On the Road to Financial Freedom

From Total Money Makeover

2007-06-11T05:35:00.000-05:00

Excerpts from Total Money Makeover by Dave Ramsey (2003) - interesting how this book defies most of the conventional wisdom that it is important to borrow to build wealth.

If you will live like no one else, later you can live like no one else. (If you make sacrifices now that most people aren't willing to make, later on you will be able to live as most people will never be able to live.)

If you keep doing the same things, you will keep getting the same results.

Myth: Debit is a tool and should be used to create prosperity
Truth: Debt adds considerable risk, often doesn't bring prosperity, and isn't used by wealthy people as much as we believe.

Car lease is the most expensive way to operate a vehicle

98% of leasing is done on new car, which loses 60% of its value in first four years
creating unneeded business expense for tax write off is bad math

Debit is not a tool; it is a way to make banks wealthy, not you.

You should be far more worried about the danger of using credit cards than the danger of being robbed while carrying cash. When you spend cash, you spend less.

Insurance

Auto / Homeowner - choose high deductibles to save on premiums
Life - 20 year term - 10x income - never use as place to save $
Long Term Disability - buy through work at fraction of cost; cover 50-70% of income
Health - #1 cause of bankruptcy is medical bills (#2 is credit cards)
Long Term Care - if over 60, buy

Must have will.

We destroy our finances by buying stuff we can't afford to try to make ourselves appear wealthy to others. If you are using $ to impress others, this has to change before you can get on a real plan to fiscal fitness.

You must use a written budget every month.
If you aren't working together as a couple, it is almost impossible to win.
Once a budget is agreed to and in writing, don't do anything with money that isn't on that paper.
If something comes up in mid-month that causes budget to need changing, call emergency budget committee meeting. You can change budget (and what you do with $) only if:

both spouses agree to change
budget is still in balance - if you increase spending in one category, you must reduce spending somewhere else.

Baby Step One: Save $1,000 as Starter Emergency Fund (liquid available cash - must be easy to access - not in mutual funds). The emergency fund is not for buying things or for vacation - it is for emergencies only. A well planned budget for anticipated expenditures and an emergency fund for truly unexpected can end cycle of dependence on credit cards.

Baby Step Two: Start the Debt Snowball to become debt free, except for your home. Pay off smallest debts first (so you have some quick wins). Most important step in Total Money Makeover. Stop borrowing!

Baby Step Three: Finish the Emergency Fund so you can cover 3-6 months of expenses:

something 'on sale' that you 'need' is not an emergency
beware of using the emergency fund for something that you should save for then purchase
emergency fund is not for wealth building. It is to protect you against storms, give you peace of mind and keep next problem from becoming debt.
with an emergency fund, what used to be a huge, life altering event will become a mere inconvenience

Baby Step Four: Invest 15% of your before tax gross income in retirement. Growth stock mutual funds:

Growth (mid cap equity)- 25%
Growth & income (large cap blue chips) - 25%
International (foreign / overseas) - 25%
Aggressive Growth (small cap, emerging market) - 25%

Baby Step Five: Save for kids college

Baby Step Six: Pay off home mortgage early

Baby Step Seven: Build wealth

Myth: It is wise to keep home mortgage to get tax deduction
Truth: Tax deductions are no bargain

Myth: It is wise to borrow all I can on my house (or continually refinance for cash out) because of great interest rates, then I can invest money.
Truth You really don't make anything when the smoke clears

Myth: Take out a 30 year mortgage and promise to pay it in 15 years so if something goes wrong you have wiggle room
Truth: Something will go wrong
If you take out a mortgage, pretend that only 15 year terms exist.

Myth: It is wise to use lower rates offered by ARM or balloon mortgage if you know you'll be moving in a few years anyway.
Truth: You'll be moving when they refinance

Myth: A home equity loan is good to have instead of an emergency fund.
Truth: Emergencies are precisely when you don't need debt

Use money for:

fun
investment
give - the most fun you will ever have with money

More on web at Total Money Makeover and Dave Ramsey.

Side income vs. Full / Time income

2006-12-28T06:45:00.000-05:00

I've only earned about $300 in 4 months of work, so while I've enjoyed earning revenue through eBay, it hasn't generated the results I hoped for. Meanwhile, conditions at my full time job have deteriorated to the point where only my boss and I remain in a department that was once 7 people. So with a choice between replacing my full time revenue source (which may be in jeopardy as more restructuring will definitely come in the new year) and earning some extra money on eBay, I will need to focus on my career right now.

In the past, I've usually been forced into job changes when my employment ended. This time, it really needs to be my decision. (If I wait too long, it may end up being otherwise.)

However, my wife has suggested that we partner with someone who can get things sold on eBay more quickly, which seems like a good idea. Posting books for resale is simple since stock photos are often available and shipping is also easy. But selling other types of items takes more time to photo, resize and upload and also take longer to pack for shipping.

Our home refinancing in early November took some of the pressure off, but we clearly don't want to use this money to make up a difference between revenues and expenses. My wife's business has also ended the year strongly. But it is clearly up to me to do something about a work situation that seems to continue to be getting worse, not better. Staff that have been hired during my two year tenure have already departed. I had hoped that things would improve with time, but it's getting a bit embarrassing that I'm still there.

My wife and I also still hope to take the plunge into investment real estate. Despite the recent slump in home prices, there are clearly some areas in the US that are still worth investing in. Having read the books and attended seminars, we just need to get started.

As we approach the end of 2006, we still have quite a distance to cover on the road to financial freedom. Let's all make 2007 successful, both personally and financially and, most importantly, by maintaining good health and peace of mind.

Update on eBay status

2006-11-22T06:57:00.000-05:00

Recently having some problems with my digital camera - suddenly puts a white spot on many of my pictures of things I'm trying to sell. From a book I scanned in Borders recently, perhaps I need a tripod and / or light box. As I move away from selling only books where I can simply enter ISBN numbers, I need to be able to reliably take pictures of my merchandise.

Also exploring some of eBay's tools such as Turbo Lister (also recommended in a book) to try to speed up the process. While I've been able to sell about half the items I put up, I usually only have a handful of items up at a time, which makes it hard to make any significant income.

My wife thinks I need to be able to bring in $500 a month to make this worthwhile, but so far my proceeds after several months is only in the $200-$300 range. Fun hobby, but that's not why I started doing this. Is there a way to speed up the pricing decision, e.g. checking previous and current sales to find out what an item has been listed at?

In addition, I sold my first item internationally - to Singapore. I didn't really intend to sell to any country, but somehow one of my items went up that way. Fortunately it was an easy item to ship, but it definitely took a bit longer to figure out the international shipping items. Guess this does open things up to a much wider audience, though.

Wishing everyone a joyous and peaceful Thanksgiving.

Some helpful thoughts from an old book

2006-11-09T06:52:00.000-05:00

Often I bypass looking at a money book that is several years ago, figuring that its concepts are probably out of date. But in 1999's Your Money Matters: 21 Tips for Achieving Financial Security in the 21st Century by Jonathan Ponds, I found many ideas that are still very relevant:

1. Spend less than you earn. People who don't get in the habit of living beneath their means - saving regularly - will never achieve financial security.

2. Wealth is created by owning individual stocks, owning investment real estate or starting a business. I've already done well with mutual funds, have decided that starting a business is not my thing, so investment real estate seems like the right option for me. Ponds says its 'one of the best ways for average people to create a lot of wealth.'

3. Money needs to be distributed between necessities, luxuries and saving for the future. Persuading yourself that you really need something is often the end result of convincing yourself that some luxury has become a necessity. We also like to think that we are saving for the future, but most likely we are not saving enough.

4. Live beneath your means - but don't unnecessarily deprive yourself. This can be challening, as my wife and I have discovered.

5. Arguing sometimes with your spouse about money is inevitable because spenders are usually attracted to savers. Even if one partner tends to handle most of this area, the other person shouldn't be left in the dark. Until about a year ago, my wife was content to let me handle everything but this changed while she found out that we were consistently spending more than we were earning (see item #1 above).

Finally, in order to spend less than you earn, you have to learn to be happy with what you've got. If you can be happy with what you already have, you will find it easier to save the money to make investments that will give you financial security. This doesn't mean that you resign yourself to your current financial situation; you still strive to advance in your career, earn more money and invest better. As long as you feel deprived, you will want to acquire more 'things.' More things won't make you happier but more things could make it difficult to achieve financial freedom. Seems contradictory, but true.

Happily, I purchased this book at a library book sale for $2.

Bumps on the Road to Financial Freedom

2006-10-30T17:09:00.000-05:00

It's been a while since I've posted. Family and marriage issues have made it hard to stay focused. Although I've continued to have some success on eBay, but it's hard to see much return when you're only putting up a small number of relatively low priced items.

Meanwhile, money has proven to be a major stumbling block at home. Although things are starting to get better, we're still not making enough revenues each month to pay our expenses. We've tried to cut our expenses, but not enough to shift the balance. I'm also hoping that a higher paying job will help eventually, but it's taking some time for that to happen.

Always on the lookout for personal finance books I haven't yet read, recently I found one entitled First Comes Love, Then Comes Money: Basic Steps to Avoid the #1 Conflict in Marriage While this isn't the only issue my wife and I see a bit differently, it's easily the most frustrating. Even if we succeed in balancing our budget, hopefully reaching the point where we can also put something away for retirement, we've taken a very painful route to get there.

Get Rich Slowly also has a wonderful post on marriage and money.

Today my wife and I have refinanced our home for a larger loan than we originally took out four years ago. The new loan amount is still relatively small compared to the appraised value and will hopefully give us a bit more breathing room while we continue working on improving our cash flow.

Saving Money at Restaurants (or not)

2006-10-10T21:11:00.000-05:00

Saturday night my wife and I and our resident student from Japan dined out at an Italian restaurant on Arthur Avenue, Ann & Tony's. We've dined there previously and have had really good food. As a bonus, they participate in the Rewards Network that we belong to which offers 15% discount on participating restaurants. We just have to register our credit cards online, but otherwise the restaurant never knows we are getting a discount.

Dinner entrees were reasonable, in the $15-$20 range and included salad. Across the street from the restaurant we had noticed a cafe where we planned to go for dessert. But our plans changed when the waiter brought over the dessert tray - it's always harder to resist when the choices are placed in front of you and described in detail. I selected a brownie sundae and we encouraged our visitor from Japan to try an Italian cannoli. (Having a great view of the Mets on a large screen TV also encouraged me to stay in the restaurant longer.)

Two desserts and coffee ended up adding about $20 to the bill including tip (less the 15% discount). When we stopped in at the cafe afterwards, they had desserts at a considerably lower price. Even more frustrating, we left the restaurant before the Mets began their rally to go ahead of the Dodgers to win the game.

To keep our expenses under control, we're trying to keep our dining expenses to a minimum and be selective about the eateries we visit. But when it comes to dessert, I guess you have to break the rules once in a while.

A Report on Progress So Far

2006-10-06T05:47:00.000-05:00

When creating this blog a month ago, my objective was to find ways to generate more revenue, focusing on three major areas: real estate investment property, tax lien certificates and eBay. I dedicated specific time in my schedule where I would focus on these strategies, such as an hour in the morning before getting ready for work and at least 1/2 day during the weekend.

So far only eBay has shown results. I've now sold four items, including an autographed book for $100! I have many more things to put up for sale that I haven't posted yet, but have focused on books so far since it's so easy to put them up. The next step on tax liens is to actually attend some auctions (maybe some of this can be done online?). As far as buying investment property, with all the recent publicity about the housing market, seems like this will be more difficult unless I pick my locations carefully.

I have also followed several other personal finance blogs, many which I talk about here. It's encouraging to learn from others who are on the same path.

My blog updates lately have been less frequent, but I'm trying my best to keep at it, even if my posts are brief. Sometimes life gets in the way, but I'm doing my best to make sure I do something every day to generate revenue. Since I've been putting up items on eBay for three day auctions, it's important to keep adding new items regularly since not everything will sell.

Various Observations

2006-09-29T05:13:00.000-05:00

I've been a bit delinquent with updates, so a bit of everything today.

With the Dow Jones average near its high, I've made a partial mutual fund redemption to help pay for our recent vacation, which my wife and I agreed to do before the trip. But this strategy can only be used sparingly, which is why we're trying so hard to generate more revenue.

My wife's career service business continues to do well lately, although she is striving to delegate more work to others so she can focus on business development. Seems like this is the challenge of any small business - to get past the point where everything is being done by one person.

Get Rich Slowly has an interesting post this week on whether it's a waste to have multiple magazine subscriptions. I've also wondered about this, but still find it useful to peruse publications like Money, Kiplinger's and Smart Money while commuting to and from work. Usually I try to save articles electronically as I've found that most articles I clip rarely are found again. At least on my computer I can use my desktop search program (I use Copernic) to locate past articles. I also continue to read the Wall Street Journal daily.

Our recent switch to Geico for auto insurance includes emergency road service so we'll probably drop AAA which, fortunately, we've rarely had to use.

With gas prices continuing to slide lately, I'm glad I didn't take the plunge into commodity based mutual funds. Who ever imagined that prices would go any direction but up?

Not only is it challenging to think of things to write regularly but I've found an incredible number of other blogs focusing on revenue generation, some which I've featured on the right column. Many others are featured on the Carnival of Personal Finance. Guess making more money is a universal obsession.

Interesting excerpt from October's Kiplinger's (these magazines really are worthwhile somtimes): "The biggest barrier to becoming rich is living like you're rich before you are." The point is that too much discretionary spending makes it impossible to do the saving that will eventually result in accumulating wealth. I don't see an easy way to link to article but it is called 'The Invisible Rich." Who is best at implementing this strategy? Recent immigrants who live cheaply and work long hours yet manage to put away a chunk of every paycheck.

Finding the money to give to charity is always important, no matter what your income is. October's Money includes an article on how to find the charities that spend money responsively, recommending sites like the Better Business Bureau Wise Giving Alliance, Charity Navigator and Guidestar.

Almost every financial magazine I've read lately has at least one article on the sorry state of the housing market. Money includes one story about someone who sold their home with the help of a blog. Guess it helps to be creative these days. Yet it seems if you are planning to buy another home when you sell a house, it may not matter as much what the market is like. But when you need to pay two mortgages for an extended period (as some people I know are doing), this may not be much of a comfort.

Today is my wife's birthday so we'll definitely be spending some money tonight celebrating with a play and dinner out. Sometimes you just have to not be so careful (although I did get discounted theatre tickets through the Theatre Development Fund, a great way to finance entertainment if you meet their membership qualifications).

Back From Vacation, Back to Generating Revenue

2006-09-22T05:56:00.000-05:00

After a week of clearly spending more than earning while on vacation, it's now time to get back on track towards revenue generation. My wife and I did find some sellable items for eBay at a road side sale - although we almost lost them to security at the airport so had to end up checking part of our baggage. We had a few high end meals, but otherwise our dining out expenses weren't horrendous. Although I always save receipts at least until I enter the information into Quicken, it's difficult to keep track of how much we're spending. (And doing so would take away some of the pleasure of being on vacation.)

Both of the areas where we visited have recently experienced declines in real estate, but they're also two areas that previously had significant appreciation: Pheonix, Arizona & San Diego, California. An old boss of mine who I met up with is still trying to sell his previous residence despite having moved several months ago.

We stayed at really nice hotels at discounted rates, very different from the bed and breakfasts / motels we usually seek out. One hotel actually put us in a full apartment, which seemed a bit of a waste since we were out most of the time.

It was the first vacation involving air travel that my wife and I have taken in about four years, so it was nice to get away for a while. But now it's back to work generating income - initially from eBay and hopefully through tax lien certificates.

Increasing Revenue, Not Just Decreasing Costs

2006-09-16T11:58:00.000-05:00

I've always considered myself an excellent shopper, sometimes to the extreme of being a bit too cautious (see previous post). I'm always looking for ways to save money and to find pleasures that don't involve large expenses. Fortunately, I've been able to find many things that I enjoy that are as simple as enjoying a sunset or enjoying a waterside area.

But saving money isn't enough. If you take this too far, it starts to feel like deprivation, as my wife has warned me. There also has to be a focus on increasing income. It's not one or the other - it's a combination of both. It's only recently that I've started to focus more on the revenue side, such as starting to sell on eBay and pursuing tax lien certificates. This has been a difficult leap for me. It's easy to keep doing what you're good at (saving money); it's harder to develop new skills (finding ways to generate more income). But I'm determined to keep moving forward in both areas.

Getting Stuck On the Old Rules

2006-09-16T11:39:00.000-05:00

A teacher once told me that he wasn't able to enjoy a meal that cost more than $10. Although this was many years ago, I've always remembered this when choosing a restaurant. As a result, I often find myself selecting a place to eat based on price. Unless the food is really awful, I seem to enjoy low priced meals. In a high priced restaurant, even if the meal is very good, my pleasure is diminished by how much I've had to pay. Is this a way to live? While eating out can consume a large chunk of discretionary expenses, it seems like I've taken this a bit too far.

Similarly, I learned somewhere that hotels / motels shouldn't cost more than $100 / night, much less if possible. After all, you're only going there to sleep, right? The current hotel where my wife and I have stayed for the first part of our trip has cost $115 / night, which is a 'special' rate since she is attending a conference. Supposedly the 'regular' rate is about $300! Yes, it is a nice facility with a large pool (I am a year round swimmer), but it still seems 'expensive' to me.

In dealing with elderly relatives, I've noticed that many people get 'stuck' on prices that have long become obsolete. Unless you shop regularly and see what things cost now, it's easy to think that the old rules still apply. So for some the solution is to stay out of stores unless absolutely necessary and complain that things 'cost too much.' Then, when forced to replace an item that has broken or worn out, it's shocking to discover the new reality.

Dining out and accommodations can consume a huge part of a travel budget. But while it's nice to save money where you can, getting fixated on the 'right' cost should be can be tiring and, in the end, take much of the pleasure out of a vacation.

Taking a Break During Vacation

2006-09-13T19:30:00.000-05:00

Now that I've become accustomed to doing something every day to bring in more revenue, it's a bit difficult to be on vacation for a week. Thanks to wireless access throughout the hotel (:<), it's easy to stay connected but not as easy to monitor eBay auctions. To keep making progress, I'll also need to start getting active with tax lien / deed auctions, even if it's only to learn what it's like to attend.

I asked my wife how we should handle finance matters while we're away, whether to be as frugal as we've been at home or to be more relaxed. She says we should be 'somewhere in the middle.' Nevertheless, after paying for airfare, hotel and car rental, we've already spent a lot before even considering food and maybe a few souvenirs. Being able to write off much of it for my wife's business is helpful, but hardly a license to spend freely.

Shortly before leaving, I purchased The World is Flat (getting 30% off list price of course). Having focused so much on books about money and finance lately, I thought it would be beneficial to read about something else for a change, especially facing a cross country airplane round trip. What I find especially interesting about Thomas Friedman's book is that a year after it was released, already a huge best seller, he took the time to update it and come out with a 'version 2.0' edition.

I've only made it through the first hundred pages or so, but it's clearly a fascinating read. It reviews major trends affecting society, especially the pervasive influence of computers and the Internet. Now it's easy to work with anyone anywhere in the world - geographical barriers don't seem to matter much anymore. Although many people have been concerned about the effects of outsourcing, it's clear that this is a trend that will only increase in coming years.

Will people ever get accustomed to reading on screens instead of books, making printed materials obsolete? Certainly while flying across the US in one of the few environments that is not connected either by cell phones or Internet access, having the book certainly came in handy.

Vacation, Flea Market, Auto Insurance

2006-09-11T05:10:00.000-05:00

Today is September 11th. How life can be affected by the events of one day in our lifetime.

Vacation
My wife and I will leave for a week's vacation this week. We've estimated that the trip will cost up to $3,000. It is a combination business (she is speaking at a conference) and pleasure (we will visit some friends afterwards) trip. After working so hard to save and earn more money, it's a bit tough to switch gears. Some of the expenses will be deductible through my wife's business, but it's still a large outlay. Often when we travel we stay with friends or family instead of hotels, which even at discounted rates will still cost us about $100 / night during this trip. But vacations are important; it's also nice to live a bit differently sometimes.

Flea Market
For the first time, we spent time at a flea market this weekend and specifically looked for items that we might be able to resell on eBay. My wife found an old slide viewer in its original box. We bought it for $3; from completed sales on eBay, it looks like we may be able to sell it for as much as $100. I also bought some very old books, but I'm not as sure that they will command a high price. I haven't put many items up for auction yet, but I am accumulating items at home. It seems that we will need to put up a large volume regularly while we learn which items are 'sellable' and which items are not.

Auto Insurance
Finally yielding to Geico's unyielding commercials, we did an online auto insurance quote and found that we could save about $100 on our six month policy. We're down to one car now, having recently decided that our light usage didn't justify immediately purchasing a second vehicle after my wife's car died last month. We're unfortunately paying a surcharge due to one accident last year, but that would be the case with any company we used. Every little bit counts in trying to balance our budget.

et Al
One obstacle on the way to financial freedom: I couldn't figure out why eBay constantly asked for my password as I moved from screen to screen. Finally realized that my firewall product wasn't allowing cookies to be saved. How easy it would have been to use this as an excuse for not maintaining my efforts to develop this revenue stream!

First Success with eBay, Early Morning Schedule, Easy Steps Towards Financial Freedom

2006-09-08T16:00:00.000-05:00

I've made my first sale on eBay. Interestingly, I put up several books which didn't get a nibble (even some at a starting bid of as low as .99), but the one video game based on the Law & Order series was snapped up at the bargain price of $4.99. I bought it for my wife, who's an avid fan of the TV show, but she never used it. So I went to Staples last night and bought many sizes of shipping envelopes so I can be prepared for the upcoming surge :>) of orders.

I've also now spent much of the past week getting up at 6 AM instead of my normal 7 AM time. Not being a morning person, this has been a stretch for me, but so far it's worked. The only problem has been making sure that I spend the extra time focused on revenue strategies and not on other tempting time wasters such as 'catching up with email.'

I did spend this morning, however, filling out a refinancing application which will hopefully help alleviate the pressure a bit. In addition to the wonderful articles in Get Rich Slowly, I recently stumbled upon these simple rules on how to become financially free:

Make Money
Save
Invest
Share
Spend

Notice how 'Save' comes immediately after 'Make Money' and 'Spend' comes last. Very sound advice and a good read.

Living With the Choices We've Made

2006-09-07T05:46:00.000-05:00

Six years ago, after many years of working for mostly financial service companies, I decided to move to the nonprofit sector to find work that was hopefully a bit more meaningful. As a result my salary immediately dropped significantly. It took a few years and a couple of job changes to move back to my previous compensation. Then from 2003 to early 2005, a sudden loss of a supposedly secure position led me to try consulting. Although back in full time employment now and earning more than I ever have, it's still clear that my choices have resulted in less income than if I had stayed in the for-profit sector.

Five years ago, following a passion for helping others with their careers, my wife started her own business. It has been a long road towards profitability, as if often the case with starting a company. Having been so many job changes myself and realizing the importance of this type of work, I've fully supported her move. Having been subject to so many fluctuations working for others, it's certainly tempting to want to take responsibility for one's own career development.

These decisions have resulted in a situation where we struggle to meet our expenses. We've been fortunate to have savings to make up the difference but, as my wife has pointed out endlessly especially since we moved into our own house almost four years ago, it's important to earn enough to make ends meet. This is a main reason why I've sought new revenue opportunities, as documented in this blog. My overall philosophy about money was also influenced last year by attending a seminar based on Secrets of the Millionaire Mind - now I understand that making money is important. After my heavy reading campaign in recent months, I also know that it's better to not be dependent on any one job. Who knows when the next layoff, reorganization, restructuring etc. will occur? Since beginning my current job at the beginning of 2005, the organization has changed dramatically. My position still exists, but most of my department doesn't.

Do I regret the choices my wife and I made? Not really, but often I wonder why it's been so much of a struggle. Financial freedom is not easy to secure, but hopefully it will happen and be worth the pain to get there.

Secrets of Financial Success From Money Magazine

2006-09-05T05:17:00.000-05:00

The September issue of Money Magazine featured an section which included interviews wealthy people from around the U.S., What It Takes to be Rich. (This is similar to Thomas Stanley's The Millionaire Next Door and The Millionaire Mind. Apparently, millionaires are able to make their own luck, as described in a 2003 article by Richard Wiseman called The Luck Factor. Wealthy people:

listen to their intuition
have positive expectations, creating self-fulfilling prophecies
are resilient and are able to transform bad luck into good

More than half of the wealthy people interviewed had started their own business. My wife did this five years ago but it's been a challenging road to make it work. I tried working for myself a few years ago while in between full time employment but found that I preferred working full time. It does seem, however, that the financial rewards are potentially much greater when you are in control of your own destiny.

Unlike a key principle of Secrets of the Millionaire Mind, the Money Magazine feature claimed that you don't need a burning desire to get rich to be successful. As probably my wife would agree who is a resume writer and career coach, rich people first "chase their passion." Sadly, many people go through life not knowing what their passion is, or having the courage to go after it.

Exploring Tax Lien Certificates

2006-09-03T22:21:00.000-05:00

I first heard about tax lien certificates about a year ago. Sometimes described as the secret of the wealthy, TLCs allow you to purchase the right to collect taxes and penalties on properties that owners have not paid their real estate taxes. After you buy the TLC, there is a redemption period during which the property can be redeemed by paying the outstanding taxes and penalties. If the owner still doesn't pay, the TLC owner can end up owning the property for only the cost of the tax lien.

The strategy is fully described in Profit by Investing in Real Estate Tax Liens. Each state in the US does this a bit differently; some states offer tax deeds, which actually give you immediate ownership in the property. Apparently you have to get information from the real estate office in each county on when the auctions are offered, how registration is done etc. Supposedly this is a very safe investment since you have a lien on the property. I will start with my own state and neighboring states so I can investigate properties prior to the auction. I've also received much useful information from Professor Profits.

What about eBay. I put up my first book for sale yesterday (instead of the five I hoped for). It's a bit tricky figuring out all the angles in pricing, but I'm sure it will get easier when I've done it for a while. My wife and I have identified at least 25 books so far that we can try to sell.

Getting Started with eBay

2006-09-02T14:27:00.000-05:00

Trying to get out of the habit of doing too much reading, so I bought just one book on eBay strategies so I can get started. How to Buy, Sell & Profit on EBay was an easy read and gave some useful tips such as:

pick the one item that you think can't possibly sell, and place it on eBay. When this sells (to your amazement), it will demonstrate how effective eBay can be.
go through your own house first. When you run out of things to sell, go to garage / sidewalk sales to look for other items.
Unlike most other businesses, you can start listing on eBay for 30 cents. Better to start listing items and make mistakes rather than wait to post the perfect listing.

I'm going to start with books since my wife and I love to read and we have more reading material than we can ever get through. We're also trying to split up the responsibilities so that I do the technical stuff and my wife handles the creative end.

So why not give it a try? I'll have at least five items listed by midnight tonight.

P.S. I also read through some reference materials on tax liens / deeds yesterday and this morning and am ready to take next steps. More details in next posting.

Doing Some Things Differently

2006-09-01T14:48:00.000-05:00

It's said that if you keep doing things the same way but they're not working, you need to try something different. So I have resolved to:

Figure out whether I really am motivated to go after more money. As a project manager focused on nonprofit organizations for the past six years, I've chosen principles over maximum financial return. If I do want to have more wealth in my life, then why hasn't it happened? My wife suspects that I am getting stuck in the 'research' phase, and can't move into the 'action' mode.
Seek out 'multiple streams of income' as professed by Robert Allen. Having had many jobs in the past suddenly end without warning, it is obviously better to have many ways to earn rather than depending on a single source. The eventual hope is to not have to depend on a full time position at all, and only work when and where I choose to.
Early to Rise recommends getting up one hour earlier as a secret of successful people. As much as I dislike getting up earlier, I'm going to give it a try. By taking this time to focus on developing these additional income streams, maybe I can make some better progress.
I will also block out time on each weekend, at least 1/2 day, to focus on building wealth.
Unfortunately, I will need to curb some of my volunteer activities until I can afford to continue them. Now treasurer for Congregation M'vakshe Derekh, I may need to step back from my webmaster role until I can afford to continue these activities.
I will work with my wife to pick out 5 items that we can put up on eBay this weekend. Many others seem to do well with this strategy. Seems like there's little to lose and much to gain by giving it a try.
My wife and I will setup a weekly meeting to review finances and revenue generation strategies. We've often slipped when we've tried to do this a past, but we need to make this a priority to keep each other informed and motivated.

As I often do as a project manager, breaking up tasks into smaller phases may be the key to get back on track for earning more income.

Getting Serious About Generating Additional Sources of Revenue

2006-09-01T12:19:00.000-05:00

Last December my wife and I attended the Millionaire Mind weekend, which gave us much inspiration about the role that money plays in our lives and how we can learn ways to increase our revenue. A particular point was the importance of earning passive income - as opposed to the type of active income we receive from working at full time employment.

It's now nine months later and although I've done a lot of reading and research, I haven't been able to take the next steps towards taking action. These are the main areas we've been considering:

1. real estate - particularly investment properties
2. tax lien certificates
3. eBay - selling our junk and everyone else's

After a firm reminder from my wife this week that we haven't achieved the results we hoped for, I've launched this new blog to document our efforts going forward. Hopefully we will be able to encourage others to follow this path towards financial freedom.