I found it ridiculous when car dealers started offering 7 year loans. Now, automobile companies are now offering auto loans that extend up to 97 months. That’s more than eight years to pay off an auto loans.

When I bought my first car, I made the mistake of signing up for an auto loan that lasted for 72 months. While I enjoyed the fact that it kept my payments in the $400 range, it also kept me making payments for nearly six years. The only reason that my loan did not last the whole six year time frame is because I paid it off early. I learned a valuable lesson from that experience. Never finance an automobile for over five years. There are simply too many drawbacks.

1. You will wind up paying a higher interest rate.

Banks and automobile finance companies charge you more in interest the longer your loan term goes. It is known as the time value of money. Lending you a $1 today may mean paying back $1.25 or $1.50 tomorrow.

2. You will keep making car payments longer.

The risk of default increases the longer that your loan term is. You never know what financial hardship may come upon you with a 6,7, or 8 year loan. You are also more likely to wind up having to pay for automobile repairs while making car payments at the same time. You just may wind up making payments for years on a car that has died on you.

3. You should never take on a long-term loan for a car.

A car is an asset that depreciates in value. It will not gain value unless you plan on parking it, protecting it, and waiting 30 years for it to become a classic. If it takes you longer than five years to pay off your car loan, then you have spent too much for your car. Live within your budget. You should never purchase a car that you can afford. A 7 or 8 year car loan is a clear sign that your wants are bigger than your wallet.

Prepare yourself. A 10 year loan is right around the corner!

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

According to Bankrate, Buffett gave away over $3 billion dollars last year. “Buffett is putting his money where his mouth is. In 2010 he announced that he was giving 90 percent of his fortune to charity and urged other rich Americans to donate at least half of their wealth. Since then, his Giving Pledge, as the campaign is called, has attracted dozens of billionaires, including media tycoon Ted Turner and Oracle Corp. co-founder Larry Ellison. Buffett’s $3.09 billion gift last year was in the form of stock, to be divided equally among foundations run by his children. After Buffett, the largest donations in 2012 came from Facebook founder Mark Zuckerberg, whose $498.8 million gift to the Silicon Valley Community Foundation will support health and education. No. 3 is Paul Allen, co-founder of Microsoft, with a $300 million donation to the Allen Institute for Brain Science.”

Warren Buffett should be commended for his generosity as well as his financial prowess. While the S&P 500 had a fine year in 2012 gaining over 13% from its closing value in 2012. Warren Buffett had an even better year. Shares of Berkshire Hathaway rose nearly 17%. The billionaire investor generated a robust 16.8% return for his investors. Warren Buffett has managed to prove time and time again that you do not have to chase risk to generate solid returns. Investors could have made a tidy profit in 2012 and slept well at night by investing with the world’s greatest investor.

Class A shares are trading at $140,000 per share and Class B shares are trading at $93 per share. Full Disclosure: I do own shares of Berkshire Hathaway.

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

The last few years have not been kind to Hewlett-Packard. Since the resignation of CEO Mark Hurd, there have been a number of organizational miscues and mistakes which have hampered the company. CEO Meg Whitman is trying to restructure the company by focusing on its strength in the computer hardware industry while positioning the company to benefit from the opportunity existing in the software market.

The Good

Hewlett-Packard is trading at just 3.6 times its forward P/E ratio. The company’s strength is in its balance sheet. The company has an $11 billion dollar cash hoard and has nearly $6 worth of cash for each share. The stock trades at just 0.9 times book value and 0.2 times its sales. Hewlett-Packard trades at 3 times its cash flow. The stock is a great divided pay with its nearly 3.7% yield.

The Bad

Shares of Hewlett-Packard trade at $13.68 and are very close to their 52 week low. The stock has been pummeled over the last year as the stock is down over 50% years. The bad news for the company is that revenue has grown at a tepid 1.7% over the past three years. Earnings per share, net income, margins, return on equity, and return on assets are all negative. Earnings are projected to fall an additional 10% over the next year and there appears to be no end to the company’s free fall.  The company does not expect revenue to grow again until 2016.

Despite its low price, this is still a risky stock. I expect a significant dividend cut to be announced in 2013. It is only prudent for the company to slash its dividend to ensure its long term survival. Share buybacks will likely come to an end as well. The company is a wait and see for long term investors as the future is still too murky for HP.

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

When it comes to finding growth, small cap and mid cap companies are often my favorite place to look in the market. Small cap stocks and mid cap companies have the opportunity to become the next great growth story. That is because their overall market cap is so low. It is a lot more likely that a company like HHGregg (HGG) will increase its market net worth from $300 million to $600 million dollars than it is for Walmart (WMT) to increase its market cap from $250 billion dollars to $500 billion dollars. (I am not saying that HHGregg is a better investment right now than Walmart! I am saying that HHGregg has greater growth potential and is also a whole lot riskier.) Risk comes right along with growth. A stock with the potential to double all of your money has the potential to lose all of your money as well.

Let’s take a look at the payroll industry for an example.

ADP (ADP) and Paychex (PAYX) are not the largest players in the human resources market. They have a sizeable share of the payroll market and are the main companies recommended by advisors and fund companies. Business television programs like CNBC and Bloomberg love large companies like this. There is however a smaller player in the industry with great growth potential.

The company is Insperity.

Insperity (NSP) provides human resource services like payroll processing for many small businesses around the country.  Insperity is not interested in being the benefits and payroll processor of the Fortune 500 companies. The company is interested in serving businesses small businesses with as little as 10 employees and up. This is a niche that is often overlooked as most HR firms neglect the really small businesses that need HR help.

Insperity, formerly Administaff, generates nearly $2 billion dollars in revenue. The company has managed to increase revenue 10% year over year. The small cap company with its $730 million dollar market cap has nearly $300 million in cash and absolutely no debt. The future looks bright for Insperity if the company can maintain it 50% plus earnings growth and 10% plus revenue growth. The P/E ratio of 17 is well below the industry average as well. Insperity has done a great job of handling investor capital with its 13.8% return on equity. Insperity is not only a growth stock; investors will also appreciate the moderate 2.4% yield.

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

If you are looking for a good dividend yield, the telecommunications market is a good place to go. Vodafone (VOD) is one of the best yielding stocks on the market. Investors can currently get a $1.98 dividend payout from this telecommunications company. Vodafone is currently yielding 7%, which is an incredible payout for such a large company. Vodafone has a nearly 50% interest in Verizon wireless and serves more than 20 different countries. This multinational firm trades at 13 times earnings, 1.1 times book value, and under two times sales. Thirty two percent EPS growth and 15% operating margins make this company a decent value play as well.

It’s not surprising when a defense company makes a good dividend play and Lockheed Martin (LMT) is one of those companies. Lockheed Martin has a giant $4.00 dividend payout and a 4.3% yield which beats anything you will get on a savings bond. This is a pure income play since the company generates $3 billion a year in free cash flow but has a flat EPS growth rate. The P/E ratio is a little undervalued for the industry but not severely. At $91 a share, the stock trades at 14 times book value. The company does however have a solid history of repurchasing company stock which helps to create value for shareholders.

Not all of the banks have low dividend payouts. New York Community Bancorp (NYB) has a hefty 7.2% dividend yield which is great for a midcap bank. The company has managed to maintain its $1 dividend payout for the past seven years and has paid out a dividend for twenty straight years. This dividend is not likely to increase over the near term but investors can look forward to stead payouts as long as the loan portfolio stays stable and the bank’s growth plans go according to plan.

When in doubt, look to the energy sector for dividends. The energy sector is known for low growth rates, stable revenues, and consistent cash flows. Entergy (ETR) is an undervalued dividend dynamo. Entergy is currently yielding 4.9% and pays out $3.32 per share. The energy company trades at 12 times earnings, 1.3 times book value, 1 times sales, and 3.6 times free cash flow. The company has recently raised its dividend and been buying back company stock.

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

These 5 guys are making a ton of money on the Internet.

Online Blogging

Darren Rowse

Darren Rowse of ProBlogger has turned an occasional hobby into a full-time job with a sizeable income stream. He has built several popular blogs and has made money selling e-books, advertisements, workbooks, job boards, speaking fees, and affiliate links. Rowse has managed to leverage his passion and used it to vault himself into large amounts of income. He was earning a 6 figure income from blogging back in 2005. Who knows what the amount is now?

Internet Marketing

John Chow

John Chow has managed to earn $500,00o over the past year in income alone from his website named after him JohnChow. Chow earns over $40,000 a month as an Internet marketer. He primarily markets his products through emails to his 100,000 plus followers. Chow earns money through affiliate programs and selling products. It’s only a matter of time before Chow crosses over into the million dollar stratosphere.

Internet Media

Jeremy Schoemaker

Jeremy Schoemaker has made a fortune from his media company, ShoeMoney Media Group. Schoemaker earns over 7 figures from his early entry into the cell phone ringtone market, his auction ads service, and his Internet site ShoeMoney. Schoemaker became an Internet icon when he earned $132,994.97 from Google Adsense in one month. That’s not a bad chunk of change!

Online Stock Trading

Tim Sykes

Tim Sykes teaches traders how to trade penny stocks on his namesake website. Sykes moved into the millionaire neighborhood by trading stocks over a 3 year time period. He turned thousands of dollars into over $1 million dollars during his collegiate years. Sykes now makes over $100,000 a month selling his stock alerts services and DVD packages.

Internet Content Assistance

Brian Clark

Brian Clark of CopyBlogger teaches online writers how to capture the attention of their site’s readers. Clark’s blog covers everything from driving traffic to your site to the 8 habits of highly effective bloggers. CopyBlogger is ranked one of the 50 most popular blogs and has over 137,000 RSS subscribers. Brian built three businesses using his knowledge of online marketing techniques.  He teaches bloggers  the keys to building, monetizing, and selling website.

All of these examples above are designed to demonstrate that you can create your own business model for making money online. You should carve out your own specific niche that fits your passion. Don’t try to work in an area just to make some quick dough. It takes work to build your business and you will get sick of writing posts or selling a product that you care nothing about.

Recently, I came across Pat Flynn’s site at Smart Passive Income.

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

Here are 5 sites that can help you on your money making quest.

1. Write for eHow.

You can bring in almost $1000 a month by just writing 2 eHow articles a day for a month. Demand studios pays authors to write “How to” articles for its eHow website. The company pays $15 per article to writers. A writer that writes 3 articles per day for 30 days a week could net himself $900 per month in income. That’s a pretty sizeable chump of income for writing a few articles a day.

2. Become a consultant for Elance.

Elance is like a brokerage site for freelance writers. You can apply for writing jobs on Elance and earn anywhere from $5 to $100 depending on the writing assignment. The lower paying jobs are normally very short assignments and are much easier to get done. You could either take on 100 lower paying jobs or just take a couple higher paying gigs. There are over 36,000 jobs on the Elance website. That’s more than enough to keep you writing day after day.

3. Write for Helium.

Helium pays the lowest fixed rate of any site but the site does offer writers a share of potential revenue. Pay rates average 50 cents to $3.50 on the main Helium site and ad revenue depends on page views. There is no use bothering with writing for the traditional Helium site. You can make a lot more money writing for Helium’s Marketplace section. At Helium’s Marketplace, you are given a title, subject, and guidelines as to the topic to write on. The pay for this section ranges from $20 to $200 per article.

4. Become a Delegate2/Pure Content Writer

Delegate2 provides content for a number of sites on the net. The company has writers with varying backgrounds from new college grads to experienced writers. You can apply online at the Delegate 2 website. The lowest pay rate runs about $3 per 250 words. Most new writers will earn at least $4. If you write just over 8 short 250 word articles a day, you could make an extra $1,000 a month. Many assignments pay more than the $4 minimum rate.

5. Write for Yovia.

Yovia is different in that you actually set up a blog on the company’s site. On Yovia’s site, you choose your niche and start contributing content to the site. It is then your job to promote your blog and draw traffic to the site via social media. Your pay depends upon how large a following you can generate using email, Facebook, Twitter, and other social media platforms. If you can draw a lot of followers, your pay rate could be rather high. There are currently over 5,500 Yovia bloggers hosting 11,450 blogs on the Yovia site.

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

Shady Practices

Banks have come up with even more fees for 2012. Banks are now charging business account holders a “FDIC fee” that they claim is a government fee charged for FDIC insurance. This fee is being charged to business checking, payroll, and non-interest bearing accounts. The government has charged banks no such fee and banks are lying to customers to make even more money.

More Fees

The big banks are about to sock customers with monthly fees for accounts that used to have no fee requirements. Banks are going to charge monthly maintenance fees for customers that do not bank online, keep a large enough monthly balance, or buy enough banking products. Customers would have to open credit card accounts and charge more money monthly to avoid the service fees. Banks are encouraging customers to buy their products and take on more debt just so they can add more money to the bottom line.

Banks know that the average customer cannot afford to keep $1,000- $5,000 lying dormant in a checking account. They prey upon the financial vulnerabilities of their customers.

Tougher Loan Requirements

I have always marveled at the fact that a lot of people bank at financial institutions that would never grant them a loan if they needed one. Banks like Bank of America regularly reject its longer customers despite the fact that they may have a decent credit score. Credit unions and smaller banks are much more likely to lend money to long term customers with fair credit scores.

Let’s take a look at how banks are making you poorer. Let’s say you bank at one of the larger banking chains and they charge you $8.95 a month for the privilege of having a bank account with them. That means you are paying $107.40 per year. Over a lifetime, you could easily wind up paying a bank nearly $7,000 in fees. If you have a small business, you could easily be socked with an additional $12.95 monthly fee. This would cost you $155.40 annually and more than $10,000 over a lifetime. This is just for the privilege of having a bank account.

Credit unions, smaller banks, and online banks are much smarter bets. You can place that monthly fee amount in a savings account or with a bank that has no fee checking. This is a much wiser use of your financial resources.

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way

So, today I figured that I would take sometime to go through my journey and retrace my steps of growing my blog from virtually no readers (except my family!) to a solid readership size.

I Started Out Blogging!!

I had a solid background in finance considering that my undergraduate degree was in Finance. My first step was to start my blog, Buy Like Buffett. I started Buy Like Buffett in November of 2008. I created the site as a way to share my thoughts on personal finance and to answer any questions that people may have had. I never really saw blogging as a big money maker. I knew nothing of Google Page Rank, Alexa ranking, Search Engine Optimization, or any other rating services. I just thought of blogging as a way to express my thoughts on any finance related topic.

Contacted Sites About Guest Posting

I contacted a few sites about writing a guest post for their site and often never heard back. It is difficult to get guest posting opportunities when you do not have any content out there. It’s like applying for a job fresh out of college. Companies would always say you don’t have any experience and I would always wonder how am I supposed to get experience if no one will hire me? Getting a guest posting job on a respected site is not easy. The blog owner has to trust you and believe that your content is something that will benefit their readers. I did not have much online content when I started blogging so that was quite difficult.

My Blogging Career Is Over?

I started off writing consistently day after day and figured that my readership would grow rather quickly. Well after blogging for a few months in anonymity, I grew tired of waiting and slacked off. I would write a post once a week and then once every two weeks. I even had one month where I only wrote one post. These were not long posts either!

Lots of bloggers burn out after a few months because they get discouraged. You feel like you are writing content that no one will ever read. You start to feel like you are wasting time and that your site will never be recognized by mainstream publications.

This was the point where I almost gave up but fortunately I did not.

Blogging Take 2!

I recommitted myself to blogging and determined to stick with it for the long haul. I started writing 3 to 4 posts every week regardless of how I felt. I wrote content consistently despite my low readership. I knew that eventually more people would read my blog so I stuck with it.

Finding My Voice

One of the toughest things about writing starting off for me was finding my voice. I didn’t want to duplicate the writing style of other bloggers. That’s copycatting and I am sure they would not have appreciated that. I didn’t want to steal other people’s ideas. I wanted to have my own unique take and write about whatever I was thinking about that week. Scary, huh? No need to worry. I do keep the topics to only finance. Sometimes I will throw in the occasional sports reference.

Applied For Freelance Writing Jobs

After I had one year’s worth of content on my site, I started looking for financial writing jobs. I visited a bunch of different job boards looking for writing jobs. I was willing to take any financial writing job as long as it increased my exposure. Some of the jobs were very low paying but I saw it as an investment in building my name and the Buy Like Buffett brand.

Sold My First Ad

You read that correctly. I made my first ever ad sale. A site contacted me about buying an ad for $10/month. I was so excited that I leaped at the offer. It was the first ad that I had ever sold. I realize now that I sold myself way too short but I was happy for any income. When you aren’t making any income blogging, you appreciate every dollar.

Networked With Other Bloggers

I started visiting other financial sites. I must have visited thousands and thousands of financial websites from the very good to the not so good. I almost always learned something from visiting a site. I begin to email bloggers whose sites that I enjoyed reading. I didn’t ask them to link to my site or promote my site. I just wanted to let them know that I enjoyed reading their sites and out of this I built some pretty solid blogging friendships.

I Got Hired!

I ended up getting hired by a couple of financial sites and started building my portfolio as a financial writer. Over the next 10 months, I wrote hundreds of articles for different financial sites. I wrote articles on everything from investing to shopping to taxes. If it was in the financial arena, I wrote it. At its peak, I was writing 20 articles every week.

More Exposure For Buy Like Buffett

Myrate of pay for articles increased and a few of my articles were picked up by national publications and I was on my way to becoming a professional writer. I had a few articles that were run by Forbes, New York Times, and a couple of other large sites.

Emails, Emails, Emails

I am not sure what changed but after about 18 months of blogging I started to get bombarded with offers. I started getting a bunch of advertisers contacting me about buying ad space. I have gotten ad requests for electronic cigarettes, tennis shoes, pornography. I get about 25 book review offers a week, tons of article submissions, guest post requests, and speaking opportunities.

Networking Part II

I stumbled across the Yakezie Network in June of 2010. I met a ton of great financial bloggers and found some new blogs that I never knew about. That network taught me a lot about Alexa Ranking and Page Rank. I had no clue what those things were until the past 6 months.

The Present

Since then I have written a book, an e-book, and I am working on a second one. I have cut down on the number of sites that I write for because it just became too time consuming. I spend more time now writing articles for Buy Like Buffett now. I still write for a few sites because I enjoy it.

The Future?

I plan on writing for Buy Like Buffett for a long time. I may add a writer next year to bring additional expertise to the site. I plan on spending more time developing the BLB Forum. Hopefully, the site will continue to grow and I will look to cover more of the financial stratosphere in the future.

Final Thoughts

The fascinating part to me is that the same people who are reading this post now would have never seen these if I had written the same thing just 2 years ago. It’s proof that persistence does pay off!

Photo by Bakingforgood

BUY LIKE BUFFETT - Make Money Investing The Warren Buffett Way