Money Brick

Requirements for Your Job

noreply@blogger.com (Mr. Shawn) — Tue, 04 Aug 2009 23:54:00 +0000

Make sure your job fits these requirements, otherwise you'll spend your whole life labouring away for nothing except a paycheque:

- It's something you like to do.

- It's something that'll create lasting value (and preferably, increasing value).

- It's something that'll start growing eventually, thus precluding you from always working.

- You'll get more and more income from it over time, even as the hours you put in head towards zero.

- It'll make the world a better place for at least one person other than yourself.

The One Winner in Today's Financial Crisis

noreply@blogger.com (Mr. Shawn) — Mon, 09 Mar 2009 00:19:00 +0000

The environment.

Yes! Have you ever thought about it? The ultimate winner in this financial crisis is the environment - but that also means that we are all winners. Sure, many of you have lots your pants and shirts and underwear - but for the majority of the people on this Earth, nothing has changed. That majority of people are still struggling for survival today as they were during the height of the boom. You may point out that there are people, like recyclers in China, who lost their life savings because of the financial crisis - but is economic prosperity really worth decimation of the Earth's environment?

The biggest polluters on this Earth are manufacturing, mining and shipping (cargo and people), and it follows that with a decline in the economy, these activities are reduced to a fraction of what they were before. What does that mean for pollution? Yes, it also means that pollution has been reduced by an equivalent amount.

As manufacturers reduce output, mining operations scale down, exporters export less (people turning to local products), consumers stop going out as much and people start tightening their belts - the environment gets a little more room to breathe. And so do we.

What's Your Labor Earning You?

noreply@blogger.com (Mr. Shawn) — Sun, 12 Oct 2008 19:31:00 +0000

Today I was at a place in Taipei called "Ximen Ding," basically "West Gate Square," and I stopped to watch one of the many street performers. The guy I was interested in played the Erhu accompanied by music... as I stood there watching with the crowd that had also gathered to watch, I noticed that every couple of minutes, someone was dropping a donation into his box (he was blind). Then, I saw that across the ways was another street performer who was doing traditional Chinese paper cutting of people's silhouettes (he also had a crowd). Both of these street performers only asked for donations - it was up to you what you wanted to donate. The person cutting the silhouettes left it up to the person whose silhouette was being cut to decide the amount donated. The person playing the Erhu didn't even explicity ask for donations.

Now, why am I talking about street performers and their donations? Well, there was a huge difference between these two street performers, economically speaking. The Erhu player was able to perform his services (music) for a large group of people, who could stand there and enjoy the music together, and they could all donate at the same time. The Silhouette Man, however, made it so that the expectation of his "customers" was that they must get their silhouette cut before even considering making a donation. In actuality, however, there were equally large crowds gathered around both men watching (and enjoying) what they were witnessing. The people watching the Erhu took away the music and the sight of seeing him play. The people watching Silhouette Man took away the sight of seeing his skilled hands cut the paper... but only one person at a time received their own unique silhouette paper cutting.

I talked to my wife, Sandy, and she boiled it down to this: the Erhu guy was offering his services to many people all at once, whereas the Silhouette Man offered his services to only one person at a time. I agree with this, and that is the thing to think about here. The labor that you do - is it being offered to one person at a time, or is it being offered to a multitude? If your answer is the former, you'll be stuck making low wages. If your answer is the latter, you'll have the chance to make great wages.

Now, you probably think I'm simplifying this too much. After all, the nature of music is that many people can enjoy it at one time (a service), and the nature of paper cutting (a product) is that you trade your money for the item. But, let me first argue that the paper cutter could have not only asked for a donation for his cutting of your silhouette - but he could have asked for donations from people who enjoyed watching him (make a sign, perhaps?). He could have also simultaneously cut out several sheets of a famous Taiwanese landscape (or any other landscape) and had people watch him, and at the end sold the product to whoever would like one. Of course, maybe more people go for their own "personal" cutting.

Beyond these two street performers, however, let's talk about what you do for a living. Do you just serve one person a time, make one thing at a time? If so, that blows. Let's look at making a tangible item first. Let's say you hand craft a wooden chair... you are using your own labor to make that one hand crafted chair. That's nothing to laugh at, but you only get the money for that one chair, and maybe it took you an entire day to make. Even if it was expensive, you still pocket a limited amount of money. The money's all yours, however. On the other hand, let's say you come up with a popular design for a chair and you have it manufactured and sold to the multitudes. You've labored alright, but your labor was put into the design (and not the crafting), which can be disseminated amongst tens of thousands, if not millions of chairs. You'll get a cut from each of the chairs sold, and although you won't pocket as much per chair, the numbers would just be overwhelming. (Of course, there will be other people who get a part of the sale price for actually making the chair.)

Presently, let's look at performing a service. Performing services is a bit more complicated than making an item, because particular services MUST be performed one-to-one, whereas certain services can be performed for many at a time. Look at music for example - it's practically limitless as to how many people can watch you at once (think TV). Teaching is a good example, too - university lecturers have hundreds of students listening all at once. Other services, however, must be performed one-to-one; such as hair cutting, massage, cooking your food, etc. The only way that these one-to-one services can be expanded beyond your physical capacity as one person with one body is if you train others to do it and you are the proprietor (But in this case, you're not actually using your own labor - you're just taking a cut of the labor of others and being rewarded for the risk you took in entrepreneurship.).

Think about this as you go about your days... examples are everywhere.

Everyday is Labor

noreply@blogger.com (Mr. Shawn) — Mon, 01 Sep 2008 23:37:00 +0000

Yes, that's right - everyday is labor! You're either going to have to get out there and labor away your days, or you're going to have to get other people to do it for you. There are only two choices.

Of course, I would choose the second choice anyday. And that's how a business works. Sure, the workers are paid their share of the profits the company generates, but ultimately, it is the owners who are making money off the backs of the workers. Of course, this doesn't stop you from being the owner of a corporation (through stocks) and at the same time laboring away at one.

It's like this: If you can generate $50/hour through whatever economic activity it is that you're doing, a company would pay you maybe $20 to do the job. They'd take the rest of the $30 and do other stuff with it; such as marketing, R&D, and profits, etc.

Now, the thing is that if you're a worker and have to work all the time in order to support your lifestyle (however grand or sparse you choose it to be... YOU choose...), you're going to have to be using your own body and mind to do that labor every day. In order to support all the material things that are your life - you're going to have to keep working. From that, you'll have to save a portion (parsimony) to support yourself when you're not working or can't work (vacation, retirement, etc.). BUT, what if you get injured or can't work for some reason? Or what if you just don't want to damn work? Too bad! You've got to work because that's the path you've chosen.

You can choose another path, however, but you've got to do it early! You can choose to be the owner of an entity that continues to generate income for you even when you're sitting at home. What is that entity? Yes, it is a corporation or a business. Of course, there are some businesses that require you to work, and virtually all businesses require you to work at least at the beginning... but you better be aiming for a business where the reigns can be handed over to someone else AND still give you a nice monthly income (if you want to be truly free). In this way, you can still pass your days working on the business (which, in the context of the universe is probably insignificant... unless you're doing something that will change the world), or you can choose to take vacation at any time, OR you can choose not to work altogether! Of course, you're going to have to create this business for yourself or take one over somehow.

Freedom, Williams, Freedom

noreply@blogger.com (Mr. Shawn) — Mon, 04 Aug 2008 02:14:00 +0000

I've always remember the name of this CD album cover... Freedom, Williams, Freedom... and I think not because I remember the music (I don't), but because of the powerful message. Sure, he could've meant freedom from any number of things, but because I live in this money-driven society that I do, I choose to consider it "financial freedom." As you may have figured out already, the only type of freedom that we have in this world (society) that we choose to live in is financial freedom. Sure, it's great to have political freedom, but what pattern emerges? People are most always happier with some sort of financial stability than they are with liberty and political freedom. If you're poor in a politically free country, your life would probably be pretty crappy. If you're rich in a politically unfree country, you can be sure that things will be pretty good. Like Singapore!

Anyway, the point of today's post is:

"The poor think of survival, the middle class think of comfort, and the rich think of freedom."

When I say "rich," I don't mean someone who has lots of money - I mean rich in the sense of a rich and wonderful life, rich and wonderful thinking. Poor means poor, of course, and middle class is talking about the amount of money they make. However, the key to this is that anyone (living in a developed country) can move up to thinking "rich" and living a life of freedom.

What I talk about today only applies to developed countries... talk about underdeveloped countries is a whole different topic. Anyway, the poor just think about paying their bills, putting food on the table and surviving day to day. And that's all that they ever do, because they don't even know that they have options to live a better life. If they come into a little money, they just "treat" themselves and start enjoying material objects... rather than invest it in some furthering education or some asset of value. It's a mindset. There are a few who move out, however.

As for the middle class - I'm sure most of you out there are middle class - they just think of comfort. They're always asking themselves how they can make their life more "comfortable." Maybe if you work longer hours, you can afford a nicer house... maybe if you kiss more ass, you can take longer vacations? Is that what comfort is? Killing yourself most of the time, so that you can enjoy a very small portion of your life? (Y'know, sleeping doesn't count as enjoying your life, because it's partly done for the sake of your crappy job - AND you don't know what the heck's going on while you're sleeping.)

The rich, however, all they can think of is freedom. And yes, that's a good thing. Sure, they might seem middle class at some point in their lives (and might even start out as poor), but the difference is in their thinking. They're always thinking about what they can do today to make tomorrow free. The key is free. Will you spend the money you have on a vacation now, or will you sock it away and enjoy 10x the reward in a couple years? I think the answer is obvious for the rich. Are you going to buy a fancy Beemer, or are you going to get a nice used Chevy and put the difference away for a rainy day? And by rainy day, I mean freedom.

So go ahead, the choice is yours.

Young Folk

noreply@blogger.com (Mr. Shawn) — Thu, 31 Jul 2008 09:18:00 +0000

I look at young people walking around these days, and they look so bright, so energetic and so full of ambition. Well, at least some of them are - the others are just having fun while they can. Anyway, the sad thing is that after these young people have enjoyed their lives and finished university, they'll go onto the sad world of the workplace. At their dungeons of employment, they'll be forced to do menial tasks and to climb rungs of some metaphorical ladder. This will be the case for most of these people, and some will enjoy their climb, while others won't. It's all the same, however, as the outcome is the same: getting old, having children and having them repeat the vicious cycle. Even the ones who enjoy it don't really enjoy it - they're chasing phantoms, they're chasing material wealth which really brings them nothing in the end. Sure, actually betting with money at the casino makes it more exciting, but what does everyone know? Yes, that most people come out losers! It's no different with life.

The fact is that you can't go into a casino expecting to come out a winner. Even though there are those lucky individuals and those that really know how to play the system; most people come out losers. You shouldn't think to yourself that you can overcome such huge odds, because c'mon, they're HUGE odds! Obviously, some do come through, but that is a very, very, very, very, very (I can't emphasize it enough) small percentage. Even the godfather of economics nags us over and over that people always beleive their luck and fortune and skill to be better than others. C'mon, stop fooling yourself! The sooner you understand that you aren't lucky, the sooner you can actually escape the casino.

The trick is not to even go into the casino in the first place! Life is about living, right? And what is living? Living is lifestyle, and if you can have the lifestyle you want, there's nothing more to ask for. Teachers and professors have got it figured out, I think. They are people that understand how to play the games at the casino, can play the games themselves (and might be good, or might have played the games in the past), but have figured out that it's not worth it to gamble. Why not just teach others the rules of the game, understand how to play, and get people's chips? This way, you can have a great lifestyle, earning enough to keep you well fed and keep life relaxed and a little interesting... but no need to kill yourself at the tables trying to make the next buck or it the jackpot.

Other people forgo the casino altogether and have figured out how to live outside the casino, while everyone else tries to make their way amongst the tables and slot machines. Maybe they'll put up a slot machine or two in the casino of life and live off the money that generates. Or maybe they'll rent out a spot in the casino where other people can put up a table and hire workers to work the tables...

Income Units

noreply@blogger.com (Mr. Shawn) — Tue, 22 Jul 2008 01:49:00 +0000

I bet you've heard the term "economic unit," which basically means each one of you! Yes, you are an economic unit capable of producing economic output. Of course, nobody wants to be called that, because the world and our lives are about much more than just mere economic capability. However, you do know that practically whatever you do is input into the economy, right? You take the bus in the morning: you've just paid for part of the bus driver's wages and the wages of the multitude of people it takes to service the bus and the roads it plies. No small feat! You buy breakfast and coffee - same thing. You read a newspaper, use your computer, etc. This is all economic input. Even putting your savings into the bank is economic input! It's inescapable!

Anyway, let's talk about income units today, rather than economic units. Economic units normally focuses on the amount of output that the "unit" can contribute to the overall economy. I want to discuss what is relevant to the individual: which is "income units." You yourself are an income unit, eh? In fact, for most people they only have one income unit, which is theirselves. Well, most people, but I'm sure that most middle-class people have a few other income units - but still, their own self is most likely the major income unit, with the other income units just making up a small percentage of total income.

So, what is an income unit? An income unit is something that is capable of earning money (the equivalent of labor) all on its own. It gives its master (hopefully, you) some money every month, week, year, etc. You yourself are an income unit, because you go out there all on your own and earn and income through some type of activity. Now, for many people, that's where it ends. One income unit, and only one. Commonly, however, there is the stock or share income unit. You own a couple shares in a publicly traded company and that is an income unit for you. Of course, it's still people down there ultimately generating the income, but they're generating for both themselves and for the shareholders. If you have a great stock, it'll go up in value all the time (capital gains) and pay you a dividend (a portion of the company's profits). There you go: income unit.

But, for the more ambitious (if you don't trade stocks or futures or options full time), there are other types of income units available. You have a home, right? Sure, you spend tons of money on it every month in the form of mortgage, maintenance, upkeep... but if you were to own a home that you rented out - ba-da-bing, ba-da-boom - income unit. Ultimately, it is people paying you that income, out of their own wages, but who cares?! It's income and money in your pocket for something that they need. Real estate is a powerful income unit, because like stocks, they can go up in price, pay you dividends... but the most powerful thing about real estate is that you can borrow maybe 80% of the total cost. Of course, the lender (the bank, usually) will make a percentage profit in the form of the mortgage, but everything above that, you keep... even though you only paid 20%. Over time, that gets paid off by the renters, too... so you own more and more of the real estate (equity). AND any increase in value is all yours! Decrease is also yours, too, just to let you know.

More income units? Well, you can own a van and rent it out to a delivery company. As long as you've got your books in order and are charging appropriate rent, you've got income from that investment. How about a burger joint? If you run it correctly and have taken yourself out of the management picture, that equals income unit. My neighbor's friend has three "Harvey's" burger joints in Toronto somewhere, and supposedly, that guy spends about an hour each day at each of his locations and collects about $300 per unit, per day net profit. Not bad income units!

More income unit ideas: vending machines, coin laundries, convenience store, etc. Of course, owning stock in a publicly traded company amounts to the same as owning your own business (and is a heck of a lot easier), but you only own a part of the business. But anyway, that's not a bad way to go, either.

Hourly Wages Worth It?!

noreply@blogger.com (Mr. Shawn) — Thu, 17 Jul 2008 01:59:00 +0000

Imagine if you will, a secret government organization that wanted to raise soldiers right from birth. Basically, after they somehow acquired the baby, there would be so much investment into that child before he could grow up and become a useful soldier. The government organization would have to educate the baby in all the various fields of knowledge they would wish him to have. They would also have to feed him everyday of his life, without any repayment, until the day he could work and produce returns for his masters. Lodging would also have to be provided; in order to make sure that their investment was protected from the elements. Furthermore, they would probably have to provide him with entertainment and leisure of some sort, for the human species cannot endure for very long without such sustenance.

Think about the above scenario for a moment. Sounds crazy, doesn’t it? Sounds like the movies, “Star Wars: Clone Wars” or “Soldier,” doesn’t it? Wait… it even sounds like slavery! Well, if you must know – it was just a story about you! That’s right, you. Each and every one of us who is working for someone else right now is pretty much being treated in the same way.

Do you think “your company” is paying you a fair wage? They have benefits, yadda, yadda, yadda?! Well, they are the ones that are benefiting and not you. It is very rare (although they do exist) for a company not to just use you like a slave. The situation is even worse in Asia, where workers work six or seven days a week and maybe 10 to 12 hours per day. Imagine the torture!

People like to think that they’re being paid “per hour” or are paid a “salary,” when in fact the truth is that the hour you just spent doing that report or making that sales presentation was the culmination of your entire life. Yep, “your company” is paying you peanuts to do something you spent a whole lifetime to learn. PEANUTS. And who knows? If you don’t meet their expectations, you’re out the door… and even if you do, they might boot you out anyway, because there’s another sap waiting in line to do what you do for half the pay! (Of course, he’s a sucker more than anyone else.)

The point here is not that you should demand more wages or stage protests over beef imports from the U.S. or cry for subsidies or do some other ridiculous, pointless, nutty thing. You should strike out on your own, doing something you love and benefiting from it. You shouldn’t turn over a large portion of your output to others – what you do should be totally for your own benefit and advantage.

I must address another point. Some of you may argue that part of our wages are used to pay for things that we need; such as food, clothing, cars, shelter, etc. Hahaha… do you think that it is only we who need the food that we put into our bodies? Food is fuel for our mind and bodies, and if you weren’t working such a stressful job with jerk co-workers – do you think you’d need ten cups of Starbucks coffee a day? I think not. Would you eat more if you were lounging under blue skies and on white sands, or would you eat more in a gray office in front of a droning computer terminal? The answer is obvious. Would you even need a car if you didn’t have to leave your family farm by the tropical seaside? Of course not!

So don’t be a sap and don’t get fooled. Your hourly pay probably really only contributes a small portion to what you need to get by (I’d estimate 20%); whereas the rest is for the benefit of the company (or for crap you don’t need). Why work your butt off developing the next BMW M3, just to buy an iPhone 2.0, when the guy developing the iPhone 2.0 is working his butt off to get your BMW M3? It all just doesn’t make sense… reduce your wants and reduce your stress. And most of all, don’t let “your company” take you for a ride.

Hourly Pay

noreply@blogger.com (Mr. Shawn) — Wed, 09 Jul 2008 04:31:00 +0000

Is going to school just to get a crappy job really, really worth it? Most middle-income people think so, while lower-income people want to but can’t necessarily, and upper-income having mixed views. What is the right answer, anyway? Well, the answer is that there is no right answer and that one must consider him or herself as an individual; what are your goals, ambitions and aspirations? Do you know what you want to be doing everyday Monday through Friday for the rest of your life? Would you enjoy doing that day-in, day-out? Will you feel like killing yourself?! These are all options you’ve got to consider.

I was once told by one of my university professors (yes, I took the go-to-school route… but the thing is that I like school!) that having a university degree opens a lot of doors. Obviously, he has a biased opinion. Not only is a Ph.D. holder, but he’s a university professor with tenure! How can he not be biased? As for me, I can say that I feel less biased, but I can’t be sure. Anyway, if you’re reading this, I’m sure you’re interested in my humble opinion – IMHO – yes, get some web jargon in there.

Anyway, I love reading and I love school, so it wasn’t hard for me to choose to go to school and study something I love. I choose “undecided major” in my first year, and I subsequently chose to pursue “East Asian Studies.” Originally, I was apt to choose some type of business studies, but luckily I didn’t get into my university’s business school… and I also discovered something that I loved. I really do love East Asian Studies, and I read books about it even now, two years after graduating. But, do you know what I was not thinking about while I was in school? I wasn’t thinking a damn thing about money! What a mistake.

The mistake is that I studied what I loved, but I didn’t at the same time study things that would make me money. Now, I don’t mean you have to study “how to make money” in school as part of your academics – I just mean that you must learn in any way possible how to make money! I totally encourage you to study what you love in school, but I also totally encourage you to learn about money when not in class. If I had done that, I’d definitely be waaay ahead of where I am now in terms of personal finance. Remember folks, freedom in this already-democratic society means money. Freedom = financial freedom.

I think I went off-topic a little there. Actually, the main point of today’s post was to talk about much people get remunerated in each of their jobs. Sure, it looks like a doctor is getting paid wads of cash – but he or she had to attend almost a decade of post-graduate study! And sure, maybe a university graduate starts off by making more than a mere high school graduate, but the university graduate had to attend at least three years more of school. And yeah, yeah, there are tons of studies out there showing that a “college graduate” makes much more than a “high school graduate” over a lifetime… but do you really want to be spending your lifetime working?! Do yah??

Anyway, think about it, a really smart high school graduate could start off by making $30,000 per annum as, say, an administrative assistant. He or she could save that money and pour it into assets, thus generating passive income and thus having the ability to buy more assets, which generate more passive income! A typical three-year university graduate would have to spend about $5~10,000 per year for three years on their education… so that starts them off with a debt! There’s also no guarantee that they’ll get a job much higher paying than $30,000 (with a liberal arts degree, that is). Let’s say it’s an engineer; that first salary could be about $55,000 – not bad. Let’s look at the doctor now: four years of undergraduate at the same price mentioned above, followed by four more years of post-graduate at $10~15,000 per year. Once the doctor gets out, he’s just an intern making $60,000 a year for 2~3 years with a massive debt! Well, let’s say that both the university graduate and the doctor pay off their debts within two years – that’s fantastic. But now they’re two more years behind the high school graduate.

Anyway, I’m not trying to preach anything here; basically, I’m just saying that higher earners actually put in a lot before they started their jobs. That means when they’re working, they’re not only getting compensated for their time now, but they’re getting compensated for their time before. Of course, the longer they stick to their chosen field, the higher the compensation for now time is, and the less it is for before time. With high school graduates (taking it as the minimum mandatory education), he or she is getting paid completely for now time. Of course, there’s no stopping a high school graduate from learning just as much about anything as a university student – and he or she has the advantage of being able to earn now money, which is worth more than later money.

Everyone is Doing Physical Labor

noreply@blogger.com (Mr. Shawn) — Thu, 03 Jul 2008 02:38:00 +0000

People have only their bodies, right? That’s what most people erroneously think. It’s of course the truth when they’re young, as they’re discovering the world with all that they came into it with. However, as one grows older, the error is in the education our parents and our school system give us. But, who can blame them? They know no better than what the generation before them taught them.

If you observe society on any day of the week and at any time, you’ll see people using their bodies in all manner of way. And basically, that’s all you’ll see. People using their bodies to serve other people, so that they can in turn be served at another time by someone else – a ridiculous cycle. There are the people “lower” than those who really use their bodies; such as construction workers, cleaners, handymen, etc. Lastly, there are the people who think they’re better than others and are using their “minds” not their bodies. The foolish thing about that is that firstly, the person you are is merely a manifestation of the physical thing that is your brain; and secondly, even if your brain wasn’t physical, it would still need the input of your eyes and ears, and the output of your mouth and hands. You see – everyone’s going about things in the wrong way. They’re using their bodies just the same as the first human to have evolved from an ape.

Shouldn’t we be evolved past this concept of merely using our bodies for our goals in life? Sure, there are many things that we use our bodies for that is enjoyable, but what about the things that aren’t enjoyable? Why do we continue to use our physical labor? Or, a question that hits closer to home: why is our contribution towards our money-making endeavors so linked to time? Why do our bodies have to be somewhere for a certain amount of time in order to be considered productive? Most workers these days must commute to work, thus dragging their half-awake bodies up from bed just to get to some place to use the equipment there and to interface with other workers. It’s good, however, that there are some workers who know that their body doesn’t have to be in a physical place and at a certain time in order to get things (menial, still) done.

It’s like the revolution of the music industry. First, there were magnetic tapes, which were long magnetized strips wound around two spools. You inserted your tape into your walkman and you got music. But, wasn’t rewinding and fast-forwarding tiresome? So, the next revolution was the CD. The CD was great, not only because they were more durable, but because they were much less physical. Yes, physical still, but much less so. The CD just spun and spun and the laser would travel a really short distance. Amazing! No more tape to be tangled up and ruined. That’s an amazing improvement over the overly-physical cassette tape. What happened after that? Well, we all know that the MP3 took over. A completely non-physical way of music! There are absolutely no moving parts in an MP3 player! Just copy your music on over to the flash drive in the MP3 player (the flash drive doesn’t move), and the music magically goes to your ears from the stored file. It doesn’t move! That is a triumph over the physical.

Now, if you want to get ahead in this world, you’ve got to stop thinking physical and think like the MP3. How do you go from dragging yourself out of bed everyday to staying in bed as long as you want and having your “daily quest” completed for you? (Oh, and having someone else do it, or a robot do it is a great thing, but it’s not a revolution, since it’s been done before. Not to say that you can’t profit from such activities; it’s just merely non-revolutional.)

How to "Make" More Money

noreply@blogger.com (Mr. Shawn) — Wed, 25 Jun 2008 07:14:00 +0000

The way that things become worth more money is by adding labor to them. What the populace-at-large calls this is “adding value.” Basically, if you have something that’s worth a certain amount and you do something to it to make it more appealing, you are adding value – that “value” was added by your labor. So, that’s the short explanation of how you can make more money with whatever you have. Of course, that doesn’t mean that it’s possible or even desirable to add value to everything.

Let’s take a piece of cotton for example. If you grow the cotton and sell it how it comes off the plant, you’ll probably only be able to get a certain amount of money for it. However, if you weave it into a beautiful white cloth, you’re sure to get a much large amount of money at sale time. Now, there’s no telling what value could be added to that white piece of cloth! It could be turned into a nice T-shirt, or it could be turned into baby clothes: this is where entrepreneurship comes in. The entrepreneur must now decide in what way value will be added to the cloth in order to allow it to sell for the most amount of money. (That’s where things like marketing, branding, etc. come into play, but that’s a topic for a whole other post.)

There’s basically no way of escaping the fact that you have to add labor to things in order to make them worth more. Even for a basic natural resource such as water, the labor of getting it from the source adds value to it. Sure, water in the well is free for all, but if you want someone to get it out for you (or you want it to come in bottles), you’re going to have to trade your “money” for the added value. In fact, if you get the water yourself, it seems free, but you’re actually paying for it with your labor (maybe you could’ve sold that labor for something else?).

So… labor away, people! Haha… but really, if you want to sell something, make sure to add more value to it, thus increasing its worth and at the same time increasing the percentage of profit you can make off of it. Every further step of value-adding increases a product’s selling price by a larger percentage, after all! (Think of LV, Gucci, or any of those other high-priced things.)

The Real Value

noreply@blogger.com (Mr. Shawn) — Thu, 19 Jun 2008 02:21:00 +0000

Since gold is no longer the governing factor against which all other commodities can be compared – what can we use to figure out the price of what things are worth? We certainly can’t use the paper, coin and kilobits that we call money to determine what things are worth; that fluctuates everyday and depending on what country you live in, it could go up or down. For example, if you live in the U.S. right now (or are watching the price of things in relation to greenbacks), you see that a lot of things have apparently gone “up” in price. Oil has skyrocketed and gold has reached all-time highs!

However, what has actually happened in this case is that, yes, oil and gold have gone up in value relative to other things – but one must consider how much of that “increase” in the price of those two commodities can be, instead, attributed to the weakening of the U.S. Dollar? If you’re a Canadian, your dollar has gone UP versus the American dollar, and therefore, the gold and oil price rises haven’t been as great. Therefore, you must always consider the many factors involved in the rising price of things.

Just maybe, however, nothing has gone up in price: wages have gone down! Have you ever considered that? The price of oil, food, gold, etc. have all stayed the same, but it is wages that have gone down. Maybe it’s a conspiracy where the powerful people in the world are raising the price of everything in order to corrode your buying power. You see, they’ve gotten clever. Instead of giving in to demands of workers to raise wages and lose money… they just raise your wage a little, making you happy that you have “more,” and then just turn around and raise the price of everything beyond what you got! Smart, eh?

In actuality, that’s how inflation works, but on a slower and less conspiracy-like scale.

All I’m saying is that you should not just be thinking about the numerical value of the money in your pocket or in your computer – you must think what it can get you! Adam Smith says that corn is the good against which all things should be measured, because it is the staple of all food. He also postulates that labor is the REAL measure of what things are worth: as in; how many hours or days of work does a certain thing take to obtain? The longer it takes you, the more it’s worth. Corn in this case, is just a comparative measure. Make sure you compare the right things!

Multiple Streams of Income

noreply@blogger.com (Mr. Shawn) — Wed, 04 Jun 2008 02:32:00 +0000

If you've read any book about personal finances or are familiar with any of the "techniques" for great wealth - then you've definitely heard of "multiple streams of income." The analogy is that a large river is fed by many tributaries - streams - and they all coalesce into one mighty, unstoppable force. So, the advice goes that you should do the same with your own life. Don't just depend on your one job to give you all the money you need for your life; find other ways to supplement your income, in addition.

This is a good idea, actually; you work your daytime job and start searching for ways to gain extra income in your spare time. Maybe you like making wooden toys and other people love your toys. Sell them on Craigslist and in no time, your wooden-toy-income will make up about 10% of your monthly income! Great! Now, you've got two "streams" of income; one big one from your day job, and one small one from your wooden toys. Financial gurus tell this to you like it's a new and crazy idea. They tell you to keep doing this until you have several sources of income, each only representing a small percentage, so that in the event you lose one source it won't cripple your finances. This is all true and good advice, yes, but the catch is that it's not a new idea.

In fact, it's one of the oldest ideas on Earth! It was, however, because of the industrial revolution that this idea of multiple streams of income became erase from the minds of average people. During the industrial revolution, extreme specialization and dedication to one factory/company/job was all the rage; capitalists wanted you to dedicate yourself to the factory. They wanted you to break your days down into three, eight-hour shifts, so that their products would roll off the lines quickly. One shift for working, one shift for sleeping, and one shift for the rest of your life! Ever since those times, that mindset has predominated and has caused people from all walks of life to only look towards their daytime job for income.

In the past, before the industrial revolution, society was mostly an agrarian one. There were mostly farmers, but there were also those that lived in towns in order to provide other services; such as butchering, blacksmithing, carpentry, trading, etc. In such a society, you could be sure that each and every family (and person) had more than one source of income. The farmer didn't just farm all day and watch his crops grow in the meantime; he would tend to livestock (chickens, pigs, children, etc.) or maybe he would spend some of that time as a carpenter. Thus, the farmer had multiple streams of income, and you could be sure that if his income from carpentry exceeded his income from the selling of his crops that he'd concentrate more effort on that. However, he would not always completely give up any one of the trades.

His wife, too, would be pursuing multiple streams of income if there were any young children to be taken care of in the home (yes, back then, tending to children was the woman's job). She might be knitting things for her own family and selling the excess, she might be making preserves to sell at the market, or she could be taking care of rich people's children! There were many options for her while cooped up in the house with those noisy and demanding children. Of course, when the boy children reached the tender age of seven, they were immediately sent out to help pa with the farming. The girls would help ma with the in-house projects.

Opportunity Cost

noreply@blogger.com (Mr. Shawn) — Sun, 01 Jun 2008 06:08:00 +0000

If you've never taken a course in economics (and maybe business), you've probably not heard the term, "opportunity cost." However, it's a sure-bet that you deal with it everyday - you just don't have a term for it. Or maybe, just maybe, you don't even think about it at all! Yes, it's true, some people don't think about opportunity cost at all, thus costing them opportunity.

The bane of all of our existences is basically that we can't have all we want, right? Sure, we may have enough money to trade for that awesome car we've always wanted... but then there's nothing left over for the even-more-awesome house that we wanted. Or maybe you make a lot of money, but since you work so much, you never have time to spend it. And yet again, maybe you have lots of free time, but no money to go anywhere because you don't work much! All of these circumstances blow, don't they?

That's the reality of life, but never fear, because opportunity cost is here to help you understand how to deal with life's decisions. Let's say you only have $20, and you want to purchase some clothes; so you go to the shop and see a great pair of jeans for exactly $20 (no tax!). Great, you can get those jeans and it costs you only $20, right? Wrong! It also costs you the opportunity of maybe buying two T-shirts for $10 each, or costs you the opportunity of saving that money for the proverbial rainy day, or costs you whatever else you can think of that $20 can do. So you see, the cost is not just the money... but the cost is lost opportunity.

Opportunity cost is not just talking about things costing you, either. This term could be talking about trade-offs that are either good or bad. Let's say that tonight, you decide to put in overtime at the office rather than go to a boring family dinner. Well, working that night cost you the opportunity of going to the boring dinner, but it also cost you the opportunity of not earning extra money. So basically, working that night maybe took away one positive thing (if the boring dinner is considered positive), but also gave you another positive (the extra money). This is a second way to look at how the decisions you make in life affect you.

Society Can't Buy Time

noreply@blogger.com (Mr. Shawn) — Sat, 24 May 2008 13:34:00 +0000

The biggest realization that I've come to in recent years is basically that: things take time.

Whether it's simply saving your money for a down payment on a house (simple), or reforming your country through violent revolution (complex), none of these can be done without everyday consistent effort, and also the elapse of a great period of time.

Society has ruined and distorted our perspective of time. We all come to view time as something buyable right now... something that we can simply purchase and is at our disposable. Pitiful we are... not knowing any better. Who are these engineers-of-perspective that make it so that we, the ordinary citizen, come to believe that time can be bought? Are they powerful groups involved in a world-wide conspiracy to keep people down? Or are they simply you and I - those who try to make their living by pushing this idea forth - trying to sell each other the guns and butter that supposedly make our lives better (but in actuality, only make the lives of the seller better)?

Why is time viewed as something that can be bought? Travel used to be a journey, a life-changing, life-altering educational experience - it has now morphed into the all-inclusive package tour. A pity, because the quick trip to see tourist spots and eat local delicacies is not even a small glimpse into the real lives of those who live there. It is only by living there, living in that locale, that one really knows life in other parts of the world. This is the only real way to experience the world. But, what does that take? It takes time - time that you won't be able to use to "build your career" - time that you think is too valuable to "waste".

If you slow down the pace of your life, I'm sure you'll discover many things you've never noticed before. You'll discover how beautiful life can be when you're not rushing to your job, rushing to meet some friends, rushing to have fun, rushing for no reason... you'll see that all the marketing and all the noise out there is just trying to keep the blinders over your eyes.

Most important of all, you'll notice that things take time. Just as it took you a dozen years to become as fat as you are now, it'll probably take you almost the same amount of time (or less, if you concentrate your efforts) to lose that weight you put on. Don't be fooled and think that by buying the "fat-ass-eliminator" that you'll compress the time of years into a few short months. Just the same, if your dream is to serve the finest coffee in the world from your chain of coffee shops - you can't expect overnight success. Things take time and effort - just as any great civilization and any great person labored for years, decades and centuries before they were recognized.

I encourage you to take the first step right now towards achieving your goals. Want to pay off that debt? Go ahead and make an online payment of $10... do it now and do it often. Want to become healthier? Go ahead and do a few push-ups... do it now and do it often! You get the point... go ahead and start now. But remember to continue everyday.

Standard of Living (Part Deux)

noreply@blogger.com (Mr. Shawn) — Wed, 21 May 2008 00:09:00 +0000

As you may or may not remember... or as you may not even know because hardly anybody reads this blog, I talked about Standard of Living in a past post. Today, I will talk about it again! Yeah! Anyway, last time I said that it is not people's wages or earnings that go up - it is merely that things get cheaper and thus standard of living for the average person raises. It may seem like your pay is higher than what your father's was when he was your age - but you can't compare the dollar amounts. You must compare what he could buy and what you could buy at the time. A really simple way to calculate is basically to see how many cans of Coca-Cola your dad could buy back in the day with one hour of his wages; and then see how many cans you can buy now. I bet you'd it would be almost the same!

As our world progresses and Moore's Law is in effect, the way an average person's standard of living increases is just amazing! It seems that all the conveniences of the world and things that our parents never dreamed of are within our grasps. It would be surprising if your grandparents ever took an airplane as youths (unless you come from some sort of wealthy legacy...), but now it's just run-of-the-mill travel and everyone does it. In fact, travel used to be a journey in which you'd come back a changed person; it is now mostly nothing more than another "fun" thing to do. I'm sure you also remember not more than five years ago when laptop computers were only for business people and rich kids. Now, however, they're a staple of every university student and in a couple of years it'll be the same for even high school students!

The reason this happens is because things get cheaper over time. As more competitors compete for business in particular fields, they search long and hard for ways of selling their product for cheaper and thus getting larger market share. What happens - to their detriment, but to the advantage of the consumer - is that they temporarily get more market share because of their cheaper prices, but soon another competitor beats them at that... and so on. So, things get cheaper and the middle-class have more trinkets to play with and baubbles to distract.

Within the past five years, I'm sure there are many things that you've noticed plummeting in price; computers, LCD TVs, refrigerators, A/C units, cars, etc. They're going down in real price, even though inflation is driving how much you earn up. You're earning more dollars, and these things are costing less of those dollars - amazing! Sure, things like gasoline and food are going up in price nowadays, but these are only temporary spikes in prices. Over the long term, you'll see that these commodities also go down in price.

If you're old enough, you'll probably remember those black telephones that one day disappeared from either your parents' or grandparents' homes. What was the deal with those? Well, they were rented from the telephone companies for around $29 per month. Yes, $29 per month! That's crazy, isn't it? And think about how much $29 could buy back 20-30 years ago! Now, $29 can purchase an excellent cordless phone, much less a rotary-dial telephone that wasn't even yours. Going even further back in time, refrigerators used to be rented out to people, else they were leased. And going back even farther than that, furniture used to be rented out! But let's go into the future for a moment; soon, cars will be so cheap that you could purchase one on a whim. Right now, some people can buy cars outright and others lease them... but in the future, beware!

That Makes Sense!

noreply@blogger.com (Mr. Shawn) — Mon, 12 May 2008 05:44:00 +0000

If that makes sense to you, then you're obviously not being challenged in your thoughts. Yes, that's right... if you hear, read or are told something and you think, "That makes sense!" you're basically just agreeing to something you already agree with. And what is the point of that? What do you learn when you are just re-iterated something that you already know? Furthermore, it may be something that you think is correct, but is not - that is the most harmful information of all! It happens everyday, though. People are always spouting off so-called common sense as "advice" and "knowledge". You hear it, you agree with it, and it makes you think that person is so smart. Sure, "That makes so much sense."

In reality, however, you should pay little attention to the advice out there that you immediately agree with. Pay no attention to the things that you merely mull around in your own mind and come to agree with based upon your own, limited knowledge. As people, we all have limited knowledge, and if we agree with something; it's because we know about it, we've heard it before, and probably everyone else in the world understands it, too. This kind of thinking will get you almost nowhere further than where you are now. You'll probably just end up buying tonnes of books and reading blogs that tell you what you want to hear, rather than something that would enlighten you. This is one of the weaknesses the "financial gurus" play upon... giving the audience what they want (not what they need).

If you've ever studied history, you'll find the old pattern that great thinkers who have changed the world with their thoughts were always crazy. Yes, crazy. They were crazy at first, because you're crazy when no one can see your novel point of view. You're crazy when your ideas and thinking seem so far-fetched that people get angry and lock you up. With hindsight, however, we can see that people like Galileo (who thought the Earth was spherical) and Leonardo DaVinci weren't so crazy, after all.

But, who is that Chinese guy up there? Well, that's a man called Xun Zi, who learned stuff from Confucius, but didn't sit there and think, "Hmm... that Confucius is so smart! I totally agree with everything he says, therefore it must be right." He learned from Confucius, but also questioned Confucius' words of wisdom. Xun Zi proposed that all people are born innately evil and only through rigorous law and education could they become civil beings. Xun Zi proposed that society needed to depend on laws to keep people in line, rather than depending upon moral upbringing and education. I'm not trying to propose who was right and who was wrong - I'm merely pointing out that if Xun Zi had just agreed with Confucius, he might never have proposed his history-altering ways of thinking. Don't you know that the man who united all of China, Qin Shi Huang, created a society along the guidelines of Xun Zi?

The point is that we all have limited knowledge, and if we come across something we totally don't agree with - don't just dismiss it as being crazy or unworthy of your attention. Maybe you should think about it, analyze it, research it? In the best case, you'll come away with new knowledge (that most other people don't have) and a new understanding; and in the worst case, you'll only have wasted your time (but you'll be able to intelligently refute future "crazy advice").

The 80/20 Rule

noreply@blogger.com (Mr. Shawn) — Thu, 01 May 2008 07:08:00 +0000

I'm sure you might have heard the term, "80/20" in your days browsing blogs, reading articles and watching the news. Usually, the 80/20 rule is used when people are talking about employees at companies - what they imply is that 20% of the employees produce 80% of the revenue, and that the other 80% only account for 20% of the revenue. It makes most people think that obviously, the company should just fire that 80%! And to an extent that's true... but there's a certain dynamic that is missed out on in such a simple explanation of the rule. The rule is also not very talked-about much when it comes to money. That's why I chose this topic today for MoneyBrick!

Let's look at it simply first: some people say that 20% of their stock portfolio is giving them 80% of the gains that they received this year. The other 80% only gave them 20%! Isn't it time to get rid of that other 80%? It might seem like an obvious answer, but the real answer is no. Although you can identify precisely in your portfolio which stocks accounted for the majority of gain - unlike a company that may have a harder time identifying the top producers - you may screw yourself over the next year! The catch is that although this year stock ABC and stock CBC gave you 80% of your returns; there's an equal likeness that next year, they will be the under-performers (relatively speaking, of course). If you choose your stocks well, all of them will go up, but some will undoubtedly outperform all the rest.

Even though people like to slap labels on certain statistical discoveries and call them things; "80/20 rule", "law of the few", etc. The fact is that these observations are always in hindsight and thus very clear. It's easy to discern a pattern when you're looking for a pattern through historical performance. Just as it's easy to see various animals in random cloud patterns! Basically, it would be close to impossible to pare down your investments so that all your holdings are giving you a phenomenal rate of return. It's probably a lot easier to pare down a company - to get rid of people who don't do their job well - but there's also an intermingling between the "20" and the "80" that in part account for how a smaller number can produce a majority of revenue, results, etc.

When it comes to anything, it is usually the entire mix of what you have in your basket that produce the results that you get. Surely, you can break it all down and say that this and that produced 80% of the results, but it is possible and more than likely that whatever little seemed to produce those large results were assisted in unseen ways by everything else. No one would argue that flour is really important in baking a loaf of bread - but flour makes up such a large portion of the bread and without yeast, it's nothing. Does that mean one should try all manner to get rid of the flour, because yeast does so much for so little? You see... not really! The truth of the matter is that bread requires both huge amounts of flour and a little bit of yeast; they work best that way and although seemingly put forth differing amounts of effort - it is only together that they can produce the desired result.

So basically, when it comes to money, education, business or anything else that's important to you, don't take the 80/20 rule to an extreme and start cutting out what's big and seems to not be doing its job. You might find out that it was the interaction between the various ingredients that was the most important after all.

Japanese Peanuts

noreply@blogger.com (Mr. Shawn) — Sat, 26 Apr 2008 04:01:00 +0000

What do peanuts have to do with money? Well, more than you think! The price you pay for peanuts includes the three factors which we've talked about before; profit, rent and labor. In the case of peanuts - you've got to pay the labor of the farmer (or farm-hands) that grow and harvest them, you've got to pay the rent of the farm itself, and you've got to pay a little profit to the enterprising farmer who takes the risk of selling his peanuts to you. And, all I just mentioned only counts if you're buying directly from the farm! If you're buying from a store, then you've got a multitude of other people that have to be paid.

Japanese peanuts - peanuts grown in Japan - cost up to five times more than peanuts from China or other poor peanut-growing countries. Why is that? Is it because Japanese peanuts have a hint of Wasabi and are as fierce as the earthquakes there? If that were true, I'm sure they could charge more than five times more; the real reason is that because our little friends were grown in Japan, Japanese people had to be paid. Japanese laborers, who are expensive by international standards, had to be paid to get those peanuts out of the ground. Expensive Japanese land had to also be used to grow those peanuts on. Basically, the Japanese peanut is more expensive than the Chinese peanut mostly due to differences in cost of production.

This is almost exactly the same for those brand name goods you purchase. I say almost, because a peanut is a peanut, but there really are quality differences between brand-name and non-brand-name when it comes to certain things (electronics, clothing, etc.). However, the huge markup that a brand name enjoys is sometimes (and in the case of clothes, always) way too much for the slightly higher quality. If you buy a bag from some vendor on the street for a couple bucks, it might break in a week or two... but then again, it may last you a couple years. If you buy something brand-name from a posh department store, you'll be paying a lot more, but that bag will probably last you for years to come.

The point is that with a brand name product, you're paying a premium mostly for the name (i.e. the profit of the entrepreneur) and only a little extra for the added quality. With Japanese peanuts, you're paying extra mostly for the rent and labor, and not much for peanut-quality. So what you've got to do in the future is to look at which of the three components (profit, rent, labor) you're paying for when you trade your money for product.

Money Can Buy Happiness

noreply@blogger.com (Mr. Shawn) — Sat, 19 Apr 2008 15:32:00 +0000

I know, it's a bold statement to say that money can buy happiness, even after everyone keeps telling you that it can't. However, I'll explain it all to you! Firstly, however, I must explain that money can buy you anything you please; even other people! Yes, money can buy you your own personal attendants. Kinda like slaves, except that in order to keep them, you've got to pay them - slaves were your actual property and didn't require payment (only upkeep, like a fruit-bearing tree). The basic fact is that the world is about money (actually, about the material things that it can get one), and everyone needs it in order to survive, and needs more of it in order to survive comfortably.

Even though money can buy you anything you want - it'll cost a lot more money than if you acquired it in other ways. Let's say you wanted to move house and hired some movers; that might cost you a few hundred dollars. However, if you used your social capital and asked a few good friends to help you - you wouldn't have to repay them at all! Of course, you'd probably appreciate their help very much and would treat them to dinner, else help them when they need help. So, you're able to get their assistance without the involvement of money because of your social capital with them. They're your friends and both sides have done good for each other throughout life. A true win-win situation. If you asked someone you just met to help you move, however, you can forget about ever cultivating their friendship. That's how it is... it takes a load of social capital to get such favors, but if money was used, it would require a relatively small amount.

That's the point here: money can get you what you want, but it'll cost a lot more than if you had gotten those things using social capital. Money can even buy you happiness! Now, let's not get all confused and say that money can buy you out of lonesomeness and that you can spend your way out of sadness. That's totally not the case. If you're lonely because you're a big jerk, you'll still truly be lonely no matter how much money you have (you may not feel lonely, however, because there are lots of moochers out there). If you're sad for a reason worthy of being sad about, money can hardly help you - only other people can. Back to the main point - money can buy you happiness! That's because happiness is the opposite of boredom, and that means you can use money to get rid of the boredom blues.

If you're bored, why not spend some money on a trip somewhere and relieve yourself of the boredom? If you're bored, why not buy a car and take it up and down mountain roads? If you're bored, you can take classes and learn a new hobby. The options are limitless and they're all things that require sums of money (large and small), but it's money that's buying you happiness. You're probably going to share that happiness with loved ones, too, I surmise. The lesson is that you can definitely spend your way out of boredom, but that's pretty much the only thing you can spend your way out of in this world. Being a crappy person who has no friends cannot be fixed with money.

A few hundred years ago, before the advent of trinkets and baubles, rich landlords had no use for the extra produce harvested from their lands. Therefore, they would use (i.e. spend) their wealth (all that one has that other people might also want) to entertain and treat guests to magnificent feasts. They would use their wealth to feed a multitude of retainers and the poor workers who worked their fields. Thus, the rich landlord would have many friends who were grateful to him for constantly providing for their basic needs; he would also have many other friends who didn't work for him, but felt nice just to be invited to his feasts. I'm sure such a person would've been really content with life; helping out so many people and in turn having many friends.

After the advent of trinkets and baubles, however, landlords instead chose to spend their wealth on useless things...

Live Inside The Box

noreply@blogger.com (Mr. Shawn) — Tue, 15 Apr 2008 03:42:00 +0000

There are rules and laws everywhere we look. Specifically, there are three places from which rules come; nature, physics and man. You definitely can't break the rules of nature and physics. So why do people always think they can break the rules of man? Of course, the rules of man are not as fixed and unchangeable as the laws of nature and physics, but they're still mighty hard to change. It's to one's advantage, therefore, to work within the laws of man. I will explain more on this later, but first, let's examine some great examples of rules in nature and physics.

In nature, the small are hunted and the large get away unscathed. This is a basic rule in nature. Size matters and it matters greatly. Lions never attack elephants because elephants are huge! They sometimes attack water buffalo, however, although water buffalo sometimes win and sometimes lose. The law here is that size matters; it's something that can't be changed. Animals naturally evolved to deal with this law in their own way; animals who can't evolve to be large because of lack of food supply evolved other things. Maybe their skin became tougher or maybe they can run faster - but the basic fact remains that size matters. It is an unchangeable law.

In physics, too, the rules are unchangeable. You cannot deny the pull of gravity, can you? Birds can in a way, however. Birds are not really denying the pull of gravity; what they're doing is actually taking the law of gravity and the law of matter density and using those things to their advantage. (Okay, they are not doing it - they were born with it.) In effect, they're not playing with gravity at all, because gravity still affects them equally. What they're playing on is being lighter than air. When birds flap their wings, they're able to float on air like a duck floats on water. In effect, the birds are lighter than the air that fills the sky! Gravity always pulls the heavier things to the bottom, so by becoming lighter than air, birds are able to fly. And humans obviously learned from birds, since we can fly in airplanes.

The basic concept of this post is just that simple; you shouldn't try to break the rules as is oft said. What you need to do is to understand the rules and be able to use them to your advantage. (Well, not if you live in a dictatorship with crazy rules - then, it is your duty to break the rules!) In a free society such as ours, in order to get what you want (and I suspect that one of the things is money), you've got to really understand the rules and be able to use them to your advantage. It's just like how birds don't break the rule of gravity - they instead use those rules to their advantage and become lighter than air. It's the same in society; society rewards those who do certain things that are within the rules.

I'm not at all saying not to think creatively, but after all, we live in society with other people and all the things we think of as success have to do with other people. To give you an idea of our ideas of success having to do with people, answer for yourself these few questions: Would you rather have a magnificent house in the middle of the desert, or in a great city? Would you rather have a billion dollars, or a billion sea turtles? Would you rather have many friends, or many cats? After answering for yourself these questions and asking of yourself even more, I'm sure that you'll see that we live in society and it's a major part of who we are (no matter how much we deny it).

So... your mission is to go out there and understand the rules of society. Use those rules to your advantage; do what other people aren't doing and you'll see different results. But, you still want what society has to offer, so you must use society's rules. Live inside the box!

It Takes Practice

noreply@blogger.com (Mr. Shawn) — Fri, 11 Apr 2008 02:27:00 +0000

In life, if one wants to become good at anything at all; practice is always required. Sure, there may be the perception out there that some people were "born with it," or have "a natural talent." I can tell you, however, that it's all a load of horse doo-doo. Whatever you, or that little girl practicing the piano in the picture, has become good at is purely due to practice. Anything that anyone is good at in the whole world is precisely because of practice - and that includes money.

Take a look again at all those people you consider "talented" in anything; music, carpentry, art, rugby, computer programming, money. If you look deeply enough, you'll find that they all have some sort of history within their field of expertise. Many people developed this expertise (what some erroneously call "talent") from a really young age and in ways that were obscure; it is therefore that they're said to be "naturals", or be "born with it". Other people, however, developed their "talents" at an older age and they can thus identify exactly where they picked up all their skills. In the end, however, these two forms of practice amount to the same thing: expertise or great ability.

Look back at your life as a child for a second - it just seems like a blur and it seems like it went by in the blink of an eye, didn't it? It was during this time that you probably developed a lot of what you're good at now. And because you started developing expertise as a child, you thought it was merely a "talent", so you thus pursued it into adulthood and have become really good! If you ask your parents, however, they'll probably tell you that raising you was a long time and they'll also be able to point out to you how some of your "talents" developed.

Normally, people think of talent having to do with things like; music, sports, etc. The fact of the matter, however, is that the ability to handle and grow money is also something that took practice. Did your parents introduce you to the concept of money at an early age? Did they allow you to touch money and to take responsibility for it? Did they teach you new concepts as you advanced in age? Even if it wasn't your parents - maybe they were bad with money - did a kind uncle or your friend's "rich dad" tutor you? Maybe you were an inquisitive little kid and turned your inquisitiveness towards money instead of cars like the other little boys. Maybe you watched business reports on TV instead of "Barbie Goes to Ken's"?

Even if you didn't develop any expertise or budding expertise as a child, it doesn't preclude you from having done so at an older age. It also doesn't preclude you from developing expertise now! Sure, if you have a late start at things, you may not become one of the top experts - but I can guarantee you that you'll be much better off than where you are now. Whether you're 35 or 55, it's not too late to start learning as much as you can about money. It's never too late to start practicing good money habits and good management of money. Money is, after all, a part of all our lives.

How does one "practice" money? You probably have a clue already (one of the ways is by reading about it), and we'll discuss more of that in the next post. See you then.

It's Extremely Hard to Make Money (Part 2)

noreply@blogger.com (Mr. Shawn) — Tue, 01 Apr 2008 14:42:00 +0000

As I said in my last post, I'm going to tell you how to spot your secret to amassing a fortune now! Get ready, this is it: you must invent the idea on your own, or you must be told it in confidence by the person who invented it. It must be a unique idea that has never been done (it's okay if it's been attempted, but that attempt failed). As long as no one out there is doing anything half-similar to what you've discovered; there's a good chance your idea will succeed. But, just because your idea will succeed, it doesn't mean that you will. The reason is simply that an idea can be good, but without good implementation and without the perseverance to see it through... it can die just before it flourishes.

Don't bother jumping upon the bandwagon of any of the "money-making ideas" out there, because you didn't invent them and neither did your best friend who is sharing her secret with you. "F'get about it," as Donny Brasco would say. If you heard through an indirect source about a way to amass wealth that seems like a great idea; I assure you that the boat is already over-loaded. The pie will be split between too many hungry mouths. And don't think you're going to jump in, be the best and slay the competition. Sure, there are people who do that - but are you one of those people? Do you have ultra-dedication? Are you going to put away your social and family life just to get it done? I think not. Don't fool yourself. It's only the extraordinary that can achieve certain feats.

I'm definitely not saying to pursue ideas that you hear about that you are totally interested in and would dedicate your existence to. If you found such a thing; hurry up and jump in head-first! When you do something you love in moderation, it's not really work and it can be exhilarating a majority of the time. Just make sure that you've got someone to handle all the make-your-eyes-bleed details; such as accounting, marketing, etc. (It's those details that turn a dream job into a nightmare.)

Otherwise, if you're one of those people who have no passion or who have a fleeting passion for everything; it's time you came up with your own idea. It's the only way you're going to succeed in a world of fierce competition. If you were a lioness competing against ten other lionesses for that one water buffalo, would you just run after it like everybody else? Why not copy the Cheetah and tag-team the poor beast? Or how about using your human-level intelligence to set a trap for the water buffalo... or even, do evil things to eliminate the competition! The best bet, however, would be to go after prey that the other lionesses don't know about. In any case, the point is, why make it ultra-hard for yourself by pursuing the same thing as everyone else? Invent your own "secret" and do it!

How do you invent your own secret? Well, you first need to be well-read and know enough about the world so that you understand what things have already been done. You'll also need this base of knowledge in order to build upon it and create your ultimate secret. But, the worst thing to do is not to give yourself some free time to think everyday. It's best to give yourself a 15-minute time block every day, where you just sit there and think about nothing, just to clear your mind. After that, as you go about your daily routine, your mind will be able to grasp at ideas that appear. Your mind will also be able to articulate what you've discovered. But, you definitely need to give yourself "blank time" to just bask in your existence.

This is called giving yourself opportunity to have a "Eureka" moment. Basically, this Greek scholar called Archimedes was trying to figure out how to measure the volume of the king's gold crown. Sure, he could melt it down and then measure the lump of gold - but that would destroy the crown! He thought and thought about it for days to no avail. So, he just decided to leave the question aside for now and go about his regular routine. The problem was still in the back of his mind, however. One day, however, as he slipped into his almost-full bathtub to soak... a certain amount of water spilled out and all-of-a-sudden he had a revelation. The volume of the water that overflowed from the tub must equal exactly the volume of the parts of his body that he submerged. "Eureka!" he proclaimed, and ran through the streets of Syracuse naked due to excitement.

So basically... if there's a problem or a solution you want to get the answer for, you should think about it for a while and then put the problem down. Go about your daily routines (not thinking too much or concentrating heavily on anything) and then before you know it - Eureka! You'll have figured out the perfect plan or solution. It's also a great idea to write down everything you think of. You sometimes may not think it's a good idea at the time, but you could later come back to it and find out that it's the perfect solution.

So, the bottom line to make your money-dreams come true is to think of the idea that no one else has thought of; and once you've got it, to work on it with passion and fervor!

It's Extremely Hard to Make Money (Part 1)

noreply@blogger.com (Mr. Shawn) — Fri, 28 Mar 2008 17:45:00 +0000

Yes, you heard it here first; it's extremely hard to make money. By make, I mean gather a sum greater than you as an individual sharing this Earth with billions of others deserves. Sure, it's simple and easy (well, not easy at times) to make a living for yourself and your young family - but woe is to he or she who ventures to gather and amass more than his or her fair share!

But there are definitely people out there who have more than their fare share, you say. Yes, there are, but those people are either incredibly smart or incredibly dedicated. You must ask yourself if you are either of these; if you're not, all you've got is the slow way of amassing wealth. The slow was is both slow (takes almost half your life!) and the amount of wealth amassed isn't really that much compared to those who have the aforementioned incredible smarts or dedication. In fact, incredible dedication counts for a lot more than incredible smarts. Really.

Don't listen to anybody who tries to teach or tell you how to make money, but expects you to pay up (aside from authors who don't push any other product within the pages of their book). These people are useless "gurus" who actually don't know anything about amassing a fortune and are actually trying to make their fortunes of your back. If you buy their product - you just helped them amass more wealth. Don't be fooled.

According to Adam Smith, whenever there's an advantageous way out there of making money, it soon loses any and all of its advantages. Why? The reason is because once word gets out that "making a blog about making blogs" can get you a hundred thousand a year in income - you can bet that everyone out there is going to try to get on the bandwagon (and drive the profits down into the ground). Of course, 90% of those wannabes are going to give up really fast and go looking for the next "advantageous way of making money", but that still leaves a huge number of people competing in that particular endeavor. What ends up happening is that what was once a giant cake for one or two people has become only slices for so many... and crumbs for most.

By the time you've heard of what seems like a sure-fire way to make a fortune; you can bet every Tom, Dick and Haru has heard about it already. They've either tried it, or are trying it. Don't be bothered. The profits involved in any type of business (and even professions) are set based upon the number of available suppliers and the demand out there. At the very beginning, the profits are highest because the supply is low... and at the end, people are killing each other just trying to survive. You'll buy breakfast from Bob's Breakfast Basket for $10 when he's the only one around. But what about next month when Brenda's Breakfast Barn starts selling the exact same breakfast for $8? You bet everyone's going to go to Brenda's; and you can bet Bob is going to start lowering his price. It's a price-war! Good for the consumer, bad for business.

With professions; such as doctors, engineers, lawyers, etc., it's more of the same. It might seem like a good idea to become a lawyer, because lawyer's make big bucks, right? You might be surprised to find out that the majority don't! The majority are doing crappy menial tasks like writing contracts for people - they aren't defending O.J. Simpson. The reason for this is the same law of supply-and-demand. Too many lawyers out there; too little demand. Even doctors face the same deal. When there are too many doctors in a certain area, or too many graduating doctors (ironically caused by a shortage just a few years before when young minds decided to become doctors to fill the need); they either have to leave the area to find proper employment, or they have to settle with a less-than-full client roster. (Physician Glut to Shortage in Canada)

Basically, the world is set up in such a way that labor equals money and that is all the value anyone is ever supposed to have in this world. Just like animals, we're only supposed to be as well-fed as we can hunt or gather. Humans have broke those rules (amongst many others; such as how to treat the environment), and so it is that for some extraordinary people, it's not just their own labor that equals money. It's still labor that equals money - but they get many people laboring towards their fortune-amassing-endeavors.

There are secrets to making money, yes - not just one secret, but many secrets. And don't think for a second that someone is going to sell those secrets to you. Nobody will trade their secrets for a couple of dollars or even the price of a seminar. Nobody. People who've made it obviously want to protect their information - wouldn't you? In my next post, I'll tell you how to spot a "secret" when you see it (and there are different secrets for different people).

Money is Like Water, My Friend

noreply@blogger.com (Mr. Shawn) — Sat, 22 Mar 2008 08:13:00 +0000

Bruce Lee once said, "Empty your mind, be formless, shapeless — like water. Now you put water in a cup, it becomes the cup; You put water into a bottle it becomes the bottle; You put it in a teapot it becomes the teapot. Water can flow or it can crash. Be water, my friend." Although Lee was talking about martial arts, this view of things can be aptly applied to the world of money and economics. It seems that money has followed Lee's advice; it becomes whatever it's put into, it flows and it crashes. Put it into the stock market, it becomes the stock market. Put it into real estate, it becomes real estate. Put it into commodities, it becomes commodities. Put it into your teenage daughter's hands, it becomes clothes and jewelry!

Throughout the history of the Earth there has been a constant amount of water around. There is the same amount of water on Earth today as there was a billion years ago. Water may seem to disappear at times, but it doesn't - it merely changes form. It is in the sea now, only to change form and disappear into the air. It is in the form of clouds now, only to fall as snow and eventually turn into an ice shelf. Water never disappears; it only changes form and goes elsewhere on this planet.

The exact same thing can be said about money. Money never actually disappears - it just moves into different sectors of the economy. This may seem hard to believe, because I'm sure you have seen days when the overall stock markets plummet in value - but it's true, money just moves. Money doesn't just "disappear" or "appear" out of thin air - it always comes from somewhere and goes to somewhere.

Let's take a macro (large) look at the economy first and see what's going on when stock markets/real estate/commodities plummet in price. As I'm sure you've heard, stock prices all over the world have been declining over the past few months. This doesn't mean that institutions (like banks, investment firms, mutual fund firms) and individuals have lost their shirts into thin air. What actually has happened is that the fall in prices of stock has been counterbalanced by a rise in price of commodities. If you watch the price of the S&P 500 and the price of gold, you'll neatly discover that when the S&P goes up, gold tends to go down - and the opposite is also true. The reason this happens is that as investors get scared out of the stock market by general "bad news", they move their money into other types of investments (commodities such as gold and oil being the big thing right now).

Thus, when there was a huge housing boom in the USA, stock markets were doing okay, but they weren't doing exceptionally well. But then, when the housing market collapsed (due to many factors), the money moved into stocks. Thus, the stock market started to roar... until investors decided it was time to get out and move their money into commodities. Today, that is the case we are seeing all over the world; a multitude of investors have moved their money into "safe" bets, such as gold and other commodities.

On a micro (small) scale, money works the same way. Money doesn't just disappear - it exchanges hands! Let's say you go to Wals-Mart and purchase a Rintendo Wee... money goes from your pocket into the pocket of Wals-Mart. But, it doesn't just stop there, because Wals-Mart has to pay their suppliers, their staff, their rent, etc. The money just keeps getting divided until the total price you paid for your Wee is in the hands of hundreds of individuals. Those individuals in turn will also purchase things (food, clothing, entertainment, etc.) and thus money goes around and around.

What if an entrepreneur creates a crappy product that nobody likes, however? Doesn't the value of that product just disappear because nobody wants it? Well, for that entrepreneur, his or her money just disappeared into the form of a pile of junk that nobody wants. However, people got paid to design it, make it and provide the raw materials; those people now have that money. Your loss is someone else's gain; and someone else's loss is your gain! Not that buying lunch to eat is a "loss", but it is a loss of money.

The last issue to address here is when companies (or that entrepreneur) "write-off" assets that they thought were worth millions, but turned out to be junk. Doesn't that money just disappear? Well, in actuality, the money was never there in the first place - they just thought it was worth more than it was actually worth. If Koka-Kola sold a bottling plant that cost $100,000 (to make) to Bebsi for $200,000, that difference of $100,000 just went into Koka-Kola's pocket. Now, if Bebsi enters that bottling plant as worth $200,000 in their accounting books, but one days finds out that it's really worth nothing, they write it off and the value is now $0. But, the $200,000 is not lost! $100,000 is with Koka-Kola, and the other $100,000 is in the hands of all the people who helped create the factory from ground-up.