 times per week, with content spread evenly between freelancing and self-employment, entrepreneurship, social media, blogging and personal branding. Even if you don’t blog at all, I will make sure each post relates to you. And if you’re willing to learn, I’ll also show you the methods I used to create a lucrative freelance business fed entirely by a blog. No hunting for clients, no accepting work I didn’t want to do, and no crappy rates.

The main benefit of this move is that my writing will (hopefully) help the largest possible number of people. The down-side is that some people won’t make the switch over, but that’s not necessarily a bad thing. It means the people who do make the switch are active and engaged - the best kind of readers.

What about Anywired.com?

For now I hope people will continue to find the blog, read this post and look for newer posts on Skelliewag. One day I might do something cool with this domain. And if you’re lamenting about me changing things so soon after a redesign, it only took a few hours of very enjoyable, flow-inducing work and a pre-made $25 theme (’Convergence’ from the wonderful ThemeForest). Not a huge loss, and nothing says I can’t use the design for something else in a pinch.

One last time: if you want to keep following Anywired posts, please subscribe to Skelliewag if you aren’t already. You’ll be in good company - I’m very excited to have over 6,000 subscribers today, my first day over 6k.

See you on the flipside!

Post image by katmere.

The #1 Untapped Income Source That Freelancers Forget

Skellie — Mon, 13 Apr 2009 01:00:50 +0000

Are you a designer, developer, copywriter, freelance blogger, or any other kind of freelancer? If so, there’s one lucrative income source that you’re probably missing out on.

You don’t need to buy any products, join any programs, or learn something new from scratch. This is something you already know how to do, and if you’re like most freelancers, you’re giving this valuable service away for free without even knowing it.

Read on to find out the biggest untapped source of income that most freelancers never realize exists.

You could add consulting to your freelance business right now

You don’t have to ‘be’ a consultant to do it. If you can teach or advise clients about something, you can provide consulting services for them. If you already do this for clients, you’re already doing consulting work - but may not realize it, and as a result, you’re probably not charging what it’s worth.

Here’s how you identify consulting work:

Are you working with the client to flesh our their ideas, strategies and concepts? Example: a client approaches a web developer saying they want to create an ‘interactive learning environment’, but they don’t know how to do it. The web developer then helps the client choose a plan, structure and software solutions that will create their ideal system. Here the developer is not doing any coding at all. They’re consulting.

How often do you do consulting without realizing it - giving the client advice on their overall strategy - and charge your regular coding fee?

Are you teaching clients how to do it themselves? Example: a copywriter submits a completed sales page to a client. The client is extremely happy with the copy, but also worried about the future. She wants to use the same copy for updated versions of her product, but is afraid that she’ll wreck the effectiveness of the copy by making uneducated changes. The copywriter teaches the client the basics of copywriting so that she can update the copy on the fly as she adds more features to her product.

How often do you give clients advice on how to do the work for themselves without realizing that you are actually giving them valuable consulting time?

How this can affect your bottom line

Everyone knows that consultants often charge high hourly rates. This is because the skills and advice they pass on to the client are extremely valuable. Teaching a client how to ‘do it themselves’ means they could save hundreds or thousands of dollars on hire costs. Lending an expert hand to a client’s strategy can be the difference between success or failure for them.

If these kinds of activities are already part of your business but have been lumped in with all the ‘doing’ work that you do - writing the copy, building the code, designing the logo - and charged at your regular rate, I’d urge you to start thinking of these higher-level activities as separate consulting services, and presenting them as such to clients.

I’ll talk about packaging and pricing a bit later on. For now, I want to dedicate some time to those of you who are not yet doing consulting-type work in their business, and explain how…

Any freelancer can start consulting on the side

When dealing with clients, you’re usually in a position of expertise. If you can see a way to sharpen their system, introduce cooler features or do something better, offer to consult with them and tell them how.

OR, as an upsell when your ‘doing’ service ends, offer to teach them how to ‘do it themselves’. Web designers can show clients how to update and customize the website they’ve just been built, going above and beyond a quick summary and working with clients in-depth. Search Engine Optimization experts can show clients how to perform ongoing basic SEO on their site. Similar opportunities exist in any field of freelancing.

You also don’t need to wait until your service ends to sell this kind of consulting. It might help you attract new clients who only want to invest a few hours in learning how to do it themselves to save on the much greater costs of hiring an expert to do everything for them. Rather than paying someone $3,000 to run a Pay Per Click ad campaign on their behalf, the client might invest $500 in learning how to run a similar campaign themselves. Learning DIY methods is a common strategy for people who are time rich but money poor.

OR, you can teach other freelancers how to do what you’re already doing. Freelancing is a booming industry and there are brave people escaping ‘the man’ and going solo every day. These people are often hungry for guidance. They read blogs like this one, buy eBooks promising freelance riches, but what they’d find most useful is a mentor who has been there, done that and can teach them how to get started from scratch.

If you’re concerned about creating competition for yourself, work with people who are in a field that doesn’t overlap with your own sphere of work. If you’re a logo designer, train up web designers, for example. (To be honest, though, I think there are enough freelancers plying their trade that one extra person entering your field won’t make a difference to your own chances).

Why doing consulting work can transform your bottom line

I don’t want to promise you that as a consultant you’ll be able to charge $500 an hour, $250 an hour or even $100 an hour - though I know that some freelancers are. Where you’ll be completely depends on how your clients value your time, value your consultations and to what extent they view you as an expert. What I can state with confidence is that you will be able to charge significantly higher than your hourly rate, since you’re providing a high-level service with long-term value to the client.

If you’re completely stumped as to what this should be, think about starting at double and slowly working your way up. If you charge $25, charge $50 for consulting. If you charge $50, charge $100, and so on. If these figures sound unattainable, consider that they are below what most people doing consulting work will charge. These people are not necessarily special or uber-talented, but they do have faith in the value they provide.

As you become more confident in your worth as a consultant, work on raising your consulting rate by increments. Of course, wait until you’re in a safe financial position first before trying this. My suggested method is as follows: each time a client accepts your rate, raise it $5 for the next prospect.

The point is not to keep raising your rates until you’re an out of work prima donna. You do this to test various price-points and find the one that balances a high conversion rate from prospect into client, while providing maximum profits for your business. In the long-term (and hopefully the short-term) you will thank yourself for going through this process.

If clients are snapping up your services without even a little bit of haggle, this probably indicates that you could be charging more. If they are always saying no on grounds of price, you’ll need to raise your perception of value in their eyes before you can raise your rates. Or, find a different type of client.

This is only a tool

I’m certain that a few people will read this and say: “Yes, I do consulting for my regular rate, but it allows me to land bigger jobs,” or other similar objections. That is totally fine. Doing consulting work is a high-yield service you can add extra profits to your business straight away, but it is completely up to you how you use it.

One interesting parting fact I’ll leave you with is this: almost every single six figure freelancer I’ve known does consulting work alongside ‘doing’ work, and every part-time freelancer earning a full-time income I’ve known spends a significant percentage of their time consulting.

If you’ve read this far, you’re clearly interested in the possibilities. Take out a pen and paper and write down all the ways consulting could fit into your freelance business.

Photo by Tiago Ribeiro.

The Complete Guide to Creating Effective Square Banner Ads

Skellie — Wed, 09 Jul 2008 15:14:47 +0000

If you’re selling a product or service online one thing you might choose to do is advertise it. One increasingly popular form of advertising is the 125 x 125 pixel (or small square) banner ad, usually displayed in a grid formation in blog sidebars. Their compact dimensions make them perfectly suited to this format.

In almost every case, advertising in this manner will cost money. In return, you’ll be hoping to get click-throughs, exposure, name recognition–and ultimately, more sales. In this post I’ll be explaining what makes an effective banner ad, and some common pitfalls to avoid.

Designing for conversions

In this case, it’s impossible to put the cart before the horse. Before you place an ad you’ll need to design it, or have someone design it for you according to your specifications. There are certain qualities you should be striving for, and certain qualities you should be striving to avoid.

Good qualities

Eye-catching/attractive. A good banner ad is visually interesting. It doesn’t have to be beautiful, but it does have to attract the eye and stand-out from its surroundings. It should do this without cheap tactics like garish animation and gaudy colors, as these things may make your product or service look dubious. The clever hook will go to waste if nobody ever notices it. The banner on the left is a good example of eye-catching design: the bright white text on bright red is very striking.

It contains a hook. Your banner needs to motivate the viewer to click-through to your product or service. If it leaves the viewer thinking “So what?” the presence of many other good qualities won’t matter. Common hooks include: special offers, benefits, descriptions and elements designed to arouse curiosity. The banner on the left is a good example: it promises a benefit for the target audience.

It’s branded. Many web banner designers make the mistake of designing solely for clicks. However, the number of people who see any given banner is always much higher than the number who click on it. Just because a viewer doesn’t sign up for your product the first time they view your banner doesn’t mean it won’t influence their buying decision later on. Your banner should be used to build brand awareness, even among people who do not (yet) believe they need your product. Every good banner must contain some branding. The banner on the left is a good example: it builds brand awareness for Freshbooks while also encouraging click-throughs with a hook.

It’s succinct. Don’t assume a viewer will spend more than a second looking at your banner ad before they make the decision to move on or investigate further. A good banner ad will catch a viewer’s attention and comminicate its hook and branding very quickly. The banner ad on the left does this well by including branding, the hook and a call to action, all at a glance and in logical reading order (from top to bottom).

It’s in the right place. A wonderfully designed ad for Range Rover SUVs will never fare well on a sustainability blog. The chief determining factor in a banner ad’s conversion rate is where it’s placed. Choosing the right environment for your banner ad is exceptionally important, and it will be covered in greater detail soon. The banner on the left is a good example of smart targeting. It names its target market directly (bloggers) and uses lingo that bloggers and internet marketers are familiar with (CPM). The hook is also something that the target market will appreciate, as $2 CPM is a nice payout!

It stands out in its surroundings. Most square banner ads of this kind are situated in grids among other similar ads. How can you stand out? One effective tactic is to play with the background of the environment and use shape to differentiate visually. In amongst a grid of six or eight straight square banner ads, an unusually shaped banner ad will be very noticeable. You can see how the banner ad on the left has used shape to stand out (the border is added by the Anywired design–the actual image has no outer border).

Things to avoid

Visually uninteresting. Your banner ad should never look like just another banner ad. Use bright, eye-catching colors, interesting shapes and unique imagery. The banner on the left has an excellent hook but the combination of dull colors prevents it from popping out of the page.

No hook. This is the most common pitfall of small banner advertising. The banner may be gorgeous to look at and well-branded, but it may still evoke the “So what?” reaction in the viewer. They won’t feel they’re missing anything by not clicking on the banner, because they have no idea what to expect on the other side. While these banners can still be good for building brand awareness, they’re not effective when it comes to click-throughs. The banner on the left is visually interesting, but there’s no hook, and no reason to click unless you’re already familiar with the brand.

No branding. Some banner ads bear many positive qualities but completely miss the opportunity to build brand awareness and name-recognition among the thousands of people who will see them but never click on them. It’s essential to remember that the purpose of a banner ad is not just to get traffic. The psychological benefits are just as valuable. Advertising on a particular blog or website means you are associated with that brand and the person/people behind it. The next time someone sees your brand mentioned elsewhere, they may think “I’ve heard of them before. Maybe they’re worth checking out?” While the logo on the left is visually interesting and contains a solid hook, there’s no branding present.

Wrong image. There is a certain ’style’ of banner ad associated with scams, usually featuring gaudy or clashing colors, flashing animation and unbelievable claims. While they might be successful at gaining curious click-throughs, this kind of advertising strategy does not contribute to a trustworthy brand. Many potential customers will be turned off by the appearance of your ads, even if your product is very good. The banner on the left is well-targeted to its intended market (it’s displayed at ProBlogger.net) but it does make the service or product being offered look a bit scammy–even though it probably isn’t.

Drawn-out message. Animation can be used to add visual interest to a banner, but it’s often used to draw out a message that could be communicated in one frame. Assume that a viewer will only glance at your ad before making the decision to keep looking or look away. They will not sit there like zombies for nine or ten seconds waiting for your ad to play out. If you’re going to spread your hook over several different animation stages, make sure each stage is a strong advertisement on its own. Ask yourself: if a viewer only saw this frame, would they be sufficiently motivated to click the ad? While the banner ad on the left is well branded and eyecatching, none of the animation frames offer a strong enough hook to stand up on their own.

Wrong place. Some banner ads are of limited effectiveness because they’re not cleverly placed. Lots of traffic does not necessarily mean targeted traffic, but it will always be expensive. The banner ad on the left is quite well designed, but it currently appears on the TechCrunch main page. TechCrunch readers are interested in start-ups, venture capital, social media, social networking, powerful website hosting and blogging, but they are not necessarily interested in renting out stuff. The targeting here is not terrible, as Zilok is a start up, but more effective banner placement would see the ad on blogs and website dedicated to products that people might want to rent out (cars, video game consoles, and so on). Being interested in the start-up is one thing–but using it is another.

Case studies

To demonstrate the above principles in action I’ve provided some mini-reviews of various small banner ads. I’ll describe what they do well, and what they don’t do well.

If you want to see examples of good banner design it’s always wise to look at how big companies do it. They have the funds to hire the best advertising agencies and do the most extensive testing. The banner ad on the left is from Microsoft and it does a lot of things right: it’s eye-catching while being strongly branded, it contains a hook (search jobs in the Valley) and a call to action (click here).

When designing a banner ad, don’t assume anyone knows what your product or service is or why it matters–unless you’re a big-name company like Microsoft or Coke. While the banner on the left is interesting to look at and prominently branded, there’s no hint as to what the website has to offer, especially considering the context: it was found on an internet marketing blog. In short, there’s no hook.

This banner ad appears to do everything right, but let’s look a little more closely. Most of the ad is devoted to imagery that, while interesting, doesn’t provide a hint about the nature of the product or communicate any of the brand’s attributes. While the keywords at the bottom seem like a hook, they’re very vague, and I still don’t know what the service or product being offered actually is.

This banner ad from sponsored reviews is an example of many good qualities in action. From top to bottom it features branding, a hook that speaks directly to the target audience (bloggers and advertisers) and a call to action (build buzz now). By having the top of the green tick extend outside the box, it will stand out in a grid of straight square banner ads.

This is an example of a banner ad that is very well targeted to people already familiar with the brand. If you know anything about Crazy Egg, you’ll know that it’s a click-tracking service that costs money. The offer of a free account is a tempting one. However, looking at the ad from the perspective of someone who’s not yet familiar with Crazy Egg, there’s no hint given about what the service actually is. The space at the top of the banner could be used to summarize the service in just a few words, and tap into a new market.

While this banner ad is visually interesting, branded, and contains a hook, I don’t believe it’s effective. This is because the hook is weak: if I want to ‘Get Video’, I can go to YouTube. What makes the service different? The hook doesn’t sound enticing enough. Though I’m sure the mediaplayer has many unique qualities, the ad doesn’t hint at any of them.

A useful formula to follow

While it’s possible to innovate and create a banner with plenty of good qualities, innovation can be hard work! Luckily, it’s possible to create an effective banner by following a simple formula.

Place branding at the top of the banner.
Place your hook in the middle.
Place your call to action (i.e. ‘Download now!’ or ‘Click here’) at the bottom.

If the design is interesting to look at, you have just created an effective banner. Remember: even a cleverly-constructed banner can be ineffective if poorly placed. I’ll be discussing ad placement in-depth in my next post.

A Practical Guide to Earning Six Figures: Re-inventing What You Have

Skellie — Sun, 29 Jun 2008 13:00:12 +0000

Many people struggle with the duality of enjoying their current work while yearning for an increased income. Our Freelance Switch survey showed that many freelancers are working part-time to supplement their core source of income (salaried work). What do you do if you love being in your profession but know it’s unlikely to ever allow you to earn six figures a year?

What should you do if you know freelancing is not the right choice for you?

You’ll need to supplement (or eventually replace) your income through strategies that are high-yield, low time, and enjoyable in their own right. If you’re already working 40 hours a week, the time you spend trying to set up supplemental income streams should not feel like work. Ultimately, I would suggest taking up an income-producing hobby.

Investing. A friend of mine delivers newspapers from his car during the day and spends between 5 - 10 hours a week buying and selling stocks. The latter produces most of his income, but he’s unwilling to leave the first job because of the friends he’s made at the newspaper warehouse. He’s mathematically minded, so investing suits him well. Income earned is also not tied to time, and stocks can earn him money while he’s not attending to them. If you’re worried about the financial risk, consider bootstrapping after one initial investment.

Blogging. Whether you make money directly (through advertising on one or multiple blogs), or indirectly (through offering services on a blog), blogging is a hobby with the potential to earn a supplementary income. If you’re a freelancer, focus on getting blog readers to your services page. If you create great content but you can’t be prolific, focus on building one very popular blog. If you’re able to produce lots of content but you’re unsure how to create a super-popular blog, focus on creating a small network of two or three blogs. A few moderately popular blogs can earn just as much as a one highly popular blog.

Blog/Website flipping. With some pundits valuing subscribers at $35 each, Anywired is apparently worth $105,000 (yeah right!). I think $10,000 to $15,000 would be a much more realistic figure, but the example does show that blogs and websites can accrue a lot of value. If you’re quite good at monetizing blogs/websites and drawing traffic to them, growing and then ‘flipping’ your properties could be quite lucrative. As you build a larger network of web properties, you can channel your existing traffic into new projects to give them a very useful head-start.

Create an online product (web app, paid membership website, etc). Blogs are certainly not the only way to ‘make money online’. Web apps are being built and becoming successful at a rapid rate, as are premium content websites, membership-only websites, and so on. However, the start-up costs for these can be quite high if your idea requires that you work with a web developer to make it happen.

Consulting. Simply the act of imparting your skills and expertise to others, or making recommendations based on your knowledge, consulting carries a high per-hour rate and is highly customizable. Aside from traditional types of consulting (SEO consulting, branding consultations, etc.), there’s nothing to stop a talented World of Warcraft player offering consulting to players who want to increase their skills, a high-achieving student offering consultations on how to achieve similar results, a freelancer offering consultations on how to start freelancing, and so on. If you have skills or knowledge that other people want to learn, you may be able to turn this into a source of supplementary income, even if not in ‘traditional’ fields.

I encourage you to break down the above options (or the many others that are available to you) into stepping stone goals, just as we’re doing with the task of earning six figures. It’s an incredibly useful approach for achieving any goal that you have.

Final notes on this method

Keep in mind, however, that if you earn $50,000 a year in your regular job, you will need to double that income in the ten extra hours you work, equivalent to more than $100 an hour (as you will surely need at least one hour a week to do non-billable tasks). In other words, the decision to stay with your existing core income will add another level of difficulty to the task of increasing it (but where there’s a will, there’s a way).

Instead, you might eventually choose to reduce the amount of time you work in your day job and increase the amount of time you spend tapping into extra sources of income. You might decide to work 25 hours a week instead of 40, with another 25 hours devoted to an income producing hobby.

One last tool

One of my favorite ideas from the 4HWW is designed to help you change the way you think about things that seem impossible or very difficult. You’re asked to imagine a scenario where you had no choice but to achieve one of your most ambitious goals. Once you start making plans instead of excuses, you’ll be surprised to find that anything someone else has done before can be repeated. This method won’t help you walk on water, but it could help you earn six figures, learn seven languages, or travel eight times around the world.

I’ll leave you with these three questions and answers:

How many people have audacious goals? Many.
How many people define what exactly would be required to reach them? Fewer.
How many people define what’s needed, then undertake all of those steps? Few.

Few succeed, but it’s those few that do.

A Practical Guide to Earning Six Figures: Reboot Your Career

Skellie — Fri, 27 Jun 2008 16:09:50 +0000

This post is part two in a series. If you’re learning how to earn six figures, start here.

If you’re not overly attached to your current job and would be willing to switch it for something better, this route is for you. Some of the things that prevent us from pursuing new and better jobs really don’t matter as much as you think.

1. I don’t have the skills to do anything else. That’s kind of irrelevant. You can learn anything with enough time. You might not be naturally gifted, but a gift simply doesn’t compare to dedication. Just because you don’t have the skills now doesn’t mean you won’t have them in six months or a year. You don’t have them because you’re not trying to have them yet.

2. I’m not qualified. You could pick what you want to do, and then get qualified, but that can be expensive. Going back to school may not fit with your schedule or your lifestyle, either. Instead, I’d suggest you focus on entering a field where you are often judged on your skills rather than your qualifications. Many types of freelancing fit this bill, while also commanding high hourly rates. I’ll explore this point further in point #3.

From here on, this article will mainly outline the possibility of becoming a six figure freelancer. If this idea doesn’t appeal to you (please read the article first, maybe I can change your mind) I’ll present another route to earning six figures in my third and final post in the series.

3. I don’t know what to aim for. At Freelance Switch, we conducted a survey of 3,000 freelancers to find out what their average hourly rates were. Here are the results:

Keep in mind that this is an average, meaning 50% of freelancers are charging more than that. Does that mean 50% of freelancers are earning six figures? Probably not, as they’re unable to fill 40 hours a week with billable work. Still, if you can optimize your work-week to minimize non-billable work (such as invoicing and liaising with clients), and maximize billable hours, six figures through freelancing is probably your most viable option.

I suggest this field because it balances a high rate of pay with an emphasis on what you can do rather than what you’re qualified to do. Most freelance jobs will look to your portfolio rather than your academic history when determining whether you’re the right person for the job.

Your suitability for a freelance career rests on skills that you can teach yourself relatively cheaply (in comparison to taking a high-end course or getting a degree). Why is this the case? Most clients don’t have a deep understanding of the industry they’re looking to hire in, so they wouldn’t actually know what kinds of qualifications are out there. You’ll find the story is different when jobs are posted by other freelancers or a firm: they’re a bit more likely to ask for qualifications, so keep this in mind.

But–here’s why you shouldn’t charge by the hour

Freelancers have to pay for more stuff than everyone else. With greater expenses, you need to earn more to compensate. However, you may have a hard time telling a client that they’re paying you $75 an hour to design a logo, or $100 an hour for your copywriting work.

Understand that I talk about hourly rates because these are an average–not the number you put on your website. If you work 40 hours a week and earn $2,000 a week, you’re on track for a six figure income (gross). That does not mean you should tell clients that your rate is $50 an hour.

Let’s say you charge $300 for a logo design that takes you three hours to create. You’re making $100 an hour, but if you don’t tell your client, they’ll never know. They’re not a logo designer themselves, so they’re unlikely to have any idea how long the process takes. $300 for a good logo sounds pretty reasonable. Paying someone $100 an hour probably doesn’t!

Another example: you charge a client $1999 for a web design that takes twenty hours. Once again, you’re earning $100 an hour. In an industry where web designs can cost up to $6000, your client will feel like they’re getting a bargain. How many hours you work is irrelevant. They’re paying for your work, not your time, and you should be rewarded for being efficient. If you finish a job early, you earn more per hour.

To summarize: being paid by the hour will limit you. You will earn more per hour if you charge for finished projects alone. I would suggest this is probably the only way you can earn six figures net rather than gross–unless you’re a consultant, of course!

Lucrative fields

If you enjoy writing, here are some options with good average hourly earnings:

Freelance writing for print or online. Note that the rate per article for this type of work varies very steeply. Successful freelance writers will tell you that a 500 word piece is worth no less than $50. Online content is also a booming industry, with many website owners and bloggers outsourcing content creation. You can expect to command higher rates when you’re writing about something you’re knowledgeable about.

Freelance copywriting. From producing the text for webpages to writing sales letters, pamphlets and emails, copywriters help people sell things through words. You can teach yourself this skill by buying some copywriting books and reading examples of good copy. Practice (and proofreading) makes perfect.

If you’re artistic, here are some options with good average hourly earnings:

Freelance graphic design. This can include logo design, magazine design, and so on. You’ll want to develop decent skills with Adobe Photoshop at the very least, though having the ability to create designs by hand will also benefit you. Design can be quite theoretical, so you’ll need to read up on your chosen field voraciously.

Freelance web design. Did you know that you can design websites without knowing one line of code? Photoshop source files can be converted into working code quite cheaply and quickly. If you know what looks good but don’t want to immerse yourself in code, this could be an option for you. Once again, Photoshop is an essential skill, as is an understanding of web design principles, typography and usability. Books and online resources can help here.

Freelance photography. If you have good equipment and a bit of skill, why not make money from your passion?

Freelance illustration. If you can wield a pen, pencil or paint-brush with expertise, there’s a market for your services. Digital scanners and fast international postage means you can also work for clients anywhere in the world.

If you’re a problem solver, here are some options with high hourly rates:

Freelance coder. Whether you’re coding websites, applications or software, freelance coders commanded the highest rates according to our survey. This is another skill you can teach yourself with the help of books and tutorials.

Freelance SEO. Search-engine optimization is a booming industry and every business wants a piece of it. Competition is fierce, so how can you differentiate?

Learning how to be a freelancer

Once you have the skills, you need to learn how to turn them into a business. As editor of Freelance Switch, I’ve read many resources hoping to teach you how to start your freelancing career with a bang, but nothing compares to the book ‘How to be a Rockstar Freelancer‘, which is truly the most comprehensive resource available (and cheap, too).

Another thing that makes this career-path the perfect choice is that it’s not an all or nothing venture. You can work anywhere from 1 to 100 hours a week (though the latter is strongly discouraged!). Test the waters by adding 5 or 10 hours of freelancing a week on top of your day job, then phase out the latter once you’ve established a firm grounding for your six figure freelancing career.

Learning how to be a six figure freelancer

As stated earlier in the series, just because a freelancer is earning between $50 and $100 an hour for their services does not guarantee they are earning six figures a year. A freelancer could be charging those rates but only completing a few jobs a week, the rest of the time taken up with finding work, client liaison, invoicing and so on.

I’ve noticed that the key differentiator between high-earning freelancers and the average freelancer is the ability to minimize non-billable activities and maximize billable work. The foundational activities they practice are:

1. Creating a situation where clients chase them, not the other way round. Receiving job offers in your inbox on auto-pilot is a really nice situation to be in. By placing a ‘Hire Me‘ page on my blogs, I’ve been able to achieve this. Other freelancers achieve the same effect by building a wide network of clients and working mainly on referrals. Other freelancers do it by concentrating on clients who provide a stream of regular work. Others do it by building a strong personal brand and name recognition through an online presence. I’m sure when many of you think logo designer, you think David Airey, for example.

2. By batching. Six figure freelancers batch tasks like invoicing and other mandatory business process.

3. By outsourcing. Six figure freelancers rarely do it without help. A freelancer is required to wear many hats and it’s impossible to be talented and efficient at all of them. For that reason, savvy freelancers are increasingly outsourcing the things that used to bog them down.

4. By making client liaison efficient. Let’s say you offer one service to most of your clients. You’ll often find yourself having to explain the details of that service to new clients. The savvy freelancer makes use of templates and will try to answer possible questions before they’re asked. Emails aren’t time consuming to write — it’s the space in-between emails that can make them inefficient. If you can learn to keep back-and-forth emails to a minimum, you’ll save plenty of time.

5. By incrementally raising their rates proportionate to their increasing experience. If you’re earning $75 an hour you can obviously afford to do less billable hours and still hit six figures a year. Most freelancers who raise their rates slowly and steadily over time are surprised at the positive results.

6. Charging for completed projects rather than by the hour. I’ve already talked about this, but it’s worth restating here.

They differentiate

Freelancers who differentiate earn more. Here’s why: if there are a thousand other freelancers offering the same service as you, with similar skills and similar portfolios, then as far as the client is concerned, the only real difference is price, and freelancers are forced to compete on that basis.

If your client isn’t aware of your competition (or it doesn’t exist), they can’t make price-comparisons. If nobody creates web designs quite like you do, a client is less likely to be sucked in by a lower price elsewhere, because they know they’re not getting the same product in return.

Many freelancers differentiate by specializing, i.e.

SEO Copywriting targeting young people
Pet photography
Usability consulting
Freelance writing on specialist topics
Coding in an obscure language

On the last point, a friend of mine knows a guy who earns over 200k by working three months a year. He crams plenty of overtime into those three months, but he’s able to earn so much in such a short time because he works in a very obscure and difficult programming language. There’s very little competition for him, so he can charge almost whatever he likes. He spends the other nine months of the year traveling and vagabonding. Not a bad way to live!

If you can’t differentiate based on skills, differentiate by specializing, or by creating a recognizable personal brand.

If your personal brand is strong enough, you can specialize simply by being you. People want your specific approach because it’s yours. Other people can’t compete at being you.

Part three, the final part in the series, will be coming soon. In it, I’ll discuss how you can earn six figures by supplementing your current work, or by replacing it with a non-freelance alternative.

Photo by pagedooley.

A Practical Guide to Earning Six Figures: Changing Your Mind

Skellie — Thu, 26 Jun 2008 02:42:29 +0000

How to have the freedom and flexibility to live the life you want.

Hello push-back, hello skepticism. You don’t want to read this post. You don’t want to like it. You don’t want to have your aspirations tugged at with promises the author can’t keep. And that’s fair, because too often, that’s the story of the web. Big promises, big disappointments, and a whole-lot of self-interested voices.

You’re ready for me to tell you about my six figure income; how I got there, and how you can too. Hey — I might even offer you a discount on my $99 eBook.

Unfortunately, I’m not earning six figures, and I don’t have an eBook. I don’t have any landing pages replete with bright-red lettering and enthusiastic testimonials from people who may or may not exist. I don’t have a product, or an agenda, aside from describing the journey I’m on to transform my life.

Like many of us, I hope to do that by transforming my income. Best of all, I think I’ve got it figured out — and I’d like to share what I’ve learned with you.

Deconstructing six figures

Pipe-dream? I don’t think so. The idea itself sounds unassailable, of course. Some people are made to be well-off, while others are ordinary. The six-figure earners have ideas that we don’t have. They’re entrepreneurs with money to buy their dreams. The list of assumptions grows ever-longer.

I started to believe these assumptions might be false when my line of work brought me into contact with a slew of six figure earners. I waited for the big idea, and the secret qualities I didn’t have. Instead, I found the stark differences I’d expected simply weren’t there. They were about as smart as everyone else. They worked about as much (sometimes less, because they didn’t need to). They had just as many ideas.

There was one stark difference, however–something I found to be common across most of the people I talked to. They were pragmatic in their approach to big goals. They filled the space we usually leave empty (the conceptual gap between where we are and where we’d love to be) with stepping stones. They built their own staircase of smaller goals, stacked on top of each other, to go from here to there. They had deconstructed six figures.

Why a six figure target?

Earning six figures is not a self-evident good. However, it’s a figure that, to many of us, represents freedom and comfortable living, but certainly not luxurious living, and certainly not extravagant living (until you start to venture higher up in the six-figure order, at least). This article uses the lower six figures as an example, but many of its principals could be expanded to reach even higher income ranges, if that’s what you would require to meet your goals.

For some of you, your goals may be a round-trip around the world, owning your favorite car, or living in Paris. For others, you might desire a house large enough to truly accommodate your family, to send your children to college and then help them financially throughout their lives, and to take a second honeymoon. The reason I mainly discuss income rather than goals in this article is because every person has radically different goals, but increasing your income can help you to achieve many of them.

Here’s what it means to earn six figures:

You work fifty weeks a year, 40 hours a week, at $50 an hour.

You work fifty weeks a year, 80 hours a week, at $25 an hour.

There are many more combinations of hours and prices, but let’s kill #2 straight away. It makes me uneasy. I hope it makes you uneasy too.

This (very basic) mathematical deconstruction of six figures reveals two things: doubling your hours will get you there, but that’s not a viable option. Six figures has no value if you’re working that much.

Secondly, that we need to be paid significantly more for the hours we work, with a minimum being $50 an hour, 40 hours a week. Alternately, we might be paid more per hour and work less.

The next practical step: find a way to earn an average of at least $50 per hour worked.

‘Finding a way’ does not include meaningful glances at your boss when raise time comes around. Raises are only going to take you so far, and I don’t think your financial future should rest in the hands of one person–that person not being you.

You have two concrete options: do what’s necessary to find work that can be billed at $50+ an hour, or supplement your existing work with high-paying, time minimal work (no more than ten hours per week).

Just like we deconstructed six figures, we’re going to deconstruct both of these goals into a series of pragmatic steps and choices. Part 2 of the series will arrive soon.

Exciting news for Anywired

If all goes to plan the blog should be re-launching soon, with a new (amazing) design and a new but related focus that better plays to my strengths as a blogger. Thank you to all the guest-posters who kept this blog updated with fresh content while I tended to other things in my life.

Photo by eliogarcia.

Building Trust In a Virtual Team

Chris Bowler — Thu, 26 Jun 2008 02:14:19 +0000

This is a guest-post by Chris Bowler.

With all the technology available to us today, no matter what your company’s setup is like, you most likely have a few virtual coworkers. Most corporations today are at the very least a heterogeneous environment — traditional offices mixed along with off-site coworkers or staff working from home. Some companies are completely virtual. And research suggests that the biggest challenge to having an effective team is trust amongst these coworkers.

Why is trust so vital to a successful, productive team? In the simplest terms, a team works together to be productive. And in order to work together, rather than work simultaneously, team members need a level of comfort with the abilities, competencies, and intentions of their teammates. Trust enables a team to focus on tasks at hand rather than protecting each member’s own interests. The interests of the group become the interest of each individual.

How to Build Trust

So how can a team build trust? Different tactics will work for different types of groups, but there are some general concepts that will work for any team.

Social Interaction

This is probably the most important idea. Getting team members to know each other is crucial, and meeting in person is generally the best way to do that. Even if a team is geographically dispersed, the benefit of meeting in person should be measured against the cost of getting a group together. Of course budget and scope of a project may dictate whether or not this is feasible, but it should be the first option considered.

Share Leadership

Another key factor for any employee is ownership. Why do small startups have such passionate team members? Because they have ownership in the product they are creating. And so it is with sharing leadership: give team members areas of responsibility to manage and they will ‘own’ a portion of the end goal the team is trying to meet.

Communication and Predictability

Communication on its own does not build trust. But it is the beginning of building that trust. Once enough communication occurs, teammates are able to learn the patterns of one another. This leads to predictability, which is where trust begins to form. Being confident in the type of response you will get from teammates allows you to focus on the content of a message instead of the recipients possible reaction.

Consistent Processes

Teams have particular bits of work that need to be performed repeatedly. Because of this we build processes (how to create a new account, submit a change request, commenting on code etc). And in order to be effective, processes need to be consistent. And communicated. When people know there is an overall ideal that should be adhered to but have never been given a logical, step-by-step plan for how to achieve that ideal, frustration will reign.

Build processes in a way that everyone on the team can at the very least be confident that all team members are performing these particular bits of work in the same manner. And a crucial element to laying the foundation for processes is ensuring that each team member is included in any communication about these processes. Which leads to…

Ensuring Inclusion

In a virtual or heterogeneous team, in order for all team members to feel a part of the team, they must feel included. This can be even harder for a team with a centralized office with outlying team members. All the points discussed so far are needed to ensure this feeling of inclusion exists.

All team members need to be a part of any significant communication and have avenues available to provide feedback.

Communicate

One last item that needs to be mentioned is miscommunication. This has been discussed plenty before but is important enough to warrant a mention.

With a virtual team there will always be incidences of mixed signals. When 90% of communication is body language, electronic communication will often result in messages being received in a manner not intended by the sender. Of course you want team members to be sensitive to this issue and proactive in resolving any misunderstanding that occurs. But there are also some good practices to keep in order to reduce the miscommunications:

Write your emails while thinking from the recipients point of view.
Keep messages short. Flowery prose will turn people off.
Hand in hand with point 1 - brevity. Get to the point.
Write a good subject line. Set the background for the message content.
Leave the jokes for other mediums. One person’s joke is another person’s insult and in an email there is just too much of a possible misunderstanding.

Awareness Is the Beginning

Building trust within a virtual team can be difficult, but it’s not impossible. It starts with being aware and making the issue a priority. By using a lot of these tips, teams can bond quickly no matter what their setup and learn to trust in one another. Once you have trust, the focus can wholly be placed on the goals of the group.

Chris enjoys entertaining his readers at theweeklyreview.ca where he writes about the thriving Mac community, GTD and the changes in the 21st century work force. Subscribe to his feed to enjoy more of the same.

Photo by stefanlacut.

Blogging From the High Seas

John Konrad — Mon, 16 Jun 2008 16:18:03 +0000

At 18 years old I was ill-equipped for the future and struggling academically. I had been an A student in high school but managed to succeed only with the help of caffeine tobacco and by working every late night that preceded a big exam. It seemed to work and during my senior year I had been accepted into the United States Naval Academy.

Then life crashed. The regimented schedules set by the military instructors combined with my father’s diagnosis with cancer from Agent Orange and some immaturity on my part to cause my grades to plummet and, upon completing the difficult first year, I was given the boot.

To make matter’ worse the schools that happily accepted me in High School no longer were willing to return my calls. For the next 4 years I would be stuck going to SUNY Maritime College, a state run school for Merchant Mariners. Located in the Bronx and all but abandoned by the SUNY system (cadets didn’t even have internet access until 2001) the situation looked bleak.

Despite the myriad of problems and annoyances at the school, including the enormous Throgs Neck Bridge that hovers directly over the campus, it did offer one glimmer of hope. Each year, in preparation for a career as officer aboard the world’s largest vessels, the entire school packed aboard the S/S Empire State and traveled to Europe, stopping at as many as five ports along the way. I was in love. The sea was beautiful, the ports were exciting and I had found a job that fit my schedule of nocturnal productivity. The future suddenly was bright.

During my short presence at the Naval Academy a retired Admiral gave a speech in which he told the story of a young John McCain, a less than stellar midshipman who came in second place for the honored title of Anchorman, last in the class academically. The Admiral said he saw a bright future not for the graduates but for those who were kicked out. He predicted success not despite but because of failure. Out of desperation these seemingly ill-fated individuals discover their faults and upon their next success realize that failure rarely kills you.

Today, at age 30, I’m a licensed ship’s captain working on the world’s largest drillship. I’ve circumnavigated the globe, write a successful blog about ships, have seen more countries than I can list from memory and have had short articles published in the NY Times, Wall Street Journal (ok, it was the online edition) and the world’s longest running publication, Loyds List. Most of all I enjoy what I do.

I can’t recommend joining the military, getting kicked out and spending four years stuck under a noisy bridge in the country’s most infamous community as a path to blogging success but I can share a few Lessons Learned to help you find it.

1. Forget Risk

Risk is the Winter North Atlantic or a port call in Yemen, blogging is rarely a risk.

Take bold steps. Call an expert in your niche for an interview, write the inside story that traditional media is unwilling expose, become an LLC and take out a loan. Bold steps are needed if you want to stand out.

2. Be different

The world is filled with bloggers but it is the rare exception to find one doing something new.

I have gotten more publicity by telling people I blog via satellite from the ocean than all my writing, podcasting and hard work combined. Technologically it’s no more impressive than a blogger in Kansas using a Hughsnet satellite but it sound much cooler.

Find something that’s interesting about you and market it.

3. Do What others don’t want to do

My alma mater places 99% of graduates in jobs within three months of graduation at an average salary of $57,000. Garbage men in New York City get better pay and benefits than fireman or school teachers. Why? Because no one wants these jobs.

While the sea may still not be for you, jobs like captain of a research vessel can be very rewarding, the Sanitation department has just as many interesting jobs.

Starting a gadget blog is like becoming an astronaut. Very cool but even the best qualified candidates will find it’s a difficult road to success.

4. Do what you love, do what you’re good at

The most frequent question I get when people learn of my profession is: Do you get sea sick? The second most frequent question is: I must be real difficult for you to navigate such a large ship? I find this ludicrous. Why would anyone take a job at sea if it made them sick? Why would you pursue a job that’s real difficult for you?

If you hate sitting in front of computers or find writing difficult then don’t become a blogger. Try podcasting, it can be just as rewarding.

5. Kill the Nice Guy

Being nice is critical to every blogger’s success. If you answer reader comments in a dismissive manner, be anything but gracious towards your competition or, worse yet, ignore those who wish to converse then you’re blog will quickly fail. It’s critically important to be nice and helpful. That being said you must be able to shut it off if needed.

On the ship we have fire drills every Sunday and I’m always choosing the most inexperienced but eager hands for the fire team. I spend time practicing with them, answer questions, I teach and put my guys up for company rewards when they do well. Late last year we had a real fire and as I approached the staging area found a new seaman suiting up to fight the fire. Being inexperienced I asked him to take a supporting role and, with tears in his eyes he asked me to give him a chance. He told me he could fight the fire, he wanted to prove himself. I ignored his pleas and ordered the guys to escort him from the scene. He was hurt and angry…. but alive the next day.

6. Don’t cave to the wrong type of pressure

Why did the Titanic sink? The company wanted to set a speed record and they were unwilling to wait for summer. Captains are often pressured to make deadlines, take too much cargo or travel shorter, unsafe routes. The rewards for doing so can include a performance bonus, promotion or plaque for the wall but doing so despite safety considerations is a gamble. Legally the captain has ultimate authority and retains the right to say no to his boss on shore, local experts and even the authorities. Granted he may get arrested or fired once reaching shore but it’s always his call.

You are the captain of your blog and are going to be the one who sinks with the ship if pressured into the wrong decisions. When the leading CPA for sailors called about a blog post I wrote exposing his recent IRS conviction he sounded really nice and offered me a free flight on his private jet and stake dinner to listen to how I could avoid future embarrassment by removing the post. It was a tempting offer and I naturally wanted to help but doing so would mean lying to my readers. I turned off the nice switch and said no.

7. Stay ahead of the ship.

It takes us miles to stop a ship which means we can’t rely on sight alone to predict a collision. We use radar to search miles out and tools to help predict a collision course. If something looks like it may cause a problem we address it early.

You’re blog should be use the same strategy. If a back-up fails, find out why. If a reader says your icons look ugly, don’t dismiss the comment, ask him what browser he’s using.

8. Find a pilot

When a large ship goes into port they pick-up a pilot. This person is a local expert who has spent years learning everything there is to know about one specific harbor and provides the captain with advice during the transit. The captain is still in command and his crew is still steering the ship but the advice is important.

If you’re starting an SEO campaign, blog redesign, platform transition or whatever. Get an expert’s advice. You may need to save money or want to retain control of the project so you decide to do it yourself. This is fine just make sure you have an expert helping you along the way. Don’t expect this service to be free either.

9. Take interesting assignments

At 24 I was the youngest person in my class to be promoted to chief officer but I have a secret to tell. I was not the best qualified or the most capable I simply was the only person willing to try something new. I took a job in Indonesia on foreign ship with an Indian crew and Dutch officers. Not only did no one want the job they all said I would be hurting my career for picking a rust bucket. They were wrong. By working with many nationalities I learned each of their secrets on ship handling. During that time I also worked with many different types of equipment, explored different ways to navigate and learned new ways of doing things I thought I had mastered.

Join a community blog based overseas, write for a foreign audience and try using different platforms and tools. You blog is not alone at sea and if it were you’d still need to know a little about the other blogs you meet.

10. Look The Part

I once boarded a ship that looked impressive. Fresh paint, no rust on deck, all the lines neatly stowed but after two days aboard I found out it was a smoke screen. To avoid hard work the crew had become masters at painting over rust but were incredibly lazy and didn’t maintain their equipment. When auditors arrived they were often so impressed they did no more than a cursory inspection. A year later the ship caught fire, a total loss.

This teaches us two things. First it’s a lot easier to get away with editorial mistakes and impress people of influence if your blog is visually impressive and of clean design. Just yesterday I received a very interesting question from a ship captain with over 30 years of experience currently working for the United Nations. He, like those inspectors, assumed we were experts just because we looked the part.

11. Find your readers’ specialties and ask for their help

Want to know my reply to that UN Captain? I sent him a reply stating “We have a reader with an impressive resume at the UN, let me ask him.” Then I sent a second email to him with his question attached. His response, to my surprise, was “Let me find out”. The next day he sent me a detailed answer and gave me permission to post it.

Your readers are looking to help but will not digg your story because you bug them to. They will tackle jobs that interest them, find out what these are and you suddenly have a team helping you.

12. “I don’t know” is a good answer. “I screwed up” is even better.

The above two replies I use on a daily basis both at work and in replies to my blog. Countless times in history ship captains have caused incidents because they made up answers to questions from their crew. Many more captains have caused incidents because they made mistakes and tried to cover them up. No incident is caused by any single action, it’s caused by thousands of small decisions dating back years that create an incident chain. It might be because you stayed up to watch a movie 2 days before and fell asleep at watch or it could be the cook who accidentally bought decaffeinated coffee or the person who, five years ago, decided to put a barkalounger on the bridge of the ship. The correct answer is it was all three.

You are building a chain of trust with your readers. If you make a mistake admit to it, if you don’t know the answer to a question tell them and then go find out.

13. People like to help

If you’ve ever been a tourist in New York City you may have been confused when one person flipped you off then the next spent 5 minutes helping you with directions. If you’re a pessimist the reason is because people are narcissistic, if you’re an optimist you may believe it’s nature’s way of spreading knowledge. Whatever the reason is, every New Yorker thinks he’s an expert at directions, every Captain thinks he’s a master shiphandler and every blogger is a social media guru.

Anyone who has spent years learning something is eager to share his knowledge. When the Cosco Busan hit San Francisco’s Bay bridge I called the president of the captain’s association, a marine investigation expert and the editor of the leading maritime trade show. I said “I run a blog and my readers are very interested in this event but I don’t have much experience with collisions, can you walk me through the facts?” Each one spent over an hour sharing their knowledge and I posted a great article one the collision. Two days later I was called by the San Francisco Chronicle and quoted on the next front page article with a link to my blog!

John Konrad writes at gCaptain.com — resources for maritime professionals.

Photo by Mike Baird.

How to Rock Retirement When You’re Self-Employed

Jim @ Bargaineering — Wed, 28 May 2008 02:28:18 +0000

This is a guest-post by personal finance blogger Jim who writes at Blueprint For Financial Prosperity.

With all the talk of Social Security becoming insolvent and our retirements lasting into the 80s and 90s, there’s no question that proper retirement planning is crucial for everyone.

If you have an employer, you probably have some sort of defined contribution plan (401k, 403b) and, if you’re lucky, might even have a defined benefit plan (pension). If you’re a freelancer, or an aspiring freelancer, you don’t, and won’t, have access to either of those great plans.

So, what’s a freelancer to do? Luckily America was built on the backs of small business and there are plenty of retirement programs available. I’ll go through the major ones today so you get a good feel for them and are able to research them further. For the purposes of today’s discussion, we’ll assume that you’re a sole proprietorship or pass-through LLC entity.

Disclaimer: Before you make any financial decisions of any kind, please consult your accountant or tax attorney first. There may be inaccuracies in this post but I have tried to be as accurate as possible. Just remember, I am not a professional tax attorney or financial adviser, I’m a freelance writer.

Roth and Traditional IRA

You may already be familiar with the Roth and Traditional IRAs as they’ve seen plenty of press lately. Both share the same contribution limits of $5,000 a year, meaning your total contributions to Roth and Traditional IRAs must be less than or equal to $5,000.

If you contribute $1,000 to your Roth, you can only contribute $4,000 to the Traditional. These limits are also based on your earned income, here is a listing of the contribution limits for both IRAs types.

The difference between the two is significant. A Roth IRA takes post-tax dollars but grows tax-free. The Traditional IRA tax pre-tax dollars but grows tax-deferred. When you contribute $1 to your Traditional IRA, you are able to deduct $1 from your taxes.

As the Traditional IRA grows, you will not be taxed on anything inside it, it’s tax-deferred. When you begin taking disbursements, or payments, in retirement, you will pay your tax rate on those earnings as income. With a Roth IRA, you do not deduct the contributions in the beginning but you are not taxed on the earnings when you begin taking payments in retirement.

SEP-IRA

A SEP IRA, the retirement plan I use, is a type of Traditional IRA. It was designed specifically for the self employed and small business. It’s a Traditional IRA from the employee perspective, sharing the $5,000 contribution limit, and contributions are tax deductible.

It gets more interesting from the employer perspective. The 2008 employer contribution limit for a SEP IRA is $46,000 or 25% of your net adjusted self employment income, whichever is smaller. This means that while you can only contribute $5,000 as an employee, you can contribute far more as an employer. When you set up a brokerage account to handle a SEP IRA, you will have the opportunity to mark contributions as either employer or employee.

The downsides to the SEP IRA are for those business that have ‘eligible’ employees. An eligible employee is someone who is 21+ years old, has had 3 years of service in the last 5 years, and earned over $450 in compensation. The amount you contribute as an employer must be the same for all employees. If you say you are contributing 10% of income, you must contribute 10% to each and every employee.

Individual or Solo 401(k)

The cons:

Someone in this situation may be paying too steep a price for success.

Which one are you?

Hunter Nuttall wants you to stop sucking and live a life of abundance. Visit HunterNuttall.com to learn how to improve your life and your income.

Photo by Bobster1985.