Network marketing is no longer taboo

If you have considered starting a business from home, you may have contemplated, or at least come across the concept of network marketing. Network marketing — also known as multi-level-marketing — has had a bad rap over many years. Admittedly, some of it has been justifiable due to shady companies’ unscrupulous marketing and recruiting tactics.

According to the Cybercity Mommies website, multi-level marketing (MLM) is selling products by using independent distributors and allowing these distributors to build and manage their own sales force by recruiting, motivating, supplying, and training others to sell products. The distributors’ compensation includes their own sales and a percentage of the sales of their sales group (downline). Another description is any business where payouts occur at two or more levels; i.e., if you make a sale, both you and the person above you will get a portion of the proceeds. Most often, network marketing companies are MLM in nature.

What is less known by the general public is that several popular businesses today are based on a network marketing structure. You can find network marketing businesses in the following industries:

• Cosmetics and skincare
• Telephone services
• Real estate services
• Legal services
• Jewelry
• Tax services
• Educational toys
• Health care products, vitamins and other wellness-related products and services
• Financial services, insurance, mutual funds and credit cards

Tupperware, Mary Kay Cosmetics and Amway/Quixtar encompass elements of network marketing in their business models. A number of major corporations like Citibank and Warren Buffett’s Berkshire Hathaway have network marketing business operations.

Why is a network marketing business a good business to start?

There are many reasons to explore the network marketing avenue. Your initial investment is small and you can build the business in your spare time. Good network marketing companies provide training to distributors. When you recruit willing participants to start their own distributorship, you earn proceeds from their sales as well. As your downline grows, your passive income stream builds. Plus, you have a support system in your fellow distributors of other like-minded people who will encourage and assist in your efforts to grow and build your asset.

I am particularly supportive of the network marketing system (as long as it’s a reputable company) because for a few years I ran a business from scratch. I unwound the business after I realized I wasn’t going to make a go of it. Why? Well, as with many businesses, I was faced with high inventory costs, damaged inventory, geographic limitations, and the business didn’t make any money if I wasn’t there for specific operating hours. I had invested a fair amount of money to make a go of it, and I needed to invest an even larger sum of sum of money to keep it going and hope for any success. Realizing the challenges and the small odds of becoming successful with that business, I admitted I made a wrong choice in business model, but appreciated the lessons that stemmed from the experience.

As I was deciding the fate of my last company, I came up with a mental checklist of the ideal company to start in one’s spare time. Here are a few points from that checklist:

1. Low up-front financial investment
2. Manageable expenses
3. Work the hours I choose
4. Can ramp the business up at my chosen pace
5. Fewer geographic limitations for marketing my wares
6. Work from home or on the road using my computer (no need for “store hours”)
7. No need to carry inventory for cost, storage and shipping reasons (electronic delivery or drop-ship is ideal)
8. Access to mentoring and a support network

What I did not realize at the time I made my list was that I was describing the virtues of a network marketing company!

How do I choose a good network marketing company?

The very first thing is to ensure you have a passion for the products or services. If you aren’t convinced of the quality or the benefits of the products or services you are selling, most likely you will not get very far in the business. It also helps if you are a consumer of the products so you can guide your customers and train your distributors first hand (not to mention some people may be suspicious as to why you are in the business if you have never tried the products!). Also, be sure the network marketing company has a good training program and offers support to the distributors. This is your opportunity to go to a “business school” with real opportunity to apply the learning, so for the time you invest you want to learn useful skills. And, be sure there is an ability to build a community with your fellow distributors to enable a healthy exchange of ideas and feedback.

What is also important in your network marketing business is to build your marketing around your own style. Some people are very comfortable with the direct selling method. Others love to teach by seminar format. Still others enjoy online marketing. Whatever style works for you, make sure the network marketing business you join supports the way you want to build your business.

Personally, since I have a passion for money management, that’s the business I am in. I’m with a great program called Money Mastery For Life. Not only is it a fantastic money management system to get your personal finances in order, but they allow you to start your own business and capitalize on favorable tax treatments for businesses. This in turn increases your income (you keep more) and you have more to invest and spend. So, not only do I use the system happily because it’s helped me get my financial house in order, the business opportunity allows me to help others get their finances in order by introducing the Money Mastery For Life system to them. And, there is no inventory to store. How great is that?!?!

Money Mastery For Life is a relative newcomer to the network marketing scene compared to other players, but they offer training and there is excellent mentorship and a support network for the distributors. Would you like to find out more? Go to the Money Mastery For Life information site to receive free information — just check the “Business Opportunity” box (referral id. 50645). This program works in the US and Canada, and you can sell products and/or build your downline in either or both countries. If you have any questions, just post them as a comment and I will reply.

Money is emotional — especially for women

In a recent blog post, The next big thing (Part 1), I mentioned that money is emotional, meaning that everyone sees money with an emotional lens. While money in and of itself is neutral — neither a positive or negative entity — the concept of money can evoke thoughts of fear and anger, envy, or independence, freedom and happiness, depending on the person and circumstance.

Due to their nature, women tend to have stronger emotions when it comes to money (retail therapy, anyone?), but are often the more timid gender when it comes to discussing money, the last taboo. Editor Hilary Black has released a book with stories from well-known women writers, revealing to reveal their deepest, most private thoughts about money and how it affects their most intimate personal relationships with loved ones and relatives, as well as with the writers themselves. This Sex & The City meets The Wall Street Journal book is called The Secret Currency of Love: The Unabashed Truth about Women, Money and Relationships.  [Canadian link].

Read the Hamilton Spectator’s detailed overview of this unusual and worthwhile book in its article Women and money: Writers reveal heart-rending personal experiences with cold, hard cash.

Study tracks financial habits of college students into adulthood

One post I recommend you read is from the Wall Street Journal blog The Wallet, called Students Take Chances With Finances. Gulp. It reports on the first phase of a study by researchers at the University of Arizona; almost three-quarters of college students surveyed made what the report calls “risky” financial moves in the last six months, including not paying bills on time, maxing out credit cards or borrowing from credit cards.

The report says students averaged 59% on a test of financial literacy, considered a “failing grade,” but one that is consistent with national surveys. To assess the students’ behaviors in the preceding six months, the researchers asked them a series of questions about budgeting, paying, borrowing and saving. Specifically:

Budgeting—proactive financial management, including establishing a budget, tracking expenses and staying within a budget
Paying—paying bills on time and paying credit card bills in full each month
Borrowing—maxing out credit cards, borrowing from credit lines and borrowing from payday loan services (responses were reversed)
Saving—putting money aside for emergencies, saving for the future and investing for longer-term financial goals

The report goes on to say that when it comes to influencing financial socialization, teaching of money skills by parents had the most influence on the high scorers — more than work experience and high school financial education combined. If you want to get a head start with your children, read my blog post Financial education: the missing piece in school for suggested books and games on teaching your kids about money.

While in college, students establish financial behaviors that will follow them into their adult lives. Acquiring good financial management skills stands as one of the most important developmental tasks during this life transition. The research illuminates the need for partnerships between parents, schools and the marketplace to help children and young adults develop positive financial attitudes and behaviors.

Interestingly, but not surprisingly, page 22 of the report states that college students with positive financial behaviors and who felt more control over their finances were both more satisfied with their financial status and less likely to incur debt. This financial well-being was positively associated with academic success, physical and psychological health and overall life satisfaction. Similar links have been found in other studies.

The study stresses the role of education, that there must be more financial literacy programs to teach young adults how to be more effective in managing their own financial matters, and a higher number of flexible, affordable educational options made available to students.

Read the full report here:
Arizona Pathways to Life Success for University Students: Cultivating Positive Financial Attitudes and Behaviors for Healthy Adulthood

Is gold as an investment outdated?

If you have been following the media these last few years, all you would have heard is gold, gold, gold. People who thought the sky was falling (and perhaps justifiably so) sought refuge in gold and gradually drove up the price to about $936 US at writing.

Now that we are coming into the summer of 2009 and the stock markets have rebounded somewhat from the terrible lows of last year, is seeking to invest in gold an idea past its prime?

Well, I have no crystal ball but I’ve been reading and listening to numerous experts on the subject and I have drawn my own conclusions. The short answer is no, gold has more gain to ground and is still a sound investment. Here is my long answer.

Since the creation of society, give or take, gold has been used as a means of wealth and money. This precious metal has always been sought-after. According to Doug Charney, Vice President/Investments with Wachovia Securities, gold has special characteristics that set it apart from other commodities. Throughout history, people used gold in trade as money because it was scarce, transportable, non-perishable, divisible and easily sold at current market rate anywhere in the world.

Gold and other precious metals are popular investments during times of economic uncertainty. Many investors use gold as a hedge against inflation, political unrest or economic downturns. Gold is a sound investment when there is a negative outlook on the world and the economy.

Because of the recent economic unrest, there are concerns that many currencies, especially the US dollar, will quickly lose its value. The US government plans to pay off much of its overwhelming debt by printing more money. What happens when the market is flooded with too much supply? The price per unit goes down because the demand cannot sustain its current values. So, why invest in gold? Investors realize that even if the value of the dollar falls to zero, gold still has value. The increases in the price of gold not only measure increasing demand versus current supply, but also measure those investors’ increasing unease with some world currencies, especially the US dollar.

In 1971, Nixon removed the US dollar from the gold standard, allowing inflation to have its way in the 1980s, and is still causing problems today. Removing the dollar from the gold standard allows the government to run the money printing presses at will. Because of this removal from the gold standard, the US dollar is backed by… nothing (except maybe a promise by the government). This is why the US dollar is called a fiat currency. Fiat currencies have no value, except by virtue of a government decree. Many currencies worldwide are fiat currencies.

Now, there are some drawbacks to investing in gold. If you buy physical gold coins or gold bullion, or invest in a gold bullion fund in your 401k (US) or RRSP (Canada), the gold can’t create additional wealth or pay interest. But it can preserve wealth, as it is a hedge (i.e. a bet) against a falling US dollar or other currency. If you are hoping to gain from investing in gold, it will be for capital gains reasons, meaning you are hoping the value of your gold will rise sufficiently to make a profit when you sell. No matter what you do, investing for capital gains alone can be risky. If the price drops, you lose. If you invest in gold or other precious metals, be sure that they occupy only a portion of your investment portfolio (i.e. the sum total of your investments). Hedging is good, but you don’t want to lose out on any gains you can make in other areas of the market.

I’m investing in gold for a couple of reasons. First, the US government’s debtload and desire to print more money to pay those debts make me nervous. Countries like China have been buying debt from the US, and the day they stop buying that debt (that the US is struggling to pay back) everything will change. Secondly, China, the next big superpower (always my opinion here, but don’t kid yourself) has been stocking up on gold reserves for the last few years. When I heard that news, I took notice. Guess where China has been buying its gold from? In part, from the countries that took a big hit with the toxic assets that rocked the banking world last year… these same countries with fiat currencies. They are selling their gold to collect cash, but in reality they are shooting themselves in the foot. Due to the domino effect of today’s economic uncertainty, there are future risks of hyperinflation (i.e. extreme inflation, where price increases are so out of control that the concept of inflation is meaningless) or stagflation (i.e. inflationary period accompanied by rising unemployment and lack of growth in consumer demand and business activity) in many countries, and gold will increase in price when this happens. It may not be for a few years, but the stage is set. Countries without sufficient gold reserves are backing themselves into a corner. China will be one of the only countries with the financial ability to clean up the worldwide mess.

Canada is in an interesting position to be both helped and hurt by what will happen in the next few years. With its economy heavily focused on commodities like precious metals, including gold, and energy reserves, like oil, the country stands much to gain. Canada’s banking system weathered last year’s worldwide banking shudder because of regulatory oversight and conservative investment practices. However, the sad fact is when the US sneezes, Canada catches cold. The physical proximity of the two countries, the strong trading partner relationship and the intertwining of economies make Canada vulnerable to the economic challenges the US still has yet to endure.

And lastly, I see the stock market taking a nose dive in the next few years as the first baby boomers get ready to retire. When this happens, there will be several consecutive years when people are pulling out of the stock market, with fewer people buying into the stock market. Because of supply and demand again, stock prices will drop as people will instead be putting their money in safer, convertible investments… gold, perhaps? I see gold rising in value until about 2015, when the standard 20-year gold cycle reaches its peak. For these reasons, I am putting some of my money in gold.

The next big thing – financial education, financial coaching and Money Mastery (Part 2)

Further to my Part 1 post from yesterday, I am reviewing Principles 6 to 10 of the Money Mastery program, a financial education system designed to coach Americans and Canadians (and frankly, everyone) about how to properly understand, manage, control and grow their money. Money Mastery provides a hands-on, practical means of immediately applying the ideas taught within it using the 10 time-proven principles of solid financial management, providing a complete approach for making all the pieces of your financial puzzle fit.

Principle 6: The Rules Are Always Changing.

Don’t kid yourself… you have to stay on top of things when it comes to finances. Recently, the IRS (the US tax agency) implemented 1,200 changes in one year to the US tax law. This illustrates that things are always changing financially and that you must be able to cope with those changes. You know those toxic assets you kept hearing about? The ones that the banks bought as investments but ended up virtually wiping out the banking systems of several nations? They did not exist 20 years ago. Hence, things are always changing in the world of money.

While you may not know about every change, just being aware that the rules are always changing will prompt you to dig a little deeper every time you are faced with a new financial situation, and be willing to ask the experts such as an accountant or a business, tax or estate lawyer (depending on circumstance) for guidance. Knowing this principle will shave years from your working life!

Principle 7: Always Look at the Big Picture.

I can safely say that Principle 7 is one of my biggest weaknesses because I experience moments of impatience. It is also the principle (unknowingly at the time) that drove me to pursue financial coaching with Money Mastery because I knew that if I kept going in the same direction, I would never get ahead financially. This one taught me to focus on what I truly wanted out of life and stop wasting my money on unnecessary purchases. Every unimportant purchase takes me and my money away from my goals, and I remember that each time I reach into my wallet.

In the absence of long-term goals, you will make financial decisions you cannot afford. With specific goals clearly in mind, you will make spending decisions today that will not only bring happiness to you now, but that will build a happy life for the future. A person cannot become wealthy without first “Master Planning” their life. They accomplish this by looking at where they are now, where they want to go in the future, and figuring out a plan to get there.

Principle 8: Organizing Your Finances Enables the Creation of Additional Wealth.

Disorganization breeds procrastination. Procrastination leads to lost opportunities. Organizing your finances means knowing where important documents are, having an estate plan for your loved ones, and knowing how to protect your assets from over-taxation, litigation, and theft. It’s more common than you think! Don’t neglect this or it could cost you or your loved ones thousands of dollars, and can turn family members against each other.

Principle 9: Understanding Taxation Enables You to Retain More Money.

The easiest way to earn more money is to keep more of the money you already make. That means giving the tax man what he expects only when it is due and not one penny more. Tax refunds are mythical benefits (very mythical — like unicorns and leprechauns). They are not a bonus, but rather money that you should have collected over the year that is simply returned to you. Only, it is returned to you at 0% interest. If you had put that money to work over the course of the year, you would have either made more in interest, or been able to save on debt interest by paying down your credit cards or loans.

Are you aware of the incredible tax advantages of running a part-time or full-time business? When you earn a salary at a job, you are taxed on your full income. Only then do you have your after-tax income to spend on expenses. If you own a business, you deduct your business expenses FIRST and are then taxed on the rest!

Knowing the rules about taxation will empower you.

If you are interested in learning how you can build your own part-time or full-time business using the Money Mastery system, Click on this Money Mastery link and check the Business Opportunity box (referral id 50645) to learn more.

Principle 10: Money in Motion Creates More Money.

This principle is a combination of applying each of the other nine. This principle is where wealth is truly built and accelerated, but only when the other nine principles are clearly understood and applied. If there is one single strategy that builds wealth and financial security the fastest, it is understanding the “leverage” factor of Principle 10 and how to get your money to do more than one thing at a time. The banks do it and so can you! So, if you invest in real estate, take the positive cash flow and re-invest it. You will be amazed at how fast your money will grow because it is doing more than one thing at a time.

“The most powerful force in the universe is compound interest.” — Albert Einstein

 

If you have ever experienced stress or worry over money, fought with your spouse over money or hid some of your debts from loved ones, you can identify with at least a few of these principles. While we must all take responsibility for our actions, it is important to understand the reason you are most likely in a challenging financial situation is because of a lack of understanding on how to control money. If you were never taught, how could you possibly know what to do? The best strategy starting today is to recognize where you are, determine where you want to go, and start finding the resources and education to help you get there.

So why do I think financial education and financial coaching is the next big thing? Well, first of all, it’s because we’re long overdue. Look at the consumer debt levels in the US. I blogged about this recently in my post, US consumer debt grows by a whopping $3.8 trillion since 2001. Secondly, also written about recently on my blog is the fact that our education system teaches kids skills to eventually earn money, but does not teach skills on how to manage the money they earn. See my post, Financial education: the missing piece in school, for more information and a list of books you can consult to help teach your kids about managing money. It could be the most valuable lesson they learn!

At first, I found it amazingly surprising that credit counseling is a known recourse when in financial dire straights, but financial education and coaching, a preventative measure so a person will never need credit counseling, is not. But I soon realized this makes perfect sense. It’s because there are precious few resources available for quality financial coaching, and those that exist are small-time and sometimes incomplete in their teaching. I see a huge future for this industry, but once the industry takes off, the danger is that many imitators will crowd the marketplace and do more harm than good.

The best chance of success for a new industry is for it to be quickly adopted by willing consumers. To accomplish this, a new industry should model itself after an existing, established one. This makes the system easy to navigate and understand, making it simple for consumers to adopt. In my opinion, the obvious choice for a budding financial education industry is to model itself after the weight loss industry. Take the Jenny Craig model… you can go to one of several drop-in centers, be assigned a coach, and spend several weeks learning about weight management, track your eating habits and weight loss, and are educated on proper eating. With a diet coach, you are made accountable for your actions, and are able to repeat actions over the course of weeks and months until they become a habit. After many of the habits become ingrained, you are ready to do things on your own. The same model can apply for financial coaching. Throw in some group meetings like Weight Watchers, and you have an instant support group to encourage your efforts.

So why has this not been done yet? Well, I can see one main reason. For all of the so-called “gurus” out there, for all of the books written, and TV shows on couples with out-of-control spending, there are very few people who are knowledgeable enough to create a comprehensive system. That’s why I am such a fan of the Money Mastery program. They have spent years refining a system that works for just about everyone. And, once a person begins applying the Money Mastery system, they begin to see results, which encourages them to continue. Stresses over money are reduced and fights with spouses over money are no more. People gain peace of mind as they increase their control over money.

Interested in learning more about Money Mastery? Try their no-obligation 21-day free trial. Not only will you learn how Money Mastery can help you control your money through a series of informative emails, you will have access to hundreds of dollars’ worth of materials… free! Click on this Money Mastery link and check the Free Trial Offer box (referral id 50645).

The next big thing – financial education, financial coaching and Money Mastery (Part 1)

The one beauty of having a blog is that I can rave (and rant) about things, and share information I believe is really valuable. One such gem is the Money Mastery program by an outfit called Time & Money LLC in Utah. Peter Jeppson and Alan Williams, the founders of the program, should be as revered as rock stars (I am sure they would laugh about this… they are quite modest). Just as people hire life coaches, Alan Williams was my personal financial coach. Through a series of phone-based coaching sessions, he opened my eyes to so many things I probably would never have learned on my own. And no wonder… there is so much we ordinary folk don’t know about the convoluted world of money. Alan helped me untangle it.

The Money Mastery coaching is superb. Alan taught me valuable lessons about money, gave me homework and made me accountable. The exercises really opened my eyes to my financial situation. Imagine going through all of your expenses from the previous year… yes, every single expense! He also helped me set up a spending plan, a debt payment plan, and a retirement plan. Their software is amazing… I could re-order my list of debts and instantly figure out the optimal order to pay them off. My pay-off date fluctuated by as much as two years when I changed the order of my debts! Then, once my debts were paid, if I channeled that money to a retirement fund, I’d be several hundred thousand dollars ahead. It was there, in my analysis report, in black and white. Change a number, and presto! The software re-calculates everything. Their planning software alone is a gem, but the financial coaching program changed my life.

I don’t know of another organization that takes such a comprehensive approach to helping people get a grasp on their money. They use a four-pronged approach: control spending, eliminate (bad) debt, maximize savings and minimize taxes legally. They don’t just offer live coaching; they also have a suite of products to help any family improve their financial knowledge, no matter where they lie on the curve.

Money Mastery’s program is based on 10 principles. I’m listing them in my blog with a brief explanation on each to give you some context. In this post, Part 1, I will cover principles 1-5. In my next post, I will cover principles 6-10. When you read these over, you will see these principles are quite true. Depending on where your money weaknesses are, some will resonate with you more than others.

Principle 1: Spending is Emotional.

This is the biggie, and that’s why it’s number one. The reason why so many people have money issues is because they believe money is a math issue. They don’t make enough, and that is why mathematically they can’t get ahead. But, it’s not. Money is an emotional issue. You see, money itself is a neutral entity, neither positive nor negative, good or bad. Money does not make people turn “bad” or greedy. Money makes them more of what they are… so, if a person generally has a bad personality, money will heighten that trait. If a person is naturally generous, having money to give will make them more generous. It’s the emotions we have about money that influence our view on the green stuff and whether we think it is good or bad.

Principle 2: When You Track Your Money, You Control It.

Corporations are legally required to track spending and assets. Individuals on the other hand, have no such requirement and therefore, most do not take the time to track and control their personal spending. Why? For some, it’s boring. They may feel it takes the spontaneity out of things. Perhaps they feel they work hard for the money and should be able to spend it on anything they like (remember, you can have ANYTHING you want, you just can’t have EVERYTHING you want — see Principle 7 for more). Problem is, most often there is too much month left at the end of their money.

People who do track their money find they are wasting at least $300 every month (for me it was $400-800 a month, without an increase in income!) that they could be applying to savings or using to pay down debt instead of wasting. Tracking helps uncover spending patterns — especially ones that are sabotaging your efforts to get ahead — and allows you to correct these negative habits through consistent reinforcement. Tracking has allowed me to better evaluate each purchase. It’s amazing how many wants are mistaken for needs!

I found that every time I track my money, I have more left over every month and I am able to channel that extra money to areas that I designate as priorities. When I didn’t track, I was surprised at how much less I had left over. It’s now become a habit. And surprisingly, the joy of having extra money makes me happier than shopping ever did. I feel richer having the extra money, not by acquiring more “stuff.” I was enlightened the day I discovered this fact. And, I sleep much better at night knowing that I am disciplined and I am in control of my money. And… get this… I am still being spontaneous and having more fun than before because I am not worried about money!

Principle 3: Savings Is Actually Delayed Spending.

This puts an interesting twist on things. For all you spenders out there who think you can’t save, just look at it this way: you are spending your money, just not all at once. It’s not about how much you earn, but how you spend what you earn. Some money is meant to be spent now (groceries, utilities, etc.) and some is meant to be put aside and spent another day. Even if you buy investments, that is a form of spending. You just happen to be channeling your money into something that will reap you returns.

The important part of that spending equation is to pay yourself first, even if just a little to start. Once you gain more control over your money, you will be able to increase the amount you pay yourself. People who pay themselves first add at least an additional $300,000 to their retirement savings!

Principle 4: Power Down Your Debt and Power Up Your Fortune.

Most people don’t know the difference between “good” and “bad” debt. What is good debt? It’s debt that, when spent, the item (or asset) it was used to buy produces positive income, meaning it brings in more money than the cost of the debt. So, debt to help a business grow, or a mortgage on an income-producing property with positive cashflow (meaning after all expenses are paid, there is money left over), are examples of good debt. Bad debt, on the other hand, is debt that was used to buy “stuff” that produces no income. Consumer debt is a classic example of bad debt. Credit cards, lines of credit or loans to purchase boats, clothes, furniture, etc. are all bad debt.

This principle teaches the difference between good and bad debt and how to get out of bad debt as quickly as possible. Bad debt will hold you back from achieving your financial goals. Money that should be directed towards saving and investing is instead directed towards the interest costs on bad debt. You end up working twice and three times as long to pay off an item just to cover the interest costs!

By applying this principle, it is mathematically feasible for anyone, no matter how bad their debt load is, to get completely out of debt in nine years or less, including a 30-year mortgage. Why not become debt-free and pay yourself compound interest instead of giving it to creditors? Then without taking on any additional risk or needing any more money you can not only be out of debt in 30 years, but out of debt with a million dollars in your pocket!

“Those who understand interest earn it; those who don’t are doomed to pay it.” (Attributed to too many people to mention)

Principle 5: Know the Rules.

You do not need to know everything financial, but you do need to know where to go for information that is important for you. This means reading and understanding all contracts you enter into (yes, even the fine print), asking the right questions and relying on financial mentors and professionals as needed. In yesterday’s world of easy credit many people feel they are entitled to play very complex financial games, like owning credit cards, without paying the price to learn the rules of that game. Asking the right questions and shopping around could be worth thousands of dollars to you. Assume financial products were designed to benefit the seller, and they are NOT all created the same. If you adopt those points of view, you will naturally be more careful about the contracts you enter into, whether financial or otherwise.

In Part 2, we will explore Principles 6-10 of Money Mastery’s program.

Interested in learning more about Money Mastery? Try their no-obligation 21-day free trial. Not only will you learn how Money Mastery can help you control your money through a series of informative emails, you will have access to hundreds of dollars’ worth of materials… free! Click on this Money Mastery link and check the Free Trial Offer box (referral id 50645).

Do not overlook the second largest search engine when marketing your business

There is no doubting the importance of being found online by potential customers, especially when it comes to internet searches… doubly so if your company operates solely online. Google is the number one internet search engine in the US, and given its prominence most businesses naturally focus on landing on the first page of Google’s search results. By focusing uniquely on Google though, could your search engine optimization (SEO) strategy be incomplete? Consider the explosive growth of the number two search engine in the US today and you will see that your strategy may need updating.

By the way, what is the second-largest internet search engine in the US today, anyway? Is it MSN? Yahoo? Ask.com? AOL? Well, you might be surprised… it’s YouTube. Now, if you think about the recent searches, you may not be surprised. Take the video clip searches of Susan Boyle for example, the surprise hit on “Britain’s Got Talent” that wowed everyone with her rendition of “I dreamed a dream” from the stage play Les Misérables (at time of writing, that one video I linked to — there are several on YouTube — garnered 55.6 million views). But would you believe people are searching traditional search engine terms in YouTube? Try searching “personal injury lawyer” in YouTube (6,930 results so far). Yes, it’s in there.

Not only is YouTube now the second largest search engine on the internet, but YouTube is now selling advertising on their site.  

If you have an online presence, no matter if your company is bricks-and-mortar or virtual, you run a network marketing company or a blog, perhaps it’s time to dust off your online SEO strategy! Don’t be caught without a presence on YouTube. Now is the time to start uploading promotional videos and using smart keywords to lead people to your site.

How much do you really make per hour at your job? (Part 3)

How to Calculate Your Hourly Rate For Your Job After Out-Of-Pocket Expenses

Here we will be calculating how much you actually have left per hour after factoring in the costs for those activities that relate to your job.

Just like in Part 2, I’ve continued the numbering of the steps so as not to confuse you. I am also encouraging you to do the following calculations on a monthly measure because monthly is big enough to encompass averages but a small enough amount to easily track activities.

Step 14 – Expenses Directly Related To Job

Add up all of your out-of-pocket expenses directly related to your job in an average month. These are expenses you are not reimbursed for.

Money spent buying lunch + money spent buying dinner when working overtime hours + money spent when traveling for business (including to/from airport, on flight, at hotel, vending machines, newspaper stands, etc.) + any other amount you can think of not mentioned here = Out-of-pocket expenses directly related to your job in a month

Step 15 – Expenses Indirectly Related To Job

Add up all of the out-of-pocket expenses indirectly related to your job in an average month.

Money spent at association meetings/conferences (add gas for commuting) + Money spent at business-related (but not direct job-related) dinners and other events, seminars, continuing education, etc. = Out-of-pocket expenses indirectly related to your job in a month

Step 16 – Expenses Related To Commuting To/From Job

Add up all of the out-of-pocket expenses from commuting to and from your job in an average month

Money spent commuting into work + money spent commuting back home = Out-of-pocket expenses for commuting to/from your job in a month

Step 17 – Extra Money Spent During Personal Time Related To Job

Add up any extra out-of-pocket expenses in an average month paying for things that you wouldn’t do if you stayed at or worked from home.

Money spent shopping for work clothes + money spent on personal care (extra haircuts, manicures, etc.) + extra money spent on car maintenance from all that commuting + money spent on dry cleaning and alteration stops, etc. + anything else you can think of = Extra money spent in a month

Step 18 – Total Monthly Extra Out-Of-Pocket Expenses Related To Job

Step 14 + Step 15 + Step 16 + Step 17 = Total extra out-of-pocket expenses related to job

Step 19 – Remaining Net Monthly Salary After Deducting Out-Of-Pocket Expenses

Monthly net salary (Step 5) – Total extra out-of-pocket expenses related to job (Step 18) = Remaining net monthly salary

Step 20 – New Net Hourly Salary

Remaining net monthly salary (Step 19) / Total hours related to job (Step 12) = Actual net salary per hour you make per hour invested in an activity related to your job!!

 

By the time you got to Step 20, how much less were you earning? Were you at 70% of the original amount? 50%?

Let’s go back to the end of Part 1. In our example, the hourly net salary for a yearly take-home pay was $15.87/hour. While I didn’t specifically calculate it (too many variables), if by Step 20 the take-home pay dropped by about one third to $10.00/hour, is that really paying your bills? And, considering a home-based business, do you see how it is more likely you could float on two thirds or even a half of your salary if working from home?

If you had the patience to work though this entire exercise, you will realize that a salaried job does not afford the financial comfort that we think it does. We are fooled by the yearly gross salary amount, but by the time we factor in all of the calculations, there is very little left for us and the rest of our expenses!

Perhaps now, if you have been toying with the idea of working from home, you might be more willing to rethink how much less income you would really need to make a home business viable. I know many people feel they can’t afford to quit their job and that it would take too long to build the necessary income from a home-based business to make it viable. However, from these calculations, you may see that replacing your current income is not as necessary as you once thought, because a home-based business can be less expensive to maintain. As well, any additional costs that arise from the home-based business can usually be written off for tax purposes because you are running a legitimate business, whereas out-of-pocket expenses incurred as an employee cannot. Consult your accountant for more details.

Need more reasons to consider a home-based business? Read this hilarious and revealing blog post from Steve Pavlina called 10 Reasons You Should Never Get a Job. The post dates back to 2006, but is timeless.

If you are working at a job and want suggestions on where to pare back spending, read The Simple Dollar’s Trimming the Fat from Work-Related Spending.

How much do you really make per hour at your job? (Part 2)

How to Calculate Your “Real” Hourly Wage

Here we will be calculating how much you really make per hour after factoring in all of those extra activities that relate to your job. This exercise is principally about time cost. It is especially revealing for those in middle-management who work overtime as “part of their job” with no additional compensation. I am sure some of you have wondered if your hourly take-home pay dropped once you took on a management role, despite the pay raise your company gave you for the promotion. If the shock value of the last post was a 4/10, this will be a 7/10 once you add up the numbers.

I’ve continued the numbering of the steps so as not to confuse you (you might be confused enough just trying to follow this!). So, I’m taking where I left off in Part 1 and beginning at Step 5. I am also encouraging you to do the following calculations on a monthly measure because monthly is big enough to encompass averages but a small enough amount to easily track activities.

Step 5 – Monthly Net (i.e. Take-home) Salary

Yearly net salary (see Step 1 in Part 1 post) / 12 = Monthly net salary

Step 6 – Calculate Your Monthly Work Hours (this is as per your employer)

# of hours worked/year (see Step 3 in Part 1 post) / 12 = # of hours worked/month

Example: if you work 9am-5pm Mon-Fri and take no unpaid vacation days, your standard schedule is 2080 hours worked a year, or 2080/12 = 173 hours per month.

Step 7 – Hours Directly Related To Job

Add up all of the hours you spend directly related to your job in an average month on top of your standard hours (the latter is factored in Step 6).

Hours spent working through lunch + overtime hours + traveling for business (including to/from airport, flight time, hotel time, etc.; subtract non-work time on business trip from total) + any other hours that count not mentioned here = Hours directly related to your job in a month

Step 8 – Hours Indirectly Related To Job

Add up all of the hours you spend indirectly related to your job in an average month.

Hours spent at association meetings/conferences (add travel time same as section above) + Hours spent at business-related (but not direct job-related) dinners and other events, seminars, continuing education, etc. = Hours indirectly related to your job in a month

Step 9 – Hours Spent Commuting To/From Job

Add up all of the hours you spend commuting to and from your job in an average month

Hours commuting into work + hours commuting back home = Hours commuting to/from your job in a month

Step 10 – Extra Hours Spent During Personal Time For Job

Add up any extra hours you spend in an average month doing things that you wouldn’t do if you stayed at or worked from home.

Hours shopping for work clothes + hours spent on personal care (extra haircuts, manicures, etc.) + hours dropping the kids off at daycare (if alternately you would be keeping them at home if not working) + extra hours spent on car maintenance from all that commuting + hours spent on dry cleaning and alteration stops, etc. = Extra hours in a month

Step 11 – Extra Hours Not Accounted in Above Calculations

Add up any extra hours you spend related to the job that is not included in the above (this is just in case I missed anything).

Step 12 – Total Monthly Hours Related To Job

Step 6 + Step 7 + Step 8 + Step 9 + Step 10 + Step 11 = Total monthly hours related to job

Step 13 – Real Hourly Wage

Monthly net salary (Step 5) / Total hours related to job (Step 12) = Actual net salary per hour you take home!!

 

Makes you think differently about your job, doesn’t it? You probably never realized your job required such an investment of your time. Perhaps now, if you are thinking of working from home, you might be more tempted since you could be investing far fewer hours in maintaining the business as you do by maintaining your current job. The beauty of a home-based business is, as long as you are building a business (like a network marketing company) and not trading your time for money (like an hourly wage), your income will not suffer the same limitations as a salaried job. You will be building an asset that will bring in passive income on a regular basis for years to come, requiring less direct involvement on your part. What does that mean? More money and more free time. 

Looking for an excellent home-based business opportunity? Why don’t you check out the Money Mastery For Life system (referral id 50645). This is based on the long-established Money Mastery program by Time & Money LLC in Utah. Here is more information on Money Mastery:

Money Mastery is a time-proven personal financial literacy program, specializing in the financial education of individuals, families, and corporations. The program is based on four parts: controlling spending, eliminating debt, maximizing savings and reducing taxes legally. It is the only comprehensive financial management system out there today that helps individuals and families take control of every aspect of their financial life.

To be successful at personal financial management, you must understand how your spending, borrowing, retirement savings, and tax paying affect each other, how they are all linked and must all fit together, like the pieces of a puzzle.

You can benefit from learning how to manage your family’s finances and help others do the same! Try the no-obligation 21-day free trial at www.mmforlife.com (referral id 50645) or more information.

In Part 3, we will explore the extra costs from your job that eat away at that take-home pay (yes, that already low hourly take-home pay we calculated in Part 1). Shock value will probably be 9/10, but that’s only because I am layering it on top of the two shocks you have already suffered in parts 1 and 2.

How much do you really make per hour at your job? (Part 1)

You think of your job as a source of income, but have you stopped to think of how much time and money you invest to maintain that job? How much do you really take home after everything has been factored in? If you want to be surprised, let’s have some math fun!

This exercise can be especially revealing to families with two working parents, or if one parent is debating returning to work or quitting his/her job. Naturally, it may be hard to quit your job if you are single, but this exercise will be a real eye opener anyway, so I encourage you to try it. You may decide that your current job is too “expensive” to maintain. Parts 2 and 3 of this post, in addition to calculating your “real” hourly wage, can also show you where to cut unnecessary expenses.

Now, in order to compare the results of parts 2 and 3, you should first measure what is your standard net (i.e. take-home) rate per hour is — this is what part 1 of this three-part post focuses on. If you don’t know what your standard net rate per hour is, here is how to calculate it.

Standard Net Rate per Hour 

Step 1 – Yearly Net (i.e. Take-home) Salary

Yearly gross (i.e. before-taxes) salary – Taxes, withholdings, etc. = Yearly net salary

Step 2 – Days Worked in a Year

(52 weeks a year * # of days you work in a typical week) – # of unpaid vacation days a year = # of days worked/year

 Example: if you work 9am-5pm Mon-Fri and take no unpaid vacation days, your standard schedule is 260 days worked in a year (we’re not factoring in statutory holidays).

Step 3 – Hours Worked in a Year

# of hours in your “standard” work day (i.e. if your job is 9am-5pm, then the number is 8, even if you take an hour for lunch) * # of days worked/year = # of hours worked/year

Example: if you work 9am-5pm Mon-Fri and take no unpaid vacation days, your standard schedule is 2080 hours worked a year (remember, we’re not factoring in statutory holidays).

 Step 4 – Calculate Standard Net Hourly Wage

Yearly net salary / # of hours worked/year = Standard net rate per hour

 Example: using the figures above, if your net salary is $33,000/year, at 2080 hours a year your standard net hourly wage is $15.87/hour.

For some people, this number alone is an eye opener! It really puts things in perspective as to why someone may be struggling financially if they bring home $15.87/hour, yet are trying to pay off a mortgage, car, vacations, flat-screen TV, etc.

Let’s say you want to buy a $1000 living room set, taxes in. It will take you 63 work hours to save for that set, or 7.88 work days. This is why people rely so heavily on credit, because dedicating almost two weeks’ worth of work just to save for that living room set is something people don’t like to do. They would rather buy it now and not have to wait until the money is saved. When you factor in other expenses, the amount of time it takes to save for that living room set is really much longer than 1.5 work weeks. However, by using credit, people rarely consider that they are easily doubling and tripling the amount of hours they work to pay off that living room set by incurring interest charges! But I digress… this isn’t the topic at hand.

In my next two posts, I will show you how to calcualte your ”real” net rate per hour. Be afraid… be very afraid!!