Minding My Own Business

[This is a post I wrote as part of Adrian Cartwood's Seven Millionaires in Training experiment...I hope you enjoy it...Jeff].

Making Money 201 is all about focusing efforts on increasing your income so that you can build wealth and make some headway on achieving your Number.

Being in the military affords me a nice and steady income (which I’m thankful for these days) but it doesn’t give me much of a chance to earn more by working harder or smarter so that I can earn that big promotion at work.  Nor can I focus on growth opportunities for the organization to improve profitability and earn more through profit sharing or bonuses.  This means I need to find an alternative, separate from the military to pursue new profits for my family.

But what should that be?

My required annual compound growth rate is approximately 38% to reach my Number ($10M in 10 years).  I expect to use stock and real estate investments as well as some type of small business to make that happen.  I have more detailed plans for stocks and real estate that I’ll share another time, but today I’m going to focus on my options for a small business.

Ideally, whatever I pursue should be as passive as possible.  I’m not afraid of hard work, but my time is my most precious asset.  The more income streams I can generate that require little or no time/effort to maintain, the more wealth I can produce as an individual.  I think of this as leveraging my time.

Another reason I’m chasing passive income streams at this point in my life is that being in the military is a full time job that doesn’t leave me much room to head off in my own direction.  If I find the perfect business opportunity, I’m not at liberty to “quit” when I decide.  Therefore, my efforts need to fit with my present situation and service obligation.

My final reason for chasing passive income is that I have some big dreams I want to pursue on a full time basis as soon as possible.  Yes, I understand the point of our exercise is to achieve the Number so we can retire and fulfill our life purpose stuff.  But I think I can get on with it sooner than 10 years from now if I can generate sustainable passive income streams to live off of.

Currently my passive income efforts revolve around:

- Real Estate investment - One of my 2008 goals was to begin investing in real estate other than my primary home.  However, the Navy changed my real estate investment efforts and that goal with orders to Boston, MA.  I’m going to be managing the Navy’s recruiting efforts in New England.  Drop me a line if you want to join up.  Because of this change in plans I’ve had to defer my goal just a bit, but will still be a real estate investor very soon, I’m just going in through the back door.  I have renters lined up for my VA Beach home and am closing on a house in Boston at the end of January.  The Va Beach home is renting with positive (and passive) cash flow and the Boston house is a foreclosure that I’m picking up for $200K below market. 

- An Internet approach - As I mentioned above, I need a business that I can fit into my military career.  The Internet is everywhere.  It never sleeps and my online activities can be tailored to my schedule.  I can devote some time over lunch, during my commute on the train, or even while on travel and in the evenings at home.  Thus the title of this post, I’m trying to click my way into increasing my income.

I think of the internet as a big river money just waiting for me to dip a bucket into.  I am using several approaches to try and scoop my bucket into that river.  Mostly centered around advertising and internet marketing, I’m using several blogs (I have ten right now) to target specific niche markets.  The idea is to drive highly targeted traffic to the niche blogs which contain Google advertisements and related affiliate products.  Traffic = Clicks = Advertising and Sales Revenue.  So far the websites are paying for themselves, and I continue to build content and generate traffic via back links and search engine optimization.

I’m also dabbling in running targeted Pay Per Click ads (they are at the top and right side of Google’s Search results) to sell affiliate products.  I paid for an online course to learn some of the in’s and out’s of PPC, but have only lost money so far in this area of Internet Marketing.  I’ve suspended my PPC activities for now because I need all the cash flow I can muster to finalize my real estate deals in the end of January.

For now I’ll just focus on my niche blogs since I’ve got that breaking even.  I’ve heard “stories” of folks on the internet using this approach to make several thousand dollars per month.  I’ve only been at it for three months now and am making whopping $45/month from my ten blogs.  It’s not much, but I see the potential.

The idea is passive income from military retirement (someday), real estate rentals, and internet income so that I can really begin to focus on what I view as my true business calling…building an Air Taxi business.

You knew it had to come back to flying at some point didn’t you. 

In the mean time…Click Baby Click!

-Jeff

Learn about a leadership approach to money management and personal finance.

December was a hectic month for me and I have pretty much neglected discussing money management and personal finance in lieu of other activities.  I’m sure most of you probably think I’m referring to the normal holiday craziness that comes between Thanksgiving and New Years.  While that certainly added to my busy-ness this month, I had several other balls in the air that have demanded my time.

I think when I look back on December 2008, I’ll remember it as one of my most financially rewarding months.

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Just a quick post today linking back to this week’s Carnival of Personal Finance.  Edition #182 is being hosted by Free From Broke and features several articles from around the Personal Finance and Money Management blogging community.

My article on selecting a credit card for your Money Handler is featured as well.

Normally I go through the Carnival with a keen eye for posts that align with my leadership approach to money management and pertain specifically to either the Money Leader, the Money Manager or the Money Handler.  However, this week I’m off to Europe on business, so I don’t have time to review the carnival.

Instead I’ll remind you of our definitions of the roles in personal finance as a primer before you head off to the carnival.

The Money Leader decides where you are going, when you need to get there and why you’re on this journey.

The Money Manager develops financial plans and monitors our performance executing the plan.  He seeks to improve the efficiency of the processes the Money Handler operates within.

The Money Handler accomplishes the tasks necessary to implement financial plans.

Happy Reading

-Jeff

Learn about Money Management and Personal Finance.

[Note: The role of the Money Handler as well as those of the Money Manager and Money Leader are defined in my post on financial roles and responsibilities.  In short the Money Handler does the necessary daily grunt work to keep your personal finance business running.]

The Money Handler is a key ingredient to making your personal finance and money management business successful.  As such it is important to ensure he or she is equipped with the best tools and resources with which to accomplish the job.

One tool you should equip your Money Handler with is a good credit card to handle as much of your daily living expenses as possible.  This technique alone will go a long way to enabling the outsourcing of your personal finance tasks.

The benefits of transitioning to credit card enabled personal finance are many:

1. Never be late paying a bill - Many of your monthly service providers will accept credit card payments and offer convenient automatic bill payment.  If the power company is charging your credit card directly, you can be sure they won’t be late paying the bill.  Another benefit will be that you no longer write checks for your bills and your need for postage stamps will decrease dramatically.
2. Never balance your checking account again - As your credit card use increases, your check book use will decrease.  With few check transactions and a handful of electronic transfers, it becomes pretty easy to review your accounts online and determine whether anything is amiss.
3. Purchasing power is always at your finger tips - Pretty much every place you go you can use a credit card to pay your way.  Occasionally I find myself in need of cash, but that’s only because the baby sitter doesn’t have a merchant account and my kids want cold hard cash for their allowance.
4. Build credit worthiness quickly - I don’t have specific data charting changes to my credit score by employing a credit card in this manner.  But in my experience, it doesn’t take long for the bank to begin raising your credit limit dramatically.  I’ve used two different cards over the course of the last four years and watched my credit limits jump from $7,000 on one and $12,000 on the other to over $25K on each card in less than a year.  That $50,000 credit line has another side benefit.  It’s a huge cushion that I can access in an emergency eliminating my concern for a 3-6 month stash of cash “just in case.”

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According to an old saying, the only three things that matter in real estate are “location, location and location.” It is clear that a ten bedroom, eight bath home with cathedral ceilings and a swimming pool that is located next to a garbage dump is not desirable to many people.

On the other hand a little one bedroom, one bath shack sitting in the middle of downtown Boston might be worth a small fortune.  Location is of the utmost importance when you are considering a piece of real estate to purchase whether it be for an investment or a personal residence.

As I plan my move to Boston this spring (which redefined my real estate investment strategy), you can bet there is a lot of “location, location, location” talk going on in my home.

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