In today’s world, there are various opportunities that awaits each one of us. Some are risk takers, paving the way for their own entrepreneurial development, while some already have the idea and passion and just waiting for the right time. To be able to feature prominent business people in shows such as Manjit Minhas Dragons Den, these business tycoons had to bet on their gut feel and hope that things will work out. Here are some people who succeeded in their chosen businesses before the age of thirty:
As mentioned above, Minhas is now part of the reality show Dragons Den where aspiring business proprietors will present their product or idea to be able to gain investors and funding sources to jumpstart their dream business. Minhas was chosen as one of the approving ‘dragons’ or business investor because of how she was able to grow a humble company that she established with her brother, to a company that now exports thousands of spirits and brewed drinks to all parts of the world. Starting when she was just 19, Minhas and her brother were able to purchase the second oldest brewery in the United States only a few years in the business. It only proves that determination can lead you where you want to go.
Because our world is now defined by technology, Phan was able to utilize the internet to gain popularity and served as her investment in creating her own make up line. Michelle Phan started as a youtube star posting tutorials on how to apply make up. She used the popularity she received to start a business in line with cosmetics which was called Ipsy- it’s a subscription offer she started in 2012. Phan has also partnered with prominent makeup lines such as L’oreal. She is a living testimony that nothing is impossible- from posting videos and sharing your opinions, Phan, just age 27, is now worth millions because of her product line and Youtube channel.
Spiegel is a cofounder and currently the CEO of the behemoth social media platform snapchat. It is a photo-messaging app that has been able to amass a whopping 100million users. The business ventures of younger generation are mostly focused on apps and other technological advancements, and even if there are other much prominent platforms, Spiegel captured the preference of users hence the public patronized his app. Other giant companies on the online web tried to buy his app, but Spiegel did not give in. To this day, it’s still one of the top apps being used for the online community. The 24-year-old developer only proves and shows to us that even fun and games can be a source of income as long as you continue pushing boundaries and not setting limits for yourself.
There are various ways on how you can also become a business tycoon- first, you have to decide which sector of the market are you planning to invest on? A physical store, or try your luck with online transactions? Not all of us are programmers that have the capability to design and develop games, but this is to inspire you that everything is possible despite the trials and the constant nagging that you’re still too young. These business tycoons took their passions into a whole new level, and now they’re reaping the rewards of their hard work. We all have to start somewhere, and a good business man learns from his mistakes. Never be too afraid to fall, if it does happen, get up and start again.
My debt paying buddy Matt Jabs recently blogged about a challenge to “earn more money” being spear headed by his buddy Josh Gordon from The NonConformist Family. I have to be honest, I know little about Josh, and have not ever had any contact with him . But chances are if you’re a friend of Matt, your a good guy.
In Josh’s words:
The 1M21K is a 30 day challenge. During the space of one month, you will be equipped to earn an extra $1,000 by month end. Maybe the money goes into your pockets. Maybe you kick your debt square in the face. The choice is yours.
You’ll be successful if you’re already moving in the right direction. If you’re paying your bills on time, putting a little somethin’ somethin’ in your savings account once in a while. You’re doing all the right things, and just need an extra ‘mmph’ as the kids trot off to school. You’ll be successful if you’re willing to pour a little extra on this month. If you’re willing to carve a few more hours out of your schedule. Sweat a few extra buckets.
Furthermore from Matt’s post:
“The challenge begins September 1st, 2011 and costs only $67. You get 10 hours of ridiculously practical audio material, 12 killer guides / mini-ebooks stuffed with practical, applicable tips, and 4 tele-seminars covering the questions and hurdles that we’ll inevitably face. And, you’ll be hearing from peeps like Dan Miller, Justin Lukasavige, Pierce Marrs, Deb Ingino, Matt Jabs, and more.”
Addtional details can be found here. Do yourself a favor and take a look.
As you can see, its a pretty simple, challenge yourself to succeed!
Doing what works for me!
Personal finance is all about “doing what works for you”, and that’s why I have modified the timeline for myself.
First off, the month of September is on of my busiest timess at my day job, so I don’t think its practical for me to dive head into any new challenges during this time frame. I am keeping the September 1 start date but I am giving myself until Thanksgiving to accomplish the challenge. I am going on a vacation trip right after Thanksgiving so I figure that is a perfect time to have everything wrapped up.
Next I am increasing the amount of additional income I want to make/earn during my time frame. I am giving myself more time so why not up the ante in terms of what I hope to make/earn.
Matt has a solid list of suggests to earn extra money in his post. Give them a look!
What I am going to do:
I previously wrote about my experience signing up for Lending Club and now I am here to report my first Net Annualized Return (NAR). My first NAR came in at 10.87%. This is a result I am pretty happy with, but I know that it is going to come down as I have a couple loans below 10 percent that I have not received my first payment on the loan yet and thus are not included my current NAR calculation.
My initial strategy – start conservatively
My initial allocation is to have 80% of of my notes as Type A notes. Type A notes are from borrowers with a credit score of 714 or better and have an interest rate between 5.42% and 8.49% currently. I decided to invest the remaining 20% of my money in Type D notes in order to “juice up” my returns a bit. Type D notes are from borrowers with a credit score below 660, but they have an interest rate between 15.62% and 17.49%.
Another part of my strategy was to invest primarily in 36 month notes compared of 60 month notes. My thought process here is that my investing in shorter notes I will get more of my principal back with each payment and hopefully reduce my risk of default. I figure that a borrower who takes out a 36 month loan is more motivated to pay back their debts then a borrower of a 60 month note.
The last part of my conservative strategy was to limit my investment to $25 for each loan I invested in. The idea here was to keep any potential loses to a minimum. The way I see it, it is easy to blow $25 for a reasonable dinner for two, so why not take a chance making some money with that $25 instead.
What might change ?
As long as I don’t have any major default issues with my current batch of notes I will likely increase the risk I am taking over time. The first step I will probably take is to increase the number of 60 month notes that I invest in. Why? 60 month loans are currently paying interest rates that are at least 2.23% higher than 36 month notes.
Another step I may take is to switch my allocation out of the 80% Type A/20% Type D that I mentioned above to something along the like of a 60% Type A/20% Type B/ 20% Type D. Type B Notes have an interest between 9.99% and 11.99% from borrowers with a credit score between 685 and 713.
Per Wikipedia – Goal-setting ideally involves establishing specific, measurable, attainable,realistic and time-targeted objectives. Work on the goal-setting theory suggests that it can serve as an effective tool for making progress by ensuring that participants have a clear awareness of what they must do to achieve or help achieve an objective. On a personal level, the process of setting goals allows people to specify and then work towards their own objectives — most commonly financial or career-based goals.
I have decided to join the ranks of the bloggers that post updates of their financial situations. Many bloggers do it to be transparent and bottom line is that is a great reason, but it is not my main objective. I do feel that it is important to show you, the reader, that I do what I say I do, but my motivation for posting updates on my financial status is to help me ensure that my wife and I meet our goals.
When I developed our 2011 goals I made sure they were specific, measureable, attainable, realistic and time-targeted. These quarterly updates are my way of measuring my progress which will keep me on the path to achieve my goals.
Also by posting my goals and progress I hope that it encourages my family, friends, and readers to both encourage and hold me accountable to my goals.
One last thing, I have decided to take more of a “big picture” approach to my updates and accordingly my updates will lack the detail of other bloggers.
Now lets look at the progress I have made in achieving my goals.
During the last 3 months my wife and I saved $2,900 dollars. This puts us ahead of the pace we need to achieve our $6,500 goal this year. This is in part because we saved $2,000 for our tax return.
While preparing this update I noticed that I forgot to change my direct deposit for my savings account, so there is my first benefit of doing this update.
During the quarter we invested over $6,500. Once again, ahead of our yearly pace but we also had approximately $5,000 of employer contributions. Both my wife and I receive profit sharing contributions during this time frame, so this will be a good quarter for us until something changes with our work situations.
An update to our goals, we have decided to take $200 a month we were investing and focus it on paying down debt. My wife and I have decided that debt reduction is our number 1 priority for the rest of 2011.
During the past 3 months, my wife and I have paid off approximately $6,000 of debt. On top of our normal debt paying down we used $2,000 from our tax return to pay down additional debt.
I signed us up for Mint.com during March to help us track all expenditures. So far I like using Mint.com but I still have some work to do to get it to work the way I want it to. I also revisited our budget during this time frame to make sure everything was appropriate and make necessary changes. Once again this post is a great reminder of our goals and the work that we will need to do it achieve them.
Some progress was made in this area. No money has been made from my efforts here at Common Financial Cents but I knew that would be the case. My expectation is not to make any money from blogging for at least 6 months.
Thanks for reading, what do you do to make sure you achieve your goals?
I love saving money! But it hasn’t always been that way. I used to spend every dollar I made, and then some (UGH!)
What changed? God blessed me with a friend who helped challenge my views of personal finance. Matt was plugging along on his Debt Free Adventure. We met at church and had an instant connection. I loved his passion for personal finance. Probably his biggest influence on me was my realization that the best way to avoid future debt is to save money.
That was almost two years ago. My wife and I are currently saving by building our emergency fund and also are saving for vacations, home related expenses, and for our auto expenses. The more I save that happier I become with my life.
Now that I am a saver I want to share some great ways to save more money.
One of the best ways to start saving is to budget for it. A budget should be one of the first steps of any personal finance plan. Include the amount you want to save as an expense in your budget. Pay yourself first! Start small and build over time.
Make it automatic
Once you have budgeted the amount the amount you want to save, automate it. If you are working for an employer, they probably offer direct deposit, use this feature to save with every pay check. If your entreprenuer or your work doesn’t direct deposit set up automatic transfers via your bank.
Making savings automatic makes it a habit, before long you won’t even miss the money you are saving.
I am a big believer in segregating savings into the virtual buckets that have their own purpose. I have a checking accounting for paying bills and I have a savings account for each of my goals. I currently use ING Direct because they make it simple to open multiple accounts under one master account.
Increase over time
Over time increase the amount of money you save with every month. Here are a few suggestions to increase your savings
Seems like every personal finance blogger I read did their goals for 2011, so here are mine. I know its almost March but I just got this blog up in the last couple of weeks, so now is as good of a time as any to share my family’s goals.
Our savings goal for 2011 is to save over $6,500 dollars.
We will accomplish this by saving $350 monthly ($4,200), in additional we plan on saving $2,000 from our tax return. This gets us to savings of $6,200. The additional savings will likely come from my wife’s 25th or 26th bi-weekly pays or my year end bonus, neither are included in our monthly budget. These funds might also go to debt reduction. Whether we pay down debt or save depends on if any emergencies come up that result in us tapping our savings. We use what I call the “buckets approach” to saving, meaning that we save money for each our our specific goals ie emergency fund, vacation, home, and auto.
Our investing goal for 2011 is to invest over $12,000.
This will be accomplished by putting $225 a month ($2700 for the year) into our IRA accounts. We also put another $400 a month ($4800) a year into our 401(k) accounts. We also get around $4,500 of employer contributions. That gets us $12,000. In addition I get about $250 dollars of cash rewards from my credit card that I have transfered directly into one of our IRAs.
Our goal is to slay $20,000 of our debt.
This might be the hardest of all of our goals to achieve. When I calculated what we are on scheduled to pay off I came up with around $17,000 that we shouldn’t have a problem slaying. It is the additional $3,000 that I am not sure about at this point. If everything goes as schedule we will make up the additional $3,000 by using my wife’s 25th and 26th pay that are not included in our monthly budgets. Also if I stay at my current job I will get a year end bonus in December that help us clear $20,000.
We have had a budget in place for several years now but we have not followed it in detail or tracked our expenditures to ensure our budget was working as planned. So this year my goal starting in March will be to track expenditures in detail. Additionally, we will try to find ways to cut expenses out of our budget so we can pay down more debt, save, or invest more.
My goals for 2011 are 1) Get this blog started (check) 2) Monetize this blog (in progress) 3) Turn a profit for 2011 (we will see). I started this blog in part to help diversify my income but I also wanted to do it as learning experience. My friend Matt Jabs over at Debt Free Adventure, who blogs about paying down debt, helped me get started in blogging. He has told me not to expect much income for the first 6 months or so. Thus as long as I am building momentum toward being profitable I will be happy.
I really think that my wife and I can achieve all of these goals but it will take discipline and determination to stay on track. Emergencies or unexpected events may come up that could change our goals and that is fine, we will adjust.
What do you think of our goals? How are they similar to yours? How are they different?
I took the plunge, and I signed up as an investor with Lending Club. I am excited to see what my results will be as I have been debating whether to sign up or not for a while. I do not have any loans that are ripe for a consolidation so I will not be using the borrowing feature.
I first heard about Lending Club about a year and a half ago. My friend Matt Jabs used Lending Club toconsolidate debt and after a while he even started investing through Lending Club.
At first I didn’t give Lending Club much thought because I didn’t have the borrowing need and I was happy with my investments. Over time I have slowly learned more and more about Lending Club and peer to peer lending. The more I learned the more intrigued I got.
Why I signed up
Signing up and funding account
I was able to sign up and fund my account within the time of sitcom. The sign up process was very easy, it only took about 5 minutes.
Lending Club offers 3 main ways to fund your account 1) 4 day bank transfer 2) One day wire 3) 15 minute “instant” with a credit card. I decided to use my credit card because I get 2% cash back giving me an instant return on my money. Don’t worry, I am paying my credit card back as soon as the money moves from my savings account to checking.
My Initial Strategy
I am going to start with what I think is a conservative approach.
My initial allocation:
I also plan to keep my individual loans small, no more that $25 for B and D notes, and no more than $50 for grade A notes. This strategy should help to reduce my risk by forcing me to diversify my investments over a variety of borrowers. Also by keeping my investments small it limits my loss potential on any one loan.
Even though I was able to sign up and fund my account I still have to wait a couple of days until my FOLIOfn account is approved. When I get approved I will follow up with a post about the initial investing process.
I also plan to do a quarterly update about my trial of Lending Club. I will share my successes and failures along with tips and techniques that I learn along the way.
Welcome to Common Financial Cents!
My name is Chris Michaels, and I am a certified public accountant (CPA) living in the great state of Michigan. I am happily married to my beautiful wife Nicole and we have two Weimaraners (Spartacus and Sadie) and a cute cat, Matilda.
Personal finance is a subject I have become very passionate about over the years. This blog is my way of sharing my passion with you.
“Common Cents” to me is Saving, Investing, Income Diversification, Debt Reduction, and Expense Reduction. This blog will mainly be about these topics but anything in the “personal finance” arena is fair game.
My Common Cents Beliefs
I firmly believe in making savings a part of the monthly budget, even better make it automatic through payroll deductions. I also believe in saving money while in debt because it is the best way to avoid future debt . Online savings are a great tool, I currently use ING Direct.
In general when I refer to “Investing” it is for retirement via tax advantages accounts. I believe retirement investing should happen before you start investing in taxable accounts. I have been investing for several years now but I am recent a convert to “Index Investing”. My conversion to index investing is largely due to the great work of Mike Piper over at the Oblivious Investor. In the past I have worked with a financial advisor and I plan on writing about some of the pros and cons of that relationship.
One of the reasons why I have decided to start blogging is to diversify my income. I don’t plan on my writing career replacing my day job anytime soon but if it were to happen, great! I also believe in diversifying income by selling the stuff I don’t use on a regular basis.
Who likes debt? Definitely not this guy! My family debt is around $200k with the overwhelming majority of that being our home mortgage (104,000) and our student loans (80,000). We are currently using a version of the “debt snow ball” to prioritize our debt and strategically pay off our debt. I have to be honest I have a dirty habit of taking on debt via “0% Interest” offers that I am trying to kick.
Expense reduction/elimination is key trait for anyone that wants to improve there personal finance health. Every dollar that you save is another dollar you can save, invest, or pay down debt with. I believe that every dollar matters when it come to expense reduction/elimination.
I am not perfect, I make mistakes, but I am continually trying to improve my discipline in each of these areas.
How? Be a member of the United States Congress.
According to a recent academic study of common stock trades made by members of the House of Representatives, members were able to beat the market by pretty significant margains.
In a recent article about the study, Dan Froomkin noted:
“Four university researchers examined 16,000 common stock transactions made by approximately 300 House representatives from 1985 to 2001, and found what they call “significant positive abnormal returns,” with portfolios based on congressional trades beating the market by about 6 percent annually.”
Don’t we all wish we could beat the market by 6%? Well members of the U.S. Senate don’t just wish for it, they do it.
“A study of senators by the same team of researchers five years ago found members of the higher chamber even better at beating the market — outperforming it by about 10 percent, an amount the academics said was “both economically large and statistically significant.”
How are they doing it? According to Dan:
“The report speculates, but does not conclude, it could have something to do with the ability members of Congress have to trade on non-public information or to vote their own pocketbooks — or both.”
How were Senators able to do better?
“Being one of 435, as opposed to one of 100, is likely to result in a significant dilution of power relative to members of the Senate,”
The researchers also noted:
“In the course of performing their normal duties, members of Congress have access to non-public information that could have a substantial impact on certain businesses, industries or the economy as a whole. If used as the basis for common stock transactions, such information could yield significant personal trading profits”
Dan also noted:
“At the same time, House rules don’t require them to divest themselves of common stocks when they assume office, don’t prevent them from trading freely while in office — and don’t require them to recuse themselves from votes that could affect their own interests.”
“But the House’s official position is that demanding that members either divest themselves of potential conflicts or recuse themselves when there is a conflict is “impractical or unreasonable” because it “could result in the disenfranchisement of a Member‘s entire constituency on particular issues.”
Initially I was shocked by the significant margin by which members of Congress were able to beat the stock market. But after thinking about it more, given the fact they have nonpublic information, influence the regulatory environment, control tax breaks and incentives, and government contracts, it’s not really a shocker at all. If I had that kind of information I would most definitely take my chances at beating the market. For the rest of us, thats called insider information.
Conflict of interest? Without a doubt in my opinion. I disagree with the House’s official position that it would be impractical and unreasonable to require members of Congress to divest of common stocks. I don’t think its impractical because there are other investment choices such as mutual funds or ETFs that would allow members to potentially profit from the market without being such a conflict of interest. In addition, I don’t think it would be unreasonable because members of Congress enjoy generous retirement benefits compared to the average American worker. Lastly, being a former member of Congress provides lucrative opportunities such as becoming a K-Street lobbyist.
Do you think it is right that members of Congress seem to be profiting from there insider knowledge? What should be done to fix this issue?
The Story Begins….
I got my first credit card right around when I turned 18. Yup, the got the banks teeth into me at a young age. It was a secured card with a low limit of $200. I didn’t use it much but I remember feeling coolbecause I was the first in my group of friends to have a credit card. It made me feel like an adult.
Looking back on it, I can see how that card started the attitude of “I will have the money later to pay for that”. I remember going on a spring break trip and using that credit card to make some purchases that I didn’t have in my trip budget. My attitude at the time was not worry about then, I could pay later. I was living in the here and now.
I kept that card until I switched from my local credit union to a larger regional bank that had locations in my hometown and soon to be college town. The bank employee sold me on the fact that the credit card was an easy way to have overdraft protection on my new checking account. As a college student without much money I thought it was the prudent thing to do, so I did it. I remember feeling proudthat I had done something right with my previous card that they were willing to give me double the credit limit, and it was not secured.
The College Years
During college I got another new credit card that I don’t even remember signing up for it. I probably signed up for to get a free t-shirt sporting the logo of my college, why not show school spirit? When the card showed up in the mail I wasn’t even sure if I wanted it, but I ended activating the card anyways.
I ended up using that as my primary credit card and racked up a few thousand in debt over the next few years of college. I used that card to purchase school supplies, buy shots at the bar, and even the occasional cash advance. My attitude towards debt was probably at its lowest point. Things were going to be better in the future, no need to worry, I could get what I wanted.
One of the craziest things about that card was that my credit limit was consistently going up while the balance was also going up. I wasn’t making much more than the minimum payment and they were giving me credit increases on an almost monthly basis. As an accounting major, I never did quite see how that added up. In reality it is obvious what they were doing, they were trying to hook me intobecoming dependent on that card.
Working Life Begins
Before I graduated I already had my first job lined up, with a fancy offer letter and all. I used that offer letter to buy a house. The bank never even verified my future employment. Adding to my credit worthiness was my complete lack of a down payment, $45,00o in student loans, and no savings.
Also with my fancy new job I needed a new car. I didn’t get a new car but I did a new loan. Because I was in the process of buying a house, and had my fair share of student loans my interest rate on that car was almost 10% when everyone else was paying around no more than 5%.
It was also about this time that I started to get an addiction to zero percent interest offers. Over the years I/we have used zero percent financing to buy 2 TVs, 2 computers, 2 beds, 2 house doors, and a washer and dry set, and that is just what I remember.
With this debt I thee wed
Two years ago I got engaged to my wife Nicole. Along with all the great things she brings to my life, she also had her fair of debt. We first attacked all of her consumer debt and have all of that paid off. My wife also used student loans to pay for the vast majority of her college related expenses. Other than our house, student loans are our single biggest source of debt.
Where we are now.
What we currently owe:
Our first priority is to eliminate the consumer debt in the next few months. After that is paid off we are going to attack a private student loan that I incurred. I want to attack it because it is a variable interest loan and that rate is currently the lowest it has ever been.
After that, we are uncertain of our next step. Our first thought is attacking our mortgage next. My wife and I would like to move into a more family friendly house and increase the size of our family. If we put everything into that loan we could probably pay it off in 5 years. Allowing us to move to a new house, and potentially keeping our current house as a rental property. We have about a year to figure out the next step.
Some of the lessons I have learned about debt