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Our New $10.00 Per Month iPhone Plans

2013-05-29T10:07:00.003+05:30

After more than a decade of enjoying mobile phone plans that were subsidized by various high-tech companies, Mrs. Money Mustache and I were finally brought back down to Earth this month as she shed the last remnants of her cushy part-time job.

This meant that suddenly we were paying for our own double iPhone habit out of our own pockets, which at $110 per month combined, was a pretty Antimustachian thing to leave on the books. Sure, we can afford it and they are still used mostly for “work”. But it is an inefficient way to handle our communications, since neither of us is a heavy phone user. Our existing carrier (AT&T) did not offer any reasonably priced plans for light users (the mandatory data package alone runs $20/month for 300MB, whether you use it all or not). So we went hunting.

The goal was to combine the best aspects of mobile and smartphone ownership (nationwide calling without long distance fees, having your phone, email, internet access, recipe book, camera, video recorder, voice recorder, calendar, notepad, music player, virtual scratch turntable, etc. all in a single device that is always in your pocket).. with the minimal cost associated with a ‘dumbphone’ on a prepaid plan.

As I’ve learned over the past year from some of the MMM readers, nowadays you can do just that. You can take an existing smartphone (iPhone of any version, Androids such as the Samsung Galaxy, and many others), and by simply swapping out the SIM card, bring it to another mobile carrier. You even get to keep your old phone number when you switch companies.

Many of these new options are called Mobile Network Virtual Operators (MNVOs), and they are in fact just re-selling access to the bigger carriers’ networks. So you get the same reception, coverage, and reliability as you had before.

I’ll start with the juicy end result: Mrs. MM and I now have our iPhones running on plans that cost us only ten bucks per month. That includes any combination of the following:

Up to 250 minutes of voice calling, which uses up your $10.00 at a rate of 4 cents per minute.
Up to 500 text messages, which use up your balance at 2 cents per message (in either direction).
Cellular Data (any that you use while not on a wi-fi network) is billed at 33 cents per megabyte.

If you use up your 10 bucks, you log into your Airvoice account and add another $10. Note that there are currently some annoying glitches in the way their system works, described in footnote 1 at the bottom of this post.

The plan we’re using is called the Airvoice Wireless $10 Plan. It looks great on paper, but the company is just a bit new and flaky at this point, so be warned that it might not be quite as smooth an experience as your current Cadillac $120/month plan. However, being both Mr. Money Mustache and a retired software engineer from the telecom/datacom industry, I figured I’m up for a little Telephone Science Experiment. Especially considering the thousands it will save me (and the millions it could save the MMM readership as a whole)! By chopping a combined $100 per month from our monthly costs, we’ll end up about $17,300 further ahead every ten years after compounding, as noted in the old classic about Short-Termitis, the Bankruptcy Disease.

So let’s get into the details:

Looking at our phone use history for the past year, we found our habits would fit nicely into the new plan. My chitchatting has ranged from 58-234 minutes of voice and from 50-100 text messages per month. On top of this, most of the voice is done at home, which could just as easily be done on the computer using any of the free voice-over-internet programs including Google Talk or Skype (Google talk allows you to call regular phones for free, even between Canada and the US). And text messages from one iPhone to another don’t cost anything these days (they go through the “iMessage” feature). Plus even text messages to other non-iPhone people can be had for free, as mentioned in my Google Voice article.

Switching from AT&T to Airvoice (or a similar MNVO) took some research and quite a few steps. But to make it easy for you, here’s the summary, based on a report fresh from the keyboard of Mrs. Money Mustache, who did most of the legwork:

Steps to Switch your iPhone from AT&T to a Prepaid Plan:(in this example, we refer to Airvoice, but other MNVO carriers would be similar)

Check to make sure that your contract is up. If you just signed up for an iPhone5, you might be hearing the litle wah-wah-wah-waaaah trumpet song right now, as you are probably locked into a 2 year contract. Come back and read this later. You can use this link to check your AT&T contract start and end dates.
Next we’ll need to “unlock” your phone so it can run with other carriers. You only become eligible for an unlock when your contract ends. You can check unlock eligibility here.
Request a device unlock for your iPhone through AT&T’s online formhere.
You will need your IMEI number, which you can get from your “settings->general->about” menu, or by dialing *#06# from your phone. You will receive a “IPhone Unlock Request Received” e-mail notification from AT&T.
If you are sure you’re eligible for an unlock, and you are happy with the Airvoice coverage area (see this map) go ahead and order your SIM card ($4 per card) from Airvoice Wireless here .
If you do not have a Passcode/PIN set up for your AT&T account, go ahead and set one up now with this link. You’ll need to give this PIN to Airvoice when it’s time to port your number.
Wait for your unlock request to get processed (it took 3-4 days for each of our requests). Once your unlock has been processed, you will receive an e-mail from AT&T called “How to Complete Your Authorized iPhone Unlock”.
The email will tell you to plug your phone into iTunes and do a backup and restore. Once you finish, iTunes should show a “Congratulations, Your iPhone is Unlocked” message.
This worked perfectly for Mrs MM, while MMM had hacked and jailbroken his own phone earlier, so it became a can of worms. He never got the Congratulations message. But eventually we prevailed after further hacking. You can check your phone’s unlock status by typing in your IMEI at this website: http://iphoneox.com/
Hopefully you’ve received your SIM card from Airvoice Wireless by now. Ours both came in the mail very quickly. Note: if you have an iPhone 4 or newer, you’ll need to cut down the plastic frame around the Airvoice SIM card with scissors to fit in the newer, smaller slot (as shown in headline picture for this article. See YouTube for examples. No need to do this with the iPhone 3.
You’re all ready to purchase a calling plan and port your number! Take a look at all the Airvoice plans here. As noted earlier, we chose the $10 Talk and Text Plan, but there are also plans for heavier users, and pay-as-you-go-plans for extremely light users (which cost more per minute).
Download any statements or other stuff you need from your old AT&T account. After step 11, your account will automatically be nuked!
Fill out the “Port Your Number” page on the Airvoice web site: . You can also call Airvoice at 1-888-944-2355. You’ll need to provide
- your account number with AT&T
-your PIN/Passcode from step 5
- the number from the Airvoice SIM card you just got in the mail
- your AirVoice Refill PIN Number (if you don’t have one, just put xxx in this field
- the type of plan your purchased
Put your new Airvoice SIM card in the phone. You can use the end of a paperclip in the small hole in the side of the iPhone to pop out the SIM card tray.
See if you have service! One of our phones started working immediately, and the second took and hour and required a phone reboot.

It was a long haul, but you’re finally done. In my case, I can look forward to a $1200/year savings, which translates into the cashflow generated by$30,000 of ‘stash at a 4% withdrawal rate.

Whenever you need to buy more airtime, you just use this link. After purchasing, you’ll get a confirmation e-mail with an order number.

A few notes and observations on Airvoice:

Every time you make a call or send a text, you’ll get a very useful pop-up alert like the one in this picture to let you know the funds remaining on your plan.

Since data is more expensive with this plan, we now disable cellular data for casual use (settings->general->cellular->cellular data-> off). Text messages and wi-fi still work perfectly, and my own town is blooming with free wi-fi spots (all public parks, schools, and most businesses around here provide free access, not to mention the blanket of coverage in my immediate neighborhood from my giant rooftop wifi antenna). So the data plan is mostly for trips and adventures.

Apple’s proprietary iMessage system still works (no charge to message from one iPhone to another), which is a nice surprise.

You might want to set up Google Talk on your home computer so that you can easily make free calls from there. This will help reduce the number of minutes you use on your phone.

The account options on the Airvoice website are pretty limited. You can edit your profile, change your password, and buy airtime, but you can’t view your usage or call history. Luckily, you get that information at the end of each call as noted above. You can also use your phone’s built-in statistics as a backup tracker: Settings – General – Usage – Cellular Uses (at bottom) – Reset Statistics.

We’ve only had this service for four days so far. And so far, so good. But as problems crop up, I will note them at the bottom of this article.

And now I’d like to turn it over to the readers: Airvoice is just one of many low-cost phone options besides the expensive main providers. Thousands of readers are probably already using other alternatives, perhaps better ones than the plan I chose for this article. Share them, give us all the details and links, and we’ll build an even better guide to killing the $100-per-month phone bill.

Alternatives include:
AT&T Operators

Airvoice, Black Wireless, Fuzion Mobile, H20 Wireless, Straigh Talk

Sprint Operators

Platinumtel, Ting, Republic Wireless ($20/month for unlimited everything)

Verizon Operators

PagePlus Cellular, Walmart Family Mobile, Straight Talk

T-Mobile Operators

Spot Mobile, GoSmart Mobile, PlatinumTel, SIMPLE Mobile

More of these MNVOs are opening (and closing) every month. Luckily, a reader later pointed out that there is now a Wikipedia page that tracks all of these : http://en.wikipedia.org/wiki/List_of_United_States_mobile_virtual_network_operators

(…more to come…)

Footnotes:

1 – The Airvoice $10 refill glitch:

Update as of March 29, 2013: It looks like this has been fixed – the company now offers automatic renewal and credit card billing at the end of the month, just like every other monthly service in the world. So it’s convenient at last.

Here’s the old problem, which has now been solved, just in case it comes up again:

When we first learned about Airvoice, the $10.00 plan worked exactly as you’d expect it to: you can pay $10 for 30 days, or you can buy multiple $10.00 credits and have them stack up in your account, and at the end of each month (or when your 250 minutes gets used up), you automatically move on and start nibbling upon the next $10.00 credit with a fresh 30-days-later expiration date. It would make sense to buy at least a few months at a time, both for efficiency, and because of the following inconvenient policy on the Airvoice site:

To avoid service interruption, you will need to add a new refill card to your account before your airtime expires. Once your airtime expires, you will have 30 days to add a refill card. If no card is added, your account will be canceled. You will lose your phone number. If you wish to restore service after your account is canceled, you will need a new phone number and a new Airvoice SIM card.

However, they recently changed it so that if you buy a $10.00 credit, you get extra minutes, but your account is only extended by 30 days from the date of purchase. So you are doomed to having to log into the site manually to purchase airtime every single month. No automatic renewal, no possible way to make it convenient to give the company your money. Is this company run by former Soviet administrators!?

I couldn’t believe such a change would happen. So we contacted their headquarters, told them we were writing an article, and received this response:

We are consulting with our IT department and are working on reversing this change that has occurred. Hopefully, within the next couple of weeks, the plan will revert back to the original policy, where each $10 refill will provide an additional 30 days. For the time being, however, the expiration date will only extend as far as 30 days from the present date.

We appreciate your patience and understanding on this matter.

Thank you,
Airvoice Wireless

And therein lies the challenge of this whole operation. These little companies are small and disorganized. Airvoice has some of the most poorly written and inconsistent sets of plan options and marketing documents I’ve ever seen. And most of the other ones, such as H20 Wireless, are in the same boat. Even the slew of options available from the big incumbent providers are sprawling, and as confusing as spaghetti*. The only carrier that does it right is the upstart Republic Wireless, which is why I’m rooting for them.

Luckily, the phone service itself is still fairly reliable and the telephone customer support from Airvoice has been excellent… so far.

*Hey Airvoice.. need someone to rewrite your materials and plans so they no longer suck? Get in touch!

Getting Rich: from Zero to Hero in One Blog Post

2013-05-29T10:04:00.005+05:30

Hi there. If we haven’t met, my name is Mr. Jaskaran Singh. I’m the freaky financial magician who retired along with a lovely wife at age 30 in order to start a family, as well as start living a great life. We did this on two normal salaries with no lottery winnings or Silicon Valley buyout windfalls, by living what we thought was a wonderful and fulfilling existence. It was only after quitting the rat race that we looked around and realized why we had become financially independent while most people, even with higher incomes, end up stuck needing to work until age 65.

I figured a post like this was long-overdue, since about half of the readers of the blog are pretty new, and casting around wondering where to start on a giant blog like this with over 300 published articles. Then we can stick this article up in the menu for all future rounds of newcomers.

“I hear Mr. JASKARAN SINGH writes some useful stuff and many people are building happy, wealthy lives for themselves using his advice”, they are saying, “but I am a busy person. How can he make me rich Right Now!?”

Great question. Let’s begin.

For almost two years, I’ve been preaching a different brand of financial advice from what you see in the newspapers and magazines. The standard line is that life is hard and expensive, so you should keep your nose to the grindstone, clip coupons, save hard for your kids’ college educations, and save any tiny slice of your salary that remains into a 401(k) plan. And pray that nothing goes wrong in the 40 years of career work that it will take to get yourself enough savings to enjoy a brief retirement.

Mr. Jaskaran Singh’s advice? Almost all of that is nonsense: Your current middle-class life is an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income. Or two thirds, or more. Sound like a fantasy? Not to readers of this blog.

What happens when you can save more of your income? As it turns out, spending much less than you earn this is the way to get rich. The ONLY way. And the effects are surprising: if you can save 50% of your take-home pay starting at age 20, you’ll be wealthy enough to retire by age 37. If you already have some assets now, you’re even closer than that. If you can save 75%,your working career is only 7 years.

So remember my freaky magician story up in the first paragraph? There was not really any magic – I just saved about 66% of my pay without really noticing it, and in under ten years I woke up and realized I didn’t have to work for a living any more. Our son was born shortly afterwards, and he recently had his seventh birthday party. And we’re still going strong.

But how can you save so much?

The bottom line is this: by focusing on happiness itself, you can lead a much better life than those who focus on convenience, luxury, and following the lead of the financially illiterate herd that is the TV-ad-absorbing Middle Classof the United States today (and most of the other rich countries). Happiness comes from many sources, but none of these sources involve car or purse upgrades. No matter what the herd or the TV set tells you, this is the truth. Far from being a social outcast, this new perspective will make you a hero among your friends. This is not a fringe activity anymore – millions of people are fixing their lives these days. And the earlier you can accept it, the sooner you will be rich.

Is that all too fluffy and philosophical? OK, fine. Here’s how to cut your life costs in half. Start by getting rid of your Debt Emergency if you have one.Live close to work. Move to another city if you enjoy adventure. Don’t borrow money for cars, and don’t buy stupid ones. Ride a bike wherever you can. Cancel your TV service. Stop wasting money on groceries. Give your kids the opportunity to achieve greatness without being pampered. Lose the overpriced cell phones. Learn to appreciate the life-boosting joy of using your own body to get things done. Learn to mock convenience. Practice optimism.

That should do it – about half of your expenses, gone in one paragraph. Keep going, as many readers do, and you can save closer to 75% of what you make – especially for those with above average incomes.

But then what do I do with all the money?

You invest it. In stock index funds, in paying off your own house, in rental houses if you are interested in local real estate, and in other sources as you continue to learn about making money work for you. My own retirement income comes from a dead-simple asset allocation: one high-end rental house with no mortgage, and some 401(k) and taxable stock accounts which pay quarterly dividends. More recently I have started experimenting with peer-to-peer lending for higher returns on a small percentage of the portfolio, but that’s another story.

How long will the money last?

If you can get 25 times your annual spending saved up and working for you,that is enough to live off – forever. Don’t worry about the details – just do the saving for now, and watch as your lifestyle transforms and your worries about safety melt away. This blog is not so much a financial nuts-and-bolts blog as it is a story about lifestyle and attitude transformation. And believe it or not, your attitude determines your lifetime wealth much more than your knowledge of financial nuts and bolts.

So welcome! I’m glad you’re here, and let’s get started. For the long-time readers – let’s keep going!

5 Ways To Get Rich Online

2013-05-29T09:54:00.002+05:30

To cash in online you need to be a game-changer. When Mark Zuckerberg launched Facebook, there was nothing like it. He is now worth $17.5 billion according to recent Forbes valuations. DrewHouston saw money to be made in online storage, and co-founded Dropbox, the web-based tool that hit $240 million in revenue in 2011. Eric Lefkofsky spotted the potential inGroupon and gave $1 million to CEO and founder Andrew Mason. This year, Lefkofsky made the Forbes Billionaires list with a net worth of $2.9 billion. There are still fortunes to be made online, and we have found a few ways to do so.

YouTube has launched the career of many a musician, including Justin Bieber, the teen pop sensation who earned $108 million in the past two years. But have you heard of Karmin, the pop duo who signed a million dollar record deal after their Chris Brown “Look At Me Now” cover went viral? The duo, real-life couple Amy Heidemann and Nick Noonan, hit it big when the video gained over 68 million views after its upload in April 2011, propelling Karmin to a million dollar deal with label heavyweight Epic Records just a month later. “Brokenhearted,” the lead single from their debut album, has now gone platinum.

You do not have to be a singer to become a YouTube star. If you are lucky, you could shoot a video of your child, pet, or a double rainbow that strikes a chord and goes viral. YouTube might then get in touch asking you to become a partner, meaning the site will run ads along with your clip and share over 50% of the revenue with you. The father of “David After Dentist” has made more than $100,000 from YouTube ads alone. As well as advertising, viral video celebrities can diversify into TV appearances, merchandise and even iPhone apps, as the creator of “Charlie Bit My Finger” has done.

YouTube is not the only platform to launch the careers of millionaires. Sophia Amoruso, the founder of online clothing store Nasty Gal, started her business by selling vintage finds on eBay. After building a fan-base she outgrew the platform and created her own website. Nasty Gal is now worth $130 million, and is set to do $128 million in sales this year.

These days, there are many more online retail options on which to cash in. Alongside the tried-and-tested web marketplaces of Craigslist and eBay are stylish sites like Threadflip, a place for sellers to turnaround their used women’s apparel. ModCloth, which peddles vintage threads while carefully integrating social and mobile aspects has become increasingly popular, earning its 27-year-old husband-wife founders Eric and Susan Gregg Koger a spot on Forbes 30 Under 30 list.

Bloggers can make it big, too. First, you’ll need to set up a site which will become your platform to write on music, fashion, finance or whatever your interest may be. Build a following and readership, and you could catch the attention of companies looking to acquire your site. In 2008, Johns Wu, the founder of Bankaholic.com, sold the site to Bankrate, Inc. for $14.9 million. Entrepreneurial tech site TechCrunch was acquired by AOL in 2010 for $30 million, making its founder, Michael Arrington, a wealthy man.

Fashion bloggers can also get rich. Just look at Leandra Medine, the woman behind the Man Repeller blog, whose site grew so popular it spawned two jewelry lines with Dannijo and a collaboration with Del Toro on $325 shoes.

Other ways to monetize your writing include selling affiliate marketing through programs such as Amazon Affiliates. Bloggers place an affiliate link for the product on their site, and whenever a visitor buys a product by clicking on that link, they will be credited with a sale and make a commission. Bloggers can also sell advertising space, earning higher rates for more visitors.

With a little creativity, you might just become the next Internet millionaire. So power up, log on, and start turning your talents into cash.

Is This Blog More Powerful than Doubling your Salary?

2012-11-16T11:18:00.004+05:30

“Spend Less!”

“No, Earn More!”

The battle goes on, with scathing mockery volleyed between the opposing camps.

Mainstream personal finance pundits like Dave Ramsey and Suze Orman advocate lower spending for those in debt. Yet they have an apparently unlimited upper ceiling on how much increased spending can still lead to happiness, as evidenced by the high-spending lifestyles they are living today.

Here in the sensible middle, Mr. Money Mustache recommends both paths: earn as much as you can, but never sacrifice your soul to do it. At a certain level of income (which I feel is around $100,000 per person per year), the time to financial independence becomes so short that it becomes increasingly futile to earn more – that’s just how the math works out.

But all the earnings in the world are useless if you never know the meaning of the word “enough”. So get that concept in place right away – before wasting your time with increased income. Otherwise very little of that increased flow of cash will find its way into your ‘stash.

To illustrate this point with sparkling clarity, I am happy to share a neat little story and graph based on data provided by an MMM reader. He says this:

Comments: Your blog > Doubling my salary
Dear MMM,
I’m sure you receive many “thank you” emails a day for teaching your Mustachian values, but I bet you don’t receive “thank you” proof too often. I wanted to show you a graph, but I didn’t know how to attach it, so the following data will have to do (you should graph it if you get a chance).
The data below is my monthly net worth (according to Mint). When you graph it, you can see two distinct slopes. In both cases, my net worth is increasing, but my rate of wealth accumulation more than doubles at one point (Jan 2012). It goes from $600/mo to $1600/mo. What astounds me is that in March 2011, I doubled my salary and you can’t really tell. But in the months after I started reading MMM, my net worth starts increasing like crazy.
I believe that this is proof that reading your blog is more powerful than doubling my salary! Isn’t that nuts??? It certainly took a bunch more research/changes, but your blog is was the impetus. This rate change should take me from retiring in 30-40 years, to retiring in 10-20!

Following his advice, I graphed his data, added annotations, and this was the result.

The Effects of Mustachianism on Net Worth (click for larger)

I was naturally both pleased and intrigued by the result, and so I wrote back and asked our friend for more details on exactly how he accomplished these feats: both doubling his salary, and increasing his savings rate. The answer (note that I added a few links to relevant MMM articles based on his list):

So here’s how I was able to double my salary. Right after graduating college with a bachelors in mechanical engineering, I started graduate school. Tuition was waived, and I got a research assistantship making about $25,000. That seemed to be plenty to live on, but the research was boring.
In March of 2011 I quit grad school because I got a job at a giant company working in their corporate sustainability department. It’s a dream job because they actually pay me to calculate/analyze their carbon footprint! It’s great!
Anyway, my salary increased to about $50,000. it’s hard to admit, but I went through some major lifestyle inflation. I moved to a big city, which is 30 miles from where I work. I started spending money like it was my job to fill the new apartment with furniture, drive to work every day/upkeep the car, shop at Whole Foods, buy lunch at work every day.
I took some expensive trips across the country and I started spending more money on christmas gifts and charities. This all seemed like a great idea because as long as I had a fairly positive savings rate, I figured that that what I was supposed to do. I never took on debt/car payments/ credit card balance, and I tracked my finances reasonable closely.
So in December 2011, while searching for this article Men With Mustaches Make More Money, your blog popped up. Although I never found a post related to that news article, I knew I’d struck gold. I read every post you’d ever written in about a month. After that I read many personal finance books/blogs as well as investing books. It all started to become so obvious to me. Here’s a list of the changes I made in a relatively short period of time:

Started taking public transportation to work
Started biking anywhere within a few miles
Stopped buying extra stuff (tech gadgets, extra clothing, impulse Target buys)
Food:
switched to a super cheap Bosnian grocery with great produce
made lunch every day
cooked more meals
cut monthly grocery budget in half
Bought dry goods in bulk
fell in love with oatmeal
opened online savings account
opened Vanguard IRA (simple index funds)
got a 1% cash back card
opened a Vanguard taxable investment account (simple index funds)
Ditched Cable
Started doing home energy audits for friends/family ($100 each)
got a 4% raise because I “exceeded expectations” at work
increased my gas mileage from 24 to 27 mpg by slowing down
use gasbuddy.com to find cheaper gas
bought all LED light bulbs (got them super cheap through my work)
I can’t point to any one thing that accounts for the slope change. I just started making changes and they kind of built on each other. Now I get really excited when I get interest from my online savings account or reinvested-dividends from my index funds. I know my net worth is small now, but the slope is certainly heading in a better direction.
Use whatever info you’d like, and let me know if you’d like to know anything else. Also, if you ever have any energy efficiency/corporate sustainability questions, I’d be happy to help you out.

I’d like to thank this reader for sharing the happy story (he wrote it a little over two months ago). I can type to you all day about the counterintuitively large effect of making a bunch of small conscious improvements in your spending.. and indeed, some days I do just that. But until you see it applied to a real life like this, where the graph of your wealth takes a sudden bend and your mandatory work career is suddenly chopped in half, it can be hard to convince people of just how useful it is to understand your spending, instead of just endlessly chasing more income.

A Positive Attitude: The Essence Of Good Manners [BLOG]

2012-11-16T11:16:00.002+05:30

As an etiquette instructor, most people think my instruction revolves around lessons in poise and posture, the importance of a firm handshake, and proper table manners. What they don’t realize is that, before I get into any of the manners skills training, I begin each and every client session with a very frank conversation about the importance of a positive attitude as being essential to having good manners.
Learning how to be more positive actually led me to my interest in teaching manners in the first place. As a New Yorker, I was born with the natural tendency to look at the more cynical side of everything, often viewing the glass as half-empty rather than half-full. Growing up in a household with an unhappy parent certainly didn’t add to my ability to look on the brighter side of life. It certainly hasn’t been an easy road, however, I had the good fortune to marry someone who is eternally optimistic and has inspired me to move forward in the right direction.
A positive attitude has no prejudice. It is not bound by color, race, or religion. It does not care if one is rich or poor. Anyone has the right to display a positive attitude, and it makes that person much more attractive to others. As far as making a good first impression, a positive attitude (coupled with an ear-to-ear smile) is a sure-fire way to show others you are likable, friendly—and a full participant in your life.
When I decided to immerse myself in manners, I thought long and hard about this concept of a positive attitude and how it can affect our relationships, our interactions, and our everyday circumstances. I began to look at people of all ages and noticed how many walk around with what I call “mad on” faces, like they have the weight of the world on their shoulders, barely able to crack a smile. And I realized that having a positive attitude—like having good manners—is a choice, and requires discipline and practice.
Here are two pieces of etiquette advice that I share with my clients, and that I aspire to live by on a daily basis.

Possess a great attitude!When you wake up each morning, choose to be upbeat and positive, as this helps to set the tone for the day. Life is one giant possibility, so why not embrace it with an open and willing attitude to try new things and take risks. You only have one lifetime, and there is no point in wallowing in negativity. Make a conscious choice to enjoy a happy and successful life.

Don’t Forget to Smile.A smile is critical and often overlooked. Find something to be thankful for each day and put a smile on your face. This will win allies and attract friends. A smile is the most inviting of all gestures. If you smile on the outside, your insides will follow suit. Practice your smile each day in front of the mirror when brushing your teeth, and in no time you will have a perfect, authentic smile.

How To Get Rich [BLOG]

2012-11-16T11:14:00.001+05:30

I have a whole lot more fun now. It doesn’t suck to be rich.
The question everyone wants answered, is how to get there. There are ways to get there. But there is not a template that works every time for everyone. Getting there requires being ready when opportunity presents itself.
Change and uncertainty create opportunity. Times like we are facing now, with complete financial uncertainty, are perfect times to start on the road to getting ahead financially.
First, here is WHAT NOT TO DO:
There are no shortcuts. NONE. With all of this craziness in the stock and financial markets, there will be scams popping up left and right. The less money you have, the more likely someone will come at you with some scheme. The schemes will guarantee returns, use multi-level marketing, or be something crazy that is now “backed by the US Government.” Please ignore them. Always remember this: if a deal is a great deal, they aren’t going to share it with you.
I don’t broadcast my great deals. I keep them all to myself. Also, if the person selling the deal was so smart, they would be rich beyond rich rather than trolling the streets looking to turn you into a sucker. There are no shortcuts.
So what should you do to get rich?
Save your money. Save as much money as you possibly can. Every penny you can. Instead of coffee, drink water. Instead of going to McDonald’s, eat Mac and Cheese. Cut up your credit cards. If you use a credit card, you don’t want to be rich. The first step to getting rich, requires discipline. If you really want to be rich, you need to find the discipline—can you?
If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich. Yeah, you have to give things up, and that doesn’t work for everyone, particularly if you have a family. That is reality. But whatever you can save, save it. As much as you possibly can. Then put it in 6 month CDs in the bank.
The first step to getting rich is having cash available. You arent saving for retirement. You are saving for the moment you need cash. Buy and hold is a sucker’s game for you. This market is a perfect example. Right at the very moment when cash creates unbelievable opportunity, those who followed the buy and hold strategy have no cash. they can’t or wont sell into markets this low, that kills the entire point of buy and hold. Those who have put their money in CDs sleep well at night and definitely have more money today than they did yesterday. And because they are smart, disciplined shoppers, their personal rate of inflation is within their means. Cash is king for those wanting to get rich.
The second rule for getting rich is getting smart. Investing your time in yourself and becoming knowledgeable about the business of something you really love to do.
It doesn’t matter what it is. Whatever your hobbies, interests, passions are—find the one you love the best and GET A JOB in the business that supports it. It could be as a clerk, a salesperson, whatever you can find. You have to start learning the business somewhere. Instead of paying to go to school somewhere, you are getting paid to learn. It may not be the perfect job, but there is no perfect path to getting rich.
Before or after work and on weekends, every single day, read everything there is to read about the business. Go to trade shows, read the trade magazines, spend a lot of time talking to the people you do business with about their business and the people they buy from.
This is not a short-term project. We aren’t talking days. We aren’t talking months. We are talking years. Lots of years and maybe decades. I didn’t say this was a get-rich-quick scheme—this is a get rich path.
Now you wait for times of uncertainty and change in your business. The time will come. It may come quickly, it may take years and years. But it will come. The nature of our country’s business infrastructure is that it is destined to be boom and bust. Booms are when the smart people sell. Busts are when rich people started on their path to wealth.
You will know when that time is here for you because you will know your business inside and out. You will be ready because you will have been saving up for this moment in time.
With all the change and uncertainty in the financial markets, there are people right now making more money than they ever dreamed of. They are the ones who have been living the real estate market and the financing behind it and understanding what actually was going on. They’re the ones who understood the complexities of the credit markets. When everyone was following the crowd, they kept on saving their money and avoided the temptation of groupthink.
Boom and busts happen in every industry. The question is whether you have the discipline to be ready when it happens for you?
If you do, you will find out what it feels like to get lucky

Get Rich With: Blogging?

2012-11-16T11:09:00.001+05:30

Well, there goes another million.
Sometime last week, this blog reached the “two million page views” milestone. It took less than three months to get that second million, compared to nine months for the first one, which I wrote about on December 10th. I remember we all thought we were pretty big business back then, but by any measure there are now more than twice as many Money Mustaches growing out there as there were when we blew past the first million mark!
Blogs that talk too much about blogging can get pretty boring, so don’t worry, I’m not going to write an article like this for every million. But today I thought it would be worthwhile because there are several interesting lessons that I’ve learned from this writing hobby that I’ve wanted to tell you about. Hopefully they will be useful for the many other blog writers that hang around here, as well as for writers of other stripes and even regular Mustachians.
Lessons Learned:
1 – It’s really hard to understand exponential growth.
Even though I occasionally like to write equations and draw graphs in my spare time, I still find that I have the natural human weakness of thinking in linear rather than exponential terms. When I check this website’s statistics page each night, it looks like readers are just trickling in at a steady rate, like guests to a nice party. But when you look at a graph that spans several months and divide out the numbers, you can clearly see that an exponent is at work. The exponent always surprises you.
This has applications in any internet-related business or creative venture, since the pool of people on the internet is effectively infinite. If you can get something started that has a positive growth rate, that tends to grow all by itself (by word of mouth, or search engines, or viral-style-forwarding), you can end up with some very interesting results. The Honey Badger video that we all like to quote from is up to 40 million views. A friend’s internet-based sales business is making tens of thousands of dollars per month in sales, just because of a bit of self-perpetuating exponential growth.
It also has applications in saving for early retirement. Beginner Mustachians are occasionally blown away by the numbers we throw around here. “Nobody could save hundreds of thousands of dollars!”, they say, “I’ve only got a few hundred bucks and it was damned hard to save that much!”.
I felt much the same way when I was younger. The problem is not with the numbers, it’s just with that tricky exponential function again. Today’s hundred-dollar-saver can invest his savings even as he improves his skills at efficient living and increases his employment income over his working career. When you combine all of these effects, you will see strong exponential growth in your savings. The hundreds of today can quite easily become many thousands per month in the future, until in the years just before retirement, many people are easily increasing their wealth by over $100,000 per year – sometimes more than their entire gross pay.
2 – People can actually make money with this blogging thing.
When I started writing these articles, I assumed I would only be entertaining myself and a few facebook friends until I ran out of stuff to say. The writing habit proved quite addictive, however, and the number of fun and enthusiastic readers grew. So I upgraded my goal slightly to “Saving the Entire Human Race from Destroying Itself”. But even at that point, I never thought I’d earn much more than the cost of paying the web hosting fees.
But one day, I had a look around at some other personal finance blogs. It turns out that these things are serious business. Sites that rank in the top 20 on the Wisebread list are routinely bought by internet marketing companies, often for over a million bucks. One clever guy named Pat Flynn who runs smartpassiveincome.com is an expert at generating income from websites. Last year he raked in over $400,000 from his carefully designed portfolio of sites. Get Rich Slowly, possibly the biggest blog in this niche, sold over three years ago although the sale was a secret until recently.
The most surprising part is that MMM already has a larger amount of traffic than some of the big-name websites at their time of sale. I don’t know exactly why this has happened, since we have done almost no promotion of the site. But I like to chalk it up to the fact that Frugality is the New Fanciness. This is an idea whose time has come.
In the right hands and with enough flashing credit card ads, a site this big could probably already earn more than my software job used to pay. You can tell from my feeble attempts at revenue-generation that income is not one of the main goals of this blog. But I will still proudly note that we earned $500 last month, and the income graph also has one of those sneaky exponents at work!
And don’t worry, I am not even thinking about selling this thing. Someone did send me an unsolicited offer once for something like $10,000, and I thanked him for the information. But it seems unlikely that anyone would want to pay in the millions for a blog, with the condition that the author can continue to write (or not write) whatever he wants and quit at any time without notice.. with anti-consumerism, political incorrectness, and swearing being key parts of the message.
But I do love learning about this entirely new field, and I am pleased to see that writers now have a more democratic way of making a living than they did back in the old paper publisher days. Even big-time authors like Joe Konrath now publish exclusively in e-book formats, and they find they earn more money doing that then they could with big traditional book deals.
3 – It’s Time for Mr. Money Mustache to Get Off His Ass and Write.
The biggest thing I have learned from this Two Million Views business is that we are onto something big here. If this blog really is one of the fastest-growing things in the entire personal finance blogosphere, then maybe I’d better start taking it a bit more seriously.
So I’m going to set a couple of goals. I’d like to increase the amount of time I spend working on this site. Not to the point of burnout, but I’d at least like to get a chance to write up more of the 100+ draft article ideas that keep piling up, and answer more of the emails that people send me. I’m going to talk to more people, take better pictures, start putting out the odd amusing educational video, do more science experiments.. stuff like that. I’ve even applied to be a speaker** at this year’s “FinCon” (financial bloggers conference) since it’s right down the road in Denver, and hey, I like talking.
I’d also like to set a goal of having this writing gig pay for my whole family’s living expenses. That’s about $2000 per month. Yeah yeah, we’re already retired and all that, but I think it would be nice psychological boost to be able to say that I’m supporting a family just with writing, and more importantly to share my thoughts on how easy or difficult it is to do without any soul-selling.
In reality, since we already have our consumption covered from other income and we have no desire to spend even more money, that means that 100% of MMM proceeds will in some way, over time, be used to improve the world. I’m not sure exactly how yet, but I still like the idea. Plus, as blog writing increases, my carpentry income has to decrease, which eats into my safety margin. By making a point of having the blog earn just a little bit of income, I can regain this margin.
We Mustachians are still a brand-new family. Most of the world has barely even heard of us so far. This site hasn’t even cracked the top 100 on Wisebread’s widely-cited blog list, since they aren’t measuring website traffic or even feed subscribers (if they did we’d be in the top 40 or better!).
That’s fine with me, since I’m here just to write to you and I have my own way of defining success. But if you do want to help out, here are a few ways to game the system a little bit:
Follow MMM on Twitter by clicking here.
Befriend MMM on Facebook by clicking here.
Become a RSS subscriber by clicking here. Even if you usually read on the website (which is the way I prefer to read blogs), this helps boost the still-important Feed Subscribers number, and you might learn a thing or two about the convenience of RSS reading as well.
Hardcore readers can install the Alexa Toolbar* which will boost this site’s Alexa Rank.
Some generous people have actually asked me if they could donate to this blog just to say thanks. I have always said no in the past, but given the new goals above, I will now accept that generosity and see how it goes. This is of course fully optional.. if you just want to read for free, please continue to do so!
This Paypal Button
Or the Tiptheweb Service: Tip
Or the Flattr Service

In the long run, the biggest fundraiser for this blog will probably be the MMM Recommends Page and the Commission-paying Rewards Credit Cards list. I like that method, because those things are tucked out of the way, useful, and non-spammy.
That’s enough of this behind-the-scenes stuff, it’s time to get back to the real world. Thanks again for reading and I’m looking forward to taking it all up several notches as the blog begins its second year of existence in just a few weeks.
Yee Haw!!

*The Alexa Toolbar is a browser add-on which displays the ranking of any site you visit in a tiny bar graph at the top of the browser. The toolbar sends anonymous stats to the Alexa web ranking company, which in turn determine the popularity of that website. The only weird part is, only bloggers actually use that toolbar, so your Alexa rank is really a measure of how popular your site is with bloggers. But yet many people haven’t caught onto this weakness, so your Alexa rank influences your rankings in the top 100 list as well as how much you get paid for advertising spots. If a significant number of readers could be enticed to run the toolbar… hoohoo, that would be funny. There are already blogger networks which do a good job of exploiting this loophole, although MMM is not a member of any, hence my less-good current rank.

15 Tips to Increase Blog Traffic

2012-10-17T14:24:00.004+05:30

The blogosphere is a big and busy world with over 100 million blogs and growing. How do you attract visitors to your blog? Follow these simple tips to drive traffic to your blog.

1. Write Well and Write Often

Frequently updating your blog with useful content is the first step to building your blog's audience. The content you write is what will keep readers coming back for more. Make sure you have something meaningful to say to them and say it often to maintain their interest and keep them loyal.
Furthermore, post frequently to increase the number of chances you have for your blog's content to be noticed by search engines such as Google or Technorati.

2. Submit Your Blog to Search Engines

Get on the radar screen for the popular search engines such as Google and Yahoo! by submitting your blog's URL to them. Most search engines provide a 'Submit' link (or something similar) to notify the search engine of your new blog, so those search engines will crawl it and include your pages in their results.
It's important to understand that simply submitting your blog to search engines doesn't mean your pages will appear at the top of a Google search results screen, but at least your blog will be included and will have the chance of being picked up by a search engine.

3. Use and Update Your Blogroll

By adding links to sites you like in your blogroll, the owners of those blogs will find your blog and will be likely to add a reciprocal link in their blogrolls. It's an easy way to get the link to your blog in front of many readers on other blogs. The hope is that some of those readers will click on the link to your blog on the other blogs' blogrolls and find your content interesting and enjoyable turning them into loyal readers.

4. Harness the Power of Comments

Commenting is a simple and essential tool to increase your blog's traffic. First, respond to comments left on your blog to show your readers that you value their opinions and draw them into a two-way conversation. This will increase reader loyalty.
Second, leave comments on other blogs to drive new traffic. Make sure you leave your blog's URL in your comment, so you create a link back to your own blog. Many people will read the comments left on a blog post. If they read a particularly interesting comment, they are highly likely to click on the link to visit the commentor's website. It's important to make sure you leave meaningful comments that are likely to invite people to click on your link to read more.

5. Syndicate Your Blog's Content with an RSS Feed

Setting up an RSS feed button on your blog makes it easy for your loyal readers to not just read your blog but also know when you publish new content.

6. Use Links and Trackbacks

Links are one of the most powerful parts of your blog. Not only are links noticed by search engines, but they also act as a tap on the shoulder to other bloggers who can easily identify who is linking to their sites. Linking helps to get you noticed by other bloggers who are likely to investigate the sites that are linking to them. This may lead them to become new readers of your blog or to add links to your blog from theirs.
You can take links to other blogs a step further by leaving a trackback on the other blog to let them know you've linked to them. Blogs that allow trackbacks will include a link back to your blog in the comments section of the post that you originally linked to. People do click on trackback links!

7. Tag Your Posts

It takes a few extra seconds to add tags to each of your blog posts, but it's worth the time in terms of the additional traffic tags can drive to your blog. Tags (like links) are easily noticed by search engines. They're also key to helping readers find your blog when they perform searches on popular blog search engines such as Technorati.

8. Submit Your Posts to Social Bookmarking Sites

Taking the time to submit your best posts to social bookmarking sites such as Digg, StumbleUpon, Reddit and more can be a simple way to quickly boost traffic to your blog.

9. Remember Search Engine Optimization

When you write your blog posts and pages, remember to optimize your pages for search engines to find them. Include relevant keywords and links but don't overload your posts with too many relevant keywords or completely irrelevant keywords. Doing so can be considered spamming and could have negative results such as your blog being removed from Google's search entirely.

10. Don't Forget Images

Images don't just make your blog look pretty, they also help people find you in search engine listings. People often use the image search options offered by Google, Yahoo! and other search engines, and naming your images with search engine optimization in mind can easily boost your traffic.

11. Consider Guest Blogging

Guest blogging can be done when you write a guest post on another blogger's blog or when another blogger writes a guest post on your blog. Both methods are likely to increase traffic as your blog will be exposed to the other blogger's audience. Many of the other blogger's readers will visit your blog to see what you have to say.

12. Join Forums, Web Rings or Online Groups

Find online forums, web rings, groups or social networking sites such as Facebook and LinkedIn where you can share ideas and ask questions of like-minded individuals. Add a link to your blog in your signature line or profile, so each time you post on a forum or participate in another online network, you're indirectly promoting your blog. Chances are many people will click on that link to learn more about you.

13. Promote Outside Your Blog

Promoting your blog shouldn't stop when you step outside the blogosphere. Add your blog's URL to your email signature and business cards. Talk about it in offline conversations. It's important to get your name and your blog's URL noticed offline, too.

14. Nominate Yourself and Other Blogs for Blog Awards

There are a number of blog awards given out throughout the year. Nominating yourself and other blogs and bloggers can draw attention to your blog and drive traffic to it.

15. Don't Be Shy

The most important part of the blogosphere is its community and much of your success as a blogger will be tied to your willingness to network with that community. Don't be afraid to ask questions, join conversations or just say hi and introduce yourself. Don't sit back and hope the online world will find you. Speak out and get yourself noticed. Let we know you've arrived and have something to say!

Get rich

2012-10-12T11:23:00.000+05:30

Here are some links lets check them out and get rich easily by referals.

http://www.twodollarclick.org/index.php?ref=jaskaran

http://www.therichptc.com/index.php?ref=jaskaran

How to Invest in a Bull Market

2012-10-12T11:14:00.003+05:30

A bull market is a rising market increasing by at least 20% from a bottom. Bull markets are times of prosperity and tend to last much longer than their counterparts, the bear markets. So learn to discern a bull market cycle and invest accordingly to help you thrive in a bull market.

EditSteps

1
Prepare for a bull market when prices are still falling during a bear market. Because bear markets are invariably followed by bull markets, it is important to raise cash and keep a handy wish list of stocks with target prices to buy, before a bull market begins. Bull markets tend to begin abruptly when things appear gloomiest, prices are in free fall, with no light at the end of the tunnel. When fear, pessimism, and pain reach their maximum, a bottom is reached, and a bull market begins. Here are things you can do to prepare for the birth of a bull market:
- Save as much as you can. Cut down your discretionary spending, and raise as much cash as possible.
- Sell bonds and other fixed income investments, so you can take advantage of the high returns of stocks in a bull market.
- Sell gold when the Dow/gold ratio is well below the historic average of around 20:1.
- Have plenty of cash deposited into a stock brokerage account, so you are ready to buy stocks once the bear market ends and a bull market begins.
- Watch for a bull market to begin in the depth of a recession, when everything is still in free fall, and the economic outlook appears the darkest. If you wait till a recession is officially over, you would most likely miss a great portion of the bull market's gains.
2
Early in a bull market, when prices have just started to bounce back from the bottom, buy all kinds of stocks, but preferentially load up on the ones that have fallen the most during the bear market, typically the lower quality, cyclical stocks (such as Alcoa and Dow Chemicals). Lower quality stocks tend to have higher debt and lower margins and cyclical stocks are dependent on the business cycle, so they tend to be hardest hit in a recession, and will bounce back dramatically when the recession ends. Load up in stocks that belong to the hardest hit industries and sectors during the bear market, for example, the financial sector in 2008 and 1991. Likewise, focus on the hardest hit investment styles. If small cap stocks have fallen more than large cap stocks, buy small caps. If international stocks have fallen more than domestic stocks, buy international stocks. If value stocks have fallen more than growth stocks, buy value stocks. During the early phase of a bull market, only a few forward looking investors will believe things will get better and are willing to take new positions. As the outlook turns just a little less depressing, the market will start to move up from the bargain hunting.
3
Keep buying stocks and hold onto your positions as the bull market continues to rise, transitioning from early to mid phase. During the mid phase of a bull market, the economic outlook remains poor, but it will gradually seem less poor. Investors will begin to realise that improvement is taking place, and they will bid stocks up to their fair values. Fear of "double dip" will continue to keep prices in check from time to time, and a sizable minority will remain skeptical of the rally. The mid phase is usually the longest phase of a bull market and can last for many years. As long as skepticism in the market's recovery remains, the bull market will continue to rise, so be sure to hold on tight onto your positions.
4
As the bull market continues to rise during the mid phase, shift your focus more on high quality stocks and begin to pare down or sell the lower quality stocks to make room for higher quality ones. As the bull market matures, risk increases along with asset prices, and the hardest hit stocks tend to recover a lot more than higher quality ones (often lower quality stocks will go up by 300-400% when higher quality stocks go up by only 50-100%). As stocks prices go up, risk increases, so you should dial down risk by emphasising more on more on quality.
5
Know that when everyone finally concludes things will get better forever, the bull market has now transitioned from mid to late phase. At this point, euphoria sets in, and essentially all remaining bears turns bullish. As everyone is cheered by the improvement in the economic and corporate results, they will become willing to extrapolate it. Expressions like "new era", "new paradigm", "permanently high plateau", and "end of the business cycle" will be rampant. Parodoxically, future P/E may be low, based on overly optimistic projections for the next 12-month earnings. (Trailing P/E and P/E calculated based on averaged earnings over past 3, 5 or 10 years are always high, usually above 20, toward the late phase of the bull market.) Regret and greed become powerful forces, as the masses become jealous of the profits made by investors who were early, and they want in.
6
When everyone wants to buy, sell. Sell all the lower quality and cyclical stocks, if you have not already. Hold onto the highest quality defensive stocks if you are a long term investor.
7
Raise cash and get ready for the end of the bull market, to buy again during the next bear market. Hold off buying when the overall stock market has become irrationally exuberant, and remember that the next bear market is just around the corner.

EditVideo

EditTips

Don't be discouraged if prices continue to go up after you sold during the late phase of a bull market. It is far better to sell too early, then to have your profits turn into losses in the subsequent bear market. As the tech bubble during the late 1990s and its subsequent bust in 2000-2002 demonstrated, prices can remain irrational for a long time, but eventually reality will take hold. In the short term, the stock market is a voting machine, but the long term, it is a weighing machine.
The most important thing to do in a bull market is to hold. Don't sell your positions too quickly for a small profit; wait until everyone is finally on board and the economic outlook appears rosy.
High quality stocks are those that are prominent and conservatively financed, with no EPS deficits in any of the past ten years, have paid conservative dividends for at least 15-20 years, have low debt to equity ratio less than 1, ROE >15%, and consistent EPS growth. Low quality stocks are the ones that do not fit these criteria.
Defensive stocks are typically those in the Consumer Staples, Healthcare, and Utilities sectors; cyclical stocks are typically those in the Materials, Industrials, and Financial sectors.
If you are aggressive, buy stocks on margin and buy stock options during the early and mid phase of the bull market, and short initial public offers (IPOs) toward the mid to late phase of the bull market.
Sell short leveraged inverse ETFs.
If you afraid to buy individual low quality stocks during the early phase of the bull market, just buy ETFs in the hardest hit sectors. You need not fear, however, to buy individual stocks, if you diversify and buy at low enough prices.
If you prefer mutual funds instead of individual stocks, that is okay. Whatever you do, just be sure to buy and hold in a bull market, and shift focus from low to high quality as the bull market cycle matures.

EditWarnings

Avoid IPOs like the plague. Entrepreneurs time their IPOs at the peak of the business cycle, to take advantage of investor euphoria to raise as much cash for themselves as possible. As a bull market matures, more and more IPOs gets thrown upon the public, and the quality gets poorer and poorer toward the end of the bull market. I.e. IPOs with unproven business model and no consistent earnings (or even losses) are thrown onto the public. Many of these will go bust when the times of prosperity slows.
Make sure to get completely out of low quality stocks once the bull market has reached the late phase. One of the biggest mistakes investors make is buying poor quality stocks during times of favourable market conditions. Avoid the temptations of trying to find cheap stocks when the overall stock market is overvalued and ending up with value traps that will lose big when market conditions turns sour again.

The 5 Things You Need To Do If You Want To Get Rich

2012-10-12T11:14:00.001+05:30

The single most life changing lesson I ever learned about investing in stocks and the stock market came when I was a teenager. I was reading the 1973 edition (4th edition) of The Intelligent Investor by Benjamin Graham in the white rocking chairs at La Guardia Airport, waiting to take a flight home to Kansas City from college to visit my family during Thanksgiving.

Today, the same copy sits highlighted in my office, with notes scribbled around Chapter 8, in which Graham states, "Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgment."

Investing in Stocks Is Like Owning Private Businesses Because the Drivers of Success Are the Same

Although it was a long time ago, it was in that moment that I "got it". If I owned 25% of a local ice cream parlor, my plan would not be to make money by buying or selling ownership from the other equity holders, taking advantage of their ignorance, greed, or fear. Instead, my strategy would be sustainable. I would want to make money by generating cash from ice cream sales, opening new locations, and plowing profits back into the enterprise for expansion. If we couldn't earn a good return, the cash would be distributed in the form ofdividends so I could find something else to do with the money. The stock market is no different. An individual share of stock is no different than a limited partnership unit or a limited liability company membership unit.

My job was to take the cash I earned in my day-to-day life and use it to buy ownership of proverbial ice cream parlors. I wanted great businesses that earned high returns on capital, had little to no debt, pricing power to protect against inflation, and strong franchises to act as insurance against the inevitable subpar management, which will come along from time to time. I would routinely write checks and deposit them in my brokerage account, buying ownership in everything from industrial sealant manufacturers to teen apparel companies, regional property and casualty insurance underwriters to auto part stores. The dividends would come in, get added to the new cash I deposited, and used to buy more ownership in firms that appeared attractively valued.

There were some fantastic capital gains along the way, but I hardly ever sold anything. The general philosophy was, if I needed to sell, I made a mistake in the beginning. Great businesses rarely change. It can happen - just look at what became of Kmart and Sears in a world of Wal-Mart and Target - but it often occurs over long periods of time, right in front of you. I loved the idea that, someday, the annual dividends of some of my investment positions would exceed the cost basis of the original shares.

I saved, and acquired, watching my net worth grow. Even the Great Recession collapse, which caused equity prices to fall 53.9% from peak to trough from October 9, 2007 to March 9, 2009, was nothing more than an opportunity to buy more of the companies I loved and expand the wholly owned private businesses I controlled. As a result, my net worth and income are far higher than they were five years ago.

Inexperienced Investors Continue to Sell Off the Very Assets That Can Make Them Rich

Yet, constantly, I hear from readers, and even my own family members, who, at the first sign of trouble, sell off the very assets that throw off cash and passive income for them. It's like a farmer going out and ripping up the seed he planted only a few weeks prior. You cannot get rich doing that. Then, these same people, at the first sign of prosperity, use their cash to buy assets that lose value. They will borrow money to purchase a $30,000 Ford, adding $7,000 in interest costs on top of it, but never once consider buying a $7,000 car, instead, paying cash, and using the $30,000 to buy shares of a high yielding blue chip stock like Royal Dutch Shell, which would throw off more than $1,410 in cash the first year. Who cares what the stock price does from month-to-month or even year-to-year? You now have an extra $352.50 mailed to you in cash every three months, with a very good chance of that figure getting higher in the long-run.

You don't have to do that many times in life to make a difference. Think about what we discussed this morning when we looked at how a $100,000 investment in Wal-Mart Stores a decade ago, with dividends reinvested, now pumps out cash dividend checks of $12,696.92 per year, or $3,174.23 every three months. If Wal-Mart repeats that performance, and our theoretical investor continues to hold for another decade plowing dividends back into the DRIPor direct stock purchase plan, the math indicates that he or she will be collecting $51,258+ in cash dividends per year, or $12,815 every three months. A single decision made twenty years prior would have enormous, lasting consequences for the better. I don't care how rich you are, $51,258 in extra cash coming in automatically every year is real money, even if you want to give it all to charity.

The Checklist For Getting Rich

If you want to retire rich, there are five things you need to do:

Bring in more money than you spend, leaving a surplus. There are only two levers you can pull to achieve this.
Place this surplus in some sort of tax-advantaged entity, account, plan, or organization
Put that surplus to work for you as you would an employee, avoiding unnecessary risk and earning a return that exceeds taxes and inflation by a comfortable margin.
Add to these funds year after year by depositing new surplus capital and reinvesting the cash generated by your holdings
Wash, rinse, and repeat for several decades

There is no magic to the process other than the miracle of geometric compounding. It is so powerful that over a 50 year period, you could have 9 out of 10 starting investments get wiped out along the way and still retire much richer than you would have otherwise been. Very few investors enjoy these returns, though, because they are constantly buying and selling, trying to make money by being clever and taking advantage of the foolishness of others, rather than collecting their share of the underlying earnings in the businesses they own.

How to Invest in Stocks

2012-10-12T11:13:00.000+05:30

Everyone wants to be financially secure. If you have a house, your house may be your biggest "asset" early on, but you will need to live in it for the rest of your life. Do you want a financially secure retirement or a vacation house in the South Pacific? You must invest your savings if you plan to retire comfortably.

EditSteps

1
Save. Before you can invest, you need money. Don't start investing until you have a secure job and six to twelve months of living expenses in a savings account, as an emergency fund, in case you lose your job. Learn how to budget your money and to spend your earnings wisely. Most investors have to be careful not to spend any of their profits, and to keep some aside for future use, and for retirement, as well as emergencies.
- Be prepared to always live within or even below and not beyond your means. This will help to ensure that you always have enough money.
2
Read. Before you start investing, you need a basic understanding of what a stock is, what it means to invest, and how to evaluate stocks. Get some basic books in stock investing. Aim to read every book on investing you can get your hands on. Here are some of the very best books and resources for all serious investors:
- The Intelligent Investor by Benjamin Graham. Get this on audio CD, listen to it a few times, and it will make a lot of sense. Focus especially on Chapters 8 (market fluctuation) and 20 (margin of safety).
- The Interpretation of Financial Statements by Benjamin Graham and Spencer B. Meredith. This is a short and concise treatise on reading financial statements.
- Security Analysis by Benjamin Graham and David Dodd. This book is considered thebible of investing and will tell you how to analyze corporate finances thoroughly. You don't have time NOT to read it. Get this book now, and master everything in this book. That being said, due to its age (it was published in 1934, just after the great stock market crash), it lacks some modern aspects; in particular, it does not tell you anything about the cash flow statement.
- Expectations Investing, by Alfred Rappaport, Michael J. Mauboussin. This highly readable book provides a new perspective on security analysis and is a good complement to Graham's book.
- Common Stocks and Uncommon Profits (and other writings) by Philip Fisher. Warren Buffett once said he was 85 percent Graham and 15 percent Fisher, and that is probably understating the influence of Fisher on shaping his investment style.
- One up on Wall Street and Beating the Street, both by Peter Lynch. They are easy to read, informative and entertaining.
- The Essays of Warren Buffett, a collection of Warren Buffett's annual letters to shareholders. Warren Buffett made his entire fortune investing, and has lots of very useful advice for real people who want to invest. Warren Buffet has provided these to read online free: http://www.berkshirehathaway.com/letters/letters.html.
- If you have some time left, you should also read Buffett's early letters to his partners from 1956 to 1969; they can (for example) be found athttp://www.ticonline.com/buffett.partner.letters.html.
- Buffetology, The New Buffetology and The Tao of Buffet, all by Mary Buffet and David Clark. These are basic books on the investment methods of Warren Buffett. The New Buffetology can be purchased on audio CD.
- For a better biographic insight of Warren Buffet, read Buffett: The Making of an American Capitalist by Roger Lowenstein. This book will tell you how Buffett refined his investment style over the years and who he is.
- The Secret Code of the Superior Investor, by James K Glassman. This is an excellent treatise on the importance of buy and hold.
- Motley Fool and The Tycoon Report, both excellent online publications.
- Wikinvest.com at http://www.wikinvest.com is a great place to find information on companies and concepts in the market. It is also helpful to conduct due diligence on the investment information sources themselves. Check out the performance and advice of websites, newsletters and blogs. One resource to conduct this research is at Greedreviews.com (http://www.greedreviews.com).
3
Think. Warren Buffet says that after you think, then think again. Warren Buffet says that if he cannot fill out on a piece of paper several reasons to buy a stock, then he will not buy it.
4
Practice. Trade stocks on paper before actually trading stocks with real money. Record your stock trades on paper, keeping track of dates of the trades, number of shares, stock prices, profit or loss, including commissions, taxes on dividend, and short or long term capital gains taxes you would have to pay for each trade. It is also helpful to record the reasons for each buy or sell decision. Calculate your net profit or loss less commissions and taxes for a meaningful period (1 year or more) and compare your results with the market index, such as the S&P 500. Do not start trading with real money until you are comfortable with your trading abilities.
5
Open a stock brokerage account with a discount broker. No specific recommendation can be offered here, as the stock brokerage business is a rapidly changing field. Trial and error is probably the only way to find a good broker, but you should do your own due diligence by checking out their site and looking at reviews online. The most important factor to consider here is cost, namely, how much commission is charged, and what other fees are involved. Discount brokers generally charge commissions of less than $10 per trade, some as low as $1 per trade, and some offer a limited number of free trades per year, provided you meet certain criteria. Other than costs, you should also consider whether dividend reinvestment is offered (which is the best way to build up your positions), what research tools are offered, customer service, etc.
6
Build a small portfolio of 10-50 stocks. Blue chip stocks are stocks of market leading companies known for quality, safety, and ability to generate profit in good times and bad, although they are generally fully priced and difficult to buy at a bargain price except in a severe bear market. Choose stocks of companies with proven records of profitability with at least some earning in each of the past ten years, pay at least some dividend in each of the past 15-20 years, at least 30 percent EPS growth over the past 10 years (using 3-year averages to smoothe out variations, for example, average EPS for years 2008-2010 compared to average EPS for years 1998-2000), low debt to equity (less than 1), and high interest coverage (at least 5).
- Stay up-to-date with different value investing websites such as Motley Fool or Fallen Angel Stocks to see what kind of deals are out there.
- If you do not have the time or inclination to learn about individual stocks, buying and holding no-load, low expense index funds forever using a dollar cost averaging strategy is best and outperforms most mutual funds, especially over the long term. The index funds with the lowest expensive ratio and annual turnover are best. For investors with less than $100,000 to invest, index funds are usually best. If you have more than $100,000 to invest, however, individual stocks are generally preferable to mutual funds, because all funds charge fees proportional to the size of the asset. Even the lowest fee index fund, Vanguard Total Stock Market Index Fund (VTI), has a 0.07% annual expensive ratio. This amounts to only $70 over 10 years for a $10,000 portfolio, but $700 over 10 years for a $100,000 portfolio, and $7,000 over 10 years for a $1,000,000 portfolio. If the expense ratio were 1.50% (typical for an average mutual fund), the fees would amount to $15,000 for a $100,000 portfolio, and a whopping $150,000 over 10 years for a $1,000,000 portfolio. See Decide Whether to Buy Stocks or Mutual Funds for more information whether individual stocks or mutual funds is better for you.
7
Hold for the long term, at least 5-10 years, preferably forever. Avoid the temptation to sell when the market has a bad day or month or even year. On the other hand, avoid the temptation to take profit even if your stocks have gone up 50 percent, 100 percent, 200 percent, or more. As long as the fundamentals are still sound, do not sell. Just be sure to invest with money you don't need for five or more years. However, it does make sense to sell if the stock price appreciates too much above its value (see below), or if the fundamentals have drastically changed since purchase so that the company is unlikely to be profitable anymore.
8
Hold on to the winners and do not add to the losers without good reason. Peter Lynch said that if you have a garden and every day you water the weeds and pick the flowers, that in one year you will have all weeds. Peter Lynch said that he was the best trader on Wall Street for 13 years because he picked the weeds and watered the flowers.
9
Avoid stock tips. Do your own research and do not seek or pay attention to any stock tips, even from insiders. Warren Buffett says that he throws away all letters that are mailed to him recommending one stock or another. He says that these salesmen are being paid to say good things about the stock so that the company can raise money by dumping stocks on unsuspecting investors.
- Likewise, don't watch CNBC or pay attention to any television, radio or internet coverage of the stock market. Focus on investing for the long term, 20 years, 30 years, 50 years, or more, and not get distracted by short term gyrations of the market.
10
Invest regularly and systematically. Dollar cost averaging forces you to buy low and sell high and is a simple, sound strategy. Set aside a percentage of each paycheck to buy stocks every month. And remember that bear markets are for buying. If the stock market drops by 20 percent or more, move more cash into stocks, and move all available discretionary cash and bonds into stocks if the stock market drops by more than 50 percent. The stock market has always bounced back, even from the crash that occurred between 1929-1932.
11
Consider selling portions of your holdings as a stock appreciates significantly, at least 50 percent to 300 percent, based on quality of the stock. Use upper limit for better quality stocks. Letting your winners run as long as the story is still good will increase your long-term chance for success. Warren Buffet says that you should hold winners forever, but if the price-to-book gets too high (above 100 is definitely too high), you should consider selling the stock.
12
Consult a reputable broker, banker, or investment adviser if you need to. Never stop learning, and continue to read as many books and articles as possible written by experts who have successfully invested in the types of markets in which you have an interest. You will also want to read articles helping you with the emotional and psychological aspects of investing, to help you deal with the ups and downs of participating in the stock market. It is important for you to know how to make the smartest choices possible when investing in stock, and even if you do make the wisest decisions, to know how to deal with loss in the event that it happens.

EditVideo

EditTips

The share price of a stock has no relation to whether the stock is cheap or expensive. Refer to Motley Fool, Better Investing and other groups of "value investors" for advice on determining the fair value of a stock (an inquiry often discussed as fundamental analysis).
Start a Roth IRA or 401k. You can save hundreds of thousands in tax dollars in the long run.
Buy companies that have little to no competition. Airlines, Retail Stores and Auto Manufacturers are generally considered bad long-term investments because they are in fiercely competitive industries, which is reflected by low profit margins in their income statements. In general, stay away from seasonal or trendy industries like retail and regulated industries like utilities and airlines, unless they have shown consistent earnings and revenue growth over a long period of time. Few have.
Try not to restrict yourself to any particular type of company. Understand that companies are in a sense 'black boxes' that generate revenue and profits––by becoming able to evaluate a company beyond a superficial glance––using Morningstar.com "5-Yr Restated" financials will help––you will be able to identify stocks in companies you haven't heard of and others haven't either--yet deserve your attention.
Companies with strong brand names are a good choice. Coca-Cola, Johnson & Johnson, Procter & Gamble, 3M, and Exxon are all good examples.
Aim to buy high quality stocks at temporarily low valuations. That is the essence of value investing. See http://seekingalpha.com/article/316476-10-safe-dividend-stocks-for-2012 for examples of high quality stocks selling at low valuations.
Understand 'why' companies like blue chips above turned out to be good investments––their quality is based on their prior history of consistent revenue and earnings growth. By being able to identify those types of companies prior to everyone else, you will be able to reap larger rewards in your investments. Learn to be a 'bottom up' investor.
Companies with virtual monopolies like Microsoft and Wal-Mart are good investments if you can buy them at a good price.
Buy cyclical stocks when the general market is crashing to multi-year lows, then sell them once the market is recovered and at all time high. Cyclical stocks may have periods of strong growth followed by times of contraction. They may be difficult to own by the amateur investor.
Invest in companies that are shareholder-oriented. Most businesses would rather spend their profits on a new private jet for the CEO than pay out a dividend. A return on equity (a common statistic) greater than 15%, a 2% dividend and large cash reserves are evidence of shareholder-oriented companies.
Buy companies that are in profitable industries. Look for companies with profit margins greater than 10 percent. Media and beverages are the classic examples.
Wall Street focuses on the short-term. This is because it is difficult to make predictions about future earnings, especially far into the future. Most analysts project earnings for up to 5-10 years and use discounted cash flow analysis to set target prices. You will only beat the market if you hold the stock for many years.
The goal of your financial adviser/broker is to keep you as a client so that they can continue to make money off of you. They tell you to diversify so that your portfolio follows the Dow and the S&P 500. That way, they will always have an excuse when it goes down in value. The average broker/adviser has very little knowledge of the underlying economics of business. Warren Buffett is famous for saying, "risk is for people who don't know what they're doing."
If you truly don't know what you're doing, invest in an index fund that is tied to the S&P 500 or Wilshire 5000. They will charge only a fraction the fees of other funds because they do not need to do any research.
Alternatively, if you have the time and energy to learn about the market and its daily changes, consider learning how to trade options, futures, commodities, foreign currencies, preferred stocks, or bonds. Be warned, however, that these alternative investments carry greater risks and offer significantly lower returns compared to common stocks.
Don't look at the value of your portfolio more than once a month. If you get caught up in the emotions of Wall Street, it will only tempt you to sell what is probably an excellent investment. Before you buy a stock, ask yourself, "if this goes down, am I going to want to sell or am I going to want to buy more of it?"
Remember that you are not trading pieces of paper that go up and down in value. You are buying a share of a business. The health and profitability of the underlying business and the price you will pay are the only two factors that should influence your decision. (In addition, perhaps, to the social responsibility of the business).
Always ask, will you make money? Buy and hold for the long term is the best way to maximize returns from the stock market in the long run.

EditWarnings

Do not engage in insider trading. If you trade stocks using insider information before the information is made public, you may face prosecution. No matter how much money you could potentially make, it is insignificant compared to the legal troubles you could get into.
Only invest in stocks money you can afford to lose and will not need for at least 15-20 years. Stocks can go down sharply over the short term, but over the long term they tend to outperform all other types of investment options. If you want to invest money you will need in the short term (within 5 years or less), consider bonds instead.
Do not buy stocks on margin. Stocks may fluctuate widely without notice and using leverage can wipe you out. You don't want to buy stocks on margin, watch stocks plunge 50 percent or so, wiping you out, and then bounce right back and then gain some. Buying stocks on margin is not investing, but speculating.
Stick with stocks, and stay away from options and derivatives, which are speculations, not investments. You are more likely to do well with stocks, but in options and derivatives you are far more likely to lose money.
Do not attempt to time the market, guessing when stocks hit bottoms or tops. Nobody, other than liars, can time the market. It is a sucker's game.
Do not day-trade or trade stocks for short term profits. Remember, the more frequently you trade, the more commissions you incur, which will reduce any gains you have. Also, short term gains are taxed more heavily than long-term (more than 1 year) gains.
Avoid "momentum investing", the practice of buying the hottest stocks that have had the biggest run recently. This is pure speculation and not investing, and it does not work. Just ask anyone who tried it with the hottest tech stocks during the late 1990s.
Don't blindly feed the dogs, namely, buying the stocks that have had the lowest returns and appear cheap. Most stocks are cheap for a reason. Just because a stock that was trading at above $100 and is now trading at $1 does not mean that it can't possibly go lower. All stocks can go to zero, and many have. Remember, it does not matter how low you buy a stock, if it goes to zero, you have lost 100% of your money. Always do your research before investing in anything.
Don't blindly trust the investment advice of anyone, especially who will make money from your buying and/or selling (this includes brokers, advisers and analysts).
When it comes to money, people lie to save their pride. When someone gives you a hot tip, remember that it is just an opinion.

How to Make Money By Creating Passive Income

2012-10-12T11:11:00.001+05:30

The easiest way to gain financial independence is to reconfigure your life so that a substantial portion of your income is not actively earned by your labor. Instead, it must come from passive income. In fact, the idea of passive income is closely related to the Berkshire Hathaway model, which I explain in an earlier feature.

The basic idea of passive income is that it is money received with little or no effort required to maintain the flow of income once the initial work has been done. Some common examples of passive income are:

Rent from real estate properties
Patent royalties for an invention
Trademark licensing fees for characters or brands you’ve created
Royalties from books, songs, publications, or other original works
Profits from businesses in which you have little or no day-to-day role or responsibility
Earnings from Internet advertisements in a blog or on a website you own
Dividends from stocks, REITs, equity mutual funds, or other equity securities
Interest from owning bonds, certificates of deposit, other other cash and cash equivalents
Pensions
Residual income for a sales person on accounts that are typically renewed automatically such as a sporting goods representative that earns a commission on his accounts, bringing in a few thousand dollars per store per year for servicing the customers once they have been opened

Why You Should Prefer Passive Income to Active Income
Passive income is attractive because it frees you to spend your time on the things you actually enjoy. A highly successful doctor, lawyer, or publicist, for instance, cannot “inventory” their profits in the words of one well known author. If they want to earn the same amount of money and enjoy the same lifestyle next year (the year after that), they must continue to work the same number of hours at the same pay rate. Although such a career can provide a fantastic life, it requires far too much sacrifice unless you truly enjoy the daily grind of your chosen profession. Even worse, once you desire to retire, or find yourself unable to work any longer, your income will cease to exist unless you have some form of passive income. In the past, this was accomplished by employee participation in company-sponsored pension plans.

The Two Broad Types of Passive Income
There are two types of passive income and throughout your career, which ones you focus on will likely depend upon your current financial situation, talents, skills, and personality. The two categories of passive income are:

Passive income sources that require capital to start, maintain and grow
Passive income sources that do not require capital to start, maintain, and grow

Those who choose to focus on the first category of passive income will need either family money, funds from investors, or the nerve to borrow large sums by taking on debt to fund the purchase of assets. The easiest to understand is someone who takes out substantial bank loans to build an apartment building or buy rental houses. Although this can turn a very small amount of equity into a large cash flow stream, it is not without risk. When using borrowed money, the margin of safety is much smaller because you can’t absorb the same degree of setback before defaulting and finding your balance sheet obliterated.

Another example of the first category of passive income is someone who has an ownership stake in an operating business such as a factory or furniture store and allows the business to issue debt to fund expansion. The early store managers in Wal-Mart who were allowed to invest before the company went public were in this position.

Large investment portfolios also fall into this category of passive income. If owned $10,000,000 worth of blue chip stocks, you could reasonably expect dividends of $500,000 per year. Whether or not you spend your days playing golf, painting, or writing the great American novel, you would collect checks as those businesses paid out a portion of their earnings. The problem, of course, is that it takes the ten million to be in that position.

The second category of passive income - that is, passive income sources that do not require capital to start, maintain, and grow - are far better choices for those who want to start out on their own and build a fortune from nothing. They include assets you can create, such as a book, song, patent, trademark, Internet site, recurring commissions, or businesses that earn nearly infinite returns on equity such as a drop-ship ecommerce retailer that has little or no money tied up in operations but still earns profits for the owner.

The Path Most Often Taken to Passive Income
It seems that most common path to generating large passive income streams is to work at a primary job and use your actively earned income to buy assets that generate passive income on a regular basis.

The doctor or lawyer in our earlier example, for instance, could use his income to invest in a medical start-up or buy shares of medical companies he understands such as Johnson & Johnson. Over time, the nature of compounding, dollar cost averaging, and reinvesting dividends will result in his portfolio generating substantial passive income. The downside is that it can take decades to achieve enough to truly improve your standard of living but it is still the surest way to wealth based on the historical performance of business ownership and stocks.

Taxes and Passive Income
A major advantage of earning passive income is that it is often taxed more favorably than active income. That may seem unfair, but the idea is that it will give people an incentive to invest in assets that will grow the economy and create jobs.

A business owner that works in his company, for instance, would have to pay an extra 15.3% in self-employment payroll taxes compare to someone who merely had a passive interest in the same limited liability company who would pay only income taxes. In other words, the same income earned actively would be taxed at a higher rate than if it were earned passively.

If lower taxes and control over your time aren’t incentive to prefer passive income over active income, I don’t know what is.

More Information

This article is part of our How to Get Rich guide for new investors.

7 Rules of Wealth Building

2012-10-12T11:10:00.004+05:30

Most parents want to teach their children responsibility - how to become self sufficient and succeed in life (after all, no one plans on raising a dead beat). However, very few actually accomplish this task. Why? Because, as parents, we are limited to the experiences our parents passed on to us; the antiquated notion that "responsibility" is simply getting a job, saving a little money, and maybe purchasing a car or some equally important item. Hopefully these seven rules will open your eyes and help you teach your children to avoid the traps that have stolen financial success from so many people.

Wealth Building Rule 1: Put Off Marriage

Your biggest obstacle to attaining wealth is YOU. Too often, people live their lives in a manner that is not conducive to creating riches and then get frustrated at "the system" when they only really have themselves to blame.

One of the most important financial decisions you will ever make ismarriage (more specifically who you marry and when). By putting off the walk down the aisle for a few years, you can save a decade worth of frustration. Your first goal should be to become financially independent, with little or no debt, and have your investments in place. Once you have these three things, your odds of success are drastically improved by beginning your journey on a level playing field (after all, the number-one reason for divorce is financial trouble).

Wealth Building Rule 2: Debt is a Disease

With a few notable exceptions, debt is a form of bondage; a disease that enslaves the borrower. A few years ago, there was a young lady attending college who shot herself because she couldn't pay back $2,300 in credit card debt. Although an extreme example, it is a testament to the power money has over peoples' lives. Imagine your life without owing anyone anything; your car, your house, your education, all paid for in full. Like what you see? When you want it badly enough, you will make extinguishing your debt your number one priority.

Wealth Building Rule 3: If You Don't Like Where your Parents Were at Your Age - Do Things Differently

The old cliché that "insanity is doing the same thing over and over expecting different results," holds just as true today as it did when it was originally written. If you don't like where your parents were at your age, stop what you are doing. During your childhood, they taught you all they knew about money. For many people, these early years established how they feel about their finances today. In order to become financially successful, you must do something different than they did. Otherwise, you will end up exactly as they are.

Wealth Building Rule 4: When you Begin a Job, Look at the Pay of the Highest Employee

Whether you are looking for employment now or are thinking about it sometime in the near future, one of the most important things for you to do is to look at what the top-dog gets at any company for which you are considering working. This will give you an idea of how high you can expect to climb in terms of earnings and promotion. If the CEO is making $30,000 a year, you have no chance to make six figures. Select a job accordingly.

How Much Money Does It Take To Be Rich?

2012-10-12T11:10:00.002+05:30

As a new investor, you probably know that you should spend less than you make and invest the rest in stocks, bonds, mutual funds,real estate or other assets. Over time, you know that the money should grow if it is wisely managed and, you hope, you will one day have enough upon which to retire. (For more information on howpeople get rich, read How to Get Rich - A Guide for New Investors.)

Have you ever wondered, though, "how much money does it take to be rich?" That is the question posed to a group of financial planners from a recent CNN Money publication that caught my eye. Most seemed to believe that it took between $2 million and $12 million to be rich. This would generate roughly $300,000 in annual income and would allow you to afford the following lifestyle all without a job:

Pay all taxes
Spend $3,800 per month on housing expenses
Have $12,000 in cash left over each month to spend any way you like

I find it interesting that this correlates closely with the bottom-tier of the so-called capitalist class in the United States. It seems that most people really do just want to put on their Mr. Monopoly hat, setup an office to monitor their investments, and spend all day reading, going to nice restaurants, giving generously to charities, and adding to their net worth.

People Are Satisfied By Increases In Net Worth, Not Absolute Income

It is interesting that people are satisfied by watching their net worth increase each year notby making more money per se. That is, you are more likely to be satisfied if you make $300,000 per year, live well but add $100,000 to your stock portfolio each Christmas than you would be making $1,000,000 and spending every penny of it.

Something deep in most investor's psyche seems to be triggered when we pile up treasure at no expense to our lifestyle or giving. It turns out that once you have the granite counter tops, the nice car, and are dressed in bespoke Ede and Ravenscroft with matching bespoke George Cleverley shoes, wearing Creed Bois du Portugal as you study your portfolio in your newly built custom Clive Christian study, spending more money doesn't make you any happier.

It seems the psychologists have found that everyone just wants to get to that point; collecting municipal bond interest, cash dividends, and playing golf. Once you are there, you don't want to spend more money, you just want to watch the figures get larger like a game or scorecard.

The Secret to Successful Investing

I explained this concept to you in an article called The Secret Philosophy of Successful Investing. Your goal as a new investor should not be to merely pile up treasure endlessly at the expense of the products, services, and experiences you want for your life. Instead, it should be to find out what it is you want, how much monthly cash you need to afford it, and then we can work on calculating the total investments that would be required to service that lifestyle.

Some Have Argued It Requires Much Less Money to Be Rich

A recent study in the United Kingdom found that people were happiest with $75,000 (United States) household income without working, which requires only $1,500,000 in net worth earning 5% per year. Presuming this income came from tax-free bonds, that is $6,250 in monthly income without working. For most people, I would think that would be a great source of satisfaction because you could have a house, car, clothing, and pay cash for what you wanted if you were middle or working class, lived in a nice neighborhood, and were located in the Midwest or South where the cost of living is substantially lower than New York or Los Angeles.

The point of all of this is you must answer the question - "How much money does it take to be rich?" for yourself. There is no right or wrong answer and the difference is going to depend upon whether you are happy driving a Toyota or you want a Bentley, whether you are comfortable in J.C. Penney dress shirts with a Seiko watch or you prefer wearing a $250,000 Patek Phillipe Grand Complications watch with flawless diamonds. You are on the only one that can answer that question and there is no right or wrong answer.

How to Make Money

2012-10-12T11:08:00.005+05:30

1
Buy underpriced used books. Outfit a phone or PDA (personal data assistant) with a scanner, scan the ISBN numbers of books at used bookstores and thrift shops, and compare the asking prices with what the books are selling for on a site like Amazon. Whenever you get a good hit (which won’t be often but, since the process is fast, won’t take long, either), buy the book and resell it online. Be discrete about this, as the store managers probably won’t like what you’re doing.
2
Bargain-hunt at yard and thrift sales. If you have a bit of knowledge in a particular area (ex. Taxco Mexican silver, action figures, classic National Geographics) or even just a good eye for quality, visit private sales early and often to find unexpected deals.
3
Go to police auctions. You can find incredible deals here, and though may not be able to resell a car that was involved in a serious crime, you can probably find some spectacularly cheap jewelry that someone else would be happy to buy off you.
4
Refinish ratty furniture. If you have lacquer thinner, sandpaper, stain, and some craft sense, you can buy worn-out furniture and fix it up for a great resale price.
5
Rescue battered wood. Pallets and pallet stock are cheap (or free) and easy to come by. Look for untreated specimens at construction sites, community colleges, buildings under renovation, or shipping warehouses and plane them down and/or kiln-dry them in a homemade kiln-dryer to uncover their hidden beauty. You can then resell the wood as is or even turn it into beautiful furniture. (Be sure to advertise that the wood is “reclaimed,” as people are often willing to pay much more for this.)
6
Flip houses or apartments. If you are a handy(wo)man with great design sense, a knowledge of what’s valuable in the construction of a home, and assets you’re willing to play with, consider buying, fixing up, and reselling real estate. This requires quite a bit of up-front cash and elbow grease, but the payoff can be big.

Participate in Studies

1
Sign up with focus groups in your area. Studies that you are eligible to participate in pop up sporadically but pay quite well – often more than $50 for an hour of your time. You can also look for focus groups online but will have to sort through a lot of bogus “opportunities” and sites that ask you to pay up-front for the privilege of participating before you find anything worthwhile.
2
Participate in medical studies. If just the thought of this frightens you, know that the intensity of such studies varies greatly. Some studies ask participants (particularly those with medical conditions) to test treatments or medications that can have adverse side effects, but others ask participants to perform physical tasks with no lasting effects. If you are able-bodied and paranoid about keeping it that way, you can even participate as a control in a study at a nearby medical research facility or medical school.

Find an Artistic Outlet

1
Sell photos. If you have a decent camera and a good sense of light, color, and composition, you can take and sell stock photos – i.e. nondescript images that lend themselves to many applications and are commonly used to illustrate online articles or products – with minimal effort. Stock photos of locations (a fire hydrant, a bare wall near an interesting tree, or anything you might find as a default background image on your computer) are easier to take, but stock photos of people (i.e. people arguing, people kissing, people laughing) usually sell for more, as they have more uses and require the written legal consent of your subjects. Hunt for a reputable stock photo dealer or database that will pay you fairly before signing on with anyone.
2
Design web images. By pairing good aesthetic sense and the use of design or photo-editing software, you can make and sell background graphics for social media pages, web logos, or computer icon packages. If you know or are willing to learn computer programming, seriously consider making web pages; programmers may be easy to come by, but programmers with an eye for beauty are another thing altogether.
3
Make and sell crafts. If you are even a little bit crafty, consider selling your goods on a site like Etsy. Though you can make more money on intricate projects (ex. an exquisitely woodburned gourd), even labor-light projects can bring in good money if you’re willing to produce them in high quantities. Who knows – if you do well, you might even be inspired tostart a crafts business.

Participate in Marketing Research

1
Become a mystery shopper. This means doing business with various establishments and rating their products and services without their knowledge. It may sound like cake, but remember that it requires discreteness, a good memory for detail (ex. the name of every individual who helped or served you), and enough cash for you to be able to pay for your shopping experience up-front and then wait to be reimbursed pending the approval of your review.
2
Write product reviews. Many companies will pay a lot more than two cents for your two cents. Product reviews are a great way to get paid for being opinionated that doesn’t require the writing background that many other writing jobs do.
3
Complete online surveys. Though tedious, online surveys are often quick and painless and, for a few bucks at a time, can add up quickly. Read How to Make Money with Free Online Surveys for more details.

Pursue a Passion

1
Start a website or blog. Sure, competition in the online world is steep, but one thing that makes a good site or blog stand apart is the dedication and enthusiasm of its writer. Plenty of sites focus too hard on SEO and keywords, and while SEO-optimization is certainly necessary to help your content make money, delving into something that truly matters to you will set you apart from your fluff-and-stuff competitors.
2
Start a small business. Being passionate usually translates to a superior product and better service, which is especially sought after in the age of the anonymous, 1-minute online review. Worried that there isn’t a market for your interests? The fact is that though you may not personally know many people who want what you have to offer, thanks to the internet, there’s a huge market for niche-products (pigeon diapers, chainmail wedding dresses, you name it)… and you might just end up being a trend-setter. To create an online store, you can either make your own website or, if don’t want to self-host, you cansell on eBay or a similar site.

Do Odd Jobs

1
Watch and/or walk your neighbors’ pets. Taking a few pooches to the park every week is a good way to have fun, get some exercise, and meet new people, all while making a little cash on the side.
2
Landscape. Look for brush-clearing, mowing, or woodcutting jobs, some of which may land you regular customers. This can save you money at the same time: if you are hired to pick up pine needles, use them to mulch your roses, which will appreciate their acidity and smothering effect on weeds; if you are hired to cut and clear a fallen tree, use it to heat your house that winter.
3
Run errands for the elderly. Contact your local community center or church to get in touch with people who need help getting groceries, cleaning their gutters, or getting to the post office. You might cultivate some lovely friendships at the same time.
4
Find odd jobs online. Check out Craigslist, Fiverr, or Zaarly for interesting or unusual gigs that come up.

Use Money-Making Apps

1
GigWalk: This iPhone app allows you to team up with companies posting gigs and get small jobs done for cash. These can be anything from mystery-shopping to making deliveries to testing apps to taking photos. Simply install the app, make a profile, and start looking for gigs in your area.
2
WeReward: This iPhone and Android app allows you to complete small tasks (ex. taking a photo of yourself with your favorite beverage or eating at a new establishment) for points that translate to cash. Though the per-task reward is small, there are millions of participating businesses and the points can add up quickly. The location-based rewards are best if you already have an active lifestyle and won’t have to force yourself to starting eating/drinking out all the time.
3
CheckPoints: This iPhone and Android app allows you to go to stores and scan items for points, which you can then use to redeem prizes. This is a handy way to make a little extra while you do your shopping, but note that the rewards are either actual products or gift certificates – no actual cash.

Sell Things You Find Outside

1
If you have a manzanita thicket: trim and dry the branches and sell them online. Believe it or not, people love using them for crafts projects. In fact, many of the things you don’t even look twice at have to be ordered online by people living in cities don’t have access to them.
2
If you have a curly willow tree: trim, dry, and sell the twisting branches online to craftspeople or to a local florist, as they are commonly used as accent pieces in bouquets.
3
If you have a pine tree: sell the pinecones that flood your yard every fall. Extra long or large ones make beautiful holiday decorations, especially with a simple twist of ribbon.
4
If you live by the beach: sell driftwood, which can be used for crafts or, if the pieces are large and dense, as decorations in marine aquariums.
5
If you have a pond: pick and dry the cattails before the downy seeds begin shedding and sell them as decorations for bouquets (or even bunched together as stand-alone bouquets). You can also divvy up and sell bits of your water lily, water hyacinth, fairy moss, or any other plant that’s doing its best to overtake your pond anyway.
6
If you have a tree drowning in mistletoe: cut the mistletoe down, turn it into festive, ribbon-wrapped bunches, and sell it around the holidays.
7
If you are selling something that you know or can verify hasn’t been treated: you can even advertise it as being organic, which might heighten interest and allow you to increase the price.
8
If you don’t have access to any of these items: get paid to collect them from other people. Plenty of people would happily hire someone to cut back their Manzanita forest or wade into a pond and break apart their water-lily thicket, meaning you can make money from both gathering and selling your product.

Make Money Passively

1
Become a moving advertisement. “Wrap” your car in an advertisement, go about your usual commute, and get paid monthly to do it. (Some car-wrappers in San Francisco make as much as $400 a month doing this,^[1] but of course this varies depending on how big a city you live in and when / how often you make your commute.) You can also get paid to wear a company’s logo t-shirt around (particularly if you wear it someplace conspicuous, like at your school; see ShirtsInSchools.com as one example).
2
Rent out a space. If you have a spare room, an unused parking spot or driveway in a busy part of town, or even an empty lot that you wouldn’t mind seeing transformed into an urban garden, rent it out and enjoy an extra monthly paycheck.
3
Try affiliate marketing. This means promoting someone else’s products or services for pay without actually carrying an inventory. There are many ways of incorporating affiliate marketing into your website/blog/page including banner ads (which are generally ineffective, as people tend to avoid these), linked articles (which are quite successful when the article content is thoughtful and doesn’t appear spammy), and product-placement videos (which can be very successful when done by people with charisma or a good sense of humor). You can even become an affiliate marketer without a website. Basic ways of making money through of affiliate marketing include:
- Cost-per-click: you get paid a very small amount every time someone clicks from your content onto the advertiser’s site; good for high-traffic content
- Cost-per-lead: you get paid a bit more every time someone signs up or fills a form with the advertiser thanks to your content
- Cost-per-acquisition: you get paid a (fixed or percent) commission every time someone makes a purchase with the advertiser because of your content; good for focused, high-quality content

Make Money Quickly

1
Sell CDs and/or DVDs. Back up your collection on a computer or external hard drive, then sell the original discs. You’ll make quick cash and save space at the same time. If you have prized collections (boxed sets, limited-release editions, etc.), sell these individually for what they’re worth; otherwise, sell your discs very reasonably (remember, your potential buyers can also get the exact songs they want instantly by downloading them for buck or less apiece). Even for a mere $4 each, a sizeable collection of CDs can haul in a tidy – sum.
2
Sell hair, plasma, or other body parts/fluids. Long, healthy, untreated hair can be sold for a variety of purposes (including high-end wig- and extension-making) and earn you anywhere from several hundred to several thousand dollars depending on color, health, and length. Plasma can be “donated” (for compensation) provided that you are old, healthy, and heavy enough to qualify. Sperm can be donated, but you usually have to know (and be able to document) a fair amount of information about your parents as well as your medical history to be eligible. But be wary; for example, donating eggs is often touted as a fast, high-profit medical procedure, but the process is actually requires that the participant undergo hormonal and medical treatment, receive regular checkups and ultrasounds, and abstain from sex and intoxicants, all of which take weeks or even months before the eggs are even eligible for removal. The removal process itself is invasive and lasts about 30 minutes.^[2] Consider your options very carefully before taking on anything like this.
3
Read How to Make Money Fast for more ideas.

Financial Wisdom to Live By

1
Use the law of supply and demand to your advantage. Most of us are familiar with the law of supply and demand--the more there is of something, the cheaper it is; conversely, the rarer the product or service, the more expensive it is. However, other than when we get to a toy store before sunrise to get on line for the latest fad toy that kids can't get enough of, we don't really apply the law of supply and demand to our own lives--particularly our careers. For example, if you're aspiring to do something that many, many other people want to do (so much so that they do it for free, as a hobby) then it will be far more challenging for you to make money doing it. On the other hand, if you do something that most people don't want to do, or if you get very good at doing something most people don't do all that well, then you can make a whole lot more money. In other words, choose a career in pharmacy over photography.
2
If your career path is going nowhere, resign gracefully and switch careers. Research occupations to find out how much they pay and what their future outlook is (in the U.S., you can find this information in the Bureau of Labor Statistics Occupational Outlook Handbook). Find an occupation that pays well, and invest in the education and/or training to get you that job. Look for employers that offer competitive salaries and ample opportunity for advancement.
3
If your goal is to make enough money to retire early, prioritize earning potential over job satisfaction, since you plan on getting out of the rat race early, anyway. Consider the types of jobs that pay extraordinarily well in exchange for hard work, little psychological satisfaction, and a punishing lifestyle, such as investment banking, sales, and engineering. If you can keep your expenses low and do this for about 10 years, you can save a nest egg for a modest but youthful retirement, or to supplement your income while you do something you really love doing but doesn't pay much. But keep in mind that delayed gratification requires clear goal-setting and strong willpower.
4
Recognize that time is money. This critical piece of advice is attributed to Benjamin Franklin, who was an accomplished American inventor, journalist, printer, diplomat, and statesman--the ultimate multitasker. Your ability to manage your time (and stop procrastinating) is a critical ingredient in your ability to make money. Whether you have a job or are self-employed, keep track of what you're spending your time on. Ask yourself "Which of these activities make the most money, and which of them are a waste of time?" Do more of the former and less of the latter, simple as that. When you're focusing on high-priority tasks, get the job done well, and get the job done fast. By working efficiently, you're giving your employer or clients more time, and they'll appreciate you for it. Remember that time is a limited resource that you're always investing. Will your investments pay off?
5
Jack up your prices. If you're providing a skill, service or product that is in high demand and low supply, and you're making the most of your time, you should be making good money. Unfortunately, there are many people who are too humble or fearful to demand that they get paid accordingly. It's the pushovers in life who get taken advantage of and exploited, so if you think you might be one of them, learn how to stop being a people pleaser. If you work for someone else, ask for a pay raise or get a promotion, and if none of that pans out, revisit your career options as described previously. If you're self-employed, the first thing to do is to make sure your customers and clients pay up on time--this alone can substantially improve your income. Check your prices and rates against those of your competitors--are you undercutting them? Why? If you're providing a superior product or service, you should be getting at least the average, unless your profitability depends on mass production, in which case you're probably making a lot of money and wouldn't be reading this article anyway!
6
Be proactive. Remember Murphy's Law: "Whatever can go wrong will go wrong." Make plans, complete with as many calculations as possible, then anticipate everything that can go wrong. Then make contingency or backup plans for each scenario. Don't leave anything to luck. If you're writing a business plan, for example, do your best to estimate when you'll break even, then multiply that time frame by three to get a more realistic date; and after you've identified all the costs, add 20% to that for costs that will come up that you didn't anticipate. Your best defense against Murphy's law is to assume the worst, and brace yourself. An appropriate amount of insurance may be something worth considering. Don't forget the advice of Louis Pasteur, a French chemist who made several incredible breakthroughs in the causes and prevention of disease: "Luck favors the prepared mind."
7
Redefine wealth. In studies of millionaires, people are surprised to learn that most millionaires aren't doctors, lawyers, and corporate leaders with big houses and fancy cars; they're people who religiously live below their means and invest the surplus into assets, rather than liabilities.^[3] As you're taking the above steps to make more money, keep in mind that increased income does not necessarily equal increased wealth. Most people who flaunt their wealth actually have a low net worth because their debt to asset ratio is high--in other words, they owe a whole lot more money than they actually have. All of the previous steps have outlined aggressive strategies for making money, but you'll never get anywhere if you have a hole in your pocket.
8
They say that a penny saved is a penny earned. Actually, when you consider that you pay taxes on every penny you earn, you really do make more money by saving than by increasing your income, especially if the extra income will increase your tax rate dramatically. For example, let's say you have a choice between saving $100 or earning an extra $100. If you pay 15% taxes, then when you earn an $100, you only get $85. But when you save $100 off of your existing budget, you keep it all. To sweeten the deal further, if you take advantage of compound interest as found in most savings accounts, over time you'll start making money on the amount saved plus previous interest paid on that amount saved. It'll be pennies at first, but eventually the amount will multiply exponentially.
9
Take advantage of tax laws if you're self-employed. Money saved on taxes is still money saved. You may be able to deduct many of your business expenses (use of your home, use of your car, office supplies, etc.) if you keep good records. You may also qualify for tax breaks, such as deducting your health insurance premiums on your tax return. These laws are in place to encourage commerce and business growth, so don't neglect their benefits especially if you want to make money.
10
If you're not self-employed and work for a company, find out if they have a retirement plan. If you're lucky, employers will sometimes match contributions you make into a retirement fund. Retirement plans also often have the benefit of being tax-deferred. The longer you get to keep your money (and make interest on it) the better. It's never too early to start planning for retirement.
11
Know the difference between an asset and a liability. The dividing line is whether it puts money in your pocket, or takes it out.^[4] As much as you love your home, for instance, it is a liability rather than an asset because you put more money into it than you get out of it (unless you're flipping it or renting it out). Whatever money you save, invest it in assets such as stocks, mutual funds, patents, copyrighted works--anything that generates interest or royalties. Eventually, you might get to the point where your assets are doing the work for you, and all you have to do is sit there and make money!
12
Watch out for inflation chipping away at your assets. We've all heard an elderly person describe the purchasing power of a coin in their day. Inflation continues to make today's money worth less in the future. To win the race against time and inflation, learn to invest your money in the right places. A savings account might help you to keep up with inflation; however, to stay ahead of the game you'll want to invest in bonds, stocks, or some other investment that returns above the average rate of inflation (currently 3%-4%).

Make Money as a Kid

1
Ask your parents if they'll pay you for doing more chores. You're probably already expected to do chores around the house and help out your family for free. If you need a little extra pocket change, however, ask your parents if there's something else you can do for a small fee. For instance, maybe your mom really hates folding laundry and would be willing to pay $5 a week for you to do it instead. Whatever it is, let your parents know you're willing to take on more work for a bit of allowance.
2
Make sure you're able to do whatever you agree to do. If you know your parents like a chore done a certain way, don't cut corners - do it well, and they may even agree to give you a raise in the future!
3
Run a lemonade stand, or something similar. During hot summer months in the US, many kids run lemonade or cold beverage stands on the sidewalks in front of their houses. Here are a few tips to get you started:
4
Offer something that's appropriate for the weather. Cold drinks or popsicles will sell better on a hot day than on a rainy day. If it's too cold or miserable outside to do much business, hold off and wait for a better day.
5
Keep your costs down. In order to turn a profit on what you're selling, choose to sell an item that's inexpensive to make. Lemonade is a classic because all of its ingredients (water, sugar, lemons or lemon juice concentrate, and ice) are fairly cheap and easy to obtain. Popsicles are another favorite because they can be bought in large quantities from the store!
6
Set up on public property. You can set up your stand on a sidewalk, public park, or other area that is not owned by a private person. Doing this can help you avoid accusations of trespassing. Be aware, though, that some larger metropolitan parks might require you to get a permit to sell there.
7
Advertise your price. Get a large piece of paper, cardboard or poster paper, and write what you're selling and how much one serving costs. For instance, you might write "LEMONADE, 25 CENTS". Set a fair price point, and make it something you'd be willing to pay yourself; if you're not sure what's fair, ask your parents or another trustworthy adult.
8
Have somewhere secure to keep your money. Find a lockbox, coin purse, wallet, or envelope to keep your earnings safe and collected.
9
Do odd jobs around your neighborhood. Mowing lawns, babysitting, raking leaves, snow shoveling, washing cars, and bathing pets are all examples of services that many people are willing to pay someone else to do. If you can do some of these things and you have some spare time, knock on the doors of family members or neighbors you know well, and offer your services.
10
Only work for people you know or your parents know well; never work for strangers.
11
Be trustworthy. People like to know that whoever's working around their home or with their children can be trusted, and they might even be willing to pay extra for that peace of mind. Be fair and honest in all your dealings, and never steal; these qualities will pay off later.
12
Be willing to negotiate. You might have two neighbors who want their sidewalks shoveled, but one might be willing to pay $5 per week while another will pay only $3. If the neighbor who's paying you less is elderly, living on a fixed income, disabled or otherwise strapped for cash, consider accepting the lower price in order to build your clientele. Remember, that person who pays you less might later recommend your services to someone else willing to pay more.

How to Get Rich

2012-10-12T11:06:00.002+05:30

Getting Rich Through a Career

1
Excel academically. Whether it's a four year college or vocational training, most successful people pursue further education beyond high school. In the early stages of a career, your employers have little to go off besides your educational background. Pursue an appropriate degree.
2
Choose the right profession. Look at research survey salaries which indicate average annual incomes for specific professions. Your odds of getting rich are way less if your pursue a career in teaching than a career in finance.
3
Choose the right location. Go where the good jobs are. If you want to pursue finance, for example, there are far greater opportunities in NYC than in Kansas.
4
Get an entry-level job and work your way up. Play the numbers game. Apply to many places and conduct many interviews. When you get your job, stick with it to get the experience you need to advance.
5
Change jobs and employer. By changing your environment, you can increase your pay, experience different corporate cultures and reduce risk. Don't be afraid to do this many times. If you're a valued employee, it's also likely your current company may offer you a raise or other benefits if they know you're looking at leaving.

Getting Rich Through Investing

1
Invest your money in education. Go to universities and obtain degrees that are considered in your chosen profession. You sometimes have to spend money to make money. For example, if you're interested in business and obtain an MBA, the money you spent on that will likely earn itself back in a few years.
2
Put money in the stock market. Invest money in stocks, bonds, or other vehicles of investment that will give you an annual return on investment (ROI) that's enough to maintain you in your retirement. For instance, if you have one million dollars invested and you get a reliable 7% ROI, that's $70,000 per year!
3
Invest in real estate. Relatively stable assets like rental properties or potential development land in steadily growing areas is a good example. These are purchases whose value will likely increase over time. Your odds of that happening are better in some spots than other. For example, an apartment in Manhattan is guaranteed to increase over a five-year period.
4
Invest your time. For example, you might like having free time, so you give yourself a few hours a day to do nothing. But if you were to invest those few hours into getting rich, you could work towards having 20 years of free time (24 hours a day!) with early retirement. What can you give up now in exchange for being rich later?
5
Avoid purchases whose value is guaranteed to decline. Spending $50,000 on a car is usually considered a waste because it's a guarantee that it won't be worth that much in 5 years, regardless of how much work you put into it.
6
Stay rich. It's hard to get rich, but it's even harder to stay rich. Your wealth is always going to be affected by the market, and the market has its ups and downs. If you get too comfortable when times are good, you'll quickly drop back to square one when the market hits a slump. If you get a promotion or a raise, or if your ROI goes up a percentage point, don't spend the extra. Save it for when business is slow and your ROI goes down two percentage points.

Getting Rich Through Saving Money

1
Pay yourself first. This means before you go and blow your pay check on a new pair of shoes or a golf club you don't need, put money aside in to an account that you don't touch. Do this every time you get paid and watch your account grow.
2
Make a budget. Create a monthly budget that covers all your basic expenses and leaves a little bit of "fun" money aside. Do not go over this.
3
Downgrade on your car and house. Could you make do with an apartment instead of a house, or have roommates instead of your own place? Could you buy a used car instead of a new one and use it more sparingly? These are all ways to save a ton of money every month.
4
Cut expenses. Look at the ways you frivolously spend money and remove everything. For example, avoid going to Starbucks every morning. That $4 you spend on designer coffee every morning comes out to $20 per week, or $1,040 over the course of a year!

How to Build a Website

2012-10-12T10:47:00.002+05:30

Simple steps on how to Build a Website

Before you start building your website it is a good idea to learn some basic HTML and CSS. Learning this language is not all that hard you just need to set a little time aside and get down some of the basics. I don’t expect you to become a web programmer, but understanding the basics of HTML and CSS will help save you a lot of time later while you are designing your website. There are many ways to learn web design, but here are a few suggestions to help you get started.

Learn Web Design, invest some money in your education.

I have learned a great deal of web design, graphic design, video editing, photography and more from Lynda.com this web site offers a wide variety of video based tutorial training on web design, such as HTML basics and CSS training as well as training on how to use web design programs like Adobe Dreamweaver and more, Download Adobe Dreamweaver CS5 now. I highly recommend Lynda.com if you are serious about learning web design in its entirety.

Here is a Free 24 hour pass to lynda.com. courtesy of FreeWebSiteTrick.com

Step 1. Buy a Domain Name

The first thing you are going to need to do in order to start building your website is to register a domain name. A domain name is an easy way for people to find your web site, because if you build a website on a server without a domain name you will have to give out your server IP address which is a series of numbers, and is not very easy to remember. A domain name simply points people to the server which your website resides on, so what is a domain name? a domain name is what ever you choose for example www.imagineyoursitenamehere.com you will need to go to a domain name registrar and check the availability of the domain name you desire, and as long as the domain name you want is available available you can buy it. Check if your domain name is available here

Step 2. Use a free web hosting space or purchase web hosting space?

Well you might be saying if I can get free web hosting then why would I pay for it. Well that’s a valid question, but as always if its free there more than likely there is a catch, but if you still decide to use the free web hosting space that comes with your domain name purchase assuming the company you purchased you domain name with provides it of course you will have advertisement on your website that you have no control of, so with that said I would opt for the paid hosting it is relatively affordable and you will have more space and control of your website. Web hosting now a days is about $35 a year and your domain name will be around $10, so $45 a year is not to bad.

Step 3. Decide what your web site functionality will be, and your target audience.

You have decided to build a website, but wait before you begin to build your site there are some very important questions you need to ask yourself. These questions will help you in choosing what type of website is right for you.

Find your niche

2012-10-12T10:44:00.002+05:30

How to find your niche when creating a web site

Well before I talk about finding your niche I think it is important to explain the definition of niche.

Definition of Niche: A specialized but profitable corner of the market.

Now that we have an understanding of what the word niche means I think it is pretty clear why you need to find your niche. How do you find your niche? The simple answer is try to get involved in something you are familiar with such as a product or service, and then try to find the type of market or people you would like to try and target your products and or services to, so basically the group of people who are more likely to need your products and or services. For example my website is geared towards guiding beginner web site creators towards the tools and resources that will help them in the process of creating their web site. I am recommending many of the products and services that I have used over the last 10 years of my career as a web designer, although I am no longer designing web site’s for other people I have found personal satisfaction in creating websites for myself and teaching others how to become self sufficient when it come to creating a web site, so this is my niche I enjoy sharing my knowledge of web design and this is the main purpose or niche of my site.

How to Make Money Online with Google Adsense

2012-10-12T10:39:00.003+05:30

Make Money Online with Google Adsense

If you own a web site and would like to find a way to make some extra money from your ever growing page views, then Google ad sense is right for you. Even if you own a simple cooking web site that you use to post your favorite recipes or if you own a personal blog where you simply talk about your daily experiences it doesn’t matter anyone can make money online with Google adsense. The thing that I find so amazing about this program is the money earning potential is limitless and the Google adsense program is completely free to join.

What is Google AdSense?

Google AdSense is a free, simple way for website publishers of all sizes to earn money by displaying targeted Google ads on their websites. AdSense also lets you provide Google search to your site users, while earning money by displaying Google ads on the search results pages. (Google adsense)

AdSense outlined

Get paid for displaying targeted Google ads on your site
Customize ads easily to match your site’s look and feel
Track your success with online reports
Read how publishers found success with AdSense in our case studies

How does it work?

Choose the type and placement of ad units to be displayed
- Specify where you want ads to appear
- Choose what types of ads can compete for those slots
Highest-paying ads display
- Advertisers bid on your inventory in a real-time auction
- Always show the highest-paying ad
Get paid
- Google bills advertisers and ad networks
- Get paid through our reliable payment options

How Does Google earn money from adsense?

Through a program called AdWords.

What is AdWords?

AdWords is Google’s advertising product and main source of revenue. Google offers ad space on their search engine search result pages to companies or individuals who want to get more exposure for their web site, products and or services. Google AdWords offer these ad spaces in the form of pay per click (PPC) advertising, which simply means that when someone clicks on the ad whether it be a text link or image ad the company or individual who is the owner of that ad will be charged per click hence the tern pay per click (PPC) advertising. For more information on Google Adwords click here

Web design questions to ask new clients

2012-10-12T10:38:00.003+05:30

Getting started with the web design process.

One of the hardest things for a web designer is to make sure he/she is a able to ask all of the right questions to his/her client durring the meeting / planning stage of a web site design. This is a very common problem that most web designers face, and although it can be very difficult to generate the right questions to ask your client rest assured that as time goes on and you have delt with a few clients your list of questions will begin to develop. I have compiled a list of common questions below to help make the web design process a little easier for you.

Keep in mind that as you develop your list of questions that gathering the right information will help you in the long run with the design process. Get as many of the following questions answered and 85% of the design battle is already done because you will already know what needs to go on the page and where to place it.

Just giving you the questions isn’t enough because you need to understand why the questions are asked. For this reason I have also included example options for the more in-depth questions so you can see why the question is important and what kind of answer you’re looking for. Remember that getting all the right answers is crucial, because having all of the necessary questions answersed the page will pretty much build itself!

One more tip before you read the following questions; rather than taking your laptop into your meeting with your client just keep it simple and use the old pen and paper method. This will allow you to make quick notes and avoid any interuptions from your computer and allow you to give your full undevided attention to your client.

Web design build questions to ask new clients

What do you want the web site to do for your company?(is it to just promote brand awareness and for people who hear about them and then go to their site, will people be finding them through search engines, is it existing clients looking for support or news, are you selling online, are you offering downloads, company reports etc)
Who is your target audience (age / level of internet experience etc)? (Do they require a modern, fast paced, highly graphical site to target the younger generation or a more user friendly site for the less experienced or older internet users. )
What image do you want to portray (Professional / Casual / cutting edge etc)? (Some sites use white space and limited text to give a relaxed feel while others use lots of images and text to give the site a busy feel. Define the feel of the site)
If you have branding what colours, fonts, styles do you use? (See business cards, letterheads etc). More often that not the sole trader will have no graphics, no logo and no identity so in these cases you need to ask the client for colour schemes they think fit with the ideas but also do market research on the competition because the client may not be right.

WEB DESIGN CORE QUESTIONS:

What do you absolutely definitely want on the site? (This list could include blog, shopping cart, members log in, private areas, RSS feeds. Gallery newsletter, contact forms, advertising space, different languages, search facility, etc)
What would you like if possible/within budget?
What absolutely must be on the homepage and what is the order of priority? (This is a core question and you should allow the client time to ponder and discuss this with you. Their answers here should define the position of the building blocks. The answers could be phone number, email, help icon, downloads, cart total, core product links etc.)
What must be visible at all times? (Every page has a fold. A fold is below the visual part of the page and requires you to scroll down to see it. I have a height I use but you should decide for yourself where it should be. The client must understand this and agree what can go above and below).
How many links will be needed and how many levels of navigation will there be? (You need to understand the journey paths and decide how far down the link structure will go (level one, level two, level three etc)
If the business has different sections and each wants its own presence on the page which business sections would get the best locations?
Is there any content that may require a database or scripting? (Contact forms, shopping carts, newsletters etc)
Who are your competitors? (Supply some URL’s of competitors that you think sell your product type well)
Do your competitors use something on their site that you really like? (Could be navigation structure, form layout etc)
What do you offer that the competition doesn’t? (This often makes the client think about his own business in a new way and I’ve started a new path for a few businesses with this one!)
List 5 general sites that they like and why do they like them? (This could be navigation method, colour scheme, fonts etc.)
Do you have any text/copy / graphics / Logos for the site? Will they be supplying the text in a ready to go copy/paste format or will someone have to input all their text into the site from paper etc. Likewise will we need to outsource all the imagery from other sources or do they have their own graphics that need to be included. Will we need to input all the links?
Will you require space on pages for external/internal advertising (If yes what types)? Header ads, sidebar ads, ads in the content etc.
When do you want it finished and who is going to be updating the pages.
What is their level of experience?
What are your main products and/or services? For each explain what you would want you visitors to do, (sign-up, purchase, contact you, etc.). i.e. a call-to-action for each.
What are the main categories of information you want to publish? (Time-sensitive like news & events? Product or service descriptions? Case studies / Success Stories? Careers information? Special offers?)
How would you like to communicate with you visitors? (Telephone, Email, Live Chat, Blog’s or discussions, Mailing list, Brochure/magazines)

Shopping Cart questions

Do you want to offer real time shipping?
Do you want the consumer to sign in or log-in?
Do you need cross selling?
Do you need to offer unlimited products?
Do you need unlimited categories?
How will you charge for shipping?
How will you charge for taxes

Blog’s

Will there be multiple authors?
Should the site clearly be displaying author info?
Are there multiple styles of blog posts, like longer feature posts and shorter quick posts?
What other kind of content will be on the site?
Does the site need to accommodate for advertising?
(What type? Sizes? )
Do you plan to use categories? tags? both?
How do you want to handle archives?
How do you want to handle search?
Are you going to be presenting source code in the posts?
Are there any other blog’s that you really like?

Content Management Systems

Do you require multiple levels of access?
Does the new content need final approval before being published?
Will they want simple content editors or web developers to change styles?

So I have the web build answers…now what?

I usually start with scribbles on a napkin or pad. Seriously if you start sketching out as the client is answering your questions you quickly get a feel for the blocks and usually when I leave the client I already have sketched out where the blocks need to go.

Once the client agrees with the position and prominence of the blocks I can start thinking of the graphics. This is where your preferred way of building a site comes into play but the difference between how you did it before and now is you have the building blocks in front of you and with the answers to your questions beside you it should be a much simpler process than ever before.

The visual wire frame should include the effects on the page. For example if your navigation has a mouse over then have that mouseover on “one” of the links. Likewise for active stats etc. If the effect is transitional then try to give a example web page with it working or give a detailed description.

The visual wire frame may be overboard for some of you but for me it is easier to modify a PDF than a pixel perfect web page. A client can often try and change the layout after looking at it for a while and while I’m in the PSD stage I’m happy to accommodate this. Once the visual wire frame has been agreed then the build begins and any changes after that point will incur costs. The client can’t really argue because they have already agreed to the block wire frame and visual wire frame so it is a lot easier to ask for extra costs when you’re at the final stage of the contract.

I wish I had this list when I first started and I hope my years of building and updating this document helps you.

Create Free Email address Using Your Website Domain with Google Apps

2012-10-12T10:37:00.001+05:30

One of the very first things that any web owner likes to do after purchasing a domain is setting up a branded Email address ending with the domain name. Blogger users whopurchase a domain often find it difficult to set the MX records in their webhosting account, thus they don't bother using a branded email address. If your website address is www.example.com then your branded email Id would look like yourname@example.com. You will be able to access it using the address mail.example.com. The best thing about todays' tutorial is that we wont be using inefficient webmail services like roundcube, squirrelmail or horde that you often find in your hostgator webmail clients. We will be using Gmail, which means you will manage all emails received at your website's email address straight in your very own custom Gmail account. You can also create up to 10 email addressesusing your domain without paying a penny with Google Apps. You will stay safe, protected and most importantly served well. Lets now create a Gmail account for your company's website or blog and connect it to your web host in easy steps.

Google Apps Services

Part1: Create Free Email address For your domain with Google Apps

Part2: Google Short Links - Create Shortcuts to URLs

Part3: Create short URL For Email & other services in Google Apps

Part4: Connect your Website Emaill address To Gmail

Note: This post may seem too much techy but its really simple to apply and all fun! So act like tomb boys and give it a try. :)

Steps To Create a Gmail Account For a Website

You will get a free 10GB storage to save all your emails no matter how loaded they may be with rich media.
Follow these easy steps:

Go To Google Apps for Domains
Submit your website address without typing http://
Then fill up the vacant blanks with required information. Keep your username simple because this will be attached to your domain name to create your custom Gmail account username. In my case I choose Mohammad for my sister blog.

      4. Keep Alternate email address the same as your personal Gmail ID or any ID that you use frequently.
      5. Click the submit button to create your account

      6. You have now successfully created an account with Google apps. Now you need to verify that you actually own the domain. You will be given two options Express andCustom. Choose express.

   7.   Click the next buttons till you get to Domain verification page. Here you get 5 options to verify your domain which are:

Upload HTML File (Recommended Method)
HTML Tag (under alternate Methods tab)
Google Analytics (under alternate Methods tab)
Domain Name provider (under alternate Methods tab)

Choose the second option of HTML Tag because it is the easiest of all. Copy the simple Meta tag and paste it inside your template just below <head> section.
Tip for Genesis Users:
Once done, hit the verify button and you are half done.

Click the continue link and you will be taken to Google Apps Setup wizard. You may keep all options default and keep clicking next till you reach setup Gmail:

Choose other from the drop down box which says "Choose your Host" Click Next
Setting up MX Records
Here you will be given four MX entries that you need to submit to your webhost.

You will need to log into your web host account and navigate to DNS Manager or DNS settings. DNS zone is also called DNS Management, Mail Server Configuration, orName Server Management, depends on your webhost. I will be sharing here the settings for hostgator here which will give you a clear observation on what to do.
Setting For HostGator:

Log in your Control Panel
Click the MX entry icon just under Mail
Choose your domain
Set Email routing to Automatically Detect Configuration
Now enter 5 MX entries one by one inside the Records box. These MX entries are given to you by Google apps. While entering the destination remove the dot in the end. For example ASPMX.L.GOOGLE.COM. should be entered asASPMX.L.GOOGLE.COM

5. When everything has been entered correctly it will look like this:

Note: If an MX entry exists by default, you may delete it and keep only the above 5 MX entries. It will take 24 hours for your Email to connect to Google servers so be patient
Go back to Google apps and keep on clicking next till you complete the wizard. Though completing the setup wizard is not necessary but to avoid the irritating prompting messages better complete it.
Congratulations! You have now successfully created a custom Gmail address for your website. .