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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 8

Finance

This is a continuation of the budget series. See these posts for the history of this series.

This time, I’m looking at our discretionary budget. These are the things that don’t have a fixed cost. Any individual item is largely optional, and, ultimately, we don’t track these purchases closely. At the beginning of the month, I pull this money out of the bank in cash, except for 1 category. When the discretionary budget is gone, it’s gone.

  • Groceries/Dining  – At the beginning of the week, we sit down with a meal planner and (Can you guess?) plan our meals.  The planner we use has a weekly calendar with a checklist below each day to build the grocery list.  At the bottom of the page is another checklist for staples that don’t apply to a specific day’s meal, like milk or snacks.   We build the list, then transfer it to another sheet, broken out by grocery department.  That keeps me from having to criss-cross the store.   I make one lap.  When I go to the store, I only bring that week’s grocery budget in cash,  so I keep close track of how much is going into the cart.    Recently, we’ve gotten so good at making our meals cheaply from scratch that I reduced our monthly food budget by $50.   I enjoy good food, so I wouldn’t reduce this budget item if it was a sacrifice in quality.   For example, the Rainbow Foods store-brand chips actually taste better than Lay’s for half of the price.    We stock up when things are on sale and cook creatively.   Sometimes, if time has been too tight to make a meal plan, we eat solely from the pantry for a week, buying nothing but bread and milk.   By sticking to the list, and not fearing the store’s brand, we are able to feed our family of 5 1/2 for $450 per month and still eat well.
  • Discretionary  – This is for the random things that come up, and some of the not-so-random.   Toiletries, activity fees, admissions, and fund-raisers all come out of this fund.  At the end of the month, whatever is left gets tucked into a box and forgotten.   When the box gets full, it goes to the bank to be applied to debt. There isn’t a lot to cut here, since this line-item is only $200.
  • Baby stuff  – This category is continually shrinking.   Our middle kid is recently potty-trained and our youngest is trying.   There is no baby food and no formula, just 1 pack of diapers every month.   In 6 months, this category will be eliminated.
  • Gas/oil  – This is the single category that isn’t cash-based.   It makes no sense to take the kids out of the car to pay inside, especially in the winter.    Also, all of the temptation is inside. It’s much better to spend the money at the pump.    There isn’t much we can do to reduce this, at the moment.   Our next car won’t be a full-sized pickup, but we are several years from that purchase.    We’ve started clipping oil-change coupons to keep this down to the minimum amount possible.
  • Clothes  – We only allocate $15 per month for clothes.   In a good month, we don’t spend it.   We can’t eliminate it completely, because things do come up.   Over the summer, I’m hoping to completely leave it alone to save up for a new(used) winter jacket for our older daughter, who doesn’t get hand-me-downs.
  • Blow Money  – This is the safety valve.  It can’t get reduced and still work.

We’ve now addressed out entire budget, including what we can do and have done to keep our costs under control.  Looking back, I don’t see too many cuts I’ve missed.

Money Problems – Day 8: Insurance

Finance

insurance
Image by alancleaver_2000 via Flickr

Today, I am continuing the  series, Money Problems: 30 Days to Perfect Finances.   The series will consist of 30 things you can do in one setting to perfect your finances.  It’s not a system to magically make your debt disappear.  Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days.  That’s not my schedule.  Also, I think that talking about the same thing for 30 days straight will bore both of us.   Instead, it will run roughly once a week.  To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

On this, Day 8, we’re going to talk about insurance.

What is insurance?  Insurance is, quite simply a bet with your insurance company.   You give them money on the assumption that something bad is going to happen to whatever you are insuring.  After all, if you pay $10,000 for a life insurance policy and fail to die, the insurance company wins.

A more traditional definition would be something along the line of giving money to your insurance company so they will pay for any bad things that happen to your stuff.   How do they make money paying to fix or replace anything that breaks, dies, or spontaneously combusts?  Actuary tables.  Huh?  The insurance company sets a price for to insure—for example—your car.  That price is based on the statistical likelihood of you mucking it up, based on your age, your gender, your driving history, and even the type of car you are insuring.  What happens if a meteor falls on your car?  That would shoot the actuary table to bits, but it doesn’t matter.   They spread the risk across all of their customers and—statistically—the price is right.

What kinds of insurance should you get?

Homeowner’s Insurance

For most people, their home is, by far, the largest single purchase they will ever make.  If your home is destroyed, by fire, tornado, or angry leprechauns, it’s gone, unless you have it insured.   Without insurance, that $100, or  200, or 500 thousand dollars will be lost, and that’s not even counting the contents of your home.

Homeowner’s insurance can be expensive.  One way to keep the cost down is to raise your deductible.  If you’ve got a $1500 emergency fund, you can afford to have a $1000 deductible.  That’s the part of your claim that the insurance company won’t cover.  It also means that if you have less than $1000 worth of damage, the insurance company won’t pay anything.

You can get optional riders on your homeowner’s insurance, if you have special circumstances.  You can get additional coverage for jewelry, firearms, computer equipment, furs, among other things.  You base policy will cover some of this, but if you have a lot of any of that, you should look into the extra coverage.

Auto Insurance

Car insurance is required in most states.  That’s because the kind caretakers in our governments, don’t want anyone able to hit you car without being able to pay for the damage they caused.  To my mind, I think it would be more effective to just make whacking someone’s car without paying for it a felony.  If someone is a careful driver or has the money to self-insure, more power to them.

Auto insurance comes with options like separate glass coverage, collision, total coverage (comprehensive), or just liability.  Liability insurance is what you put on cheap, crappy cars.   It will only pay for the damage you do to someone else.

Rental

I’ve never had rental insurance.  The last time I rented, I could fit everything I owned in the back of a pickup truck with a small trailer, and it could all be replaced for $100.   Heck, I had the couch I was conceived on.  Err.  Ignore that bit.

Almost everything you can get homeowner’s insurance to cover will also cover renter’s insurance, except for the building.  It’s not your building, so it’s not your job to replace it.

Life Insurance

If you care about your family, you need life insurance.   This is the money that will be used to replace your income if you die.   I am insured to about 5 times my annual salary.   If that money gets used to pay off the last of the debt, it will be enough to supplement my wife’s income and support my family  almost until the kids are in college. You should be sure to have enough to cover any family debt, and bridge the gap between your surviving family’s income and their expenses.  At a minimum.  Better, you’ll have enough to pay for college and a comfortable living.

Life insurance comes in two varieties: whole and term.  Whole life…sucks.  It’s expensive and overrated.     The sales-weasels pushing it will tell you that it builds value over time, but it’s usually only about 2%.  It’s a lousy investment.  You’re far better off to get a term life policy and sock the price difference in a mutual fund that’s earning a 5-6% return.

Term life is insurance that is only good for 5, 10, or 20 years, then the policy evaporates.  If you live, the money was wasted at the end of the term.  The fact that it’s a bad bet makes it far more affordable than whole life.  It doesn’t pretend to be an investment; it’s just insurance.  Pure and simple

Personal Liability Umbrella

An umbrella policy is lawsuit insurance.  If someone trips and hurts themselves in your yard, and decides to sue, this will pay your legal bills.  If you get sued for almost anything that was not deliberate(by you!) or business related, this policy can be used to cover the bill.

If you call your insurance company to get an umbrella policy, they will force you to raise the limits on your homeowner’s and auto insurance.  Generally, those limits will be raised to $500,000, and the umbrella coverage will be there to pick up any costs beyond the new limit.

A little-known secret about umbrella policies:  They set the practical limit of a lawsuit against you.  Most ambulance chasers know better than to sue you for 10 million dollars if you only have a policy to cover 1 million.   They will never see the other 9 million, so why bother?  They’ll go for what they know they can get.

The flipside to that is that you should not talk about your umbrella policy.   Having a million dollars in insurance is a sign of “deep pockets”.  It’s a sign that it’s worthwhile to sue you.  You don’t want to look extra sue-able, so keep it quiet.

Insurance is a great way to protect yourself if something bad happens.   Today, you should take a look at your policies and see where you may have gaps in coverage, or where you may be paying too much.

 

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Making Extra Money Part 3: Product Selection

Finance

When you’re setting up a niche site, you need to monetize it.  You need to have a way to make money, or it’s a waste of time.

There are two main ways to do that:  AdSense or product promotion.   To set up an AdSense site, you write a bunch of articles, post them on a website with some Google ads, and wait for the money to roll in.

I don’t do that.

I don’t own a single AdSense site and have never set one up.  This article is not about setting up an Adsense site.

My niches site are all product-promotion sites.  I pick a product–generally an e-book or video course–and set up a site dedicated to it.

Naturally, picking a good product is an important part of the equation.

The most important part of product selection is that the product has an affiliate program. Without that, there’s no money to be made.     There are a lot of places to find affiliate programs.     Here are a few:

  • Amazon.   If you don’t live in one of the states that Amazon has dropped in retaliation for passing laws that attempt to circumvent the Supreme Court’s ruling on collecting sales tax, you can sign up as an associate and collect a commission on every referral you send that turns into a purchase.   That means you have a lot of product to choose from.   Unfortunately, your commission is small, so you need to promote fairly expensive products to get a decent return.   On the other hand, people trust Amazon, so that’s one less hurdle to making a sale.
  • Commission Junction.   These are the people managing affiliate programs for a large number of credit cards and banks.  If you’ve opened an account with INGDirect through one of my links, I got a commission for the referral. (Thank you!)   They have a lot of other products, too.
  • e-Junkie.  This one is a popular distribution system for bloggers.   It’s likely that, if you’ve bought an ebook from a blogger, e-Junkie handled the fulfillment process.   A lot of the products available there have an affiliate program, but that is up to the owner of the product.
  • ClickBank.  My favorite.   This is one of the largest affiliate networks specializing in electronic products, whether that’s membership sites, ebooks, or video courses.   Commissions are good, often 50-75%.   They also offer a 60 day guarantee of every product sold through their site, which helps soothe the wary customer.  This is the site I’ll be using for this series.

The first thing you need to do is sign up for whichever program you intend to use.

If you’re not going with Clickbank, feel free to skip ahead to the section on keyword research.

Once you are signed up and logged in, click on the “Marketplace” link at the top of the screen.

Clickbank

From here, it’s just a matter of finding a good product to sell.   Here are the niches we’re going to be looking for:

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

I’m going to look for one or two good products in each niche.  When that’s done we’ll narrow it down by consumer demand.

For now, go to advanced search.

CBSearch

Enter your keyword, pick the category and set the advanced search stats.     Gravity is the number of affiliates who have made sales in the last month.  I don’t like super-high numbers, but I also want to make sure that the item is sellable.  Over 10 and under 50 or so seems to be a good balance.

The average sale just ensures that I’ll make a decent amount of money when someone buys the product.   I usually aim for $25 or more in commissions per sale.  Also, further down, check the affiliate tools box.    That means the seller will have some resources for you to use.

This combination will give us 36 products to check out for back pain, unfortunately, none of the results are for back pain products.    After unchecking the affiliate tools and setting the gravity to greater than 1,  I’ve got 211 results.    Sorting by keyword relevance, I see three products, two of which look like something I’d be interested in promoting.   One has a 45% commission, the other is 55%.  The X-Pain Method has an initial commission of $34 and claims a 5% refund rate.   Back Pain, Sciatica, and Bulging Disc Relief pays $16, which will make it a potentially easier sale.  I’ll add both to the list for further research.

I’m not going to detail the search for the rest of the niches.  That would be repetitive.  You can see my selections here:

Now we’re going to go through a few steps for each of these products.

The Sales Page

We need to make sure the sales page doesn’t suck.    If the site doesn’t work, is hard to read or navigate, has a hard-to-find order button, or just doesn’t look professional, it’s getting cut.

  • Raw Foods is eliminated.  The sales video is horrible and the order link is at the bottom of several screens worth of nothing.  It’s a crap site.
  • The 7 day foreclosure-avoidance product is out.  Site’s down today.  I want reliability.
  • Management Training By The Book is out.  I don’t like typos on the sales page, especially in the page title.

The Email List

If it has an email subscription form, we’ll need to subscribe, then double-check to make sure our affiliate information isn’t getting dropped in the emails.   If it is, the seller is effectively stealing commissions.  In the interest of time and laziness, I’m going to eliminate anyone pushing for an email subscription.  It’s harder–and time-consuming–to monitor that.  On of my niche site had a seller completely drop their product.  Instead, they pushed for email subscriptions so they could promote other products as an affiliate.  Absolutely unethical.

  • Wedding speeches is eliminated for  throwing a mandatory email entry into the order process.  There’s no guarantee they are up to anything shady, but I’m taking the simple route.

Checkout and Credit

Finally, we’re going to visit the checkout page.  You need to do this from every links in the newsletter and the links on the sales page, just to make sure you’ll get your money.

The way to tell who’s being credited is to look at the bottom of the order page, under the payment information.   It should say [affiliate = xxx] where xxxis your ClickBank ID.   Anything else, and the product gets cut from the list.

When you are checking these, don’t click on every possible link at once.  That confuses the cookies. Do one at a time.  I tried to do it in one batch for this post and lost half of the cookies.  If it weren’t for the fact that I already own one of the products and bought it through my own link and got credited, I would have been talking undeserved trash about thieving companies.

Other Factors

Sometimes, when you’re examining a product, it just doesn’t feel right.  When that happens, drop it.  There are millions of other products you can promote.   In this case, I’m dropping the anger management program because, in my experience, angry people don’t think they are the problem.  Here’s a life tip:  If everyone else is a jerk, the problem probably isn’t everyone else.

  • Another important factor is the sales page itself.  If it doesn’t make you want to buy the product, why would anyone else?
  • Amazing Cover Letters is eliminated because it’s too easy to overlook the buy link.  If I have to hunt for it, it’s losing customers.
  • Amazing Wedding Planning is getting eliminated because I don’t like the sales page.  The buy link is easy to overlook, and it doesn’t compel me to buy.

Now we’re down to 10 products in 6 niches.    At this point, we’re comfortable with the sales pages and we know that they are crediting commissions.   As it stands right now, all of the products are worth promoting.

We’ll make the final determination after doing some heavy keyword research in the next installment.   That’s where we’ll find out how hard it is to compete.

Any questions?

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Money Problems – Day 3: What’s Coming In?

Finance

Husquarna automower, taken by me 2007-06-02
Image via Wikipedia

Today, I continuing the  series, Money Problems: 30 Days to Perfect Finances.   The series will consist of 30 things you can do in one setting to perfect your finances.  It’s not a system to magically make your debt disappear.  Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days.  That’s not my schedule.  Also, I think that talking about the same thing for 30 days straight will bore both of us.   Instead, it will run roughly once a week.  To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

This is day 3 and today, you are going to take a look at your income.

We are only interested your take-home pay, because that is what you have to base a budget on.  If you base your budget on your gross pay, you’re going to be in trouble when you try to spend the roughly 35% of your check that gets taken for taxes and benefits.

Income is a pretty straight-forward topic.  It is—simply—how much money you make in a month.  If you are like most people, the easiest way to tell how much money you make is to look at your last paycheck.  Then, multiply it by the number of pay periods in a year and divide the total by 12.

Here’s the formula:  Cash x Yearly Pay Periods / 12.  Yay, math!

If you get paid every 2 weeks, multiply your take-home pay by 26, then divide by 12 to figure your monthly pay.   For example, if you make $1000 every two weeks, your annual take-home pay is $26,000.  Divide that by 12 to get your monthly pay of $2166.66.  If you get paid semi-monthly, you’ll take that same $1000 x 24 / 12, for a total of $2000 per month.

Now you know how much you make each month.  Woo!

Is it enough?  Who knows?  We’ll get into that later.  In the meantime, spend some time thinking about ways you can make more money.  Do you have a talent or a hobby that you can turn into cash?

  • If you’re a craftsy type, make stuff and sell it on eBay or Etsy.
  • If you’re a writer, start a blog, sell articles on oDesk, or start writing for paid article directories.  Squidoo has a revenue sharing plan for your articles.
  • Facebook maven?  Start making Pages for companies.  They will pay for it.
  • Are you mechanically inclined?  Watch your local free market sites for lawn mowers and snowblowers that don’t run.  You can fix them up and sell them.
  • If you’re a clean freak, start a home-cleaning service on evenings and weekends.

There are always ways to make some extra money, if you are willing.  Sit down with a friend or loved one and brainstorm what you can do.  Write down anything you can do, you enjoy, or you are good at.  Remember, there are no stupid ideas when you are brainstorming.  The bad ideas will get filtered out later.

How could you make some (more) side cash?

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Sunday Roundup: 30 Day Project, January Wrap-Up

Misc

Baen Books logo.
Image via Wikipedia

30 Day Project Update

This month, I am trying to establish the Slow Carb Diet as a habit.   At the end of the month, I’ll see what the results were and decide if it’s worth continuing.   For those who don’t know, the Slow Carb Diet involves cutting out potatoes, rice, flour, sugar, and dairy in all their forms.   My meals consist of 40% proteins, 30% vegetables, and 30% legumes(beans or lentils).    There is no calorie counting, just some specific rules, accompanied by a timed supplement regimen and some timed exercises to manipulate my metabolism.   The supplements are NOT effedrin-based diet pills, or, in fact, uppers of any kind.  There is also a weekly cheat day, to cut the impulse to cheat and to avoid letting my body go into famine mode.

I’m measuring two metrics, my weight and the total inches of my waist , hips, biceps, and thighs.   Between the two, I should have an accurate assessment of my progress.

Weight: I have lost 22 pounds since January 2nd.   That’s 2 pounds since last week.

Total Inches: I have lost 11.5 inches in the same time frame, down 1.5 since last week.

I’m sad.  I’m only down 2 more pounds this week.  On the other hand, I’m averaging almost a pound a day without exercising.    I’m on a new belt loop and I’ve actually lost a ring size.  I’m going to keep this up for another month.   That’s the beautiful thing about 30 Day Projects: A month isn’t an intimidating length of time.      My goal for next month is to drop another 20 pounds.

That said, this is a pretty easy diet to follow.  If I get a hankering for a candy bar on Wednesday, it’s far easier to tell myself to wait 3 days than it is to tell myself that it will never happen.  Moderation has never been my strong suit.  It’s far easier for me to set some solid rules that give me a built-in outlet.

Best Posts

Do you really want to tie yourself down for the next 30 years.   Sandy doesn’t, and I agree.  30 year mortgages suck.

Trent lists seven common bills and ways to save on each.

Free From Broke ran a guest post from Melissa on how–and why–to freeze your credit.

Larry Correia’s new book, Hard Magic, is available as an Early Advanced Read Copy from Baen Books.  That means you can read the book before it is published.  It’s not quite as polished as the final, but still quite good.  I’ve read the first 7 chapters and am looking forward to reading the final version.

LRN Timewarp

This is where I review the posts I wrote one year ago.

In Make Yourself Accountable, I list several ways to achieve your goals, primarily by getting other people involved, either to talk you down or to participate in your public humiliation if you fail.

In 6 Questions, I reveal the details of how I manage my finances.  The only one that has changed in the last year is #1.  We have moved back to our debit card now that we’ve established better habits.

I also wrote a post about preparing your children to deal with their finances.  The most important one is to teach delayed gratification.   Yesterday, my son finally had enough money to buy himself a PSP, after saving for it for months.   He earned it and he is incredibly thrilled to have it.

Carnivals I’ve Rocked

What Happens When You Save was an Editor’s Pick at the Totally Money Carnival.  Thank you, Crystal!

5 Steps to Save was included in the Carnival of Personal Finance.

Thank you! If I missed anyone, please let me know.

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