This brings me to the topic at hand

on creating a cash machine for yourself. For people like singers and entertainers, they, their name, the songs they write and sing, become “software” or intellectual property that is worth money. And the great thing about such intellectual property is that once it is created, it keeps on generating money over a long period of time. Another example at the moment is the Transformer movie franchise. It is going great guns with T-shirts, drinking bottles, toys, pencil holders, you name it, you have it with images of Transformers in all shape and sizes. Then there is the evergreen Star Wars franchise. Even more amazing. I wanted to create a site with Star Wars theme and everything is create and copyrighted. From the characters, the famous X-Wing, Millenium Falcon, Darth Vader, everything was created out of the mind of someone. But you say, I’m not Michael Jackson, not even close to Spielberg. That’s true but you still can create.

As an example, this site and several others I write on, becomes my intellectual property. Sure it is not even a tiny drop compared to MJ but still it brings in some dough. It is my first blog and not even that focused. And I didn’t have a framework to blog when I first started. Some of my other sites which are more targeted do generate decent money for me. Now, if you are keen to consider starting a side income initially and later turn it into a cash machine, I highly recommend you check out this course. Now the course is not for everyone. If you think you can just sign up for the course and start to make money,  then forget it. It doesn’t work that way. You have to take action and create content either by writing, creating podcast or interviews or video. It take work so forget get rich quick.

If you are prepared to work by work, I mean creating content, and assuming you can connect and build up an audience, then you will earn money. More important than just earning money is to build an asset for yourself over time, that you control. Okay, this is the free report titled Roadmap for you to read if you want to check out blogging. There are also 10 video that you can watch for free here. Why am I suggesting you check this out? Well, I’ve been exposed to lots of money making opportunity. Some are genuine, some are less so. But in the end, you don’t create an asset you own that you can sell or trade or do whatever you want with it. A site or a blog that is done properly can bring you income for years to come, and I’ve seen it happen so many times and you don’t have to hit it big to earn decent income. Anyway do check it out as the course is open for 5 days only to sign up and cost $50 for 6 months. It closes on 3rd June. Here is the sign up page if you are keen.

Let’s see some examples. First off, there is the King of Pop, Michael Jackson. MJ earned millions of dollars and the adoration of fans in his heydays. But his empire slowly collapsed in 2003 and Neverland was in danger of foreclosure in 2008. Many items MJ accumulated went to the auction to pay debts. On a documentary, the spent $6 million in just a few hours.

There are many other rich and famous who got in trouble because they failed to remember the basic money rule of spending less than what you earn. Among them Elton John, who was reported to running up debts of more than $2 million a month and Burt Reynolds filed for bankruptcy in 1996 with more than $8 million in debt.

Professional athlete also succumb to make silly financial decision perhaps thinking they can earn it all back. Don’t they realize an injury can wipe out everything. Mike Tyson earned more than $300m in his career, had pet tigers, a lifestyle that cost over $400,000 a month and finally filed for bankruptcy.

Lastly, we look at Larry Ellison, founder of Oracle and one of the world’s richest men. While Ellison have extravagant spending and made mistakes like borrowing against stocks he owned in Oracle, nevertheless, he listened to his accountant Paul Simon (eventually) to diversify his investment.

Borrowing from banks against your stocks is a bad idea because when stocks markets are down, banks will call in the loans. You might be forced to sell when prices are low. A double whammy.

To give you an idea on Larry’s rough budget here are some figures

1. Life Style - annual $20m
2. Interest Accrual - annual $75m
3. Villa in Japan - $25m
4. New Yacht $194m - (over 3 yrs)
5. America’s Cup - $80m - (over 3 yrs)
6. UAD – $ 12m (over 3 yrs)

So you are betting on a lottery ticket to solve you financial troubles? Think again. Evelyn Adams won the New Jersey lottery twice for a total of $5.4 million. Today, the money is gone and he lives in a trailer. Another winner, Suzanne Mullins won $4.2 million in the Virginia lottery in 1993. Today, she’s deeply in debt to a company that lent her money using the winnings as collateral.

There are a few lessons here.

1. Even billionaires need a budget
2. Rich don’t mean smart when it comes to growing money
3. Rich or not so rich, you need good advisors
4. It is not how much you make but how much you keep

via SFGate

Just the other day, I received my card statement with the yearly annual subscription. Although the amount they charge is not that big, around $20, money is still money especially in this economy. (That’s also why I never bothered with a gold card, higher fees just to impress someone? No thanks)

So I picked up the phone to call the customer service to have that waived. It seems like a lot of hassle having to do that every year. In the past, it is quite easy to just hint that I’ll, “cancel the card” to have the annual fee waived but banks are also hungry for cash flow these days, and they know the “cancel the card” trick.

It got me looking for alternatives since in my country, there are some credit cards that do not charge an annual fee provided I make 2 or 3 purchases with the card each month. This is quite easy for me since I pay all the utilities and fuel using the credit. It got me on the hunt. It seems the credit sales person have all gone missing. Where are they when you need them?

Anyway, if you are looking to get the most out of credit card companies like I did, you might be able to find one here at credit card deals. I’ve been a strong advocate for being “smart” when using your credit cards. If you are having trouble controlling your spending, I suggest you think twice before getting another one.

Rigsby says, “Just because you’ve been selling electronics before doesn’t mean you can’t learn to sell something else,”

The point is to re-tool yourself! Although this downturn accelerated the demise of certain jobs, it has been happening for quite some time. Stock brokers, travel agents and real estate are going the way of the dinosaur because they were just middle man in many instances. (Some of the above agents have changed and are doing quite well)

Question : Can you join all the black dots above with just 3 straight lines?

But to change everything at the same time is too expensive, too difficult and the risk of failure is high. To make smaller changes gives you a better chance of success.

I remember my senior who mentioned this. Use the same old idea for new people or use new ideas for old people. So now, let’s say you have

• employed staff, you can change what they do,
• same customers, you can change what you sell them,
• keep your machines, but make something else (sometimes not possible)
• keep your products, but sell them in another industry, another country, another way.

Here is the answer. By the way, there are other solutions to join the 9 dots with just 1 line! Just think out of your box.

Since this site is about money, we will look at the cost of maintaining them. I surfed over to SPCA site to take a look at the cost of maintaining different types of pets and the associated cost. While I think cost can vary depending on what you feed your pets, especially dogs or cats which can eat a variety of food, the SPCA gives a ball park figure what to expect if you intend to keep pets.

The annual cost is around for:-

• medium size female dog $1,000 a year
• cat - $900
• rabbit - $500
• guinea pig - $500
• hamster - $240

The above cost does not include cost in case your pet gets sick or injure or other cost that might throw your budget  way off. I know since we had pets that got sick, got hit by a car and other interesting happenings, when you have pets.

What does all this mean? Pets are expensive. If you want to keep them, make sure you have the necessary funds to maintain them. If you are in the midst of reducing debt, then pets might not make economic sense.

Whatever position you are currently at, there are some things you can do now, rather than waste time doing nothing. Skills wise, you may be into 2 possible groups. Either you are skilled at something and your expertise is worth something, (just not at the moment) or you don’t have really expertise in any field.

If you are in the latter group, then I suggest that you go learn some new things. There are many things are available online or books you can borrow from the library to learn something. Why not learn a new language or learn public speaking? Or web design? Or how to organize events. These skills will become valuable down the road! There are plenty of things you can try. But this comes with a caveat. You have to do it well enough that you rise above the norm. Don’t stay at beginner level but learn with the aim to become an expert. If you can, be great. There is where value lies.

On the other hand, if you already have some skills, the perhaps starting a blog would be something to consider. Learn to market yourself. Think out of the box. For example I have a friend who really like marketing in the retail world but could not get a job in that specific sector. He had to settle for a job (still in marketing) in an different industry that is more regulated and his creativity is some what stifiled. I suggested he start a blog to review existing marketing design especially towards the layout, design and colors. What works, what doesn’t and why etc. While at the moment, he needs to stay on the job to pay his bills, in the months ahead, assuming he is good at what he does and builds a following, instead of getting a job, many more options will open up. Possibilities down the road would include maybe a book, freelance consultant work, or perhaps paid speaking engagements all come to mind. Who knows. What you build online is like an online resume!

But best of all, you are doing something to increase your value.

You might think that my friend here (let’s call him Bob) is a top of his field or someone brilliant that he received 6 offers. Nothing like that sort. Not to put Bob down but he is an average guy, late 20s not much specialization to speak off.  The fact was that there are jobs available if you are willing to do it.

On a side note, I spoke to another business owner in an engineering related field. The problem he says, "People are asking too much pay!" While you can and should ask for as much as possible and don’t sell yourself short, depending on the industry you are in and how long you’ve been jobless, I reckon this calls for wisdom.

Being prepared for the interviews and find out about the companies you intend to work for. That’ll give you some hints which company to choose if you are fortunate enough to have several job offers. So ask yourself to see if you are asking too much.

If you haven’t noticed it yet, your job, company or industry can disappear or be radically transformed over night. I’ve also experience the disadvantage of being in a agent-principal relationship to start look at alternatives.

While I still hold out that the Almighty promised that He will take care of our needs, it doesn’t mean I don’t make provisions. Joseph in the bible had a dream that 7 years of prosperity will be followed by 7 years of famine. He prepared for it and Egypt became the riches nation at that time because of what Joseph did.

My Plan B looks like this

• I have an emergency fund that covers 6 months of living expenses
• Our only loan is our house loan
• I have developed a broad network of people I could rely on for referrals/job leads if my job ever disappeared
• I have spread our business not to depend on a single provider
• I’ve been learning about the internet and making a few bucks online

Some suggestions to think strategically. Ask yourself if:-

• your experience and expertise be transferred to other industries?
• Is there any certifications you can acquire to strengthen your position
• How much money do you have set aside?
• Who should you go meet now to build you need new connections
• Have you thought of what you would like to do even if you did not lose your job.

The present time is challenging but also a time to reinvent yourself. Grab this opportunity.

For your information, the average return of a fund is taken from the begining of a period (usually the 1 Jan) to the end of the period (usually 31 Dec). This assume no further buying or selling during the period. Investor returns on the other hand are your real life returns that you actually receive.

See the diagram below. Even though the fund below gave say 10% return for the year (from Jan to Dec), it would have been very different if you invested at Point 1 vs Point 2.

From a study conducted by Dalbar Inc. from 1985 to 2004, they found that

the average mutual fund investor achieved is a 3.7% annualized return while the S&P500 achieved a return of 11.9% and inflation averaged 3%.

According to the study,

the reason for the average mutual fund investor’s low return was that these investors invested more in “Hot Performing” mutual funds at the end of bull markets and then became frightened and took money out of the market toward the end of bear markets.

In other words, the investors bought high and sold low; buying when prices are already high, saw the high returns, got tempted by what they see and invested. Shortly after, when markets are on a downward trend, they sold because of fear and not wanting to lose more, when they should be holding.

Financial planning is more of being a smart investor rather than chasing investments!

I wrote on my previous post about doing things a bit differently this year. Deciding and setting appropriate goals are one of them. I came across this post written by Tim OReilly which I found very interesting and thought I’d share it with you. It is worth taking time to read through but I summarize the key points here.

Work of stuff that matters. This does not mean doing non profit, “do good” charity work. It does mean building a business and economy (a financial life) that is sustainable long term. You have to decide what stuff matters to you.

Ed’s take on a personal financial level: Your effort should focus to build up a sound financial plan that is sustainable. Not a few fat years of lavish living followed by depravity a few years later.

1. Work on something that matters to you more than money

Although you should having financial goals, have a goals that is more than just making money for yourself. Think of money as fuel for what you really want to do, not as a goal in and of itself. Money is like gas in the car you need to pay attention or you’ll end up on the side of the road but a well-lived life is not a tour of gas stations!

Have a big goal. Google’s motto, “access to all the world’s information” is an example of such a goal.

2. Create more value than you capture

Ideally, your goals should create more value than it captures. Example, micro finance lifts people out of poverty. As more jobs get’s create, more people borrow more and everyone benefits.

Wall Street and Bernie Madoff did the opposite and everyone knows what happened. If your goals and what you do create a circle of value, the impact it create start to perpetuate and you create an ever larger spiral effect.

3. Take the long view

See the big picture. While it is good and a must to have short term goals, it is important to see the long term as well. Tim goes on to say, the economy has many elements of a ponzi scheme. While his last point is kind of short without much explanation (or I can’t understand where he is taking it), I agree that financially, your life goals should have in view the long term view.

With such a view, your financial decisions are not just focused on the here and now which tend to fluctuate a lot depending on the state of the economy. Such fluctuations are here to stay if anything.

The whole article is here .