General

Making Money on the Side

Yeah, I could used to this view.
Yeah, I could get used to this view.

You know what’s not easy? Making money on the side.

At least for me it isn’t. For the past few days I’ve been looking into a whole bunch of different business ideas, and I think I’ve stumbled on something that works.

Of course, I’ve tried things in the past and they worked okay I guess. Mostly, I dabbled in Internet Marketing a few years back and that … didn’t end well. Yes, I made money. That was the upside. But the downside was stress. Lots of stress. I was spending thousands of dollars just to churn out a couple hundred dollars or profit margin on the other side. In fact, that margin was always a moving target and knowing when to stop, say, a pay per click campaign became an art. It’s what I imagine day trading to be like, except on fast forward. On top of that, there was a nagging feeling that I was doing something wrong and so I stopped. Some of the things I was selling seemed to promise the moon without much substance.

I don’t ever want to be in a business that could possibly screw people over.

No, relax Kermit.
No! Relax, Kermit. Like I said, I’m not a monster.

So I’ve been focused on legitimate businesses, which are rightly more difficult to build and more prone to failure. That risk of failure is what scares me. Ideally, I’d like to build my own brand of something I wouldn’t mind selling to my mother. Er, well, I’d give it to my mother, but sell it to other people.

I’m not a monster.

For a long while, I’ve had a good name for a potential e-commerce business with not much more than a name to show for it. Mainly, that’s been because I wanted to either build products myself or find a supplier that made products I wouldn’t mind putting my name on. Well, building products myself has a steep learning curve, especially if I want to scale my business. It’s not out of the question, but I just don’t have the time.

After all, I haven’t become financially independent yet.

So, now it comes down to finding a supplier. Or two. You know, just to get things rolling. And that’s been the hardest part overall, because I just don’t know where to look. And from what I’ve read, wholesalers generally don’t want to get involved with those of us who are a little green behind the ears (only established businesses need apply). Jerks.

What I’ve been looking into this week is just the material I’ve been looking for to jump start that part of the business, so as you might imagine, I’ve been soaking it up like a sponge.

The next part is buying actual products that I can put either on an e-commerce site or even use Amazon FBA (Fulfillment by Amazon) for, or … both!

Decisions, decisions.

I’ve read about people who do okay with Amazon FBA using arbitrage, but I don’t have time at this point for such low numbers. I’m really after higher numbers, which means I’m going to need to put more money into purchasing and branding up front. I’m convinced that building your own brand of quality products (that people already use) is the way to go. That way there’s no competition for the same product, which means higher profit margins. Then I could laser-beam focus on marketing while Amazon takes care of all the other things.

That's rude, Kermit.
Be cool, Kermit. You’re supposed to be my analogy for being new to something.

So, for now, I’m still trying to find products but at least I have a better idea of how to vet them. I feel closer now to the prize at the end of the rope because I’m not just going blindly about it anymore.

It’s sort of like having a mentor. Mentors, as it turns out, are super important. Having someone who knows the ropes and has gone through doing what you want to do will decrease the distance from start to success because they remove many of the unknowns, including the unknown unknowns! As much as I may know about programming, web application development, Internet marketing and the like, these are only pieces to a larger puzzle.

Generally, programmers aren’t exposed to the business side of the things they build. I know I’m not. So by the time I get to work on something involving, say, e-commerce, the real hard part has already been done so there is this illusion that it’s easy to get things going, when clearly … it is not.

I mean, programming isn’t super easy for everyone. I’m definitely not saying that. Actually, let’s throw an analogy at this thing. Those always work, right?

I’m not saying building cars is easy for everyone. I’m just saying that as well as an engineer or mechanic can put a car together, selling the car — especially in large quantities — is a different beast altogether. That’s why there are car commercials and pushy salesmen to deal with. You could have a lot of a million cars, but without someone selling the brand and the experience that is your car, they’re just going to sit there.

So branding and marketing are the missing pieces.

And brand-building is what I know virtually next to nothing about. That’s something I wasn’t aware of previously! First, that I needed to brand at all. I thought branding was optional — something you did once you were tired of eking out profit from selling other peoples’ already-popular product lines. Second, that  branding was important. I was also of the mind that you could just sell things sort of haphazardly and just build your name up (which is sort of branding), and people would trust you, the salesman, no matter what you sold.

Hey, I never said I was bright. And this stuff hasn’t really been my serious focus until now, so forgive me being green. It certainly isn’t easy.

Green Will Hunting. I'd watch it.
Green Will Hunting. I’d watch it.

Pushing Through Writer’s Block

For some reason, I don’t feel like posting today.

Maybe it’s because of the holiday weekend, or because this is a Monday or because I’m only one coffee-cup deep into the day. Whatever it is, it’s giving me writer’s block. The best approach to the writer’s curse, I’ve read, is to just keep writing, so that’s what I’m doing today.

This weekend was a great little mental vacation. I barely touched the computer, didn’t look at my spreadsheets and didn’t even touch Mint. It felt very free. I did, however, spend some time (using my phone) reading over some posts from Steve Pavlina on his Passive Income Series. Who knows whether I’ll actually use any of that information, but it’s generally entertaining to read his stuff. I’m not much for “personal development,” but I also appreciate the way some things make me think.

I made some headway this weekend with my wife. I didn’t really post about it because I prefer to keep my personal problems personal, but we’ve been hashing out the approach we’re taking toward finances as a family. This happened because one day I mentioned how I thought a particular Groupon deal she was interested in was a waste of money. Keep in mind, I have been drinking some of the Kool-aid from the folks who are frugal, and sometimes I get carried away with ideas.

So this became an issue.

All of a sudden, I’m a penny-pinching miser who isn’t the man she married. And I’m not that guy, but she had a point. I was just reacting to things with negativity because I’m trying to maximize our savings. It’s easy to forget that we’re all people and we’re all in this together. Plus, I hadn’t really discussed where I’ve been lately. Sure, I tell her about every bloody thing I read whether she’s interested or not, but that’s not discussing things. It’s not making sure we’re on the same page.

So finally, I apologized for getting ahead of myself and explained where I was coming from. It’s not that I don’t want to spend money on things that are important to us, it’s that I don’t want to spend money frivolously. More succinctly, I want to spend money on things we love, but cut way back on things we don’t. So it’s not that I’m turning into Mr. Cheapskate, it’s that my intention is to turn into Mr. Mindful.

And some of you may think me stupid for carrying this mindset, but I don’t mind, because each of us is on a different path. For my life, I want to save money but I also want to be able to have things I like along the way. While I don’t want to save life enjoyment for typical retirement age, I also don’t want to live a life of scarcity leading up to early retirement. There has to be a balance.

So that eased the tension and we were back to normal. I even worked in some ideas for some slow travel in there, because a significant portion of our monthly income goes to paying a mortgage on one fat house. The false dilemma a lot of people fall into is that you either need to rent an apartment or buy a house, but as I read and learn, there are a variety of other options. For example, we could sell this house, buy a couple houses (duplexes maybe) in different locations and then maintain a home base (which is important to people apparently) while renting out the unused (by us) units. This way, we could still travel all over. We wouldn’t be homeless nomads — a very important mental safety net for my wife and children — just wandering the earth.

The success there wasn’t that she readily agreed, but that she didn’t put up an offense to it. Honestly, there are some great reasons to get out of the main stream and venture into the wild unknown. For one, life shouldn’t be the same thing on repeat. Maybe I’m crazy, but I also think it would be far more interesting for my kids if they could experience different cultures both inside and outside their native country. I don’t know if there are published statistics on mental health for those who have traveled and those who haven’t, but I would hope it would have a generally positive impact.

I’ll have to look that up after I finish writing this post. Er, wait. Hold on. My inner critic is reminding me of kids that get moved from state to state, school to school, causing them to leave their friends behind each time. This could probably cause some damage in terms of an ability to form long-term relationships.

On the other hand, I drove far, far away from home when I graduated high school and basically left all my friends behind. I still keep in touch with some, but we all live some distance apart. Still, there’s something to be said for getting through school with the same set of friends. I was definitely able to do that, so I don’t know that I’d want to deprive my children of that experience.

Of course, recently I met a well-traveled young lady who was wise beyond her years. Her father being a diplomat, she was moved from place to place while he was stationed for a few years in each location. Talking to her, I wanted the same thing for my children. I’m aware that there are no guarantees in life and that my wife and I are completely different parents in different situations to hers, but still, there is something alluring to that kind of life story.

I mean, if you could choose your sort of childhood experience, and you were given two choices, either — A, relating to most people by sharing in most of the same experiences or B, having unique and interesting stories to tell people — which would you choose? That’s not such an easy answer, and it might differ from person to person. It’s almost unfair to force it on children, one way or the other, but we do it anyway.

I’ll have to look into this a bit more.

 

Setting Goals for the Rest of the Year

Man, today has been a busy day for side hustles!

I must have spent a good six hours re-making an old site that was just sitting there gathering dust. Well, sort of. Yesterday, I was just casually checking my AdSense stats which have been at an average of about $0.02/day now (up from $0.01! Yay!), when I noticed a single $0.15 click. Upon further investigation, it turned out that it was a site I’d sort of set up and forgotten about. So of course I had to dig in a bit more and it turns out that it’s ranked well for a number of organic search terms.

Naturally, there was only one thing to do — give that puppy a make-over while preserving SEO. And that’s what I did. As soon as work was done, I got to work. Luckily, my wife took the kids out for the night so I’ve been in focus mode the entire time (early retirement light, I guess). She’ll soon return, which is why I feel a bit rushed in writing this but I wanted to get a post out tonight. I hate breaking that chain.

Boy have I digressed from the title.

So today, I read a post from my buddy Adam over at I Want to Retire Soon (IWTRS) where he went over his progress for the year so far. I feel like I’ve been doing a lot of that, but one thing I haven’t really done is set any kind of public goals for me to embarrass myself with (just kidding), so I wanted to take the opportunity to set a few in the same vein as IWTRS. So without further adieu…

Goal 1. Fill Emergency Fund to 100% (Status: Completed)

Okay, I’m kind of cheating on this one but to be fair, it was the only real goal I publicly stated (besides my FI date goal stated in my About page, that is). Also, I killed that goal, so I’m going to give myself that one.

Goal 2. Reach $20,000 in investments for the year (Status: On track)

So far, I have about $12,000 invested (as you know from my many postings on the subject). This goal poses some threat as I have an upcoming dip in salary coming, albeit temporary (side hustles and side businesses — time to step it up).

Goal 3. Write at least 25 posts here per month (Status: Behind)

Last month, I wrote 24 posts. I feel like none of my posts are really super long, nor are they super short, so I feel like that should be a good momentum to maintain. However, I’m going to reach a little higher on this one and call it ‘Behind’ because I’d like to generate more quality content on a constant basis.

Goal 4. Comment on at least 20 posts per week on similar blogs (Status: On track)

I’m totally ripping Adam off here on this one, but I think this is vital to keeping involved and keeping the right mindset. If I’m constantly thinking about financial independence, early retirement, dividend growth investing, index funds, I will be much less likely to fail. I’m calling this one ‘on track’ because I comment on at least 5 blogs every day just because I enjoy it. And Adam, if you find a way to track that metric, please let me know.

Goal 5. Get my feet wet with Dividend Growth Investing (Status: Behind)

I’ve been bothering a lot of people in my attempts at researching this one, and I don’t think that will stop anytime soon. Still, I haven’t achieved it yet and I want to sort of pressure myself into it because I think it will pay off well in the long-run. Hopefully this one is set to “on track” by the beginning of Q4!

Well, that’s it for now. I’ve got stuff to do around the house since I’ve been staring at this stupid screen all day!

Until next time.

My Financial Enlightenment

So, I’m not quite sure when it happened. The whole thing is still a little bit hazy, but I know there was a before time and then an after time. The exact point where the skies opened up and I saw the possibility of not working for the rest of my life is somewhere between, but remains a mystery.

The Dark Ages

I remember going to look at a used BMW one day back in 2013. I’d been working as a high-paid consultant for a couple of years without much to show for it in terms of status symbols. Sure, I’d just bought a house a few years before, but the glow had since vanished from that shiny thing, so it was on to the next! Plus, the car I was driving was starting to do some very funny things that the repair shop kept charging me not to fix.

The price on the car was lower than it should have been for a 5-series, so I felt like I should go for it. On the other hand, I had a very specific number in mind so I told the sales guy and he dismissed it saying he had other interested parties. Not wanting to get emotionally suckered by a car salesman, I gave the car salesman my details and walked off the lot.

The next day, I got a call from him and he begrudgingly said he’d agree to my terms. So I went in, paid around $45k in cash (after buying a warranty, final fees and all that good stuff), and drove off the lot in my new toy.

For the record, I still love that car, despite how much it has depreciated.

That was the way things went. Saving a bunch, only to spend it on something new. Sure, we had a small cushion in savings on the side, but it was nothing compared to what I have today. It was just meant to avoid over-drafts on months where our high income was met and nearly wiped out by our high expenses. Did over-drafts happen occasionally? Yes, once or twice a year.

And yes, we never missed payments on our debts and never let our credit card debt ride. But the only investments we had were my high-fee IRA that had no on paying attention to it for years and what was left over from my wife pulling money out of investments to come up with our down payment. In other words — not much.

Certainly not enough to carry us into our twilight years.

And there were times when I’d get into a kick on the topic of personal finance. I’ve mentioned this before, but I used to buy personal finance books. I’d basically read a few chapters, set it down and then forget about it for another year. Rinse, and repeat.

Yeah, not terribly effective. All it did was add another annual expense — the very book that was meant to help me get my finances in order. I’m not sure, but there’s irony in there somewhere I think.

So to sum up where I was during the dark ages, I had a high-paying job, my wife and I bought whatever we felt like buying, we saved a little, invested virtually nothing and were both 30-ish with not much to show for it.

The Turning Point

As I type it out now, that was probably the initial catalyst and driving factor in turning things around. Just thinking about having nothing to show for all the hard work and long hours I was putting in. I was sleeping in hotels four nights a week. I was spending part of my vacations on my computer glued to the phone.

I remember one vacation where I literally did not leave the hotel room the entire two days we were there. I didn’t swim with my kids in the pool. I didn’t eat dinner with my wife. I just ordered room service while staring at a screen. And being a consultant, that’s just part of the life. It’s going to happen to you once in a while and that’s perfectly fine. My family was understanding. At least, as understanding as they could be. But it’s when that kind of life became the norm that I saw things a different way.

That was when the seed was planted. It wasn’t until I started working at the next high paying consultant job where I got to work full time from home — the one I have now — that I actually started doing anything.

And maybe that’s it. Yeah. That’s the actual turning point. Though I probably did more actual work than I’d ever done since I lacked a commute, I was also able to focus on anything that needed focusing on. In retrospect, that’s kind of a no-brainer.

The Enlightenment

When I started working from home, I remember my wife and I sat down and decided we needed a financial planner, and she’d heard something about LearnVest, so we tried that for a while. In the short time leading up to actually establishing an account with them, I had started to participate in r/personalfinance on Reddit. From what I’d learned in the very short time I’d been active there, I basically needed to establish three things before I could start investing (my actual goal through all of this).

First, it was an emergency fund (E-fund), with three to six months of expenses in there; I chose six! Second, I needed to fill my Roth IRA to the maximum every year. Then, and only then, could I start taxable investing.

This isn’t something I came up with, of course. It’s the general advice for many people who frequent those forums, but it was the best advice I’d read in a long time. Better, in fact, than all the cumulative information I’d learned from all the books on personal finance I’d paid money for. And the advice preached in r/personalfinance is free — the best price there is.

So I started on that journey around a year ago. Actually a little more than a year ago according to the first e-mails I received from LearnVest. It was around March. So that puts a number on it. I’ve officially been “enlightened” for over a year now. I did actually pay for LearnVest though, which was sort of a sunk cost because they essentially set me up with the same plan I’d already established, only with more concrete goals (i.e. actually setting up an IRA account and destroying my old one). As it turns out, that was just the bit of fire I needed to get things going. And the fire I’m talking about was paying for LearnVest.

So I accomplished those goals, weened myself off of LearnVest and started focusing solely on Mint to track my financial life. Well, that and a whole bunch of spreadsheets.

Since then, I’ve come a long way. As of this month, I will have completed my six-month E-fund (watch out for an upcoming post!). I’ve significantly reduced my expenses and continue to find ways to do so. I’ve contributed a lot (compared to how much I’ve contributed in the past 30 years of my life, that is) to my IRA and will continue to do that as well.

I’ve also picked up a lot of advice along the way from the community I’ve come to be a part of. There are some amazing people in the circles of personal finance, including those from Reddit, Bogleheads Forums and the general awesome people who take the time to comment every day on my blog and answer my myriad stupid questions.

This blog has been alive for a month now, and it’s gone by so fast. I hope to keep writing like this for a long time coming. I’ve still got so much left to learn. My financial enlightenment, as I put it in this post, is clearly just the beginning.

It’s more of an awakening from years of mindlessly doing what society is comfortable with me doing into a life of mindfully investing my time and money for a better future.

As Luck Would Have It

It's times like these when you think, "Man, I sure could use a shovel."
It’s times like these when you think, “Man, I sure could use a shovel.”

Isn’t life funny?

One moment, you’re stressing about things in a major way and the next moment, opportunity lands right on your face. Or desk. Opportunity lands somewhere. And if things have sorted themselves just so, it’s sort of like being stuck in a hole and having a shovel fall in with you — not the best situation, and it won’t be easy getting out, but at least you have a way out.

So yesterday, after getting my absolutely final offer from the company I’ll be taking a job from, I had resigned to the fact that I’d be making a lot less money over the next year — again, somewhere around 35% (but closer to 30% because of the way taxes work out).

In fact, this is why my posts have been sparse. I’ve been doing a lot of thinking. Thinking about how to reduce expenses, what that will do to my marriage, what that will do to my self-image. I know the amount of money I make shouldn’t be tied to my self worth and that’s quite often what I tell other people, but combined with a personal “crash” of sorts which has taken the FI Monkey “stock” down 35%, it’s much easier said than done. And that’s exactly what sort of hit me yesterday — my “portfolio” (income rate) is about to take a huge hit and because I am not diversified (having multiple income streams), I am feeling the full brunt of that impact.

And so I thought about that.

Now obviously I have promised myself (and my readers!) that I will start a side business (or side hustle, as they say these days) and I absolutely intend on doing just that. But as I said at the beginning of this post, opportunity landed. And that opportunity came in the form of a consulting agency that wants to farm part time work out to me at the rate I’ve been charging the company I work for.

And the more I think about it, the better it sounds:

  • I get paid the same rate I was being paid before
  • I can work at my own pace and on my own schedule
  • I can deny projects if I should so choose
  • I can even charge flat rates for projects
  • I don’t have to work directly with clients and act like a project manager
  • I don’t have to manage people
Now we're talking.
Since I was beating the stock analogy to death, here is a picture of a horse wearing roller-skates. You’re welcome.

The trade-off, of course, is that I have to charge accurately and competitively. These guys aren’t going to pay a slow horse to do a fast horse’s job. But I can swing that. The trick is staying within those guidelines while keeping my main income stream happy, but what makes me most happy about this possibility is just that — I will no longer have just one main income stream.

As of next week (I believe), I will have become diversified. Naturally, having just two income streams is not really diversified but it’s an excellent start. It just means that starting (or buying) a business will become yet a third income stream and lead to an even more balanced “portfolio.” I’ll have my stable income (bonds?) and my volatile income (stocks!) that will hopefully both grow at different rates.

The side benefit to this (not that I want to try to predict the future so early on) is that, should it somehow work out that I get close or even hit my financial independence number, I will be able to transition away from my main income stream and then slowly ramp down this side work over time in order to focus on my main business. Or who knows, maybe I’ll continue. I should probably figure out what my ideal “early retirement” looks like before waxing on about it, but you get the point.

What I have to be extremely careful about is making sure that my main job is not impacted by work from the others. But I also have to make sure I can get things done in a timely fashion with my second job. Luckily, I took the job that allows me to do all of this from the comfort of my home office. And I’m beginning to think I won’t have to keep beating myself up over the choice I made.

As luck would have it, things have a way of working out.