Your Relationship with Money

I actually wrote the following about 6 months ago. As I'm rushing out for work, I wanted to get this out to you early this Friday morning for a little inspiration. My apologies for the fast pace at which it was written. I didn't originally write it for the world to see.

I had an incredible epiphany this morning! Right at the moment between consciousness and unconsciousness, I felt as if my spirit lent me a hand and connected the two. And at that split second, one could say I had an "AHA!" moment. Before I get into the epiphany, let me note that I had been pondering over this concept for the last couple of days, not fully grasping this mental discovery on the edge of the page of the tablet in my mind. Over the last couple of days, I'd been objectively viewing money as a concept. The major pattern that brought this concept to the light, was this: I have always been in the same money situation. Always! My habits with money have been similar my entire life. From rushing to the store to buy candy when my mom would give me a dime, to renting out the most extravagant apartment I could afford. The only difference between then and now, is that my relationship with money has advanced to bigger "sticks of gum". I imagine that if I could have signed a contract with the clerk of the Mini-Mart I would have showed up month to month to purchase yet another Tootsie Roll. The epiphony is this: Everyone has a relationship with money, and in a free world, this relationship determines where you land your materialistic dreams. This relationship with money, for most, is adopted and never-changing. Many individuals will adopt, as they do with most of their habits, the habits of their parents, and this relationship with money will never change. This article is not a how-to manual on how to get more money, it simply exists to beg the question among yourself, what is your true relationship with money? What patterns, regarding money, seem to repeat endlessly in your life? My money situation has always been the same. Although I've learned to buy bigger toys, I've continued to have the same amount of money at the end of each month as I've always had. I've yet to invest a dime, except perhaps for my education, and I've earned nearly every cent through employment. My offense (or the way that I bring in money), has gotten stronger, because I've gotten better jobs, but my defense has stayed the same. Every penny that I've brought through the front door, by any means, has undeniably found a way out of the back door. And that's just it; I've spent my whole life focusing on the offensive side of money, without any regard for the defensive side. The definition of insanity is doing the same thing over and over and expecting different results. At 24, I can sanely see clearly what my results hold, and I don't deny in the least bit that the results will stay the same for the next 40 years if my relationship with money never changes.

Note: Using percentages is an easy way to see what your relationship with money consists of. Broken down to just a dollar, how would you ration out your money? (i.e. Would you save 20 cents or give away 10 cents?) You have to develop this "law" for your money, in order to build the results that you desire.

The Lower Class Doesn't Care About this Blog

One of the things that I have learned about finances, is that some sources of information that some take for granite is not as easily accessible to other folks. I should note that, as the internet grows ever-so-closer to saturation, information is becoming more and more accessible to everyone. But until we've reached that plateau, our general source for guidance comes from our parents. 9 times out of 10, people generate the same or similar lifestyle as to the life that their parents maintained. A student usually births students. Millionaires usually birth millionaires. Low class individuals usually birth low class children. People, with the lack of exchangeable guidance, will, for the most part, follow in their parent's footsteps. This fact cannot be challenged. When it comes to finances, there are basic rules that are prevalent in the affluent that the poor or middle class are not privy to. People are not informed of the basic financial guidelines in school (not even at the highest levels). Without being exposed to these laws, many people find themselves in economic turmoil, expressing the same traits they share with their parents.

I'd be a fool to argue against the fact that people become exactly what they choose to become. I can't change their minds. I've learned that this is just how life is. Somebody has to drive the bus. I cannot continue to hope to better the life of the lower class. I think that it is foolish to believe that everyone has the skills and will-power to become financially free. I've shaped my blog hoping to reach out to people whose financial life is in turmoil. I no longer believe that this is possible. I do believe that the people who do have the will-power to become financially free will break out of the "rat race" regardless of whether or not I had a blog to help them get through. I think that it is more important to be a good example, sharing with the many, my story of how I came to be financially free. This is a drastic change in perspective, from what I originally had planned for this blog. My motto is still the same, but my perspective of how I will share this with the world has changed tremendously.

With that said, I will show by example the financial philosophies that I have "stolen" from the rich. The results will be my story. It's more important that I be a good example than try to share what I know. What I know really means nothing if I don't have the stories to back it up. I can't prove that I can build a spaceship by talking about it; I can get you to follow me, when I bring you rocks from the moon.

I usually would just save a blog like this for myself to read over later, but I think that it is good for me to post it.

Google is the New Wal-Mart

I started my blog about 2 weeks ago. I have learned so much since then about the internet and how people generate income by the use of it. And as I search and explore what is popular on the internet, the most common factor that I have discovered is Google's universal presence. It is rare that I have ventured on to a website that didn't have a Google logo on it somewhere. In most cases Google was, if not the only, the major source of income for that page through the use of Google Adsense, the Google search engine, or any of the various tools that make the internet more convenient and precious. Google has fully saturated the internet more efficiently than any other one website.

With that in mind, I have been focusing a lot on the time that we live in. With technology advancing at such an exponential rate, we are entering into a time where the internet will be prevalent among everything that we do. We are moving toward a time where we will use our internet window to do everything. We currently can get on the internet and make purchases and deliveries, book vacations and rental cars, look for an apartment or real estate investments, find directions and search for absolutely anything. We are at a time where companies will go out of business if you can't find it on the internet. The internet is fastening itself to everything that we do. I currently can go on the internet and watch movies, look for friends, listen to music, chat, play video games, or an infinite list of other things that keep me entertained. All signs point to a time where people will keep their eyes glued to a computer screen.

As a blogger or website developer, your business is to get as many people as possible to glue their pretty little eyes to your page. The more efficient you are at getting people to pay attention to your site, the more valuable your site becomes. As a blogger, you are looking to gather as many readers as possible. You offer frequent updates to your blog, to ensure that people will return to your page. You capitalize on this effort, by offering businesses a chance to advertise to those readers. This philosophy is shared by all websites. The most successful sites are sites that offer a community that people can become a part of. A site where people log on multiple times a day becomes the sites that create rich founders. Yahoo, Myspace, Youtube, Amazon, eBay are all examples, and the list goes on and on. These websites are successful because millions and millions of people want access to these websites everyday.

Google has capitalized on this concept. I was looking for some unique advertising for my blog. I searched Google for "blog advertising", and the whole first page was littered with ads for Google Adsense. I searched through Yahoo, and the same thing happened. I looked on some other popular blogs to see what they used, and it was easy to see that Google had the internet advertising market well saturated. I searched page after page, and the same results were discovered. Considering the internet has not yet reached its market saturation, I think that Google has smartly positioned itself to become the Wal-Mart or the Microsoft of tomorrow. When this younger generation gets older and expects the internet to ride with them on their hip, I'm sure this will become apparent to the masses.

For those of us with the most popular blogs, generating a couple thousand dollars of income a month through Adsense, imagine how much Google is raking in. I've yet to discover a new web developer without Adsense. And I don't blame them. Adsense is extremely convenient, easy, and accessible to the new web developer. I implemented Adsense on my page and saw immediate results. From my point of view, it is inevitable that Google becomes the next big thing, as if they are not already.

How Much Do You Make An Hour

How much do you make an hour?

This is an easy question, but I'd like to explore this evaluation a little further, possibly breaking some paradigms we may have.

It's easy to answer this question with how much money you make an hour, but what I want is to get you to think about your worth differently. Beginning with the average way of answering this question, let's evaluate. If you work a job 40 hours a week, and your boss pays you $28 an hour, you gross $1,120 a week, before taxes. That's a good amount, but are you really making $28 an hour? Should you not include the time it takes you to prepare for work, the time it takes you to get to and from work, and any other time you devote off of the clock? Adding this one aspect to the equation can drop your value per hour significantly. But wait, it doesn't stop there. Do you not have work expenses like the purchase of work-appropriate clothes, meals, office supplies, gas, ect.? Would this not lower your value per hour even more?

If you believe in multiple streams of income, then you believe that you can generate income at any time of the day, any day of the week. This is the mindset of the financially free. Incorporating this mindset into our original evaluation, we can no longer limit our time of productivity to 40 hours a week. A person that believes in multiple streams of income would need to evaluate their value per hour, based on a 168 hour work week. Remember, that if you believe in multiple streams of income, you trust that you can generate income at any time of the day. Going back to our original evaluation, making $28/hour at work, your true value per hour is more like $6.67/hour. Ponder that.

I think that it is important to remember that at every moment you can be generating cashflow. This doesn't mean that you should be thinking about generating income all the time, but simply that you have the opportunity to. Most people don't consider the possibility that they could be making money outside of their jobs or careers, while the financially free understand that there are opportunities all around us. Evaluating your true value per hour is just a simple test to relate your life to the law: "time is money".

Take the time to figure out your true value per hour. You'll be surprised at how quickly you can improve that figure.

[first photo by whole9yards, second photo by Single Malt; all via flickr]

How I Got Out of Debt

Debt can be a wonderful thing. Good debt can help you generate additional income. With the right understanding you can leverage debt in good ways. You'd be hard pressed to find a business that didn't use loans in their everyday structure in order to stay afloat and generate positive cash flow. For the average person though, debt can be an overwhelming lifetime struggle. Most people are not financially literate enough to understand how to use debt in good, productive ways. This lack of understanding has catapulted the world into an economic downturn. And, unfortunately, the powers to be aren't promoting financial understanding to pull us out. If you rely on governmental support to pull you through an economic slow down, you cannot gain the economic leverage you need to become recession proof. It is that reliance, and lack of financial understanding, that leaves you vulnerable to the swings of the economy to begin with.

My debt has been less intruding on my life. When I was 21, I found myself in minor debt. I owed about $16,000, but I had absolutely nothing to show for it. I didn't accumulate debt by purchasing above my means or taking risks. I simply lacked understanding and awareness, which unfortunately, started to stack up against me via bad debt. At that time, I started building good philosophies and habits that led to me getting out of debt. These philosophies can be duplicated and utilized for any amount of debt. I think that it is important to note, that with the right philosophies, you're financial woes cease to exist.

Here's an outline of the steps I took to get out of debt.

1. I identified the problem.
One of the hardest things to get someone to do is confront an issue. The easiest way to confront an issue is to identify it. You don't know what you're fighting against until you've carefully recognized what it is. With debt, it is important to know who you owe. While this may seem logical, a lot of people find it easier to ignore creditors instead of confronting them.
When I was 21, I decided that I would not ignore another phone call, email, or letter from a creditor. With that, I took a pro-active step toward paying off my debt by getting a free copy of my credit report. I took the information from all three(3) credit bureaus and put together my own personal debt log (a 3-ring binder with tabs). This was important in identifying the problem. Up until that point, I had too broad of a tally in my head. I knew that I owed some bills, but I couldn't wrap my mind around the problem until I had it all in one log. Psychologically, this helped me to see the light at the end of the tunnel. The problem had become feasibly solvable when I knew how big of a problem I was dealing with.

2. I crafted a plan.
In my log, I had a tabbed list of every company and agency that I owed money to. Evaluating my income, I came up with a comfortable amount that I was willing to contribute toward the task of getting out debt. From this amount, I created a game plan to pay off each overdue account one by one. I would begin with the accounts that were generating the most interest and fees and work my way through one by one. Coming up with a plan that I was comfortable with helped me build up some financial confidence. At this point, the light at the end of the tunnel seemed a bit brighter.

3. I contacted my creditors.
Once I had a good game plan that I was comfortable with, I started contacting my creditors one by one. At first, I felt a little uneasy. I had always pictured the voices on the other end of the phone as evil villains, who were out to take everything I had owned. I was quite shocked to see how much they were willing to work with me to get my accounts paid off. A company would rather you pay them back in small amounts, than to not get anything from you at all. Even if it's just $20 a month, that's allot better than nothing. Companies are also willing to cut deals with you, if you can work with them. I had a credit card that had a balance of $1432.50. The company was willing to reduce that balance to $900 if I could pay the balance in a month.
Once you become pro-active toward eliminating your debt, opportunities start to present themselves, where they didn't exist before.

4. I stuck to the plan.
I must admit at times, it was hard giving up all of my extra money to pay for things I no longer had or wanted. But, as time went on, I persisted. I stuck to the plan that I had put together. After just a couple of months, I had already started to see some results to my credit score.

5. I learned from the past.
After a couple of years, I found myself completely out of debt. By that time, I had incorporated some good habits and also learned some good techniques as to how to build good credit. These habits have been tweaked, and now I'm more efficient at making sure I pay my bills on time.
One of the most important lessons that I learned, was saving to buy something is a lot more gratifying than financing it. My roommate and I bought the same TV a year ago. I worked and paid cash for mine. He financed his, on a loan that guaranteed no interest for the first 6 months. A year later, we are watching the same TV, but he is still making minimum payments for his. I'm sure he will pay for his TV two or three times over by the time he makes his last payment.

This is just the way that I got out of debt. I think that the most important aspect to understand is that I took an active role. I didn't let my creditors hunt me down and control my life. I crafted a plan that worked for me. If you take an active role and focus on your finances, good things are bound to happen.

Tip'd - A Community for Financial News, Ideas and Tips

I set a goal to make, in one month, an extra $75. Part of the accomplishment of this goal is this blog. I am constantly searching for ways to promote my blog. On a regular basis, I use sites like Digg, Delicious (or for the fabuloso del.icio.us), Technorati, Twitter, or even Blog Flux. These and an infinite list of other sites to promote your blog are great to use for promoting your blog to the general public. But now there is a place that is taking financial blogging, specifically, to another platform. Tip'd is a new community for the financially interested to come together and spread financial news, ideas and tips(advice).

Tip'd (in it's first week) has opened up a realm (and in good timing too) where people can spread the word on the economy or anything financially related. Finance bloggers or the like have a place to call home. You can help spread the word about Tipd by simply tipping good financial articles where you see the Tipd button.

Bloggers can gain popularity in the early stages of Tipd, by getting, a, relatively, low amount of tips from readers. The current top story on Tipd has only 13 tips. A blogger can be featured at the top of the list with only 14 hits. Being on the front page leads to page views, and for bloggers, that's what it's all about.

Check out Tipd for your financial information feens, and don't forget to Tipd your blogger.

Sunday Roundup - Financial Philosophy

A couple of weeks ago, I decided that I was going to change my life. I knew I wasn't doing as much as I could do with my life. If the skies were the limit for me I was definitely still on the ground. It's not that I was in a huge rut or in a large amount of dept that led me to this conclusion. I just reached a realization that I could do anything with my life. And as that thought marinated in my head, I started to see where my life did have some limitations. It wasn't enough to simply recognize my potential. I realized that I must build some sort of means to making that potential come to life. One of the major limitations that I had was my financial situation. Now, you must understand that I wasn't in a rut. I am more than capable of paying my bills on time, and I do; I always have food on the table and a roof over my head. Most evaluations of my life would probably say that I was doing rather well considering the path of which my life has come. The financial limitation that I recognized was the lack of control that I had. I was getting better at making money (through a job, at least), but at the end of the month I still had very little to show for it. No matter how much more money I was bringing in, I found that it was still just as hard to save. This mind process led me to the revelation that your financial philosophy determines your financial outcome. Your philosophies hold no regard for your income. With bad philosophies, you will always be broke.

I truly believe in this revelation. I believe in this revelation so much so, that it has transformed and bled into other parts of my life. I believe now that anything can be accomplished if you have strong enough philosophies. Additionally, I believe that strong philosophies will always out-perform talent. This is most prevalent in the book Rich Dad, Poor Dad, by Robert Kiyosaki (as discussed in last week's Personal Development Wednesday), as you learn of the lives of the two most influential men in Kiyosaki's childhood; one, a highly educated politician, and the other never finishing the eighth grade. The one that had the most talent, his "poor" dad, left his family with bills and no financial platform, and the other, his "rich" dad with very strong financial philosophies, leaving his family with millions. This demonstrates strongly how strong philosophy will always outperform talent. The best sport teams are not those with the big name players, but those who can demonstrate strong philosophies as a whole.

This entire thought process has lead me to this blog that you are reading right now. I feel that is important to get the word out, that we don't have to be controlled by our nation's economic turmoil. There are philosophies that you can put into play that will make you infinitely immune to all of the economic downturns that a nation will experience. This isn't the first time that our country has been in a rut, and I'm sure, just as Warren Buffet is, that this will not be the last.