Millions of people have blogs; a small number make money blogging—the vast majority don’t. What’s the difference between the two, and how can you join the money making crowd?

This may seem like an oversimplification, but I think it comes down to a few basics:

• You have to be passionate about what you are doing (it’s not a job, it’s a business—your business)
• You have to be patient—it will take months and maybe years to reach your goals, but that’s the case with any business
• You have to be consistent, willing to write, post and keep your blog going no matter what
• You have to be flexible—everything happens faster on the web and you have to roll with it, or get rolled over by it

If that’s describes you and your approach to blogging, you have an excellent chance of succeeding, even if you don’t have all of the technical skills right now.

How much can you make blogging? Some people are content to make a few hundred dollars per month blogging, keeping it mostly as a side business. Others make in the thousands, and that’s where blogging starts to become something more. And a small percentage are making in the tens of thousands each month, making them blogging entrepreneurs.

I’m not in that last category by any means…but there’s always tomorrow! And that’s the point—blogging is a dynamic process, not a destination. It’s an opportunity to grow your business, if you’re committed.

But this article isn’t about me—it’s about blogging as a business and how you can make it work for you. You can read my personal blogging story here in How Blogging Solved My Mid-Life Crisis. I’m doing this and if I can, you can too. I’m about as unlikely a person to make money blogging as you’ll ever meet.

Figuring out what to blog about

The first thing you have to do is decide what it is you’ll blog about. The best choice is going with what it is you’re passionate about. If you’re passionate about a topic, you’ll not only enjoy what you’re writing about, but you’ll also have the perseverance that’s so critical to the whole blogging process. People can sense passion in your writings, and that’s a draw in itself.

Why not blog about what it is you’re most knowledgeable? Knowledge without passion won’t last, but a passionate person will always acquire the knowledge needed. And chances are, what it is you’re truly most knowledgeable about is driven by what you’re most passionate about.

Setting up your blog

Once you decide what it is you want to blog about, the next step is to choose a name for your site. This is important, since not only will it be the name of your site, but it will also be the name of your domain, which is the URL the search engines will see when they look at your site.

You want your site name to be simple, yet descriptive of what your site will be about. It can help if your title contains basic, popular words like “money”, “finance”, “cars”, etc, but there are many sites that have succeeded without including them. I chose “OutOfYourRut” because it describes making a career transition, which is the primary subject of the site.

The rest is mostly a mechanical process. Other than paying for your web hosting service, when you’re first starting out you don’t need to spend any money. Save that for later when your site is growing and needs to go up to the next level.

You’ll need a web host to host your site. As a beginner, you’ll want to go with large providers, like Go Daddy. They have excellent customer support, and if you’re not technically oriented you’ll need that support.

Once you have a host, start with a blogging platform like WordPress. Not only is it a free application, but it’s also a very common one with many free plug-ins (WordPress specific applications that make it easier to run your site) and a wide variety of individual themes to choose from. The platform is very user friendly, which means you probably won’t need to pay an expert to help you set it up and run it.

Keep the site very basic to begin with, adding applications and visual and layout changes as you learn more about blogging. At the beginning, creating content is more important than site presentation.

What to write about

This is content creation—the articles you’ll add to your site. Content is the single most important component of your blog, it’s what will draw visitors to your site and keep them coming back. Since you’ll have no content to start with, you’ll need to create as much as you can as quickly as you can.

That’s usually easiest to do at the beginning because you’re filled with ideas. But as time goes by (usually just a few weeks) you may find yourself struggling to come up with specific posts to write.

Not a problem. Find other sites in your niche and see what they’re writing about. You never want to copy what another site has, but you can take the basic topic and write your own opinion on it. I’ve actually come up with post ideas by commenting on other sites. I find that I have so much to say that I can easily write a full blown post.

Getting people to come to your site

The most basic way to draw visitors is of course by writing good content. But even good content has to get out in public view.

There are dozens of ways to make this happen, and we don’t have time or space to cover them in any detail. But here’s an example of just one…

As a beginner, you can guest post on established sites—that’s what I did. Guest posts will bring some direct traffic to your site, but your real “compensation” for providing content to another site will be a backlink to your site. The more backlinks you can get, the more credibility (and traffic) you will have with the search engines.

There’s no one answer on how to do this, and what you’ll find is that certain methods of generating traffic will work better at certain times than others. The important thing is having several methods that you can use while experimenting with others.

Monetizing your blog

There are different ways to make money blogging, and here are some of the more popular ones:

• Advertising (there are several ways to do this)
• Affiliate sales (selling someone else’s products or services through your site for a percentage of the sale price)
• Selling your own products (e-books, online programs, etc)
• Promoting your business (i.e., speaking, coaching or training) to produce sales or clients
• Generating parallel opportunities—this is something I do with freelance blog writing and there are many ways to do this

The optimal way to make money blogging is to use your site to generate income using several different methods, that way if one source declines, you’ll have others to keep the money coming in. To keep things simple you’ll probably want to start with one method then add others as your blog grows and opportunities present themselves. And believe me, they will!

Getting on the blogging fast track

You can make money blogging—I’m doing it, thousands of others are doing it, and that means you can do it. It’s not some exotic way to make money, in fact it’s more methodical than most outsiders believe. But it does take time and there is an element of trial-and-error to it.

It took me the better part of two years before I started making decent money blogging, but it doesn’t have to take you nearly that long. I didn’t have a program to follow, but you can and that will make all the difference in the world.

Bob Lotich and Jonathan Milligan, two of the best bloggers in the business, have put together the three part Blogging Your Passion University series that’s the closest you’ll come to college degree in blogging.

Remember that I recommended that you guest post on established sites to get your blog going? Bob was one of the first people who allowed me to do that and it’s had an impact since. Check out his blogging series and put your blogging business on the fast track to success:

Blogging Your Passion University 101

Blogging Your Passion University 201

Blogging Your Passion University 5 Week Video Series:

Have you ever thought about blogging as a business? What keeps you from moving forward with it?

By Rob Bennett

For stocks purchased at today’s prices, the most likely annualized 10-year return is 2.21. The highest return that could apply (assuming that U.S. stocks perform at least somewhat as they always have in the past) is 8.21 percent real. The lowest is a negative 3.79. That’s a lot of territory indeed! The factor that determines the point along that broad spectrum of possibilities on which your actual return will fall is the returns sequence that happens to pop up.

We cannot know in advance what returns sequence will pop up. That’s why the range of possibilities is so broad. First, I am going to show you why this is not a super big deal. Then I am going to show you why, while it is not a super big deal, it is a significant matter that you need to be aware of and take into consideration.

The Strategy Tester

I went to the Strategy Tester and entered the following assumptions: (1) an initial portfolio value of $10,000; (2) a $10,000 contribution to the portfolio in each of 30 years; (3) a 3.0 percent real return on money not invested in stocks; and (4) a starting P/E10 value of 20 in a secular bear market.

I looked at two types of investment strategies, both using this same group of assumptions: (a) a Buy-and-Hold rebalancing strategy of 70 percent stocks at all times; and (b) a Valuation-Informed Indexing (VII) strategy in which the investor goes with 100 percent stocks at P/E10 values of up to 8, 90 percent stocks at P/E10 values from 8 up to 16, 60 percent stocks at P/E10 values from 16 up to 21, and 30 percent stocks at P/E10 values higher than 21.

The calculator shows that at the end of 30 years, the most likely return for the Buy-and-Hold portfolio is $776,000. The most likely return for the VII portfolio is 1,039,000.

The highest possible return for the Buy-and-Hold portfolio is $1,096,000. The best possible return for the VII portfolio is $1,612,000.

The lowest possible return for the Buy-and-Hold portfolio is $581,000. The lowest possible return for the VII portfolio is $667,000.

The Returns Sequence Affect

The calculator is reporting that the investor following the Valuation-Informed Indexing strategy may have a portfolio value at the end of 30 years of $1,612,000. Or he might only have a portfolio value at the end of 30 years of $667,000. That’s a difference of nearly one-million dollars! I am not going to be the one to tell you that the returns sequence that happens to pop up does not matter much when an unlucky sequence can bring you down to the tune of one-million smackers.

The same is so for the Buy-and-Hold investor. He may see a portfolio value at the end of 30 years of $1,096,000 or he may see a portfolio value at the end of 30 years of only $581,000. That’s a difference of nearly half of one-million dollars. We’re not talking small change here. Return sequences matter.

But wait.

I don’t make much of a fuss about return sequences in my writings. Why don’t I, given these amazing dollar values? Shouldn’t I be paying more attention to this aspect of the story?

Some investment factors can’t be controlled—and this is one of them

The returns sequence factor is a significant factor. You really do need to understand the concept to be an effective investor. It would be wrong of me to entirely ignore this factor. But the full truth here is that, while the dollar figures are huge, this is far from being the most important factor bearing on your long-term stock return.

There are two reasons.

One, you cannot control the returns sequence that happens to pop up. Returns sequences are determined by the emotional ups and downs of millions of other investors. You cannot control or predict those emotional ups and downs. If you could, I would place much more focus on this factor.

Given the realities that apply, I don’t think you should direct much mental energy to the task of thinking about this factor. A one-million dollar factor that you cannot control is a factor that makes a big difference on paper but that does not lend itself to much in the way of strategic thinking in the flesh-and-blood world.

Valuations: The Real Story

Two, you can control how the valuations factor plays out for you. What makes valuations so critical is that valuations also have a big dollar impact over the long-term but the valuations factor is one over which you can exert a good bit of positive influence.

Please remember that the only difference between the two scenarios examined was the way in which the investor responded to valuation swings. The Buy-and-Holder went with the same allocation at all times. The Valuation-Informed Indexer took price into consideration when setting his stock allocation. All other factors were the same for both investors.

In the worst-case scenario, the Valuation-Informed Indexer had a 30-year portfolio balance of nearly $100,000 more than the Buy-and-Holder.

In the best possible scenario, the Valuation-Informed Indexer had a 30-year portfolio balance of $500,000 more than the Buy-and-Holder.

In the most likely scenario, the Valuation-Informed Indexer had a 30-year portfolio balance of $250,000 more than the Buy-and-Holder.

The returns sequence that happens to pop up matters. Your willingness to adjust your stock allocation as needed in response to big price swings matters more.

Rob Bennett’s web site contains his article on saving for retirement and how not to impress your date. His bio is here. For background on the Big Fail of Buy-and-Hold and on the need to move to Valuation-Informed Indexing, please check out the “About” page at the “A Rich Life” blog.

Related Posts:

Long Retirements Don’t Cost Much More
Your Favorite Investing Expert is NOT Your Friend
Am I Crazy For Being Out of the Stock Market for 14 Years?
Most Stock Investors Are Gambling With Their Retirement Money
Risk-Free Stock Investing?
Three Factors that Affect Your Stock Return

Many times on this site I’ve advocated the idea of starting a new business as a side venture along with you job. Trying to juggle two business enterprises at once isn’t the easiest task but it provides certain undeniable advantages that can make it worth the effort. For example:

1. You’ll have a “cash flow”—the paycheck from your job—something you won’t have if you plunge into the new business full-time
2. You’ll have time to make mistakes because you’re job will have you covered when you do
3. You won’t have the pressure to generate an immediate living wage since you already have one
4. You’ll probably have health insurance through your employer
5. You’ll have a built-in safety net in case the business fails or you find out it isn’t for you

All of that is true, but as anyone who’s ever tried it knows, starting and running a business while holding a full-time job isn’t the easiest combination. How do you manage both without jeopardizing either?

1. Block out time for your business

If your job takes 40 hours per week (or 50+ when you factor in lunch and commuting) you’ll have to set up specific times to work on your business. You might block out 3-4 hours per day, with one or two hours early in the morning before work, two or three in the evening, then more on the weekends. Businesses require time and effort to build so you’ll have to be very disciplined in making the time that will be needed.

2. Maintain a clear separation between your job and your business

When you’re on your job you’ll need to be 100% about your job, but when you’re working on your business you’ll have to be 100% about your business. If you start working on your business while you’re at your job, you may put your job at risk, especially if it becomes a habit. Make sure it doesn’t, at least until you’re at a point where you’re ready to ratchet your business up to full-time.

3. Operate your business under an alias

I gave serious thought to this when I launched my blog in 2009, but since I was doing contract work at the time it wasn’t completely necessary. But here’s the thing, many employers are not so tolerant when their employees step into the business world—it makes them think you’ll give less than 100% to your job and that you may be preparing an exit strategy. A blogging friend was fired when his employer found out about his blog. If you do start a business, consider using an alias, or at least keeping your name off your website and out of your advertising.

4. Save your sick days for when your really sick

By running two ventures at once you’ll be truly “burning the candle at both ends”, and that can take a toll on your health. Save your sick days so you’ll have them when you really need them, rather than using them to buy extra time to work on your business.

5. Set a time frame for your business

Some people can work 60,70, 80, even 100 hours per week—but most of us can’t, at least not for very long. Set specific timelines for when you expect to reach important milestones so that doing double duty doesn’t seem so permanent. For example, if you want your business to earn enough for you to make it full-time, set a realistic goal as to when that will happen—say two years—that way you have a specific target to reach. There should be shorter term goals along the way so you can see your progress your way to the ultimate goal.

6. Be ready to pull back a bit on the job

This can mean refusing a promotion or out of town travel, or it could mean pulling back on being the office “go to guy/gal”. At the extreme, you could transfer into a less challenging job. Mostly, you’re going to downgrade your view of your job from a career to simply a job, which can free up your time and mental energy for your business. You only want to do this if you plan on making your business full-time and feel you have a better than even chance of making it happen.

7. Don’t use your employer’s computer (or wi-fi) for your business

Never use your employers computer to conduct your business, even if it’s just to check business emails from time to time. The system is owned by your employer and you have no right to privacy on it. I just heard of an employee who was fired for visiting a job board—he didn’t upload his resume or apply for a job—he just visited the site to check his salary range. The employer felt he was looking for a job. Imagine how your employer would feel knowing you have an entire business in operation?

Any computer activities related to your business should be on your own hardware and through a non-employer internet connection. If you have to, during lunch bring your laptop to a place with free wi-fi (like Starbucks) and handle any mid-day business activities there.

8. Don’t even talk about your business at your job

If you need to conduct your business in secret, don’t blow it with idle conversation at the water cooler. Loose lips sink ships!

9. Don’t talk about your job at your business

It’s best not to reveal that you also work a full-time job. Even though it’s more common then ever, many customers and clients may not be too comfortable doing business with someone who is “moonlighting”. This is another example of maintaining that separation between your job and your business—it goes both ways.

10. When it’s finally time to leave—don’t burn your bridges

When that blessed day comes that you can finally leave your job to make your business your full-time occupation, be sure to handle your exit gracefully. None of us know what life holds, so it’s best to assume that you may need a reference or even your old job back at some point in the future. Keep your departure friendly and cooperative, and do what you need to to keep the door open.
 

Ultimately, the ability to balance a new business with a job may come down to the type of business you’re looking to start more than anything else. Some businesses are easier to start and even maintain with a full-time job than others. If you’re looking for a business to blend in with your job, here are four that I’ve recommended on this site–two of which I’m doing myself:

blogging
freelance blog writing
online store
professional speaking

Have you ever tried to balance a new business with a full-time job? What advice would you recommend for someone who wants to try it?

Millions of people are going without health insurance coverage right now. Some are forced to go without it due to health conditions that render them uninsurable, or will cover them at such a high cost that they can’t afford it.

But health insurance can be expensive even for the healthiest among us, and many more are doing without for this reason. They’re taking a chance that nothing major will go wrong with them. While that may be doable when you’re young and healthy, the minute something goes wrong the whole situation changes.

Generally speaking, even lousy health insurance is better than none at all. Here are at least some of the reasons why.

ID card for hospital admission

One of the best reasons for having at least some kind of health insurance is for the identification (ID) card it provides. Hospitals can’t refuse to treat you if you show up in the emergency room, but having an ID card makes the whole process easier.

Like any other business, hospitals want to know how they’ll get paid for the services they provide. An ID card removes that question. It says you’re part of a plan and they’ll get paid at least something.

It also can eliminate a lot of paperwork. The insurance company has you on file, and that makes you “official” with the hospital.

Network discounts

Medical providers have at least two different price structures, their regular price, and another for network health plans they participate in. In order to participate in a network, the provider must discount its prices to members of the network. Each network has its own discount, so the amount of the discount will vary from one network to another.

The discounts can be substantial, ranging from 30% to 70% of the full price charged for a given procedure or therapy. If for example, you undergo treatment with a medical provider for $1,000, and the provider is in your network, and the network requires a 40% discount, you and your insurance company will only be responsible for $600, not $1,000.

That’s a substantial savings, and one you wouldn’t get if you had the same procedure done without a health insurance plan.

What if you have a high deductible, or catastrophic plan? You still get the discount. Let’s say you have an insurance plan with a $5,000 deductible that you haven’t met yet—a $1,000 procedure means you’ll have to pay out of pocket. Since you have the insurance coverage and the provider is in your network, they still have to discount the cost of the procedure, charging you only $600 rather than $1,000.

You’ll pay less for direct healthcare just for having insurance coverage, even if the insurance company doesn’t pay any part of the claim.

Coverage for the big stuff

Medical costs can easily exceed $10,000 for a relatively simple procedure, and $100,000 for anything remotely complex. While you might be able to cover expenses in the hundreds, or even a few thousand dollars, trying to handle major medical expenses can cause a financial disaster.

For this reason alone it’s worth having some sort of health insurance at least to cover the biggest medical situations. Even a policy with a $10,000 deductible—though you’d still be paying most of your medical costs out of pocket—would be worth it’s weight in gold on a single procedure that runs well above $10,000.

There are two factors with high deducible (“catastrophic”) health insurance plans that work in your favor. The first is cost. The higher the deductible, the lower the monthly premium, and the difference is substantial. As an example, a plan for a family of four with both parents age 40 and non-smokers and with a $2,000 deductible would be $424 per month with a major insurance carrier. But if the deductible is raised to $5,000, the premium falls to $271 per month. With a $10,000 deductible it drops to $197 per month.

The second factor is eligibility. Many people don’t have health insurance because they can’t qualify based on pre-existing health conditions. But many health insurers will provide coverage to the same people with a higher deductible. They consider this because the higher deductible means they’ll have to pay fewer claims. It doesn’t work in all cases, but it’s always worth a try.

Creating options

One of the biggest benefits to having health insurance is that it opens up options when a real medical problem develops. Simply put, if you have a serious medical situation and you don’t have any insurance, your treatment options are limited by the amount of your financial resources. With what healthcare costs today, those options will be exhausted pretty quickly.

With insurance coverage, even if it has a high deductible, you have treatment options you won’t have going it alone. In fact, the closer you get to your deductible, the greater your options will become. Once you hit your deductible—and let’s say it’s $10,000—you can actually increase your care level because your insurance company will handle most of the costs beyond that point.

Getting at least minimal health insurance coverage

Get into some kind of health insurance plan any way you can; as you can see there are benefits to having it even if it isn’t the level of coverage that you want or think it should be. No plan will ever be perfect, nor perfectly affordable. Look for a plan with a deductible high enough that you can afford the policy, even if that deductible is $10,000 or higher.

Many people are going without health insurance coverage because they can’t afford it. But maybe the better question is, can you afford to be without it? Even lousy health insurance can be better than none at all, and you can find that out pretty quickly with one major health claim.

What are you doing to manage the high cost of health insurance?

Related Posts:

What to do if You Absolutely Can’t Afford Heath Insurance
How to Take Control of Your Medical Bills
There IS Affordable Health Insurance IF You Know Where to Look
The Self-Employed Health Insurance Dilemma
How to Buy Health Insurance Without Paying Too Much
20 Part Time Jobs With Health Insurance

By Rob Bennett

We live in the greatest time in history to be stock investors. Why? Because it is so darn simple to a highly effective stock investor today.

In the days before index funds, investing was a complicated business. To do the job right, you had to study annual reports and Value Line and all sorts of other stuff to succeed. Not today. In the era of the index fund, there are three factors and three factors only that determine your stock return. Spend a tiny bit of time bringing yourself up to speed on those three, and you’re set for life.

Factor One: the likely long-term return for the index fund you invest in

You don’t want to invest in a fund that is going to provide poor long-term returns. The funds that provide strong long-term returns are so much more appealing!

I’m teasing. But there is a serious point to be made here. You really do want an index fund that is going to provide a strong long-term returns. The silly part in what I said above is the suggestion that it’s easy to know in advance which fund is going to provide a strong long-term return. Still, the full reality is — It IS pretty darn easy to know.

The S&P Index has been providing a long-term return of 6.5 percent real for 140 years. That’s a pretty darn strong indication that a return of something in that neighborhood is going to apply on a going-forward basis. Could it be that we have seen our best days and the return on a going-forward basis is going to be only 6 percent? Sure. Could it be that we are about to enter our golden age and that the return on a going-forward basis is going to be 7 percent? Sure.

Does it matter that much?

Invest in a broad U.S. index fund and you are going to earn something in the general neighborhood of 6.5 percent real. That tells you what you need to know. It’s a super return. So invest in a broad U.S. index fund.

You might do a bit better investing in an emerging markets fund. But guess what? You might not. You might do a bit worse. You might even do a lot worse. The U.S. economy is a mature and stable and yet also a dynamic economy. The 6.5 percent return is as close to a lock as you are going to get in this field. And it’s a return good enough to finance a middle-class retirement at a reasonable age. Stop asking questions. Invest in a broad U.S. index fund.

Okay, that one’s settled. There are still two more factors that affect your return that you need to take into consideration.

Factor Two: The PE10 Level

The most important factor is the valuation level (the P/E10 level) that applies on the day you purchase the fund. If you pay three times what the index fund is worth, the underlying business may generate enough earnings to support a 6 percent return but your return is only 2 percent. That won’t get you to a secure retirement in the time you have to get there.

The valuations factor is by far the most important of the three factors. The reason is that it is the only one of the three factors under your control. There’s nothing you can do to affect the productivity of the U.S. economy (the first factor) or the returns sequence that happens to pop up for you (the third factor). But you have the ability to change your stock allocation in response to big price changes and thereby get the valuations factor working to your advantage.

Factor Three: The returns sequence

The third factor that affects your stock return is the returns sequence that happens to pop up. I don’t discuss this factor nearly as much as I discuss the valuations factor because you cannot influence the returns sequence. But it is a significant factor and you do need to understand how it operates to increase or diminish your return.

When I tell people that long-term stock returns are predictable in the age of index funds, they often challenge me to give precise predictions. That I cannot do. The reason why is that, while the valuation level that applies when an index fund purchase is made tells us the range of possible returns that applies, the returns sequence determines the precise return and the returns sequence that will apply is not known in advance.

You can get a good idea for how the two factors interact by spending some time with The Stock-Return Predictor. The range of possible returns for an index fund purchase made today is 12 percentage points, the worst possibility being an annualized return of a negative 3.79 percent and the best being an annualized return of 8.21 percent. Yikes! That’s a big range! Maybe this business of predicting long-term returns doesn’t work so well after all.

Why it works

No, it works. You can cut that range in half by excluding the outlier possibilities on both the high and the low end. We can say that there’s an 80 percent chance that your return is going to be better than a negative 0.79 and an 80 percent chance that your return is going to be worse than 5.21. The range is now down to six points.

We can reduce it further by going out 20 years rather than 10 years. At 20 years out, there’s an 80 percent chance that your annualized return will be greater than 1.36 real and an 80 percent chance that it will be worse than 5.36 real. That’s a range of only 4 percentage points. A range that narrow gives us the ability to make remarkably precise return predictions.

The factor that determines which return in the range of possibilities will apply for you is the returns sequence. This is a luck factor—there is nothing you can do about it. So you are better off spending your time coming to understand valuations and how you need to change your allocation to keep your risk profile roughly constant. But you want to be aware of this factor so that you will understand why you obtained a return better or worse than the precisely most likely one, which of course turns up rarely.

Believe it or not, Rob Bennett thinks that saving for retirement is a bad idea. His bio is here. For background on the Big Fail of Buy-and-Hold and on the need to move to Valuation-Informed Indexing, please check out the “About” page at the “A Rich Life” blog.

Related Posts:

Long Retirements Don’t Cost Much More
Your Favorite Investing Expert is NOT Your Friend
Am I Crazy For Being Out of the Stock Market for 14 Years?
Most Stock Investors Are Gambling With Their Retirement Money
Risk-Free Stock Investing?
Why You MUST Change Your Stock Allocation from Time to Time

An online business is a real opportunity for the average person to take advantage of the combination of computers, the internet and globalization. With it, we’re able to participate in the much bigger global market, free from the constraints that are eliminating jobs and opportunities in more traditional businesses closer to home.

Even if you don’t have interest in having a full-time online business, I think that creating a part-time version as a side business offers an opportunity at increasing your income and, more importantly, creating multiple income streams that will leave you less dependent on your primary job.

Why is “going global” important?

Recessions are often local

I’ve always been of the opinion that many of our financial issues (on an individual level) come down to geography. Does that sound like an oversimplification?

At any given time, while one city or region is suffering economically, there are others around the nation and all over the world that are booming. Few of us are in a position to move to richer feeding grounds in an attempt to follow prosperity where ever it may lead. If you have family and roots and kids in school in your community leaving is not always an option.

An online business offers just such an opportunity. You can live in the area of your choice and earn your living largely from other regions. The economy in your home turf won’t matter as long as you can tap in to the prosperity of other regions.

An unlimited market

Large businesses, especially the big chains, often have traditional markets saturated. They invest a lot of money into those markets, and as they do they shut down opportunities for small businesses. But even with the big chains gobbling everything up, we can still eek out some business locally, but probably not enough to have a “successful” business.

If we go online however, we have a chance to get a little bit of business from many different markets. You won’t be able to succeed in business if all you could make in your community is $1,000 per year. But if you could make $1,000 in a hundred different markets you could make $100,000. That’s what an online business offers, at least potentially.

There’s been a major economic shift over the past 20 years: consumers are now all over the world and there’s more of them all the time. That means new markets. The big chains are chasing after that business too, but because markets become less uniform when you cross borders it’s not always as easy for them to reach them. That opens opportunities for the rest of us. The local market may be stagnant, but the other markets beyond are developing all the time.

Selling a niche products

You can’t go head-to-head with the big chains and think you can beat them at their own game. Not only do they have the resources to deliver products and services cheaper and faster than you can, but they have the name recognition that none of us small fries can ever achieve.

The solution is to find that unique product or service that the big chains won’t or can’t offer, or at least not offer well. With the market being enlarged by the web, that’s now more possible than it’s been in generations.

What kind of product or service should it be?

1. One that isn’t easily “automated”—if it can’t be automated, the chains don’t want any part of it
2. One that you have a lot of interest in
3. One that you have above average knowledge of
4. One where you have above average skills at
5. One that appeals to specific markets, not general markets (again, the big chains have the general markets cornered)
6. One that isn’t readily available to the average person

In three of the six items above I’ve bolded the word “you” and that’s not an accident. What you’re looking to sell is something that is your specialization, something where you’re creating added value. That can be difficult to identify if you’ve never thought about it, but it’s closely related to your passions. For me it’s writing, on this blog and as a paid writer on other sites. Find what it is you LOVE to do, then figure out how to monetize it.

Monetizing your business idea

Steve and Jennifer Chou turned their interest in wedding linens into an online business that earns them an income well into six-figures. I believe that it’s the uniqueness of their product that is the reason for their success. How many big box chains are selling what they’re selling? The Chou’s are doing it, and that means others can as well.

Steve is offering a course that can show you how to sell your product through an online store just the way he and Jennifer are. The best advice is from people who are already doing what it is you want to do, and since so few of us know anyone who is successfully running an online business, this could be a real opportunity not only to launch your own business, but also to fast forward past all of the rookie mistakes that come with an upstart venture.

If you’re serious about having an online business, you need to have a road map before you get started. Steve is offering that with his program.

The crack in the online business wall

A lot of people fail at running a business, but that can be especially true with online businesses. There are reasons for this.

Perhaps because the entire concept of online businesses is so new that the world is overrun with get-rich-quick-with-your-own-online-business hype. This is being peddled by marketers who are taking advantage of the wave of interest by selling the promise of online riches, not the reality of what an online business actually is.

The key word in online business is “business” and if you run it as anything less you’re doomed to fail. It’s never as easy as putting up a website and watching the cash roll in. That kind of come-on sells a lot of marketing programs but doesn’t make anybody rich.

Running on online business isn’t easy and it isn’t get-rich-quick. It involves work, creativity, sustained effort over a period of years and a willingness to overcome obstacles. It has to be approached with the seriousness and intensity that you would give to a business you would start in your own neighborhood. Approach it that way and you’ll have a fighting chance at making a living—but not necessarily getting rich—in a business that could change your own personal economy for the better.

Related Posts:

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There was controversial article out last week, How a Former Currency Strategist Went from $150K/Year to Serving Lattes at Starbucks (Yahoo! Finance), and it’s one of those stories that we all have an opinion on.

At age 38 this guy was working at an investment firm making $150,000 as a currency strategist (what ever that is!), and was living the good life complete with “$200 steak dinners”. Today, he has a $9.70 an hour job at Starbucks, the good life is gone, and he has had to pawn possessions and tap into his 401K plan just to survive.

Before we go passing judgment on this man, I think we first need to stop and consider that what happened to him could happen to any of us. I’ve said many times on this site that in today’s economy the loss of a job often means the loss of a career, and he is an example.

What’s most important for all of us is that we learn from his experience. In the past few years millions of people have had a similar experience, falling from a high income occupation to none at all. It’s the nature the economy in the 21st Century—employers are learning how to survive and grow with much smaller payrolls.

Preparation should be the takeaway, and the best time to prepare for any crisis is always before it happens; here are some suggestions…

Never assume this can’t happen to you

A lot of people will read this guy’s story and think either “this guy’s an idiot”, or “that could never happen to me!” I would argue that if you think either way you’re a prime candidate for going down the same path.

We’re never more confident than when we’re riding high—when everything is working well we can’t conceive that life will ever be any other way. But it can. The guy in the article knows that only too well—now.

Enjoy the prosperity you have, but remember ”To everything there is a season, A time for every purpose under heaven”—Ecclesiates 3:1. Will you be prepared if your season changes? Don’t bet it won’t.

No matter how much money you make always live beneath your means

It’s human nature to want a better life, and as you make more money you’re in a better position to give it to yourself. Prosperity is a blessing to be enjoyed, but it should never define your life or change who you are. Living beneath your means is the way to do this.

By spending less than you earn you accomplish two things:

1. You free up money to save for the future, and
2. You never fully “settle in” to your high income level

Each leaves you better prepared for the day the music stops. In a perfect world it never will—but this isn’t a perfect world.

Investigate health insurance options

The guy in the article works at Starbucks because they provide health insurance for part-time employees. Anyone who’s shopped for health insurance knows why he did this.

Here’s a newsflash: many of the “new jobs” being created today are “casual” (contract, part-time, temporary, etc) or in industries that don’t offer health insurance. Private plans can be expensive and hard to get if you have pre-existing conditions.

If you can’t get reasonably priced private coverage, part-time jobs are one way to get it. You can check out my post, 20 Part-time Jobs With Health Insurance as a starting point. And, yes, Starbucks is on the list.

Share some prosperity with those around you

There’s a widespread philosophy that the way to become successful is by keeping company with other successful people. There’s more than a grain of truth to that, but while you’re fraternizing with the high and mighty be aware that there are less fortunate people in your life as well, if only on the fringes. Don’t ignore them.

If you’ve been blessed with prosperity in your life, be purposeful about sharing it with others who haven’t. You can do this through organized charities of course, but you can also give direct help to those in need.

Never forget that you may one day be one of the people on the receiving end of someone else’s generosity. How would you want prosperous people to respond to you in your own time of need? In the Bible we’re told “For everyone to whom much is given, from him much will be required”—Luke 12:48. By blessing others in their time of need they may one day bless you.

Look into career alternatives

Even though you may love your job, consider and investigate alternatives. It will be far easier to do this when you don’t have the income concerns that come with the loss of a job. Also, it may take time to gear up for a new career—you may need to develop a whole new set of contacts, do some deep research, get training or even earn certain credentials. All of those are best done while you still have a paycheck.

Start your own business

This can be the single best step you take if only because you can probably start and grow your business while you’re still on your job. If you lose your job, you won’t have to transition into your business, it will already be there waiting for you. In the meantime you’re earning extra money and have an exit strategy if the day comes when you feel like firing your employer.

Some businesses are better in the side business-to-full-time transition than others, including blog writing and online stores. Both cost little to start and don’t require a bricks-and-mortar type set-up. There are all kinds of possibilities here, but it’s best to get them started before a layoff forces your hand.

Network outside your career field

If you’re an established career person, you probably have a fairly large network of contacts in your own field. Here’s a radical direction: try establishing a network of business contacts outside your career field.

Here’s the thing, if you’re subject to a layoff, chances are high that it’s because of a general layoff in your industry. You don’t want your network to be filled with people who are going after the same jobs you are. Better to have one or more networks in different career fields, or even in some in entrepreneurial circles. If you experience a full blown career crisis—of the laid-off/can’t-get-back-in variety—your in-career network may be no use to you.

Being part of networks in different fields will be an enormous advantage if you need to make a career change. Start networking now with people who are working in another career field you might want to switch to, or a business you’re interested in starting. The idea is to create momentum before you need to.

The world looks different when you’re on the outside of a long time career; you’re success or failure may very well hinge on how many people you know in completely different fields.

Have you experienced a career crisis? What advice would you give to someone who’s in one now, or is well-employed and doesn’t think it can happen to them?

Related Posts:

What to do When Your Unemployed Long-Term
Struggling on a Six Figure Income
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How Blogging Solved My Mid-Life Career Crisis
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How To Become a Part-Time Entrepreneur

By Rob Bennett

I’ve seen a number of articles in recent years arguing that middle-class people need to continue working in retirement. The argument that is often made is that we live longer than we did in the days when age 65 became the conventional retirement age. If we are going to live longer, we cannot expect our retirements to survive until death unless we are willing to work through retirement, the thinking goes.

No. The logic here does not follow.

It IS true that adding some income from work to your retirement plan in the early years makes a huge difference. So adopting a plan to work in the early years of retirement makes a lot of sense for a lot of people. If you don’t have enough saved by the time you want to retire, the best way to cover the shortfall is to agree to work during the first ten years of retirement or so.

Why saving more doesn’t necessarily make retirement assets last longer

The point that I am objecting to is the idea that you need to add a lot of cash to your retirement plan if you expect it to last not until age 75 but to age 85 or 90 or 95.

There’s a counter-intuitive dynamic at work here. Because of the compounding effect, some stages of retirement matter a great deal more than others. You don’t want to suffer losses in the early years. That’s why it is so important to take valuations into account when putting together a retirement plan. Price crashes always come at times of high prices and a price crash experienced in the first ten years has a devastating effect.

Conversely, reducing the amount you need to withdraw during the first ten years by taking on a part-time job has a very big positive effect.

The first 10 years of retirement are the key

However, stretching the retirement out another 10 or 15 years costs a lot less than you would expect. Once you get past that 10 year hurdle during which you need to avoid crashes, you are pretty much on your way.

I’ll enter some numbers into the Retirement Risk Evaluator and the Investment Strategy Tester to try to give you a sense of how these two factors influence your chances of enjoying a successful retirement.

The P/E10 level today is 23. Say that you were turning 65 next week, had a portfolio value of $1 million, a stock allocation of 60 percent, were confident that you could earn 2 percent real in assets not invested in stocks and wanted to preserve at least 50 percent of your portfolio value at death to pass it on to heirs or charities. Say also that you need $50,000 to live on, a 5 percent withdrawal. The Risk Evaluator tells us your odds of meeting your goals.

This retirement plan is doomed!

The Risk Evaluator tells us that a withdrawal rate of 4.7 percent has only a 20 percent chance of surviving 30 years (which would bring you to age 95). This plan will not fly. Back to the drawing board!

A post-retirement part-time job to the rescue

Now let’s retain all the old assumptions except for the annual withdrawal, assuming that you will work at a part-time job paying $800 per month ($10,000 per year) for the first 10 years of retirement. The Risk Evaluator does not permit me to make changes in the withdrawal assumption during the course of the retirement, so I plugged these numbers into the Strategy Tester.

It tells me that the most likely portfolio value at the end of 30 years for the plan calling for a $50,000 withdrawal in each year is $542,673. That means that there is almost a 50 percent chance that the goal of having the portfolio retain 50 percent of its real value at death will not be met.

But change the withdrawal number to $40,000 only for the first ten years (leaving it at $50,000 for the remaining years) and the most likely 30-year value jumps to $872,904. In this scenario, there is only a 20 percent chance that the Year 30 value of the portfolio will be less than $631,157. Success!

The long-term effect of less in withdrawals in the first 10 years

Please note that by adding $100,000 in contributions to the plan ($10,000 per year for each of the first 10 years of retirement), you increased the most likely Year 30 value by more than $300,000. The first ten years of retirement are the years that matter most!

Say that you were to die at age 85 rather than at age 95? Would that make much of a difference?

It would not. The most likely Year 30 value for the portfolio in which you withdrawal $50,000 in every year is $614,741 at the end of 20 years, only about $70,000 higher than the number that applies at the end of 30 years. The most likely Year 30 value for the portfolio in which you withdrawal $40,000 for three first 10 years and $50,000 for the remaining years is $798,355, only about $75,000 more than the number that applies in Year 30.

Planning to work during retirement to lower the size of the withdrawals you make in the early years makes sense. Planning to work during retirement to cover the possibility that you will live longer than you expect does not have as much of an impact as you expect.

The first ten years of retirement are the critical years. Stretching out a retirement that does well for the first ten years is not too difficult.

Rob Bennett has written about what really matters most to the success of a money management strategy. His bio is here. For background on the Big Fail of Buy-and-Hold and on the need to move to Valuation-Informed Indexing, please check out the “About” page at the “A Rich Life” blog.

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Can we be completely honest about something? We all deal with a lot of different businesses, but it’s only when we have a bad experience with one that we ever say anything substantial about them. And at that point, of course, what we say is completely negative.

There are a number of companies I do business with and some of them are actually excellent businesses to work with. One of these companies is AutoZone, the auto parts supply company.

I’ve been an AutoZone customer for several years. My wife and I have two older cars, and as we all know, the older a car gets the more repairs it needs. AutoZone has been like a “partner” for us, helping us to keep our debt-free cars a few years longer at lower cost.

Saving on car parts compared to parts at repair shops

Here’s something I’ve learned from working with independent mechanics and a little do-it-yourself—full service repair shops charge two to three times the actual cost of the parts they put into your car.

The cost of a part that a repair shop would charge $250 for—PLUS labor, taxes and various sundry charges related to auto repair—can be purchased at a parts store like AutoZone for around $100. That’s huge and a real incentive to find less expensive ways to repair your car!

But if that isn’t enough…

Free computer diagnostics

You’ve undoubtedly seen those infomercials hawking CarMD and other computer diagnostic tools—they charge well over $100 for those. That can seem like a real deal when you consider that full service repair shops and dealer mechanics will charge $100 to $150 for the same service. That’s just to tell you what’s wrong with your car—they haven’t fixed anything yet.

But you can get a similar service from AutoZone at no charge. And just as important, they’ll interpret the diagnostics for you and tell you what parts you need to fix the car. All you have to do is bring your car to one of their stores, they hook up the diagnostic tool, then give you a print out of the findings.

There are at least two ways this service alone can save you a ton of money:

1. Knowing what’s wrong with your car gives you more options, including the option to fix it yourself
2. Knowing what’s wrong with your car and what’s needed to fix it gives you a stronger position in dealing with a mechanic. You’ll not only know what’s wrong but you’ll also know what parts are needed—and what parts aren’t!

Knowledgeable staff makes a different

I’ve learned a couple of things about car repairs over the years; one is that no one is an expert in all cars or in all car repairs. The other is that you can almost always find less expensive ways to fix your car if you get out and talk to people who are knowledgeable about cars. I’ve managed to form what I loosely call my “panel of car experts”. This is a group of friends, mechanics and supply sources who I turn to in a moment of automotive need.

The carpenters saying is “measure twice and cut once”, but this is invaluable advice when it comes to car repairs too. When ever we have a problem with one of the cars I discuss the problem with each of my panel of experts to try to get a consensus before spending any money. One of the “experts” on my panel are the staff at AutoZone. And yes, there’s always a less expensive way to fix the car.

Customer service that’s second to none

Many companies are pretty good at what they do. But the best evidence of a great company is what they do when something goes wrong. Whether it’s an individual or a business, we all make mistakes—that’s human nature. What makes a person or business standout however is the follow up—what they do to make right what went wrong.

A few weeks ago I ordered a specialized part from AutoZone that had to be shipped from an outside location. I was given an arrival time of 3pm on a Friday–perfect, I’ll get it to my mechanic and have the car back by Saturday afternoon. But Friday came and the part didn’t. Saturday, same thing–Sunday, ditto. We’re now running into the new work week and we need a car. Not knowing when the part would arrive we rented a car for two days in the hope that the part would come in on Monday and we’d have the car back by Tuesday.

As hoped, the part did come in on Monday (it had been shipped to the wrong store). I asked the store staff if I could be reimbursed for the car rental–it was the shipping delay that forced us to need a rental–and they said that corporate would have to handle it.

I sent an email to AutoZone’s customer service department, and a week later they got back to me with the name and phone number of the regional office; I left a voice mail message, and the next day the local district manager called. She apologized for the inconvenience, thanked me for being a loyal customer, and told me that I could pick up the reimbursement at the local store the next morning!

Mistakes get made in business all the time; the companies I want to do business with aren’t the ones who don’t make any mistakes, they’re the ones who make good on them when they happen. Nothing breeds more confidence in a customer than knowing that a company will make good on a mistake!

Life is complicated enough–it helps to know that some of the companies I deal with have my back when something goes wrong. AutoZone is one of those companies and I’ll be a customer for life and will recommend them to anyone I know.

This article is NOT an advertisement for AutoZone nor have I been compensated by the company in any way. This is just me writing about the positive experiences I’ve had in dealing with the company for the past several years.

We all like to complain when companies mess up, but are there any companies you work with who have gone above and beyond to make it right and won your business in the process?

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When you think about having your own business do you think a lot or a little about getting rich? I think it’s pretty common for people to think of being self-employed as a way to get rich, but how important is it as a motivating factor?

The reality of self-employment

Some people DO get rich from running their own businesses—but then again some people get rich from working for large companies. Some get rich from playing the stock market, or investing in real estate. And a few—a very few—get rich buying lottery tickets.

What’s the point? Some people get rich—period. The fact that some people get rich from their businesses isn’t even close to a guarantee of any kind. Having your own business does not mean getting rich!

The failure rate for new businesses is astronomical. I’d like to quote some numbers for you from some authoritative sources, but what I’ve found is that the numbers on business failure are all over the map. On the low end, some sources say 50% fail in the first year—on the high side others say 90%–it’s hard to say definitively, but it is an uncomfortably high statistic what ever it is.

Am I trying to say that you shouldn’t waste your time starting your own business? Not at all. But what I am saying is that if you do, you need to go into it with the proper expectations. If you go in thinking you’ll get rich, and that having your own business is all about getting rich, you’re almost certainly doomed to fail no matter what you try.

Better reasons to be self-employed

Many of the best reasons to have your own business actually have little to do with money. And most, I think, are better motivators than money.

This is hardly an all-inclusive list, but it’s a solid start:

1. You work better on your own and feel trapped in an organization
2. You want more control over your career
3. Your skill set lends itself well to self-employment
4. You have a business idea you’re passionate about and want to take it as far as you can
5. You want a better blend of work and personal life
6. You’re stuck on the career ladder and feel certain you can do better
7. You’re creative and need room to grow that side of you
8. You’re one of the leaders in your company—a “go to” person
9. You have marketable talents you don’t/can’t use on your job
10. You have a talent for developing new business sources that you’d rather use in your own business than working for someone else
11. The challenge of the unknown excites you
12. You’re passionate about your work but the people you work with aren’t

In and of themselves, no one of these will come close to guarantying self-employment success—any more than wanting to get rich will. But having a combination of several could keep you interested in your business even if the business wasn’t making you rich.

The point is, you need something more than money alone to motivate you to make your business a success.

My thoughts on getting rich with a business

While I think a large dose of human nature plays a part, I admit that I do think about getting rich—from time to time. But it never lasts. Getting rich was never the reason for having my own business. Personal freedom, self-determination and the chance to be creative are way out in front on the motivation meter.

I don’t know that it’s even possible to plan and start a business that will make you rich. You have to deal with competition, changing market tastes, changing technology and a host of other complications that make planning a complete crap shoot. The fact is, some people will become wealthy from their businesses, but the vast majority won’t. Since most people plan on becoming wealthy from their businesses, the fact that a few actually do and then tell the story of how their plans made it happen can become gospel to the wannabe’s.

But here’s something that I think is even more important…if getting rich is the main reason you start a business—or even become self-employed at all—what will happen if you aren’t rich after a year, five years or even ten years? If getting rich is what motivates you you’ll almost certainly give up on what could be a solid business, one that fills a lot of other very important motivations in your life.

Starting a business requires a lot of work, an enormous amount of patience, more work, a willingness to roll with the punches, a strong degree of creativity and still more work—yes I’m trying to make a serious point about that work thing! There have to be strong personal reasons that drive you to stay the course even if you aren’t making a fortune.

What has or would motivate you to start your own business? Is it the prospect of getting rich? Or is it something else?

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