Whoops

I thought I had posted the round up from last week. Looks like I just saved the draft. So I really haven’t posted in almost a week. Sorry about that.

As I am sitting here cradling my head (allergies are NOT fun) and thinking about how much I need to get done before I go to work at 4pm to - maybe - make $100, I start wondering if this is worth it. I don’t mind hard work, but at the same time I’m not the pseudo-masochist (not sado, pseudo) that Mr. Grump is, either. I do enjoy being able to relax every now and then. He has to be constantly moving and doing.

I’ve been doing this *on the side* stuff from about 7am-3pm or 4pm every day, then going to work at night from 4-10 or 11. Then on the weekends I work at least Saturday night 4-11 and Sunday from 10am-8pm. So really I’m working about 60 hours a week for not a whole lot of money.

I figured out that if I hit my target, I am getting paid about $0.80 per hour.  As depressing of a statistic that sounds, it really isn’t the thing that bothers me the most. 

The worst part of it for me - I have no time to paint.

I keep telling myself that this stuff *should* eventually be basically passive income.  (Honestly, I still think I’d be spending about 20 hours per week on it, regardless).  But to get to that place, it looks like I’ll be doing this 80 hours and working at the restaurant for another year or so.  Wouldn’t be a bad thing - if I had time to paint.

This is exacerbated by the fact that I’ve recently done some pretty kick-ass paintings.  I really think I’m starting to finally “get” it.  And my teacher and close artist friends have told me they think I should be able to get into a gallery - and that much closer to my dream - pretty soon.  So theoretically I should be pouring all of my energy into art.  I feel like something’s gotta give.  The happiest two weeks of my life since I quit my job were when I got to paint for 3-4 hours for two weeks and make some of those paintings.  This is not an easy path.

Security vs. Risk

In our society today, the word risk has a horrible connotation.  Why?  People associate risk with irresponsible behavior and high failure rates.  In the financial world the term risk simply means uncertainty.  If we can predict an event with accuracy on a regular basis, the event is considered low risk.  Conversely, if we cannot, it is considered high risk.

Right now in my life I crave a certain amount of security.  I would prefer to have a large amount of security.  However, security can be just as damaging to your overall financial health as risk can.

If you save too much of your money without growing it, and you have a fear of the “risk” associated with higher yielding accounts or even the market, you may see a decrease in your buying power due to inflation.

True story, I swear, but when I worked with the bank I remember I had a client who distrusted banks and anything financial.  Well, instead of putting her money into investments and higher yielding accounts, she put it in a drawer of a table.  No joke, one day her house was hit by a tornado.  Her money flew throughout the neighborhood, raining down on her joyous neighbors.  Well, she thought she was doing something safe and secure, but she wound up losing a good amount of savings in the process.

I feel that If you never take any risk, you will never move forward.  These “risks” you take could come in almost any form – asking for a raise, moving to a better neighborhood, starting a new company, investing in the market, selling your home.  Because you do not know the outcome of any of these events, they all have inherent risk.

If you never ask for a raise, will your employer likely give you the value that you create? 

No.

Why not?  Your employer is most likely a smart businessperson.  They will pay you the least amount possible to keep you happy and productive. 

Nevertheless, if you walk into any of these major decisions lightly, and without thought of the possible various outcomes, the events can be disastrous.  For example, take the person who decides to begin flipping homes – with no previous experience, and without considering current market conditions.  I think the increase in foreclosures paints the picture of those who went into a speculative market uninformed.

What is the solution?  Balance.

In order to move forward, to truly succeed, you have to take risks.  Otherwise you wind up burying all of your savings in the yard and perhaps losing its location at worse, and at best, seeing a vast decrease in your buying power.  However, you do need some security, some soft landing for the hard times.  I really believe a good reserve fund will give you that security, as well as the capital and flexibility to take other financial risks without devastating yourself if the results are not as favorable as you hoped.

Who Likes Squid?

I Do! I Do!

Now, put it together, and what do you have? Squidoo!

Sorry, I had a silly moment there.  I’ve mentioned this site quite a few times in the past, so I figured that I would explain what the heck this thing is, and what my fiance and I have been doing with it.

What in the world, you might ask, is Squidoo? It is a slightly silly website with paradigm-shifting potential.

Do you remember the days when everyone was creating their own, personal homepages on angelfire.com? What were these pages about? Usually nothing, or your dog, or cat, or job. I remember trying to build one of those sites, and it being incredibly cumbersome to deal with. Granted, I was about 12 at the time, and not interested in code, but today I am still not interested in any kind of code. Copy and paste HTML is about my limit.

Then came the days of the blog - I had one before they were even named a “blog.” Back them, I just had a LiveJournal account, which was just as it sounds, a journal.

Now, Wikipedia has passed its 2,000,000th entry. People don’t even use a traditional encyclopedia anymore. Why would you? You won’t find a sentence on anything related to the Sony Playstation, or the Cure. But on Wikipedia you can find incredibly detailed entries about just those things.

What if you took all three of these significant shifts in how we think about the internet - personal pages, blogs, and Wikipedia, and throw in some social networking and mix it all together… and POOF… you have Squidoo. The beauty of this is that anyone can build their own webpage - with graphics, pictures, and YouTube - about ANYTHING.

Because it is all on the internet, and it is made by individuals, you do have the chance of coming across misinformation. But seriously, haven’t we learned that just because “I found it on the internet” that doesn’t necessarily mean that it is true? And whereas there is only one article on Wikipedia for each topic, on Squidoo, there can be several articles about each topic.

Now, for the best part. The lovely people at Squidoo must be readers of Ayn Rand. They have found a way to build something that is entirely self-perpetuating and moderating (with a little help from the staff). On top of this, Squidoo recognizes that in order to grow and attract more members, they need content - LOTS of content. So what do they do? Reward their “lensmasters” (those who create pages, or “lenses” on topics) by splitting the profits that come from the *small* Google ads.

What does this result in?

MONEY.

Those that make the best lenses rise to the top and get the most traffic. At the end of each month, the Squidoo team divides up the profits into three tiers based on the quality of the lens and the amount of traffic it draws. So, you can make your own website about the things you love - and make some drinking money on the side.

BEAUTIFUL.

Try Squidoo out for yourself. I am passionate about this site because I really do believe it combines all the best things about the internet.

And on the Eighth Day…

(This is also on my “About My Goals” Page)

God Made Sweet Tea. -Blind Melon

And on this day, man also realized that he was in debt.

I too, have found both sweet tea and debt, although I am trying my hardest to get rid of the latter. I have a lot that I am trying to accomplish here, and there really aren’t enough hours in the day to do it all. But to give you an idea of what I am trying to do, here are my goals:

• Plan my wedding (June 27th, 2008 is the date)
• Become debt free by April 2008
• Stop working at the restaurant and be working for myself by the wedding
• Eventually stop working for myself (at home) and go back to school for art
• Become a professional artist
• RETIRE by 35

That’s all doable, right?

Now, my definition of retirement isn’t exactly sitting on my butt and watching TV all day. If I am able to become a professional artist and travel the world to paint, I consider that my ideal form of retirement, even though I would be technically working. I think when you stop working and learning, you are dead.

In the meantime, I am taking a class or two for painting, waiting tables, and trying to get my internet business(es) off the ground.

In order for me and my fiancee’s budget to work, I need to make about $400 per week. Right now, these are my various sources of income:

1. Restaurant (waiting tables)
2. eBay
3. Squidoo
4. Affiliate marketing through eBay and Squidoo
5. Antique Booth at an antique mall (soon to be going bye-bye)

So basically, this blog is going to follow my quest towards accomplishing the above goals of becoming debt free, then weaning myself off the restaurant (although it is SUCH easy money sometimes), then going back to school for art and my quest as an artist, and finally - RETIREMENT.

I’m 23 right now, soon to be 24. I think I can accomplish those goals. Most people don’t really begin to save for retirement until their 50s, so why don’t I just start early? If I screw up and have to wait until 45, fine by me!

To Renovate, or not To Renovate

My fiancee and I just had the first anniversary of being in our first home. My fiancee chose the home (he bought it just before I moved here) because it was in a well-established neighborhood with good schools and custom built homes with nice trees. Good home values with slow, but steady appreciation.

The suburban dream, really.

Only problem is, we’re both 24. We don’t care about school systems and lots of space. In fact, once our roommate moves out, 2,800 sq. ft. is entirely too big for us. We want a younger, hipper part of town where people are more active and we can walk to a restaurant.

More urban, if you will.

The previous owner did a lot to update the home, but he never touched the most important part - the kitchen. And some of the other things he did, like the bathroom renovation, are ghastly. So, now here’s my question: do we move out, rent it, and rent downtown for a year, then buy downtown? Or do we renovate now, stay for an extra year, then sell?

We want to make some changes before we sell, regardless. The question is, sell now or later?

We bought this home for $135,000 (gotta love cheap homes in Texas!). If we were to rent this house, we can make it cashflow for about net $200-300 per month, so let’s say $3,000 over the year. Plus, if we were renting downtown, we figure we can knock our expenses down somewhere between $100-250/mo. or about $1,800 in a year because we are renting and our power would not be as much. So in a year, we could save around $4,800 in a year by moving and renting.

We figure we have about $10,000 to put it in to get this bad boy up to snuff, so really, I guess our break-even is somewhere around $153,000 for closing costs, etc.

Homes in the area are starting to list (and sell) for around $155,000+. I think it would be worth our while if we could get somewhere in the neighborhood of $175,000 or more for this. We want to be out within five years (for the statute of limitations for rolling capital gains), so I guess we just need to watch the prices to figure this out.

Any thoughts?

Managing Variable Income Streams

I work at a restaurant, serving (ie = waiting tables). I also have some little ventures on the side, like my eBay store, Squidoo, and a booth at a local antique mall. All in all, my goal is to make $400 per week between all of these ventures.

Normally, that is a no-brainer. But still, if I have to take a day off of work , or I’m sick, or something just doesn’t sell, I don’t have money. No *predictably* steady income stream yet.

For Example: I made $350 this weekend at the restaurant. And we happened to sell $265 worth of things in the antique mall, and we have had $85 come through advertising on Squidoo, for a grand total (and the week isn’t over) of: $700.

Not a bad payday this week, especially considering that was my bi-weekly payday at my old job. However, I know that in two weeks we will be going out of town and missing the $350 I would have made from the restaurant, and it has been almost two weeks since we have sold anything in the antique mall. We’ve been averaging $200-300 per month on Squidoo, but still, sometimes that is hit or miss.

So, I could wind up with one week (like the one before last) where I was sick and brought in only $200 total. How in the world do I manage this, and get ahead?

Well, in the past, I would think: “Hey I have extra money!” and go spend some (probably most) of it. But then I would forget I had spent it, and somehow spend it again in anticipation of it coming in. Then, because I had forgotten that I spent it the first time, I would get slammed when all the transactions cleared. My cashflow would be tight, so guess what? The credit cards come out. Well, now that I don’t use my credit cards, I had to find another way, a way to trick myself, if you will.

The trick: I don’t look at my bank account balance.

Instead, I use a budget, and Mvelopes Personal Budgeting Software to see how much I am allowed to spend in different categories.

Then, based on my budget, if I make $200 extra in one week, I’ll put it into savings for the week that I am down $250. I will still probably take $50 of the extra money and put it towards something fun every now and then, but this trick helps me not think I have extra money to blow, which is how I used to operate.

Now I have a cushion for the bad times, and I keep on paying off my debt!