Live Real, Now

The no-pants guide to spending, saving, and thriving in the real world.

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Don’t Screw Future-You

Finance, Life

A conversation between me and my temporally displaced self.
Future Me: Excuse me, Jason?
Me: Yes?
FMe: <Slap!>
Me: May I ask what that was for?
FMe: Of course.
Me: What was that for, jerk?
FMe: That was payback for all of the hell you have put me through.
Me: What?!?  I’ve never even met you, before.
FMe: Of course you have.  I am future-you, and I’m sick of getting screwed by past-me, that is, you.
Me: Huh?
FMe: Listen close.  You’re not  the sharpest brick in the box and I don’t want to explain this twice.
Me: ???
FMe: A long time ago, when you first met our wife, you were dumb.
Me: I don’t appreciate….
FMe: Shut up.  I was dumb then, too.  Remember?  You…err…we bought a new truck, built an addition on our…err…your…err…whomever’s house, got married in the same year.  On top of many other expensive decisions.  Do your recall?
Me: Yes, I do.  So what?
FMe: If that wasn’t enough, you and your smoking-hot bride are still shopping like you’re rich. You drive a new car.  Your kids wear new clothes.  You’ve got a house full of new furniture.  How did you pay for all of that?
Me: Naturally, I charged it.  Zero payments, zero interest for a year!  Pretty smart, huh?
FMe: What happens in a year?
Me: I don’t know.  I’ve got a full year to figure that out.
FMe: <Slap!>  I’ll tell you what happens!  Future-you, that’s me, gets screwed!   Your raise didn’t come through.  You had a baby. The truck broke down.  Your wife took maternity leave.  A roommate moved out.  You took a loss in the stock market.  You didn’t plan!  You had no savings to cover any of those problems because you were too busy servicing debt to pay for your current life.
Me: How was I to know?
FMe: <Slap!>  Life happens!  You never know what is coming next.  You need to plan and save for what might happen.  Otherwise, you’ll just accumulate more debt to be serviced by yours-truly.  That is not acceptable.
Me:  So?  What are you going to do about it?
FMe: <Slap!>
Me: Really?  Again?
FMe: <Slap!>  I’m struggling to pay your debt. Your son starts college next year, but you’ve left me completely unable to help.  Your daughter wants to get married in a couple of years, but the Father-of-the-Bride can’t afford a tux.  My wife, your beatiful bride, wants a vacation that I can’t afford.   You’ve screwed me, dude.
Me: I’m sorry.  What can I do to fix it?
FMe: Buy me dinner, first.
Me: Huh?!?!?
FMe: Stop the excess spending. Spend less than you make, for a change.  No credit.
Me: None?
FMe: None.  Nada.  Zip.  Zilch.  Only spend what you can afford. Budget.  Pay off those nasty bills.  Don’t leave me hanging.
Me: So, what you’re saying is that, if I don’t have the money, I shouldn’t buy it?
FMe: Exactly.  That’s the path to wealth, freedom, and financial independence.  Live in the real world.
Me: Gee, thanks, Future-Me!  Now I know.
FMe: And knowing is half the battle.

What would your future-you have to say to you?

 

Budget Lesson, Part 3

Finance

I keep calling these lessons, but they are examples and explanations, more than lessons.   Names aside, please see Part 1 and Part 2 to catch up.  The Google Doc of this example is here.

School Lunch

This time, I’m going to review my non-monthly bills.  These are the bills that have to be paid, but not on a monthly basis.  Some are annual, others are quarterly, or even weekly.  Every month, the amount–adjusted to the monthly equivalent–is set aside in Quicken.

  • School Lunch – We don’t qualify for any of the reduced lunch plan, and I don’t know that it is possible to send a brown-bag lunch that is both cheaper and healthier than the school’s menu.  This is automatically replenished whenever it gets below $15.   This actually gets paid about every other month.
  • Property Taxes – Semi-annual and increasing every year.   I know the valuations around me, so I don’t think an appeal would win.
  • Life insurance – We pay this quarterly.   If I die, my family will be completely covered for several years, without adjusting a single expense.   If the expenses are adjusted to account for the fact that I won’t be eating, driving, or using electricity, it will last much longer.  This is a separate policy from the one discussed in Part 2.  GET INSURANCE!  Take care of your family.
  • AAA – Since we got reliable cars, this hasn’t been a money-saver, but it’s priceless in terms of peace of mind.
  • Vehicle Registration – We have two cars and a motorcycle that need registration every year.  I’m planning to sell the bike in the spring, but I was planning that for last spring, too.  It’s easy to put that off, since I enjoy riding.
  • Daycare – Daycare is a weekly expense.  As a two-income family, this isn’t an expense we can do away with…yet.  As time goes on, the bill will be getting lower.   In June, my youngest reaches a cheaper pricing table and my oldest is almost ready to be done with daycare completely.
  • City Bill – Our garbage and sewer are paid through the city on a quarterly basis.
  • Web host – I’ve got this blog, plus a few other side projects hosted here.  I have been simplifying and reducing the projects that aren’t fun or profitable, but I’m not sure this expense will ever go away.

There aren’t too many items here that can be legitimately and responsibly trimmed.

Make Extra Money Part 2: Niche Selection

Business, Finance

If you want to make money, help someone get healthy, wealthy or laid.

This section was quick.

Seriously, those three topics have been making people rich since the invention of rich.   Knowing that isn’t enough. If you want to make some money in the health niche, are you going to help people lose weight, add muscle, relieve stress, or reduce the symptoms of some unpleasant medical condition?   Those are called “sub-niches”.  (Side question: Viagra is a sub-niche of which topic?)

Still not enough.

If you’re going to offer a product to help lose weight, does it revolve around diet, exercise, or both?   For medical conditions, is it a way to soothe eczema, instructions for a diabetic diet, a cure for boils, or help with acne?  Those are micro-niches.

That’s where you want to be.  The “make money” niche is far too broad for anyone to effectively compete.  The “make money online” sub-niche is still crazy.  When you get to the “make money buying and selling websites” micro-niche, you’re in a territory that leaves room for competition, without costing thousands of dollars to get involved.

Remember that:  The more narrowly you define your niche market, the easier it is to compete. You can take that too far.  The “lose weight by eating nothing but onions, alfalfa, and imitation caramel sauce” micro-niche is probably too narrowly defined to have a market worth pursuing.  You need a micro-niche with buyers, preferably a lot of them.

Now the hard part.

How do you find a niche with a lot of potential customers?  Big companies pay millions of dollars every year to do that kind of market research.

Naturally, I recommend you spend millions of dollars on market research.

No?

Here’s the part where I make this entire series worth every penny you’ve paid.  Times 10.

Steal the research.

My favorite source of niche market research to steal is http://www.dummies.com/.    Click the link and notice all of the wonderful niches at the top of the page.  Jon Wiley & Sons, Inc. spends millions of dollars to know what topics will be good sellers.  They’ve been doing this a long time. Trust their work.

Niche Research
Click for full-size image

You don’t have to concentrate on the topics I’ve helpfully highlighted, but they will make it easier for you.  Other niches can be profitable, too.

Golf is a great example.  Golfers spend money to play the game.  You don’t become a golfer without having some discretionary money to spend on it.   I’d recommend against consumer electronics.  There is a lot of competition for anything popular, and most of that is available for free.   If you choose to promote some high-end gear using your Amazon affiliate link, you’re still only looking at a 3% commission.

I like to stick to topics that people “need” an answer for, and can find that answer in ebook form, since I will be promoting a specific product.

With that in mind, pick a topic, then click one of the links to the actual titles for sale.   The “best selling titles” links are a gold mine. You can jump straight to the dummies store, if you’d like.

Of the topics above, here’s how I would narrow it down:

1.  Business and Careers. The bestsellers here are Quickbooks and home buying.  I’m not interested in either topic, so I’ll go into “More titles”.   Here, the “urgent” niches look like job hunting and dealing with horrible coworkers.  I’m also going to throw “writing copy” into the list because it’s something I have a hard time with.

Bestsellers
Bestsellers

2.  Health and Fitness. My first thought was to do a site on diabetic cooking, but the cooking niche is too competitive.  Childhood obesity, detox diets and back pain remedies strike me as worth pursuing.  I’m leaning towards back pain, because I have a bad back.  When you’ve thrown your back out, you’ve got nothing to do but lie on the couch and look for ways to make the pain stop.  That’s urgency.

3.  Personal Finance. The topics that look like good bets are foreclosures and bankruptcies.    These are topics that can cost thousands of dollars if you get them wrong.  I hate to promote a bankruptcy, but some people are out of choices.    Foreclosure defense seems like a good choice.   Losing your home comes with a sense of urgency, and helping people stay in their home makes me feel good.

4.  Relationships and Family. Of these topics, divorce is probably a good seller.  Dating advice definitely is.   I’m not going to detail either one of those niches here.  Divorce is depressing and sex, while fun, isn’t a topic I’m going to get into here.   I try to be family friendly, most of the time.    Weddings are great topic.  Brides are planning to spend money and there’s no shortage of resources to promote.

So, the niches I’ve chosen are:

  • Back pain
  • Bankruptcy
  • Conflict resolution at work
  • Detox diets
  • Fat kids
  • Foreclosure avoidance
  • Job hunting
  • Weddings
  • Writing copy

I won’t be building 9 niche sites in this series.    From here, I’m going to explore effective keywords/search terms and good products to support.  There’s no guarantee I’ll find a good product with an affiliate program for a niche I’ve chosen that has keywords that are both highly searched and low competition, so I’m giving myself alternatives.

For those of you following along at home, take some time to find 5-10 niches you’d be willing to promote.

The important things to consider are:

1. Does it make me feel dirty to promote it?

2. Will there be customers willing to spend money on it?

3.  Will those customers have an urgent need to solve a problem?

I’ve built sites that ignore #3, and they don’t perform nearly as well as those that consider it.  When I do niche sites, I promote a specific product.  It’s pure affiliate marketing, so customers willing to spend money are necessarily my target audience.

3 Habits Every Soon-to-be-Successful Debtor Needs to Cultivate

Finance

Getting out of debt is primarily a matter of changing your habits.   We’ve all heard people swear by skipping your morning cup of coffee to get rich, but that’s just a small habit.   Much more important are the big habits, the lifestyle habits.  Here are 5 habits to cultivate for financial success.

Frugality

“Beware of little expenses; a small leak will sink a great ship”– Benjamin Franklin

As Chris Farrel wrote in “The New Frugality“, being frugal is not about being cheap, but finding the best value for your money.  When my wife and I had our second baby, we couldn’t justify spending $170 on a breast pump, so we bought the $30 model.   It was quite a bit slower than the expensive model, and was only a “single action”, but for $140 of savings, it seemed worth the trade.   Six weeks later, it burned out so we bought a new one, still afraid to justify $170 on quality.   This thing took at least 45 minutes to do its job.  When it burned out 6 weeks later, we decided to go with the high-end model.   This beauty had dual pumps, “baby-mouth simulation” and it was fast.  The time was cut from a minimum of 45 minutes to a maximum of 15.   That’s 3 hours of life reclaimed each day fro $140. Six months of breastfeeding for each of two kids means my wife regained 45 days of her life in exchange for that small amount of money.   At the rate of 6 weeks per burnout, we would have gone through 8 cheap pumps, costing $240.   The high-end unit was still going strong when we weaned baby #3.  Buying quality saved us both time and money. I wish we would have gone with the good one from the start.  Sometimes, the expensive option is also the cheap option.

Maturity

A very sad, sad panda :(
Image via Wikipedia

“Maturity is achieved when a person postpones immediate pleasures for long-term values.” -Joshua Loth Liebman

Being a mature, rational adult is hard.   It means accepting delayed gratification over the more enjoyable instant variety. We save for retirement instead of charging a vacation.  It takes a lot of restraint to put off buying the latest toys, clothes, gadgets,  cars or whatever else is currently turning your crank until you actually have the money to actually afford it.   It means planning your future instead of looking like a surprised bunny caught in a spotlight every time your property taxes come due.   (Who knew that the year changed every year?  Do they really expect annual payments annually?  Geez!  There’s so much to learn!)   It means thinking about your purchases and buying what you actually need, actually want, and will actually use instead of resorting to retail therapy whenever you feel like a sad panda.    The only benefit to mature, rational management of your finances is that, given time, you will have the security of knowing that, no matter what happens, you will be okay.   That’s a huge benefit.

Pleasure

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“Do not bite at the bait of pleasure, till you know there is no hook beneath it.” – Thomas Jefferson

If it hurts, you won’t do it.   You have to learn to take pleasure from from things that won’t make you broke and you have to learn not to hate putting off the things you can’t afford.    Take pleasure in the little things.  Enjoy the time with your family.  Presence means so much more than presents. So many people never learn how to enjoy themselves.  Take the time to experience life and enjoy doing it.

Update:  This post has been included in the Carnival of Debt Reduction.

20 Lazy Ways to Save Money

Finance

Image by Paul Vivier via Flickr

Investopedia ran a post on 20 lazy ways to save money.  I thought it was worth sharing my take on the post.

1.  Schedule automatic payments. I do this obsessively.   I run all of my regular payments through my bank’s online bill-pay.  I think there are 2 bills that get paid manually; 1 is a quarterly payment, the other is due annually.

2.  Eat your groceries. According to the post, Americans–on average–throw away 15% of the groceries they buy.   I totally believe that.  We don’t throw away that much, but it’s still too much.  It tends to be the fresh vegetables, which we eat as side dishes instead of the main course.   We need to switch that mindset, both to use the vegetable efficiently and to eat healthier.

3.  Bundle services. I refuse.  I hate the idea of having a single point of failure for multiple systems.  If the power goes out, I lose my cable, but I keep the phone.   If, for some reason, I can’t pay my phone bill, I don’t lose my internet connection.   I like keeping these things separated.

4.  Pay off credit card. Hardly a lazy process, but otherwise…duh!

5. Mark your calendar. I use my Google Calendar as obsessively as I use automatic payments.  I put in reminders, grocery lists, or anything else I need to know at a specific time.

6. File your taxes on time. I just helped a friend dig out of this mess.   I pay as soon as all of my paperwork is delivered.   The IRS doesn’t give up and they have leverage, including garnishment and even jail.

7. Roll it over. When you change jobs, take your 401k with you.  Don’t leave it behind like a series of red-headed stepchildren.   It’s too easy to lose track of the accounts.   Don’t cash it out!  I made that mistake once and lost far too much to taxes.  A rollover doesn’t count against your 401k contribution limits.

8. Switch credit cards. If you can a good balance transfer offer that’s followed by a better interest rate than you currently have, use it.  But don’t forget to pay attention to the transfer fees.  Do the math.  If it costs you $500 to transfer the money, how much interest do you have to save to make it worthwhile?

9. Use your privileges. If you have a AAA membership, use it.  It gives you a discount on hotels, oil changes, car rentals, and more.   Read the paperwork. Former military gets a ton of random discounts, too.  Ask.

10. Rent instead of buy. Renting can save you money over buying, if it’s something you’ll only use once, but borrowing is free.

11. Buy instead of rent.  Rent-a-center is a ripoff, but they can’t even legally operate here.  If you’re going to use something regularly, buy it.

12. Ask. I love to call up every company I give money to and ask if there’s a way I can give them less.   Outside of chain stores and restaurants I almost always ask for a lower price.

13. Just say no. Extended warranties are generally a waste of money.   However, if I can’t afford to replace the item, I do get the warranty.  On my car, I brought it in for a full inspection and repair a few weeks before the warranty ran out and made all of that money back.    We are slowly building a warranty fund to replace the need for any future extended warranties.

14. Have the awkward conversation. We tried giving gift-giving the axe, but nobody enjoyed that.  Now, we cap the gifts at $20 and do a round-robin type of gift.  $40 for gifts keeps 10 adults happy.

15. Eat at home. Generally, I can cook almost anything better at home, but I really do enjoy eating out and trying new restaurants.  We just keep it from being a regular expense.

16. Balance your checkbook. What a waste of time!    With automatic payments and cash for all of the discretionary budget items, I balance the checkbook once a month.

17. Stick with your bank. Either use your own bank’s ATM network, or use a bank that refunds ATM fees.  I only take out cash on the first of the month, for the entire month and I do that with a teller, so this is never an issue for us.

18. Use your TV. Cable movie packages instead of a video membership?  Really?  That’s a horrible idea.

19. Quit those bad habits. I quite smoking, saving $200 a month.  I don’t drink much and I’m working on fixing my eating habits.   Vices are fun, and this is certainly not a fun way to save money.

20. Forget the pet. There is no way this would fly at my house.  we have 5 cats, 2 gerbils, and a dog.   Our renter has 2 pythons.  We’re a flippin’ zoo and honestly, mess and cost aside, we all like it that way.

How do you stand on these ideas?

First Steps – Ramsey was Wrong

Finance

Day 161: Taking <a href=Baby Steps” width=”180″ height=”240″ />
Image by bonnie-brown via Flickr

Fixing a lifetime of financial mistakes can be an intimidating process.  Scratch that. It’s always an intimidating process.  Where do you start?  You’ve got a pile of bills, a dozen messages from bill collectors and two bi-weekly paystubs.  What next?

Traditionally, and according to Dave Ramsey, the first step to fixing your finances is to make a budget, but he and tradition are wrong.   The first step is to get everybody involved in your finances on the same page.  If your spouse isn’t on board with paying off the debt and spending responsibly, nothing else will work.

Once you have that out of the way, you can move on to the traditional first step, making a budget. I’ve gone over my process to build a personal financial plan in quite a bit of detail, so I’ll just hit the highlights this time.

First, make a list of all of your expenses.   Include all of your utilities, debt payments, tax payments and absolutely everything else.  You need to know the amount of the payment and the frequency.  If a bill is due quarterly, divide it by three and you’ll know what you need to set aside each month.   Round up in all cases so you can build an automatic cushion.

Next, make a list of your income sources.  For most people, this is far easier than tracking their expenses.   Figure out your monthly income.  If you get paid weekly, that that amount times 52, then divide by 12 to get your monthly income.

Finally, subtract your expenses from your income.  If your total is a positive number then you are golden.   If you total is negative, you have been a bad monkey. You need to make some cuts, and they may be painful.  If your outgoing money is more than your incoming money, it is not possible to get ahead.

Once you have your income and expenses recorded, and you have made the cuts necessary to have a positive balance at the end of the month, you have a successful budget.  Congratulations!