Author Archives: Guest

Developing your Own Side Hustle

Posted on by  at  5:00 am
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Laptop Man by Ed Yourdon on FlickrThis guest post is from the guys over at WeWearKhakis.com. Christian and Shane write mostly about personal finance, self improvement projects, and how to have a fulfilling life on a budget.  Check out their site and learn how you can be an awesome guy or gal in Khakis too!

Just a few weeks ago my side hustles became my full time job. Naturally, I was reawakened to just how important having a side hustle truly is. To me, working side gigs has always been second nature, and finding work to do in addition to my “regular” day to day job came naturally. I might hear a co-worker complain about doing some tedious yard work they had no interest in, or maybe a friend mention someone had a broken computer, or maybe see an opportunity to do some freelance graphic design work, and I always jumped at any opportunity. 

Over time, word of mouth got around that I had certain talents and was willing to trade them for cash and as a result – I had my own steady side hustle(s) going.

I know what you may be thinking: “What about those of us who do not fall so naturally into freelancing or doing your own little side business?”  Well, starting from scratch and juggling extra work with kids, a normal work week, and life in general can be tough.

Allow me to break down how it has all worked out for me, then maybe those of you interested in starting your own little side gig can follow my example and possibly do it better.

Discover What You’re Good At

I know it seems obvious, but figuring out what are you good at, or more to the point, what you are good enough at that you could sell it to someone is the first step. My wife got on a kick where she really liked to make jewelry and I had the great idea that she could consign or sell it to small retail shops around town. After showing off a few of her pieces to a couple friends, we abandoned the idea. 

On the other hand, say you do have a knack for making awesome jewelry and do so regularly as a hobby. You might have just found your side hustle!  Point being – people have to want what you are selling.

For me, I have always been a tinkerer and loved building web pages and designing graphics. I used to spend endless hours of my own time in high school doing so. So making the leap from doing these things for fun to for hire, came naturally.

Maybe you have a knack for engines, cutting grass, building fences, or selling stuff on craigslist.  Whatever it is, capitalize on you skill, and you have now found your side hustle.

Learn How to Grow and Market Your Talents

The next step is actually getting work. I am not much of a salesman. I have never cold called anyone or done a single sales pitch. Instead, I listen out for people needing help, network, and offer free advice. Then I offer to help – which eventually turns into a paycheck. This type of marketing strategy (or lack thereof) does not lead to explosive growth, but over the last five years or so I have seen my business continue to grow and grow. 

If you treat your customer right and make them happy, they will probably spread the word about your services for you. I am also quick to do volunteer work for causes or organizations I believe in and hope that they too will refer me to new customers. I have had mixed success with this, but if it is a cause you care about, why not pitch in?

Now that my freelancing is a full time gig for me, I have began thinking more about proactively pushing my services and how I will go about it. I think the number one move is to keep it simple and personal. I plan on making as much face to face contact with people who existing customers referred me to as possible.

In the end, I think success in business relies on building trust and letting your network do most of the work for you.  Almost all of my “best” customers have come via direct referral from other happy clients. 

Find a Good Work/Life/Work Balance

I have heard my wife complain many times that even when I am home, I am not really at home. Instead, I am nestled in my cozy work corner designing away.  Having your own side hustle in addition to your full-time day job has a nasty way of sucking up all your time, especially as you become more successful.

For me, I love working for myself. The sense of accomplishment I feel developing relationships with clients all on my own, doing a great job for them, then being paid for it all, is a major source of happiness in my life. At the same time, I have to remember my family.

I try to set side hustle work hours for myself. These hours shift a lot for me, depending on what is going on. For a while they were from 5am to 7am on Tuesdays, Wednesdays and Fridays. Before that my side hustle work day was basically all of Sunday morning. Now my side hustle hours are whenever I can squeeze them in between playing with my 3 year-old and changing my newborn baby’s diapers.  I love it!

I think the lesson to take away is that it is important to set rules for yourself and establish a structure. Otherwise you will find your work hours leaking into your family time.  Moms usually aren’t too happy about that.

Make it Legal

I have not had to deal with too many disgruntled customers, but after one close call, I decided I better make my side hustle official. This meant forming an LLC, getting a separate bank account, drafting service agreements to be signed before each project, and keeping solid accounting on the business.

Hopefully you will never find yourself in any kind of legal problems due to your side hustle and freelance work, but should you, make sure it’s the business being sued and not YOU! 

Luckily in my state, setting up an LLC is as simple as going to the Secretary of State’s website, filling out some simple paperwork and sending them a check to cover some fees. There really is little reason to hire a lawyer in most cases either. I used simple internet searches and websites like legalzoom.com to guide me.

Never Mix Work with the Side Hustle!

I have been lucky enough to develop some tight relationships with my clients. Some lean on me closely to keep the IT side of their businesses running. Sometimes something might go wrong during the day and I might find a client calling me for support at 2 o’clock in the afternoon on a Tuesday! What is a guy to do?  Do I leave work to take care of a personal assignment?

I made the mistake one time of actually helping a client out while sitting in my cubicle at work. The conversation I had afterwards with my boss was neither pleasant nor fruitful.

While I don’t have to worry about that anymore, my suggestion is, if the side hustle does start finding its way into the normal business hours of the day, set boundaries. In fact, I have decided to never make the mistake of letting a boss know about my side work again. If I do ever get another mid day call for support, I will politely ask them if I can call them back and take a short break. This usually means my lunches and coffee breaks are shared with client work. 

But hey – when this starts happening too much, it’s starting to look like a good time to change that side gig to a full time job!

Get a Side Hustle!

Yes, if you develop a fruitful side hustle, you are going to be putting in a lot more hours, but if it is something you enjoy and you treat it almost as a hobby (that you get paid for) then why not?

For me, my side income has been invaluable. It started helping me make it through college, then grew into a tool to build my savings, and later went on to help me pay for grad school! Then a few weeks back I found myself laid off work and now it’s helping pay the mortgage.

In addition to that, it keeps me active in the community, meeting new people, networking, and developing new skill sets. I also look pretty impressive as a guy coming out of an MBA program and being able to show a proven history of building my own client base and effectively running my own business. For me, the benefits have been immeasurable.

Find something you are good at, enjoy, or are even passionate about and figure out a way to sell it. It is as easy as that. Start out small and keep working.

Have your own side gig or advice for those looking to start out?  Let us know in the comments!

Getting into Financial Shape with the Decamillionaire Next Door

Posted on by  at  5:00 am
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The following guest post is by Roshawn Watson from Watson Inc. Learn more about Roshawn immediately following the post.

During a time of rampant pessimism and economic turmoil, a record number of Americans cannot even contemplate becoming a millionaire in the next 10 years. It may appear a little untimely to write about wealth; after all, many are just trying to stay afloat. However, I submit to you that there is no time like the present to get into financial shape. That’s because although the Great Recession exposed the vulnerabilities of many families, some families have also gained a heightened awareness of opportunities and resolve to strengthen their finances. One of the best ways to achieve this is to learn from people who have successfully managed their money.

Today, we’ll delve into key lessons from the Tiger 21, a club for decamillionaires. I recently read an account from one of their meetings suggesting that the typical American family can get into better financial shape by employing three simple steps.

1. Maintaining Adequate Liquidity

Liquidity is essential in today’s challenging economic times; more importantly, during your own personal economic crisis, whether it be a job layoff or a gigantic car repair bill, having liquidity can give you a peace that too few experience. At a minimum, consider maintaining an emergency fund of at least 8 months worth of expenses AFTER you are debt-free excluding the house. Admittedly, this IS risk-adverse, but it is also a NECESSARY precaution because: a) job security is an illusion, b) most real estate values have seen significantly better days, c) it’s hard to convince yourself to sell equities in an emergency (especially if the market happens to be down at the time of said emergency), and d) it may be hard to obtain loans from banks when you need them the most (instead banks may close your credit line if they aren’t certain they will be paid back or may demand the balance of your loans if you default).

Liquidity is not trivial. In terms of emergencies, Money magazine reported that 78 percent of families WILL have a major unexpected event within the next ten years. In other words, LIFE WILL HAPPEN, but whether or not you are prepared is up to you. Moreover, liquidity is not just for emergencies. According to the Millionaire Next Door, most millionaires can survive for more than 12 years without working. I’m not suggesting that all of that is in cash or near cash-equivalents, but the point is that having liquidity mitigates some risks. That’s the very reason businesses deleveraged back in 2008. Liquidity decreases our absolute dependency on our income.

Indeed, it may be your best defense after eliminating your consumer debts WHEN life happens.

2.Are You Insured?

Typically, we hate insurance until we need it. Purchasing adequate insurance also reduces our financial risks.

a) Long-term disability insurance is important because it replaces your income in the event you become disabled. Still, it is one of the most underinsured areas. The Senate Finance Committee reported that 70% of people between the ages of 35 and 65 will become disabled for three months or longer, and 90% of these disabilities will occur “off the job”. Don’t think Social Security will necessarily pick up the slack either. Many people with legitimate claims are rejected on a daily basis. Fortunately, some employers offer long-term disability insurance, so check with your benefits coordinator to see if you are covered. Otherwise, purchase an individual policy. Although an individual policy is more expensive, the peace of mind is well worth it.

b) Adequate life insurance is also critical so that the death of a loved one does not financially ruin a family. It seems morbid to talk about death, but if one has dependents, life insurance is critical. Many who have life-insurance do not have an adequate amount of coverage. One should have between 10-12 times his annual wage in insurance. For example, if a household’s income is $50,000 annually, a $500,000 life-insurance policy should suffice. Let’s crunch the numbers. A 10% annualized return on $500,000 would generate $50,000 per year; thus, the income has just been replaced. Do not let an untimely death devastate your family financially as well as emotionally. Lastly, go with a good term-life policy. You can obtain these for pennies on the dollar, especially compared to whole life.

c) Health Care insurance is an obvious must. Medical bills consistently rank among the number one cause of bankruptcy. Even a major medical insurance plan with a high deductible would represent an adequate start, especially if your family is relatively healthy. Also, consider a Health Savings Account (HSA) or obtaining coverage through an association (sometimes you can get significant discounts) if your job doesn’t provide you insurance as a benefit or if you are self-employed.

3. The Person in The Mirror

Most of us can get wealthy if we learn how to control the person in the mirror. According to the Tiger 21 club, it’s not a matter of “what can I afford to spend” as much as “what do I need to spend?”

Did you know decamillionaire households are more likely to accurately an answer to the following: my grocery expenses are “X” and my clothing expenses are “Y” than the typical American family. Consider the implications of the following statements:

  1. More than two-thirds of grocery store shoppers in America today are impulse buyers.
  2. Two-thirds of millionaires surveyed (62.4 percent) know how much their family spends each year for food, clothing, and shelter.
  3. For every 100 millionaires who don’t budget, there are about 120 who do.
  4. Moreover, greater than half of the nonbudgeting millionaires invest first and then spend the balance of their income. In other words, before they purchase clothes, housing, food, etc., they pay themselves first a minimum of 15% of their annual income. Even without a budget, they are clearly controlling their income.

In short, those with more means are more likely to control their expenses(i.e., groceries, clothes, etc.) through budgeting than those with lesser means. If this is counterintuitive, remember that IT TAKES WORK TO BUILD WEALTH! Forget the media images of celebrities and Wall Street whiz-kids, most people who build considerable wealth may never get a substantially large pay check.

Frugality is the cornerstone of wealth-building. A good defense is critical to your wealth equation. Who better than decamillionaires to have internalized this lesson? If you consistently practice fiscal restraint and invest wisely, your money will eventually work harder than you.  Contemplate living off of just a small fraction of your wealth. The typical millionaire household lives on just 7% of its wealth.  That’s the kind of restraint I’m referring to.

The Income Myth and Parting Thoughts

Let me reiterate that it’s not about income as much as the media seems to represent. That’s because regardless of whether you make $50,000 or $500,000, you can still be broke! It is infinitely easier to earn a high income than it is to build substantial wealth.

  • Fewer than five thousand of the nearly 100 million US household will earn $5 million in a single year.
  • The majority of millionaires earn a small fraction of $5 million in a year.
  • Few could even become millionaires and support a high-consumption lifestyle simultaneously

Consequently, regardless of your income, I believe there is something to be gained from running an economically-productive household. By maintaining adequate liquidity, protecting your household with the appropriate levels of  insurance, and exercising fiscal restraint, you can build a financial house that is not easily destroyed by unexpected tragedy and lay the foundation to build extraordinary wealth. That’s financial peace that no flat screen, Gucci bag, or Lexus can even touch.

About the Author

Roshawn writes at Watson Inc. on eliminating debt,investing money, and building wealth. Get his free eBook Your Foundation to Wealth by signing up for his email updates (no spam I promise). Get his RSS feed and connect with him on Twitter @roshawnwatson too.

If You Don’t Establish Credit Now You’ll Hate Yourself Later

Posted on by  at  5:00 am
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The following is a guest post from Martin of Studenomics. Martin has just released a super-helpful guide that shows you how to completely conquer credit before you hit 30. You can’t live life on your own terms until you crush your credit card debt and get ahead of the game.

“The most important thing for a young man is to establish credit – a reputation and character.” — John D. Rockefeller.

We all know that we need to establish credit and create a budget. This is the sort of advice that’s very easy to hand out. We all have that friend that tells us to build credit or to create a budget. Why should we even bother with following this advice?

Do you know why you need to build credit? I honestly didn’t until I started writing about the topic so don’t feel too bad just yet. Let’s look at what I learned about why you need to establish credit in your 20s…

Your pockets will feel it.

When you go to apply for a car loan or home mortgage your interest rate will depend on your credit score. Even 1% on a home loan can impact your pockets by thousands of dollars over the duration of the loan. How much more money will you spend on a home mortgage with a poor credit score?

According to Ramit Sethi’s book, I Will Teach You To Be Rich, on a $200,000 30-year mortgage the difference between 4.384% and 5.973% is $70,560! Yes you read that correctly. That’s over 70 grand more. You could’ve got yourself a nice summer ride with that money instead of blowing it on interest. You could also use that money to pay down your mortgage quicker saving you even more money. All that money because of a credit score. It’s amazing when you think about it from this perspective.

Why does your credit determine your interest rate? Let’s look at it from this point of view.

You have lots of money saved up. You have two friends that are looking to borrow money. One friend, Steve, has only asked you for money once. When he did he returned the money within a week and bought you a coffee just to show his appreciation. In your mind Steve has great credit with you.

On the other hand, you have a buddy, Josh, that has a history of borrowing money from friends. You’re not even sure that you’ll ever see this money again. You know that he won’t even really appreciate your gesture. You’re hesitant to loan Josh the money because he has poor credit in your opinion.

Now on the same day both Steve and Josh come to borrow money from you. You tell Steve that it’s going to cost him a dinner and you expect the money back within 4 weeks. Josh (the dude with poor credit) doesn’t really agree to any strict terms. You don’t even want to loan him the money. He begs and pleads and even gets his father to co-sign the loan. When you finally do agree you tell him that you expect 10% on top of the loan just so that you ensure you’ll get your money back.

This is a simplified example. The general message is accurate. The person loaning you the money wants to know that they’ll get their money back. If you have excellent credit they’ll trust you. If you have poor credit and a history of poor decision they’re going to charge you a higher interest rate to ensure that they get their money back. It really is that simple.

You can live in the fantasy world and say that you shouldn’t buy a home or a car until you have 100% of the cash saved up. The reality is that very few of us will actually do this. Most of us will end up with a home mortgage or a car loan. If you don’t start building credit now you’re going to suffer by getting a higher interest rate.

Your employer will care.

A credit score is a tangible number that potential employers look at. For better or worse, it is what is it. You can complain about this all that you want, but your whining won’t stop from potential employers from checking out your credit score. The justification that I heard is that an employer will want to see if you’re reliable. Since so much of your credit score is based on how reliable you are with money it shows them if they should trust you or not. Another common reason that an employer will care about a credit score is that it’s just a filtering system when there are many candidates applying for the same gig. You don’t want a lack of credit to prevent you from getting that dream gig.

Now you know why you need t build credit now if you don’t want to hate yourself later. The great news now is that moving forward you now have an incentive. You can begin to make moves in the right direction. Good luck to you!

If you enjoyed this guest piece, then don’t forget to grab your copy of Martin’s new guide.

5 Frugal Tips for a Christmas to Remember

Posted on by  at  5:00 am
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The following is a guest post from Kyle James of Rather-Be-Shopping.com. Read more about Kyle immediately following the post.

Before I was a frugal Dad, I was a Dad who absolutely dreaded getting the credit card bill in early January. I would consistently overspend in December on gifts and eating out. Then I would try to figure out how to pay the bills. I knew there had to be a better way and it wasn’t until my first child came along 10 years ago that I took action and developed frugal Christmas spending habits. As we get close to the craziness of the holiday season, here are my five best tips for keeping this Christmas frugal yet memorable.

Gift Budget – The singles best way to keep Christmas frugal is to create a gift list of what you want to buy and how much you can afford to purchase for each person on your list. This makes you accountable to your spending. Stay disciplined in your buying and you will avoid those big credit card bills in January.

Shop All Year Long – If you start your shopping the last few weeks before Christmas the retail machine will typically have you over a barrel. They can set prices to meet demand and you have zero negotiating power. Instead, create your shopping list earlier in the year so you can shop sales and clearance racks all year long and store the gifts in your closet until Christmas. In other words, shop when nobody else is, you will be in a much better negotiating position, especially when shopping online sites like eBay.com.

Think Outside the Box – Consider making gifts this year. This can be in the form of baked goods, homemade jellies and jams, or my favorite, personal gift certificates. Do you have a talent that you can share with someone, or a skill the gift recipient would find very helpful? If so, then give them your time in the form of a personal gift certificate. Personal gift certificates my wife and I have given out over the years include babysitting, computer help, and yard work. On a personal note, my wife and I were given a babysitting certificate from some friends so I could take her out to dinner once a month for an entire year. What a great gift that was, by far the best gift I received that year.

Gifts from the Heart – If you are buying gifts for Grandparents, consider a photo gift of your children. Last year my wife and I, with our kids help, created a framed photo collage for the grandparents and it was a tremendous hit. We only spent $20 on supplies and frames to create gifts they now treasure. Also, consider sites like Shutterfly.com and Snapfish.com for some really neat and inexpensive photo gifts like coffee mugs and photo books.

Traditions That Help Others – I always try to implement new family traditions that focus on the true meaning of Christmas, not the stuff we get. Last year, I took my oldest son and daughter out to ring the Salvation Army bell. What a great experience for all of us and a great opportunity to talk to my kids about those less fortunate than us. I was blown away with the number of people who dropped their spare change in the kettle, took a candy cane from my kids, and then looked me in the eye and said how great it was that I was doing this with my kids. Truly gave me chills and is something we will do for years to come.

Do you have any tips to share on how you make Christmas frugal, yet memorable in your home?

About The Author: Kyle James owns and operate a website called Rather-Be-Shopping.com which specializes in coupon codes for over 750 stores, organized in 25 shopping categories. He also has a blog, where he writes about frugal living and personal finance tips as well as other musings about the adventures and mis-adventures of raising 3 active kids.

What Durbin’s Amendment Means for Your Debit Card Use

Posted on by  at  11:52 am
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We’ve been discussing banks, credit unions and banking regulations quite a bit here lately. On theme, Debbie from MyBankTracker.com submitted an informative guest post on the subject of the Durbin Amendment and its impact on debit cards. You can learn more about Debbie immediately following the article.

You’ve probably heard about new debit card fees banks are charging or planning to charge their customers for debit card use.  Bank of America is leading the pack with plans for charging customers $5 a month for debit card use anyplace other than the ATM.  Other banks are predicted to follow suit – but why the sudden increase in fees?

The Durbin Amendment

Durbin Amendment is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and went into effect on October 1st.  It changes the limit of swipe fees banks charge merchants when they accept debit cards as payment instead of cash.  Previously, banks could charge merchants up to 45 cents per debit card transaction; but The Durbin Amendment currently limits the swipe fee to about 22 cents per transaction.

Bank Response to Debit Card Fee Swipe Limits

Banks felt this change would cause them to lose 50% of their revenue from debit card transactions, and began looking for ways to recover from that loss of income.  Bank of America intends to add the $5 monthly debit card fee, but other banks are talking about changes to checking accounts and debit card rewards programs in an effort to recover their lost revenue. 

According to research conducted by MyBankTracker.com on the changes to debit card rewards programs, the following banks reported:

  • Chase Bank: ending the rewards program it maintains with Continental Airlines
  • Bank of America: no changes to the US Airways rewards program  
  • Wells Fargo: ended new enrollments to their rewards program on March 20th
  • Wachovia: ended program March 27th
  • Citigroup: ended rewards program enrollments on June 10th
  • JPMorgan Chase & Co: ended enrollments on July 20th

What Should You Do About Bank Changes?

Take a look at how your current bank is responding to The Durbin Amendment.  Will they keep their reward programs for checking accounts and debit card use or are they canceling them? 

Change banks: If you currently have a free checking account with a debit card you use frequently and your bank is looking to add a monthly debit card use fee and/or cancel the rewards program – you may want to consider looking at a smaller bank or a credit union.  Many online banks are not reacting to the changes and will continue offering debit cards for free.

Stop using debit card: Alternatively, you can continue with your existing bank even if they charge a debit card fee and simply stop using your debit card for making a purchase.  Write a check instead.  Consider using a credit card for each individual purchase throughout the month and then pay it off in full when the statement comes – or send your credit card account extra money to get a ‘credit balance’, and use your credit card like a debit card. (When the money is gone, stop spending until you send more!)

Debbie Dragon is a financial writer for MyBankTracker.com, a site that helps consumers compare savings accounts, CD rates, and home equity loans to make informed banking decisions and save money.