I have been doing a lot of thinking about family finance and especially the financial relationship between a husband and wife. I do not have all of the answers to solve every problem in this area, but I thought I would share just a few thoughts:

Family finance is about priorities. Both the husband and the wife should contribute to these priorities. It is our money, regardless of who may have directly earned it. My paycheck might be bigger, but Mrs. Stew does a whole lot of things that allow me to do the job for which I am paid.

I am not a fan of “his and hers” money or “his and hers” purchases. All money belongs to the family and all purchases need to be according to the priorities set by that family.

Different areas of financial responsibilities are certainly appropriate. When we were first married, my wife took care of almost all areas of our finances – food, clothing, utility bills and the rest. That did not work out for various reason. Now I take care of monitoring our bank accounts and paying regular bills. Mrs. Stew does a good job caring for the grocery and clothing budget items.

I am more likely to make a major purchase without consulting my wife. Not a good idea. Mrs. Stew is far more likely to consult me if the positions are reversed.

It is sometimes difficult for me to grasp the financial priorities favored by my wife. I think that we could spend more for things that she thinks are important.

A little walking around or “funny” money for each spouse is a good idea.

Open and honest is best.

When one spouse spends money in a way that does not reflect the priorities of the family, it allows the other spouse to rationalize expenditures that do not fit the plan. This can be the catalyst for friction. “Well, you spent money on ________ , so I can spend money on ________ and there is nothing you can do about it!”

Expensive hobbies can present a huge financial problem in a marriage. Hunting, cars, gambling, golf, etc. can place unneeded financial strain on a marriage. A good rule of thumb might be that each spouse is allowed to spend the same amount of money on a hobby. For instance, I gave up golf when I got married. I would love to play again someday, but not until I can afford to bring my wife along!

If both spouses are doing their best to support the financial priorities of the household, then money can never drive those spouses apart.

Hopefully there is a nugget or two here that you can use . . .

Article by Stew

Photo by makelessnoise

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Wikipedia defines a vice as a practice or a habit considered immoral, depraved, and/or degrading in the associated society. In more minor usage, vice can refer to a fault, a defect, an infirmity or merely a bad habit.

Recently, I spent some time thinking about how much money I spend on things that I really do not need – not necessarily things that make life easier – but rather things that are simply a habit, a pleasure or a waste of time. I am not going to exactly reveal my particular “vices”, but I think it is a good idea once in a while to take stock of the little money trickles in our budget. You know the holes that allow a few bucks to slip through during the course of a month? Some of these items might even have a legitimate place in our lives, but we all must consider the cost.

• Coffee: $.50 a day   $15.00 a month   $180 a year (if you make it at home)
• Cigarettes: $4.50 a day   $135 a month   $1,620 a year (pack a day)
• Alcohol: $10.00 a week   $40 a month   $480 a year (conservatively)
• Soda: $4.00 a week   $16.00 a month   $192 a year (two cans a day from the grocery store)
• Cable: $55 a month   $660 a year (low end package)
• Gambling: $250 in Vegas   $100 year in lottery tickets   $500 ($10 a week in your home game)
• Cigars: $6 a week   $24 a month   $288 a year (really cheap cigars)
• Golf: the sky is the limit . . .
• Marijuana: $15 a week   $60 a month   $720 a year
• Eating out: $50 a week   $200 a month   $2,400 a year
• Spectator Sports: $150 a month   $1,800 a year
• Tattoos:   $100 a year
• Shoes:   $50 a week   $600 a year

Okay, obviously some of these may or may not qualify as vices, but we could probably find a way to do without every item on this list. Pick out your particular weaknesses, add up the yearly cost and then compare that sum to your monthly budget, your typical paycheck or some other legitimate expense that is a part of life for you. Then ask yourself if it is worth it.

For some of us, eliminating a vice or two could have the effect of a five or ten percent raise. Now you can make an informed decision about whether the pleasure derived from that vice is worth the cost.

Article by Stew

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Many people in today’s economy are struggling to stay afloat. They are working to rein in their spending and get their finances under control, but when they see the amount of debt they have, or the 0 balance in their savings or retirement accounts they feel overwhelmed. The good news is that regardless of how big of a challenge your getting control is for you, you can do it. Doing so actually isn’t that hard, but it will take time. Here’s how to get control of your finances in a single day:

Analyze your spending

The first thing you’ll need to do is analyze your current spending. Unless you understand where your money is coming from and going, you can’t control money. Login to your online banking and begin analyzing each and every expense. If you made a cash withdrawal, try to remember what you used that money for and make a note of it. So for example, if your transaction says “Food Lion $200.00″, than that’s groceries. While you’re doing this, I should also note expenses that are what’s called in the financial world “discretionary”. These are expenses you can do without. Expenses that come to mind are: Starbucks coffee, eating out, movies, etc.

If you don’t use online banking (you should btw) or don’t have a bank statement and don’t have this information available, than what you’ll need to do is start writing down your daily expenses. Do so for 30 days then come back here and pick up at the next section: creating a budget.

Create a budget

I know, many of you are saying: Oh no, not a budget! I promise a budget is a great thing and contrary to popular belief a budget doesn’t control you. Remember you create the budget, so technically you are controlling yourself.

For this exercise, we’re going to create a very simple paper budget for next month. If you want to use a spreadsheet, check out my persona Excel budget spreadsheet. If you prefer using a software package, I highly recommend (and use) You Need a Budget. Again though, for now let’s just use a simple sheet of paper.

At the top, write “Budget for <>”. So let’s assume it’s the end of July, you’re budget would read: “Budget for August”. Below that, write: “Income”. Under income, write down each income source and then to the right enter the amount of the income. For many there will only be one or two lines here. Here’s an example for a couple that works two jobs:

Income
Ford Motor Company $3000.00
Cracker Barrel $2000.00

Total: $5000.00

I suggest listing take-home pay, after taxes and all other expenses for your first budget, it just makes things easier.  After you get used to the concept you can list pre-taxes and include all of the other items removed from your paycheck as expenses.  But skip this for now.

Now we’ll list our expenses.  Here’s where you’ll use the analysis you did on your prior months spending.  Under expenses I want you to put a category for each and every dollar you plan to spend and Miscellaneous isn’t allowed.  You have to put each and every dollar of your income into a real category and you’ll use your past months spending to help you do that.  Also use this exercise as a time to trim expenses.  So if you spent $30.00 on Starbucks coffee last month and don’t want to next month, then put that $30.00 in another category, preferably savings or debt payment.  Here’s a simple example:

Expenses:

Mortgage: $1500.00
Groceries: $500.00
Eating out: $100.00
Car payment: $300.00
Electric bill: $100.00
Water bill: $30.00
Ladies night out: $60.00
Cell phone: $50.00
Credit Card 1: $200.00
Credit Card 2: $200.00
Savings: $1960.00

Total Expenses: $5000.00

Balance: $0

If you balance isn’t $0, make it $0. Remember, every dollar has a home. Now, if your balance is negative, you’re spending more than you earn, a big problem in today’s world. You’ll need to trim some expenses. You can’t spend more than you earn. That’s a big golden rule of personal finance.

Now that you have a brand new $0 based budget, go grab a soda or a nice glass of tea and take a break. You just made a huge accomplishment, you created a budget! Creating it’s the easy the part though, following it is the hard part.

Next month you’re going to track your spending, and when you reach a budget amount for a spending category, you’re going to stop spending. If you can’t stop spending in that category, than you have to pull the money from another category. Don’t be discouraged, your first budget won’t be 100% correct, you’ll have to adjust and that’s normal. Just use what your learned for your next month’s budget.

Establish an emergency fund

This step is really important. One of the biggest budget busters is unexpected expenses such as: the car breaking down, problems with your house, unexpected medical situations, etc. The way you’re going to keep from using credit cards to handle these situations is to create an emergency fund. An emergency fund is an account that’s easy to access and contains money you’ll use for emergencies only! The amount you should have in this account really varies, but I’d recommend starting with $1000.00. You can always adjust later.

If you have $1000.00 in savings already, than move this info your emergency fund. If not, you’ll need to start saving it, so head back to our previous step and add in “Emergency fund savings” under Expenses and put a number.

Your emergency fund should be separate from your regular money, but easy enough to access that you can quickly get to it. I have my emergency fund in a separate checking account and separate bank from my regular checking. Doing so gives me a debit card I can use for emergencies. Be disciplined though…an eating out, that TV on sale, etc aren’t emergencies and don’t abuse your emergency account. Use it for true emergencies only.

Set-up your debt snowball

If you don’t have any debt, you can skip this section. A debt snowball is way of tracking and accelerating your debt payoff. You can read all about the details of creating one in my article: Get out of debt. A debt snowball is an very simple but incredibly powerful way of kicking your debt right out the door.

Be Diligent

Now that all of the tools are in place to control and manage your finances, here’s were you really have to be careful. All of these concepts and tools only work if you manage yourself. If you aren’t 100% committed to making this all happen, it won’t. Be diligent and watch yourself. Recognize if you’re falling back into old habits of impulse spending. If you even say to yourself once “Oh, it’s ok to skip the budget this month” or “Opps, that category was too low, oh well”…SOUND THE ALARMS!

As humans we are creatures of habit, and unfortunately sometimes those are bad habits. In order to get control of your finances, you’re going to have to establish new habits, which takes time and discipline. Don’t let those bad habits win. Keep focused on the big picture and the destination. Don’t let things sidetrack you. Remember, like anything else in life, your finances are a journey. Just keep heading towards the end goal.

Oh! Congrats on getting control of your finances! That wasn’t so bad huh?

author: Larry (this was his last post… and gift!)

Photo by: Robbert van der Steeg

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I’m sure it’s happened to you.  A birthday, holiday, or special occasion is coming up for someone in your life, but you have no clue what to get them.  For all but the closest of my family members this happens to be frequently.  It’s even worse for my parents and in-laws as they generally have all of the things they need or want that are within the price range I can afford.  I try to look for things they want and wouldn’t normally purchase for themselves, but that’s tough.  So many times I resort to gift cards.

Why Gift cards vs. Cash?

I fairly recently purchased a gift card for my Dad for Father’s Day and on the way home I began considering why I purchased a gift card rather than just giving him cash.  I mean on the surface a gift card isn’t near as convenient or flexible as cash.  Here are a few other things I began to consider as well:

• Giftcards cost money, cash doesn’t - Hidden in small print surrounding your the gift card is the details on the fee.  Generally they are just a few dollars and frankly I don’t have an issue with someone getting a service fee for providing the cards.  What did bug me though is that I’m paying for something that is just providing the same basic value as cash.  Why?
• Giftcards are limiting – I generally purchase Visa, MasterCard or American Express gift cards.  I’m not a big fan of buying a gift card for  particular store or restaurant as they are limiting.  What if the person I am purchasing the gift card for doesn’t like that store or restaurant.  What if they can’t find what they want at that store?  Their stuck, unless they utilize one of the gift card exchange websites.  I prefer to use the Visa, MasterCard or American Express gift cards as they can be used most anywhere.  But still, what if they want to but something that’s cash only?  We’ve found many places here in the mountains that only take cash.
• Giftcards are more personal - Technically they aren’t, but they feel more personal for some reason.  Why is that?  Why does a pretty little plastic card make it feel more valuable and important than cash?  For some reason, society has made us feel like cash is an impersonal gift, but gift cards aren’t.  That bugs me.  I remember as a kid the best gift anybody could give me was cash.  I loved the fact that I could take that cash and buy what I wanted.  Particularly things I wanted that nobody else would really know what to buy: a particular model car, or that particular model train engine I had been wanted to buy (not the engine without the dynamic brakes but the one with them).

So how do you feel about gift cards?  Why not just give cash?  Is it really less personal, and if so why?  I think from now on instead of gift cards, I’m getting people what I would want to receive, and that’s cash.

author: Larry

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I have been a customer of ING Direct for several years now and although there are other banks that are offering higher interest rates, I will always keep the majority of my savings money there. I know that many people like ING’s Electric Orange checking account, but I personally do not use it. I prefer to use a local, brick and mortar bank for checking.

Here is what I like most about ING Direct: sub accounts. I currently have seven different sub accounts as a part of my regular savings account at ING Direct.  Here is how I use the sub account feature at ING Direct:

Big picture

I can see the account number, balance, and available balance of all of my accounts immediately after log in. No clicking to other pages, no “too much information”. Just the balance and the name of that particular account.

Minor Accounts

Three of my sub accounts are for each of my children. Since my children are fairly young, they do not need much money. I opened a savings account for them after they were born and I deposit birthday money, Christmas money and sometimes just a few dollars from my account. It is easy to see how much money each child has saved and they all accrue interest. I hope that this little stash will give them a “leg up” someday.

The single log in makes it easy for me to see what they have saved and move money around as necessary. The kids are not even aware that the money exists.

Other Income

Mrs. Stew and I have several other sources of income. She runs a home daycare and I earn outside cash through consulting and some by blogging. Sub accounts make it easy to track this income. If you have a home business, online businesses, lawn business or any other streams of income, ING sub accounts can help you account for income and expense. Sub accounts make filing self-employment taxes easier at the end of the year.

Direct deposit

Of course, ING makes it easy to have your pay check directly deposited into your account – most bank accounts will do this, but an additional feature is the ability to deposit income into the exact sub account that is tied to that income stream. For instance, if you use Pay Pal, you can tie multiple ING sub accounts to your pay pal account. If you are paid from job A and job B in the same day, you can transfer the exact amount to the corresponding sub account.

Another feature that I enjoy is the ability to initiate direct deposit from ING into any personal checking account. I take care of the bookkeeping for my wife’s income. I deposit all of her pay checks into her ING sub account and then she gets a monthly direct deposit from ING into her checking account to spend and take care of expenses.

How do I open a sub account?

Easy, once you have signed up for ING Direct, simply log in and click on “open an account”. Do not choose the “joint account” option, name the account appropriately and it will appear right next to your original account. It feels like opening a brand new separate account, but if you have already logged in, the account will be a sub account. It would be nice for them to have a “sub” account button.

The only annoying thing about the sub accounts is that I cannot seem to figure out how to delete them once they are in place – or even change the name. I no longer get income from a couple of sources, but I still have the sub accounts in my profile . . . I even named one of them incorrectly . . . annoying.

So label your accounts with care! Does anyone else use ING Direct sub accounts?  - Article by Stew

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Ever look at your bank account and ask “Where in the world did my money go?”  I do that often.  As a matter of fact, my wife and i were looking at our checking account balance the other night and asking that very same question.  Fortunately for us, we budget and I track all of our expenses, so the answer was only a double click away by opening up You Need a Budget.  Ours had gone to medical payments, as we still haven’t met our deductibles for the year yet.  Unfortunately there were all unplanned expenses (son cut his hand, sick child, and a sports physical we didn’t plan on needing so soon) so we had to tap the emergency fund, but that’s what it’s there for.

Because we control our money, ours was more of a rhetorical question, as we knew the answer.  It’s just shocking sometimes to see your account balance really high the day after payday, only to be practically empty a few days later once all of the bills are paid.  For most though, the question of “Where in the world did my money go?” isn’t rhetorical, people truly have no idea.

In many cases the answer to this question is found in the small purchases people make constantly.  It’s not the big purchases and expenses that “get’ya” it’s the little things.   People generally feel the big purchases are what causes them to ask this question, but it’s not.  Big purchases are usually planned.  While I know there are some that just get up head over the Best Buy to look around, and then come up 30 minutes later with a $2000 LCD TV, that’s not common…at least I hope not.  To find the answer to where you’re money is going, instead of focusing on the big purchases, look at the little things.

Keep a detailed record of spending

If you don’t’ do this already, track all of your spending for 30 days.  I’d suggest keeping a little slip of paper or small pad with you.  When you spend money on ANYTHING, write it down.  This includes small cash purchases such as gum, soda, cigarettes, lunch out…everything.  When you get home, put the data into a simple spreadsheet and associate a category with that expense. If you aren’t spreadsheet knowledgeable, don’t worry paper and pen will do just fine, you’ll just have to do some manual adding.

Do this for 30 days, then run some totals on the categories.  I guarantee you’ll be shocked by at least one category, if not a few.  We often have small money “leaks” that in the scheme of things seem incredibly small, but over time (30 days), that small expenses can add up.

My personal education on this topic came courtesy of Starbucks.  When I used to work in Downtown Charlotte, there was a Starbucks on the first floor of the building I worked in.  I would walk by it daily, and soon got into the habit of getting a coffee each morning.  Then all of the sudden, my team mates and I were heading down int he afternoon as well to take a coffee break.  At some point some months later, I was asking that question “Where in the world did my money go?”  I added up my coffee expenses and it was in excess of $50.00/month!  That coupled with a few other small things was crimping our monthly income by more than $150.00.  Whoa.

Review with your spouse

If you have a bad habit of spending and want to control yourself but are having trouble, try using your spouse as a sounding board.  I’m a spender…unfortunately my wife is as well, but much less so than I.  I’m much better than I used to be, but still struggle with it and most likely always will.  My wife and I have cap on our personal spending.  If either of us wants to buy something that we haven’t budgeted for in excess of $30.00, we have to discuss it with each other.  This isn’t an “approval” type thing, but more of a way of placing some checks and balances ourselves.

I cannot tell you the number of times I’ve come back to my wife with something I thought I needed, and how quickly she made me realize how silly the item was or how it would be a waste of money.  Now, in fairness there have been many times as well she’s agreed and I either went back and bought it, found it online for less money, or we decided to save for it.  That’s what I’m currently doing to purchase my Macbook Pro.  Saving.

Make a budget to curb and cap frivolous spending

Nothing curbs frivolous spending than a budget.  A budget is a plan and agreement on your spending.  The budget caps are set by you and keep you from making the mistake of spending more than you earn.  If you don’t have a budget in place, start one today.  It doesn’t matter if you have more money than you know what to do with, you still need a budget.  Even the richest corporations in the world run on budgets.  Why?  To control their money.  A budget allows you to control what happens to your money, regardless of how much you have.

Not sure how to create an follow a budget, read my article on creating and following a budget.  It’s easy.

Make changes to eliminate unnecessary spending

Now that you’ve tracked your spending, put a review process in place, and created a budget now it’s time to trim that unnecessary spending.  Look for areas I like to call “leaks” and see where you can plug them.  Buy coffee every morning at Starbucks?  Make your own at home.  Enjoy a few sodas during the day?  Buy them at the store on sale and bring them to work instead.  Eat lunch out everyday?  Pack your lunch instead.

Spend some time looking at each expense, and consider if you could do something to get the same value but with less money.  I guarantee you’ll find at least a few.  Habits are hard to change, but if you stick with it the changes will soon become habits.

author: Larry

Photo by: Unhindered by Talent

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Author: Mike

When we talk about personal finance, there are several rules of thumb that can help you build a solid financial plan. Here are a few numbers to remember when you want to improve your personal financial situation.

Aim for a Credit Score of 750

A credit score may vary from 300 to 900 but most people have a score between 600 and 800. A great credit score will open the doors to get better rates on:

- credit cards,

- insurance (car, home, life, etc),

- personal loans including car loans,

- lines of credit and

- mortgages.

In order to benefit from the best rates available due to a stellar credit rating, you must aim for a credit score over 750. How can you do that? Well, there is no magical ways to improve your credit score. Here are the 5 major things that impact your credit score:

- Credit history,

- Current level of indebtedness,

- Amount of time credit has been in use,

- Credit inquiries,

- Type of credit experience (i.e. number of loans, credit cards, lines of credit and mortgages; the more diversified the better).

100 minus your age to determine your asset allocation

This is a classic in financial planning circles. While this financial rule of thumbs won’t fit for every case, the basic principle remains: The older you are, the less money should be invested in equities.

Fixed income (like bonds, certificates of deposit) will provide stability in your investment portfolio. At retirement, the last thing you want is to see your nest egg losing a quarter of its value in a single year. Those who are retired and didn’t follow this rule of thumb suffered tremendously in 2008.

8,6%: Dow Jones Yield since 1930 (including the 2008 crash!)

As a financial planner, I usually tell my clients the stock market average return is about 9%. It is important to have a realistic yield expectation. This will allow you to build a stronger (and more reliable) retirement plan and will also avoid belief in the Maddoffs of this world who promise double digit annualized returns at all times. The truth is: there are no free lunches in finance!

Another word of caution; 8.6% over the past 78 years doesn’t include management fees. Therefore, if you buy mutual funds, you will have to pay, what we call, MERs (management fees). Make sure to ask your financial advisor what are the fees and how they impact your investments.

70% of you gross income should become your revenue at retirement

This is another great rule of thumb in financial planning used in creating a retirement plan. Most people carry several expenses related to working (transportation, specific clothing, eating out, etc.). Once  retired, you should not have these expenses anymore. You should also be close to paying off your mortgage (we all hope!). Accordingly, 70% of what you earn before you retire should be enough to support your new lifestyle.

Don’t make the mistake of decreasing this amount when you reach 70-75 thinking you will do less activities and be traveling less often. It is true that you won’t spend in activities but chances that your health expenses will increase. Keep the same level of income (adjusted to inflation) in your retirement plan.

10% of your income should be saved for your retirement

In order to respect your financial plan and meet 70% of your income at retirement, one should save 10% of his gross income and invest it. This should be enough to support your lifestyle at retirement while putting 10% aside won’t kill you once you have done a budget.

This financial rule of thumb will vary depending on your age (and the age you want to retire) and your risk tolerance (that will influence your investment yield). These topics will be covered later on.

The Rule of 72

This is a quick mathematical rule to calculate how many years it will take for your investment to double depending on its yield. For example, if you invest $10,000 at a steady yield of 6%, your initial investment will worth $20,000 in 12 years. You simply divide the number 72 by your expected yield, it tells you how many years it will take to double your investment. So when you get a CD at 3%, you will need… 24 years to double your investment!

25% of your gross income should be allocated to your mortgage/rent payment

This should be used as guidance for your budget when you are looking to buy a house or change apartments. Considering that you already have to save 10% of your income for retirement and pay taxes, taking an additional 25% of your revenue should be enough to provide shelter without jeopardizing your financial situation.

You still need money for food, transportation, utilities and don’t forget to put money aside for your children’s education! You can always exceed 25% for your house payment but be aware that you will have to sacrifice something else in order to pay for the house of your dreams.

I hope these financial rules of thumb will help! I am curious to know if you use any of them or if you use other personal finance rules of thumb?

Image source: Austin ampersand Zak

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I get many emails each month from people asking for financial help and advice.  A very common theme in these emails is something along the lines of: “I am very frugal and spend little to nothing, but still don’t have enough money to make ends meet“.  My reply?  You don’t have a spending problem, you have an income crisis. At some point you can only reduce expenses so far.  Once there you are faced with only one option: increasing your income.  Surprisingly, that may not be as hard as you think.

If you’re having an income crisis, here are just a few ideas to stir those creative juices for ways you can earn extra income:

Get a second job

Proverbs 10:4 says: “Lazy hands make a man poor, but diligent hands bring wealth.”   One of the best ways to get extra income is to get second job.  While it might make for long days, its a guaranteed way to increase your income.  With our current recession, part-time and second jobs can be a bit hard to find.  If you stay persistent there are people and companies hiring.  Look for companies that are doing well as a result of the recession: Discount stores, food industry, security, house and car repairs, personal care (Barbers, hairdressers, beauticians and cosmetologists).  These are just some of the job areas you can focus on.

Make sure that your second job won’t conflict with your primary job though, or you might be putting your primary job at risk.  Also, make sure you read through your primary jobs ethics or employment guidelines to insure they allow you to work a second job.  Some companies don’t or at least frown on it heavily.

Both parents work

While not an option I like, the bottom line is that if you are struggling to pay the bills and put food on the table the stay at home parent might just need to become a working parent.  Consider this option very carefully though and do so only if absolutely necessary.  I believe that having a stay at home parent makes a huge difference in your children.  Now, that isn’t to say children of working parents have issues, I just think having a stay at home parent is better for your children.

Also carefully consider the financial implications, as it may not be worth it either depending on the addition income.  A few things to consider and factor in are:

• Will you need another car?  Don’t forget to factor in the additional maintenance and gas expenses too.
• Cost of daycare and summer camps
• Will the new job require uniforms or nice clothing?

Side work

One of my favorite ways to earn extra income is by doing side work.  That’s exactly what I do with Gather Little by Little, my other blogs and Empty Cabin Media.  I’ve taken some things I really enjoy doing and turned them into side income.  I work my day job (and always give it number one priority) and then in the early mornings, evenings and weekends I work on writing and side jobs.

The only caution I’ll throw up on this option is be careful to not burn yourself out.  This is something I’ve struggled with a great deal recently as the workload at Empty Cabin Media has really increased.  I’ve found myself working way too much.  The trick is the pace and schedule the work.  I’ve also set dedicated times for doing side work, and I’m working diligently to avoid working weekends and dedicating them to my family. For example, by dedicated times are 5 – 7am, and 8 – 10pm Monday-Friday.  Of course sometimes that varies a little.

Find something that you enjoy doing, are good at, and is marketable and start promoting yourself.  For Empty Cabin Media, I just mentioned it in an article I wrote here on Gather Little by Little and began participating in a few web development forums and the next thing I knew I was getting 3-4 jobs a week!  The work has grown enough now to where I am actually subcontracting some of the work to keep up with the demand.

I know lots of people with very successful side businesses doing: website development, software development, handyman work, baking, catering, power washing, landscaping, lawn care…well you get the idea.  The opportunities are endless.

Passive income

Passive income is everyone’s dream.  Passive income is basically “Making money while you sleep”.  Passive income is income earned while you are doing nothing for the business.  Now, with that said finding true 100% passive income is next to impossible, as everything requires some level of investment to sustain it and grow it, but it is possible.  For me, Gather Little by Little is some level of passive income.  Even if I stopped writing today, I would continue to earn money through advertisements for a good while.  But, without new content and promotion, the traffic would slowly die off, as would the revenue.

There are lots of opportunities for passive income on the internet: Blogging, affiliate stores, eBay stores, product sales…the list goes on.  Do some research on passive income and you’ll be amazed at the opportunities available.

Readers, how do you earn extra money?  What creative ideas can you share with others who might be in an “income crisis”?  Add a comment!
Photo by: vår resa

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It has been a while since we talked about giving here at Gather Little by Little. The Bible speaks about the subject of money on many, many occasions. Each time that the subject is mentioned we learn a bit more of how God wants us to order our finances. It is a little bit funny, because almost every bit of advice that comes from the personal finance bloggers of today has root in Scripture. Even one of the most revolutionary personal finance ideas of the last ten years, the so-called “latte factor” is just a repackaging of an idea first proposed in the verse that inspired the name of this blog: “He who gathers money, little by little makes it grow.” Proverbs 13:11

Another key passage that contains some principles for giving is found in I Corinthians 16. Paul was planning to visit the Corinthian church soon. In the meantime, he asked them to gather money that he could collect and then transport to the church at Jerusalem. The Jerusalem church was experiencing a huge amount of persecution and as a result, they had become a poor church in terms of worldly wealth. Paul writes:

Now concerning the collection for the saints, as I directed the churches of Galatia, so do you also. On the first day of every week each one of you is to put aside and save, as he may prosper, so that no collections be made when I come. When I arrive, whomever you may approve, I will send them with letters to carry your gift to Jerusalem; and if it is fitting for me to go also, they will go with me. But I will come to you after I go through Macedonia, for I am going through Macedonia; and perhaps I will stay with you, or even spend the winter, so that you may send me on my way wherever I may go.

Here are some biblical principles regarding giving that we find in this passage:

Give where there is a need

The plight of the Jerusalem church was well-known throughout the other churches of that day. Those believers had a great need. In contrast, when this request was made, the Corinthian church was fairly well off. Paul was challenging the wealthier believers at Corinth to give to their needier brethren in Jerusalem.

Give Regularly

Paul suggests that those who desire to contribute give on the first day of the week. It is interesting that he did not say “bring a big gift when I arrive,” instead, he challenged them to give a small gift every week. He understood human nature and the temptation of that pile of money as well as the danger of procrastination. He knew that if he did not ask for a small, regular gift, some church members would have nothing to give when he arrived.

Have a plan

Paul encourages the church members to set an amount and a time when they could contribute to this cause. Our giving is not to be random and based on feelings, but rather it should be based on planning and knowledge. It is interesting also that Paul does not want the collection to be made after he arrives. I think that he did not want anyone to give out of a desire to impress the apostle. Also, he probably did not want his own personal ministry with the Corinthians to be affected by the size of any particular church member’s gift. He wanted to treat them all with the same respect and concern.

Give proportionately

Paul did not specify an amount – not even a percentage! He simply left it up to each individual to give a gift that was proportional to how God had prospered him. The size of your income should affect the amount of your giving. Again, the onus is on you to decide how much you should give. Comparisons to the gifts of others are irrelevant. Each believer was to consider his gift based on his own unique circumstance.

Full disclosure

This point is a little obscure, but Paul is careful to recognize the autonomy of the local church at Corinth in this matter. And while he was a man of great standing and great authority as an Apostle, he suggests that the Corinthians were free to send their own ambassador with the gift of money. There were many reasons for him to do this. For instance, the Corinthians might be afraid that they might not get “credit” for the gift from the Jerusalem chruch. Or Paul was recognizing that it was prudent to have several people in charge of the money both for safety’s sake and to stay above reproach. If more people were involved in the transfer, no one could accuse him of skimming. Another reason might have been that if a member of the Corinthian church made the journey with him, that person could return to Corinth with a first-hand account of how the money was spent and the blessing that it was to those in need.

How does your giving “measure up” to the principles in this passage?

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Start a blog

Contrary to what many say, blogs to make money.  If you obtain decent search engine traffic and establish a good reader base, they can actually earn a full-time revenue.  The trick to having a successful blog is finding a niche that you’re interested (and knowledgeable) on AND that people are interested in reading about.  A great way to find what people are interested in is by using Google Trends.  The other important part of building an online community and blog is to be authoritative but be personal.

If a blog is something you’re interested in, do your research and set one up from the beginning the right way.  If you aren’t sure how to get started, engage a professional blog consultant to help you.  The initial cost will payoff in the long run.

Start an online affiliate store

An affiliate store is different than a typical online store.  With an affiliate store, you don’t actual sell the merchandise or ship it, you just market it.  An affiliate store is a front-end to other online stores and when you refer your visitors to those stores and the visitors buy, you get paid for it.  Generally the amount is a % of the overall sale.  For example, one of my online stores sells MPG meters.  I discuss the products, write reviews, and offer links visitors can use to actually buy the products.  The actual sellers are Amazon.com and EBay, both of which have affiliate programs that pay a percentage of sale.  Now that gas prices are back down, my income is very small but last year when gas prices were high, I made a decent amount of money from the site.  This is just one of about 10 different affiliate marketing sites (online stores) I have, and between them they provide a decent passive income.

You can read all about how to start an online store by reading my article: Starting an online store.

Pay per click advertising

I’ll warn you, this is easy to set-up and start but in order to be successful and actually make money, it requires a great deal of time and knowledge.    It also requires a decent amount of up front money.  BUT with all this said, if you’re successful, it can be very lucrative and their are many people making a great deal of money doing this.

The best example of pay per click advertising is Google Adsense.  Advertisers pay Google to place these ads.  90% of the time these ads (when clicked) direct you an affiliate marketing site (or store) where the advertiser hopes you’ll make a purchase and they’ll get paid.  If done correctly and the ads convert well, the payback on the cost of these ads can be significant.

I tried PPC (Pay per click) advertising for a while, but didn’t care for it much.  I preferred blogging and setting up online stores.  If you are considering PPC advertising, I’ll highly recommend a training program called PPC Coach.  The program is run by a highly successful PPC marketer, and will teach you everything you need to know about how to be successful doing PPC marketing.

Build it and they will come

While that as a great line from a baseball movie, it does not apply to the world of internet sites.  Many people have the false idea that you can just build a website and people will automagically find it.  NOT TRUE.  Getting people to your site involves a great deal of marketing, social network involvement, and hard work.  Don’t underestimate the amount of work required, and don’t think that building a site is easy money.  For two years, I worked on average 10-12 hours a week here on Gather Little by Little alone.  That time included: writing articles, researching article topics, keeping the site updated, marketing, social media participation, participation in forums and about a million other little things.

The good news is that the fruits of your labor can be well worth it financially and emotionally.  Not sure how to start?  Don’t over think it, just do some research, read a few articles and start.  The worst thing you can do is hesitate.  Sure, you may fail but better to have tried and failed than to never have tried at all.  When you do fail, use what you’ve learned to make your next effort even better.

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