Category: Money + Finances

The Secret (Business) Beauty in Complaining

Posted on by Sarah K Peck

My head buzzes when I am around people who start to complain too much. It’s like an electric current goes through my head, starts building, and then my frazzled mind-space begins to implode under all of the pressure.

I like solving problems, and can be known to interrupt or interject with “Yeah, sure, okay, but — how do we fix this?” instead of patiently listening.

{I’m working on it. I’m a much better listener than I was five years ago.}

The worst is when complaints run in a continuous loop, as though their very existence begets more opportunities to begrudge the same thing over and over again. I’m sure you know exactly what I’m talking about. Someone who complains about the same thing over and over again, and yet does nothing to fix or change the situation.

But complaints aren’t always bad.

Complaints are valuable — the first time.

If we can ignore the tinny-tin-tin buzz chattering complainers (I sometimes picture those world cup Vuvuzuelas as the pinnacle of a swarm of complainers, buzzy bees dancing around my ears doing nothing for nobody) then we can try to hear the music in the buzz. I like to think it has something to tell me — or you:

Every complaint is an opportunity.

Even the gripers have their merits: a gripe is feedback, a reflection on the world, information for a product or a process — and it can be something that reveals a way in which our environments can be different, changed, or better.

If the complaint stops at just that — a vocal expression of disapproval or — well, then it doesn’t do much good. That’s just whining.

And if a complaint happens more than once, it’s time to act.

Sometimes I find myself repeating the same complaint in my head. If I hear myself say it more than once, though, I try to immediately think: What can I do about this?

A complaint is the first key towards solving a problem. The easiest problems to solve are ones we can readily identify.

A great way to solve problems is to look around and see that they exist. So the next time you hear someone complain, look again at what’s being said.

Complaining about late buses? Then figure out a system for notifying riders of the bus schedule and arrival times. Complaining that banks aren’t open on Sundays? Figure out a way to do banking on Sundays without going into a teller. Want to stop getting parking tickets? Make a map of the cities’ street signs and rig it to your iPhone alarm clock. Complaining that you can’t find things? Figure out a better way to stay organized.

Annoyed that telephones are stuck into wires in walls and you have to stand in one place to talk to someone? Oh snap, invent a cell phone.

Businesses solve problems.

People make stuff to fix problems you have — sometimes before you knew you had a problem in the first place — and it’s in order to make your life a little bit better.

Often, the opportunities require work, effort, or time (hence the complaint) but they are certainly opportunities. They should challenge us to figure out how to do something better and figure out new solutions.

Often, it’s just a small thing that can be fixed or tweaked to make something much better. Hipmunk gives Kayak a run for it’s money on finding cheap airline flights. HootSuite, TweetDeck, BufferApp, and Meet Edgar are all variations on the same problem: coordinating social posts and sharing your work in the social world.

Making something slightly better or easier to use can be a huge opportunity.

Complaints should happen once.

Then they should spur you to action. Complain. Then think: How can I fix this?

The brightest people in the world — and the basis for many, many business ideas — comes from a simple look at something that doesn’t *quite* work so well and coming up with a way to make it better. A greater challenge, of course, is to create a solution for a problem people didn’t know they had: Apple’s iPod, for example, solved a problem that many people didn’t realize they had in the first place: the ability to carry an indefinite amount of music around with you in your pocket.

Many of the best businesses, in fact, understand a problem or an opportunity and then fix it before you even knew it existed.

An amazing example of this will come from Google’s Cars, if the cars end up working very well (which I hope they do): the problem? People don’t like driving, or at least they don’t like driving on a regular basis, when the drive is the same day-to-day and they could be using that time (often 1-2 hours in traffic each way) for something else. Clearly, the public transportation systems and the way that they are run leave something to be desired in all of us — otherwise, we wouldn’t have so many cars cramming into our cities and spaces. People prefer being in their own cars, under their own terms. Even when it’s ridiculously expensive to own a car. I look forward to the solutions that stem from the opportunities of car sharing, private rides, and better public transportation.

If you’re complaining about the same thing over and over again and you already know how to fix it, or you have an idea of how it could be better, then it’s time to start working on it.

And if you’ve never thought about it this way before: every time you see something you don’t like, from trash on the subway to long lines to confusing information, realize that it’s probably a business waiting to happen, and it could be yours.

Listen to what other people are complaining about as free advice for what might be a great business opportunity.

What are people complaining about? What are you complaining about? How are you going to fix it?

Bam. There’s your next business idea.

Go make something better.

Does money make you crazy? The Money Toolbox: leave debt behind, build your savings, and grow your wealth.

Posted on by Sarah K Peck

Want money?

Money advice often boils down to some basic tenets: spend less than you make, or conversely, make more than you spend. Increase your earnings, then maximize your returns.

Sounds simple—in theory. But the difficulty lies in the application. How do you actually do it so that it changes? What do you do when change is so incremental that it seems barely noticeable? Is the snowball effect worth it?

Enter, stage left: J.D. Roth

JD Roth 2

I met JD Roth at the inaugural World Domination Summit. He was the popular blogger of Get Rich Slowly, although, to be honest, I didn’t know that at the time.

Instead, I danced with Adam Baker’s lovely daughter on a concrete barrier, did cartwheels with a goofy lady named Laura, and laughed with J.D. about how inordinately excited we were to be in Portland at this new conference series. At some point we eventually got to talking about our professions and careers, and once we did, we geeked out over books like Ramit’s I Will Teach You To Be Rich, The Millionaire Next Door, and ways to be frugal, savvy, and more importantly—happy.

Over the years, we became good friends, sharing tips on savings, wondering whether or not I should sell my car and go car-free (ps, J.D., I don’t know if I told you, but I sold it! And I used the cash to help start my own business). We’ve crashed in each other’s houses (because when you want to be a millionaire, who springs for a hotel?), and giggled about how we each own jackets that are more than 10 years old.

J.D. has been both a friend and a mentor, and when he told me he was working on a master series called the “Money Toolbox,” I knew it would be full of good stuff.

The Money Toolbox: leave debt behind + grow rich.

ISW-resource banner-money

“By following a few guidelines and completing one small step each week, you can master your money and build wealth for the future.” —J.D. Roth

J.D.’s story is familiar to many: a decade ago, he had more than $35,000 in consumer debt—credit-card balances, personal loans, car payments—and was living paycheck to paycheck. In a world where we’re taught that debt is fine, J.D. wondered: what processes actually work to make change with regards to money? And how can I become rich?

Today, he’s debt-free and has more than a million dollars in the bank.

My own story is similar—minus the million dollars part, at least at the moment—I started my twenties with piles of student-loan debt and promptly did the next smart thing all 20-somethings do: I bought a car, because someone told me it was an “investment.” Instead, my car loan was barely approved because I had already acquired so much debt. I began my first job nearly $100,000 in the red with a job that barely paid my rent—let alone the massive student loan payments that were due. I worked nights and weekends as a tutor and swim coach to bring in enough money to afford to buy groceries (My food budget was directly linked to whether or not I taught that week—some weeks were rice and beans).

And yet by the time I turned 30, I was in the black—and it wasn’t because of a miraculous scheme or a magical job. It was through small habits and the power of time.

Just like J.D., I didn’t turn straw into gold, and the process of changing my life didn’t happen right away.

Get the guide and toolkit, here: The Master Your Money Toolkit.

In his guide, J.D. documents the time-tested principles of putting his money to work.

What he learned surprised him: getting out of debt and building wealth wasn’t just about pinching pennies. He focused on reducing expenses and increasing income. For the first time in his life, he began to accumulate savings and invest wisely.

“Getting out of debt and building wealth isn’t just about pinching pennies—wise strategies for spending, saving, earning and investing can add up over time.”

Over the past eight years, J.D. spent much of his time writing and sharing these lessons on GetRichSlowly.org, a popular blog he initially founded to share his own quest for self-improvement. With over three thousand articles and more than a million words, this work still exists as a public archive.

From the mastermind behind the blog Get Rich Slowly comes his latest project: Get Rich Slowly: the year-long course, a money-makeover toolbox designed to help people leave debt behind, master their money, and achieve financial independence. Featuring a “Money Mondays,” email series, 18 audio interviews with money experts, and a comprehensive “Be Your Own CFO” guidebook, this course collects wisdom from financial gurus Ramit Sethi, Pam Slim, Adam Baker, and more.

With a 52-lesson guide to help people master their money, he created a road map to financial freedom, developed for anyone seeking to ‘master their money’ by getting out of debt and building independent wealth.

The Master Your Money Toolkit.

What’s your money story?

As important as J.D’s story is, the new Get Rich Slowly guide isn’t really about him. It’s about you. It’s a road map for your financial freedom, and it includes a 120-page “Be Your Own CFO” guide, 18 interviews with experts who offer specific advice on important topics, and plenty of additional resources. To ensure you don’t get overwhelmed (as I sometimes do!), you’ll also receive a different lesson with simple actions every week for an entire year. I’ve just started reading my own CFO guide, and I think the “Money Monday” emails are brilliant.

If you want a copy, JD is —naturally— offering budget-friendly options, and the three different scales of the program are all discounted for the launch (meaning you can get a copy without breaking your own bank)—because what good is a money guide that sets you back even further?

Get your copy here: Get Rich Slowly: The Money Toolbox.

Congrats, J.D.

Are you letting the numbers deflate you?

Posted on by Sarah K Peck

The thing about numbers is, we give them far too much power to make us feel bad. “Only” have 100 people reading your blog? That’s like speaking to a jam-packed coffee shop or on stage at a live speaking event.

Alexandra Franzen reframes the expectations we have around blogging (and online writing) and I think it’s so spot-on that I have to chime in. You are enough. Ten people is enough. Your audience of 45 people is fan-freaking-tastic. FORTY FIVE PEOPLE! That’s a lot of people listening. [tweetable hashtag=”#story #numbers #data @sarahkpeck”]Stop letting the numbers tell you a story of inadequacy.[/tweetable]

As Theodore Roosevelt said: [tweetable hashtag=”#quotes #inspiration #joy @sarahkpeck”]Comparison is the thief of joy.[/tweetable]

People often ask me how much traffic you need before you start a business or a project. We get discouraged with low traffic, thinking that somehow we’re not “good enough” if we don’t have thousands (or hundreds of thousands) of people listening in. The secret is that you don’t need 10,000 people reading you to make a sale to 30 people. (In fact, that’s a pretty low conversion rate). If you’re doing something that helps someone else, then one sale, one client, or a small classroom might be all you need.

We’re so eager to hyper-glorify the entrepreneurs who are billionaires and the writers who reach hundreds of thousands of readers that we gloss over the beautiful middle, the delicious space where you get to express yourself, connect with others, and share your work. There is nothing more beautiful than this. Delight in the expression and the sharing. Show your work. Love your audience, in all its shapes and sizes.

It’s about connection, creation, and expression—not traffic.

I made a business out of teaching 30 people at a time in workshops. I coach people one on one. I feel honored when one hundred people read an essay I wrote. I feel the same when one person reads what I’ve written. Start small. Walk into the room. Be proud.

And also, traffic isn’t all that it seems: there is an ironic downside to too much traffic. [tweetable hashtag=”#truth #business @sarahkpeck”]Too much traffic can be a downer for your growing business.[/tweetable] It costs money, and then you end up paying for people to listen to you. Some examples: when you hit 2,000 subscribers, you need to pay your mail client (if it’s MailChimp) $30 a month to keep sending your emails. When your traffic gets high enough, your web hosting might turn into $50-$100 a month. Those U-Stream videos cost $99-$999 for viewer hours, so 4,000 people watching can cost you thousands of bucks. SoundCloud lets you do 2 hours free—then you pay.

You get the picture. If you want a big audience, you might have to pay $200-$500 a month (or more) for it.

There’s something beautiful about medium-sized.

Just like Alexandra Franzen so beautifully re-frames: there’s something gorgeous about your own personal coffee shop. Cherish it.

 

Making Money as a Creative Entrepreneur: How I Make Money, Where I Spend My Time, and What I’ve Learned From Launching My Own Ventures

Posted on by Sarah K Peck

When I was four weeks old, my mother and father took our then-family-of-four from Germany to Idaho Falls, little baby and tiny toddler in tow. We were standing around in the living room, as my mother recalls (to be be fair, I can’t recall and I certainly wasn’t standing—more likely drooling), talking about the insane temperatures sweeping in. My grandfather looked out the window at the temperature: it was minus 30 degrees Fahrenheit. Indoors, the heater warmed the house to 70 degrees.

“That’s a temperature differential of 100 degrees on either side of that glass pane,” my grandfather remarked, tall and lanky, white hair puffing out of each side of his head.

“That’s pretty impressive,” he chuckled.

Across the states, temperatures have been dropping and reeling – with 40-degree changes in mere hours as cold fronts sweep down invisible air channels and smother cities with their frozen molecules.

As a small-business entrepreneur, these temperature swings are analogous to the feast-and-famine cycle that can be all too familiar when you’re getting your business off the ground and becoming friendly with the ideas of cash flow, budgets, expenses, projections, and launches.

Dealing with the volatile ups-and-downs of entrepreneurship: it’s a bit windy out there.

Some days and months are big days full of courses sold, booked with clients, resulting in high-cash-flow months. “I’ve made it!” You think, gleefully, unwilling to look at how much you’ve spent to generate that cash flow (and just how far it really goes—because if you knew that it would only last a couple of months, you’d be back on the streets selling again the next day).

Other months are buckle-down, negative-zero income periods where you spend what money you have on resources and materials that you need (labor, equipment, time, skills)—in order to invest in and make what you want. It doesn’t matter if you’re a brick-and-mortar shop owner, an online retailer, a consultant, or a freelancer—creating a life you love involves seeking and finding customers and clients, understanding the highs and lows of business, deciding what you need to spend money on now and what can wait, and—for better or worse—’making it work.’

“Make it work!” — Tim Gunn.

So how DO you make your money as a creative entrepreneur?

What does it take to branch out and start your own side hustle, business, or creative endeavor? As a long-time “side-hustler” who started both a consulting practice and more recently an online teaching business, I’ve been invited to participate in a “blog tour” of people writing about their reflections on life as an entrepreneur.

While I still stumble over the words “entrepreneur” and “founder,” I’ve started a number of projects that have turned into profits. This month, as part of the Laser Launch Blog Party, Halley at Evolve-Succeed asked me to contribute to a collection of stories from small-business owners with all my tips for making your first and second year as a business owner fun and profitable. This post is part of a collection of essays with reflections, wisdom, and lessons from the journey it takes to become an entrepreneur.  (If you’re curious about the rest of the collection, check out the footnotes at the end of the post to see more.)

Here’s a behind-the-scenes look at what I’ve learned so far about “making it” as a creative entrepreneur. Some of the questions people ask me all the time include:

  • How are you making your money right now as a creative entrepreneur?

(Right to the point: they want to know where the money is — and I don’t blame them! Things in life cost money.)

  • What were some of the biggest surprises about starting your own business?

(Oh yes, there were plenty).

And often longingly:

  • I wish I could do whatever I wanted—do you get to just sit around in your pajamas? 

(Hah! I wish. Nope, that’s not my life right now). 

I wish I could say the last one were true — except I love learning and creating far too much to sit around all the time. In addition, the job of finding, getting, and retaining customers is a full-time job, so while I might write early in the morning in my pajamas and preferentially wear yoga pants during the day, I don’t just sit in my pajamas at home all day (and we don’t have a TV at home, either).

A quick disclaimer: I don’t have the magic recipe for everyone, but I do have a few nuggets of wisdom from learning and making mistakes along the way. Take what you will and enjoy.

Getting started (money-wise) as a creative entrepreneur:

As I shared with Brazen last month, these are the big 3 things you need to make it as a creative entrepreneur:

  • First: reduce your costs.
  • Second, save a bit of runway (emergency savings), and
  • Third, start with a side hustle to test your ideas.

People often think you need a big plan, a giant 30-point strategic framework, or have it all figured out to get going. The reality (in my opinion), is that you start small, test and iterate, and get smart about not spending too much money where you don’t need to.

First, reduce your costs — live on the cheap:

Live minimally. Gain freedom from your job by not needing the paycheck. The more expensive your lifestyle, the riskier it is to jump to something new and uncertain that could have a potentially low income at start. The more you can reduce your overhead, the less risky it is to make that jump.

“The more expensive your lifestyle, the riskier it is to jump to something new and uncertain that could have a potentially low income at the start.”

If you want to start something new or break out of a dead-end job, follow the path of the Ramen-eating hackers who live cheaply. If you live an elaborate lifestyle, you may burn through your paychecks. See how much you can cut.

Make it a game. Buy a $75 sewing machine and give up buying clothes for a year (which is something I did—and now I don’t buy new clothes very often, if ever). Learn from the family in San Francisco that lives with no trash. Eat on the cheap. Give up restaurants and alcohol for a year, or even a few months. Track all your purchases and decide whether that night out with friends or new pair of shoes is more valuable to you than your freedom.

The nomadic entrepreneurs who live around the world and work from anywhere are often working in places where the cost of living is low. They’re not somehow richer than everyone else; instead, they’ve often worked the airline systems to get thousands of frequent flyer miles and travel on the cheap. The life they’ve built is incredibly inexpensive, making the need for a giant business (and lots of possessions) unnecessary. My fiancé and I talk about and analyze ways to live with less—figuring out what we truly “need” and what makes us happiest, often discovering that things are not synonymous with happiness. The more I interview and meet people as well, the more I realize that the happiest people don’t “have it all”—they have what they want, and skip the rest.

Sound like too much to give up? Consider how much you want to leave your job or chase your business idea. What’s it worth to you? How much do you want to start this business? When you want it, you’ll make it happen.

Second, shore up your emergency savings for when you *will* have low-cash-flow months.

This is part two: save up a nest egg or a “freedom fund” while you’re on the job, if you can. Cobble together several different income streams (bartending, teaching, coaching, waitressing, and many other side hustles kept me in positive cash streams).

When I started my first job after school, I actually made less than the cost of my rent and loans. In order to make it work, I picked up two side jobs: teaching swim lessons on the weekends and tutoring high school students in the evenings after work by posting an advertisement on Craigslist as a geometry and algebra tutor. That extra $200 a week was my savings and food budget, and I was able to save a little bit each month—and eat. [tweetable hashtag=”@sarahkpeck #money #freedom http://dev.sarahkpeck.com/money”]To get started on your next project, create a freedom fund.[/tweetable]

After a year, I had saved $4,000 on the side from little side jobs. It was just the cushion I needed for the next step: several months where I used that same night and weekend time to concentrate on tweaking my side business endeavors. Soon I started making thousands of dollars on the side.

More recently, I left San Francisco to head to New York to start my next business adventures. To make it happen, I sold my car for $12,000 and had about the same amount in liquid cash savings that I was willing to use towards building my next set of projects. I also tested the projects I wanted to build in advance, demonstrating that people were willing to buy what I wanted to make—and then, not leaving until cash flow was positive and knowing that the buffer funding was there for the variant months of lower-than-expected income (or higher-than-expected costs).

In an ideal world, you’ll have about a 6-month buffer so you don’t work month-to-month, but in the real world, you do the best you can. Nearly every one I’ve talked to has said it takes longer than they expect to generate consistent income—so that cash savings helps during the buffer months when you’re making money—but not as much as you need. [tweetable hashtag=”@sarahkpeck #money #truth http://dev.sarahkpeck.com/money”]The less your life costs, the longer the money lasts.[/tweetable]

The lower your expenses, the longer you can stretch your savings. If every paycheck goes straight to paying your expenses, consider taking on a small side job to boost your income, even while building your project.

Third: build it as a side hustle, if you can.

Does it make more sense to start your business from scratch or build it as a side hustle?

I recommend that everyone have a side hustle. It’s called moonlighting, and it’s a great way to test whether something you want to do is feasible. For some it’s a paper route or a nail salon job; for others, it’s taking care of elderly on the weekends, for me, it was teaching swim lessons and tutoring high school kids. It’s a great space to make a little side money, keep your options open, and develop your skills in a particular area when you’re thinking of changing careers.

[tweetable hashtag=”@sarahkpeck http://dev.sarahkpeck.com/money”] The best time to try out your new project is now.[/tweetable]

Test the market viability by seeing if there’s any traction for your ideas, and tweak each iteration a bit to improve the offering. Perhaps you want to start a side culinary and health business. Set up evening showcases on the weekends for friends and family and let people know you’re doing a cooking class at a discount to raise awareness. Pitch your services to local vendors. Offer to teach at a high school. Spread the word about private lessons.

After a couple of months, reevaluate and see if you’ve made a profit. Tweak your project to build something people want that you also enjoy doing. If you need to, stay home and do things no one else is doing to make it work.

How do you know it’s time to finally take the leap?

There are times when you need to make the leap without a nest egg, without changing your costs, and without a plan. This happens, and people make it work. Sometimes the intensity of the jump forces laser-like clarity and an immediate reduction in expenses. But [tweetable hashtag=”@sarahkpeck http://dev.sarahkpeck.com/money”]if your goal is to set out on your own by next summer, start building your business and reducing your overhead right now.[/tweetable]

Most folks running their own businesses and building the life of their dreams are always in the process of doing that — running and building. These are active verbs, which take time, energy and innovation. It’s not about pulling all-nighters or creating an endless stream of energy; it’s about being smart about building something a little bit at a time.

People who are working on new projects or problems aren’t immune to risk. But they’ve mitigated potential risks by using strategic tools, building up their savings, creating clever cost-saving lifestyles and forming plans to tweak their systems to get what they want.

Leave your job when you need more space in your business or venture and when you have a few leads. I knew it was time to head out on my own after I made almost half of my full-time income on the side—I decided to trust that if I put my day-time energy into my side-hustle, that I’d be able to make up the difference. I also kept trying to get my expenses down to make it easier to make the transition.

If you can save a little, cut your costs, and test your ideas on the side, you’ll be excited about what’s ahead because you’ll have already planned for the risks and confirmed that project has the potential for success.

How I started teaching online and in-person:

I’ve always loved teaching and coaching—from one-on-one tutoring in high school to assistant teaching in graduate school. After I left school, I kept teaching by signing up for workshops and events and volunteering my time to run events.

I started teaching on the side—in the evenings and on weekends—by putting up an advertising on Craigslist as a tutor, by pitching conferences and workshops as a workshop leader, by running lunchtime events at my company, and by reaching out to places like General Assembly, Skillshare, and Udemy to work with them. As I built both my teaching experience and reputation over several years, I was able to test my curriculum, build ideas, practice presenting, and later teach more through my own website.

What if you have savings and a side hustle, but you like your job? When did you know it was the right time to quit your job?

I liked what I did in my day job—I got to manage the communications and work on our marketing efforts at a 200-person architecture firm. It had it’s own challenges and entrepreneurial endeavors—we created a new blog, redesigned a website, and launched a journal from scratch, and I got to work with some of the most respected names in landscape architectural design. It was intense, demanding, and rigorous. 

Yet I knew I needed to leave when I got too tired I couldn’t see straight, and when enough people were asking me for what I had—and I couldn’t answer their responses quickly enough during my night hours.

(It was also convenient that my then-boyfriend and I decided that living in the same city might be nicer that cross-country dating, so the universe conspired to get me to head out to New York. Life tells you to move and change, if you’ll listen to the call). 

Financially, I knew it was the right time to work for myself when I was able to draw clients, fill up my classes on a regular basis, and when I wanted to chase the next challenge in front of me.

What do you do now as your business—how do you make money?

Ahh yes, the money question. (I suppose I thought I could get away with not answering this!)

I do three things: I run a teaching and media company (SKP Media), I consult, and I coach. From time to time I take on additional creative and collaborative projects as well—depending on what needs to be made in the world, how much time I have, and how exciting (read: “Hell Yes!”) the project is and the people are.

SKP Media is the bulk of my current time and energy. It’s where I teach writing workshops, content strategy workshops, and my newest course—Grace and Gratitude, a two-week course on cultivating kindness and gratitude in your life. We have sold-out (and over-sold) each of the courses, and during teaching months I spend a fair amount of time interacting with participants, reading and grading, running the program, and researching new examples to share with the crew.

This is where I spend about half my time, and it brings in about half of my yearly business income. With this business income, I invest in teaching equipment, the fees and hosting charges for each of the platforms I use (in addition to processing fees), pay taxes, hire a teaching assistant, and collaborate with a number of other freelancers (like proofreaders, web designers, and graphic designers)—who help get everything up and running. It’s important to note—business revenue is not the same as income, by any means. If my business is making $60,000, I might only be paying myself $30,000 depending on the variables of expenses. So reducing your expenses and living costs is a great way to help in the early stages of building.

In addition, I consult from time to time with clients who are interested in publishing, writing, content development, and social media movements—my typical clients are people interested in developing their own thought leadership platforms, need help running a multiple-month PR campaign, or want help understanding and developing their social media and content strategy.

I also take on a select number of coaching clients if there’s space in the schedule, but I’ve been keeping this part of my business quite small as I ramp up the teaching and media company, which is taking up the majority of my time at the moment.

It should also be noted that not all time is spent on activities that make money directly—writing, for example (such as this post) isn’t something that necessarily generates a lead or a sale directly, but takes a fair amount of time. Learning how to balance business-generating activities with other activities that don’t directly generate income (writing, social media posting, meeting people at conferences)—is a balancing act, and one that’s been subject to a lot of finessing.

What else do you spend your time on?

The above strategies for how I earn my income and spend my time add up to about 60-70% of my time—but I spend a fair amount of time writing, as well (as much as 30-40% of my time, if I’m lucky).

I write about 100,000 words on this blog and my essays annually, and I write an additional 30-40,000 words for each of the various program platforms I create as well, which doesn’t include the amount of writing that’s left on the cutting room floor when I go back to edit and revise.

Each morning I get up early and write, for as much time as I have time in my schedule. (Some days are booked solid with client and teaching work, so my writing window is from 7-8:30AM before my day gets off to a roaring start). Other days are luxurious when I spent 7AM—11AM writing, before getting in to begin my work. I still have a habit of writing on Friday evenings and Saturdays, as those times are “me” times that are often undisturbed by regular work calls.

There are other parts of my life that take up significant portions of time — sleeping, eating, meeting with people face to face, yoga teacher training, traveling — but this list is focused on what I do in my business life.

What about you? Do you have any other questions about making money as a creative entrepreneur?

What have you done that’s worked? Do you have any advice for small-and medium sized business owners that would be helpful?

Leave a note in the comments! 

For more from this series on entrepreneurship, small-business success, and business wisdom, check out the posts going live this month over at Evolve and Succeed. 

 

 

A Little Bit Is A Lot.

Posted on by Sarah K Peck

Feels like I just touched down in San Francisco and turned around and took off again! After getting back in town after last week’s working vacation, I’m off again to Dallas and then Austin, Texas for work, conferences and a weekend in Austin. I’m looking forward to seeing a lot of new and familiar faces in the crowds. 

If you missed it, yesterday there was a great post on Chris Guillebeau’s blog following up on the one page career cheat-sheet from last month, where Chris asked me a few questions about what it means to be happy at your job, and what tools you can use to change your situation if you’re stuck somewhere and you’re not sure what to do.

In thinking about change, however, it’s also good to remember that it can be slow at first, and sometimes not much seems like it’s happening. I get it. It can be frustrating. I’ve been there over and over again, and often I want to bang my head against the wall and ask, “why is nothing happening!??” Sometimes I get so frustrated or scared, I give up. But it’s really important to keep going. Here’s one essay I was drafting last week in my notebooks on this very subject. 

A little is a lot.

I procrastinate–sometimes, a lot, I’m afraid to admit–and the bigger a goal or dream of mine is, the worse this habit is. I’ll even throw in some productive things to do in lieu of tackling the big, scary goal or project. When I set my sights too far away from my current state, I can render myself helpless, weak, scared, or terrifically frightened.

It ends up feeling something like this:

 

In terms of growth, we often have unreasonable expectations for ourselves to scale huge walls in quantum leaps without respect for the time and energy it takes to really do what we want to do.

And when I stagnate–when I procrastinate, delay, or avoid doing something because the something I’ve chosen is just too big–then I end up doing nothing.

Isn’t that worse?

As a constant reminder, I find that there’s a general rule of thumb I keep in my pocket for whenever I feel so scared that I want to procrastinate:

A little bit is a lot.

And along those lines:

If it’s too big to do, make what you’re trying to do today smaller.

Case in point: I was working on the designs for a 200-page document. Each time I thought about working on it, I didn’t have the time, energy, or brain space to consider editing the entire document. So I procrastinated–a lot more than I’d like to admit. I tried to break it down into chunks–Sarah, do 50 pages at a time. Unfortunately, the chunks were still too big. I was too tired at the days’ end to do several more hours of work, so I ended up putting it off some more.

I reminded myself: what’s the smallest step, the littlest bit that I can do to make a dent in the pile? 10 pages? 5 pages? even just 1 page? And so I started, telling myself that a few pages was okay. It was enough to get me to start the project again.

And then I sat and did 30 pages. And the next day, another 20 pages. Slowly, steadily, I did make progress on it–by not making myself overwhelmed by trying to tackle too much.

If there’s something you’re afraid of, or you’re putting of, and you’re still not working on it–maybe make your expectations for today even smaller.

Growth is about incremental change.

Something like this is more appropriate:

Breathe.

Yes, a little step is really a lot.

Just take a little step, every day.

 ###


Business Is Not A Dirty Word: And 15 Other Important Definitions

Posted on by Sarah K Peck

The words “business,” “sales,” and “marketing” sometimes get a bad reputation. All of a sudden it seems off-putting if you look for sales or you talk about strategy. Sometimes I just say the word “strategy” and people’s eyes glaze over – like it’s boring. The common response goes something like this:

Blogging should be about your love of writing, and nothing else. Oh well, geeez, Marketing means trying to get someone to do something they don’t want to do – I don’t want to do that! Or, I don’t want to try to sell anything, I just want to do what I love and support myself. It will work out, somehow.

This is naive. I think each of these words are not only useful – they are incredibly important. Here’s a quick list of the terms as I understand them (no business school here) – in simple language. Business terms re-defined for the rest of us to use and understand. Although I will throw in a few books here and there that I found useful – for your reference.

Business: Making something that other people want.  AND ideally exchanging that something (time, value, stuff, information) for something else of value (often time or money). A business is just an exchange of goods.

Marketing: Telling your story to the people who want to hear it.

Psychology: How your mind works.

As in, I want to understand the psychology behind why people spend money on things they don’t want, and why we make bad decisions in predictable fashions.

Further reading: Predictably Irrational by Dan Ariely, How We Decide by Jonah Lehrer, The Art of Choosing.

Corporation: An entity that we love to hate. Wait, Really? It’s just a group of people with a structure.  Some Many of them are really great. People make companies, after all.

A corporation is a group of people that have common visions, goals and behaviors. It’s an organization or structure of a business. We consider ‘corporate’ a dirty word because it represents something that doesn’t fit with our own personal visions — the time, the goals, the structure, the way it works, it’s focus on profitability over people — and so it’s our responsibility to change the corporation we dislike, or leave and start a better one.

Entrepreneur: Someone who builds new things that didn’t exist before. A person who builds thing that need to be built.

Entrepreneur is just a fancy word for people who make stuff and do things. 8-year olds who sell neighborhood services from a wagon are entrepreneurs. Moms who host start-up knitting programs or online services are entrepreneurs. Bloggers who sell e-books (oh yeah!) are entrepreneurs. 

Further reading: Rework, by Jason Fried and David Heinemeier Hansson, Change by Design, by Tim Brown. The Big Moo, by Seth Godin. The Art of NonConformity by Chris Guillebeau. 

Intra-preneurs: (one of my favorite terms!) People who change things within the existing systems. People with existing jobs and systems that learn the rules to break them.

Someone who creates a new job at a company that exists is an intra-preneur. I consider myself and intra-preneur and an entre-preneur: I make new things, I do new things, and I have a ‘typical’ 9-5 job that I constantly challenge, change, and try new things with. Last year we created a new position here within the company. Voila. Intrepreneurship.

Further reading: The Personal MBA by Josh Kaufman. Do More Great Work by Michael Bungay Stanier. Mastery by George Leonard. Linchpin by Seth Godin.

Goal: A tangible, check-able thing that you want to do.

Goals are great because you can look back at what you’ve done over time, and figure out whether or not you got there.

Plan: ideas about how you’re going to get there (loosely, because you haven’t done it yet).

Further reading: Getting Things Done by David Allen, The 7 Habits of Highly Effective People by Steven R. Covey.

Strategy: a plan of attack. A strategy is a means to an end. It’s how you think you’re going to get ‘there,’ wherever ‘there’ is.

Alternatively, I sometimes define strategy as: Knowing what NOT to do.

Business Plan: what you want to do and how you’re going to do it.

Uncertainty: The feeling that you’re about to do something cool.

Further reading:  Uncertainty, by Jonathan Fields.

Deadline: A measure and tool for accountability. An short-term anxiety inducer for (on the whole) long-term stress-reduction. See also, “Discipline.”

ROI – Return on Investment. Aka, getting paid for your hard work. Or all that dang time you spent learning.

Communications. Telling your idea or story in a way that makes sense to the audience/observer.

This is important. Telling your story in a way that makes sense to the recipient, not to you. It doesn’t matter if you understand it. It matters if they understand it.

A little more complex: Telling the story of your idea in a way that achieves your goals and objectives. Communications isn’t an end – it’s a means to an end. Perhaps you want to promote a positive, happy culture – so you create an internal newsletter to highlight the achievements of your team members.  This is an internal communications tool used with an objective.

Brand: The idea you want in people’s heads when they think about your business. (Or, alteratively, the idea that is in people’s heads when they think about your business. This idea can come in all shapes, colors, visuals, or words. Sometimes it’s a catch phrase or jingle; other times it’s an image or a logo; other times its a feeling. More often than not, it’s a bit of all of these elements.

Creativity (or Imagination): Courage to believe in something that doesn’t yet exist, and using your ideas, tools, visuals and media channels to tell the story of this idea in a way that matters, to the people who can do something about it.

 

$10 for a Financial Wizard – Buy this book. (And Other Money Lessons From Ramit Sethi)

Posted on by Sarah K Peck

I get a lot of questions for people about money, finance, spending, saving, etc. I occasionally write posts on ways to save money, what it means to save for retirement, financing a car (for which I went through my own blunders) and setting up emergency savings plans. I write these from experience – and I learn through reading, studying and living life.

There’s only so much you can learn from me, however. My blog is not about money and finance. If you want to learn an incredible amount, follow these two bloggers: JD Roth of Get Rich Slowly and Ramit Sethi of I Will Teach You To Be Rich. What follows is a short review of Ramit Sethi’s best-selling book by the same name.

*** *** ***

Ramit Sethi throws tomatoes. He throws them at people and he yells at you when you’re being stupid.

He also writes one of the best books on money and personal finance of all books on money and personal finance.

Why? Because he talks to you like you’re sitting across the table from him. It’s not full of jargon and crazy money-speak, and you don’t have to be intimidated by all the numbers. Being overwhelmed by information (“paralysis by analysis”) – and being afraid of starting because we think we don’t know enough about what we are doing – are two of the biggest road blocks to achieving personal financial success.

First of all, it’s not that hard.

Stop lying to yourself and instead do something small and do something simple. Throw $50 in a bank account. Read a $10 book. Set up two automatic systems that save money for you – so you don’t have to think about it again. Give yourself enough credit that you can learn something new and try something new. You’re not an idiot.

You’re only an idiot if you don’t do anything about taking control of your own life. And your own money.

Second of all, most of what you’ve been taught is wrong.

Personal finance isn’t about saving money and keeping strict budgets and never being able to have what you want. Sethi blows many idiotic money assumptions out of the water by introducing the psychology behind personal finance and studying what people actually do and why they do what they do.

Instead of reading this post and walking away at the end of it, I am going to recommend that you buy this book as soon as humanly possible and study what Ramit says from start to finish. And then do what he says. And then forget about it.

It’s not about micromanaging your money. It’s not about becoming the smartest person on the block.  It’s about tiny, actionable steps that make managing money automatic – and therefore painless – because you set up systems that work for you.

Because above all else, Ramit tells us to get started even if it’s just a small step today and a small step tomorrow. The worst sin is inaction. The most powerful thing you can do is take a small step towards being better with money.

In the book, he covers credit cars, banks, investing, conscious spending, automation, myths about finanical “expertise,” making money easy to maintain, and how to live a rich life.  Basically a financial guru in your pocket – a chapter explaining everything you need to know about money.

If you’re lazy? Just read the first three chapters.

If you’re curious, he even covers how to finance your wedding, purchasing a car the smart way, and whether or not to buy a house. All of this, in simple terms. And do what he says – or else he may beat you with raw onions for being too stupid to do something about your own money.

A great example? Here are a few quotes from the book to get you started:

“Doing nothing is the worst choice you can make, especially in your twenties.”

“Too many of us are paralyzed by the thought that we have to get every single part of our personal finances in order before truly getting started managing our money.”

His counterpoint: “Do you need to be the Iron Chef to cook a grilled-cheese sandwich? No, and once you make your first meal, it’ll be easier to cook the next most complicated thing. The single most important factor to getting rich is getting started, not being the smartest person in the room.”

I’ll admit: I’m a subscriber to the fabulous IWTYTBR blog and I am a member of the Earn1K Club (not affiliate links) because I’ve found that the more I learn, the more I want to know. I’ve emailed Ramit before with questions and ideas – and he writes back.

Ramit speaks the truth, he’s funny, and he spurs you to action.

Go be rich – whatever rich means to you. (He’ll ask you to define that, too.)

Love this book. I’d say spend the $10.

The Pitfalls and Costs of Car Ownership (And I Need Your Advice!) Should I Sell My Car?

Posted on by Sarah K Peck

Car-free or car-stuck?

I have an important question that I’d love people to weigh in on: Should I sell my car?

Logically, the question seems to have a very simple answer: yes.

I keep writing lists and outlining the reasons why I should sell my car (and why I shouldn’t) and the balance seems to lie heavily in favor towards selling my car. And yet I’m having the hardest time extricating myself from my car. Despite giving up several things during my current ambitions towards doing and having Less, I’m still having the hardest time with the idea of selling my car.

Why? I’m a practical, logical, pragmatic person: why is this so hard to do? Why is selling my car so difficult? Even with the facts laid out, staring me in the face, I’m having the hardest time selling my car.

The prelude: why I bought a car in the first place

I used to live completely car-free. I lived in different cities and each time, I only walked, bused, or biked to get around – occasionally living the high life and taking a taxi when I felt like being luxurious.

And then I moved to California.

I lived in San Francisco for a year and a half before caving and purchasing a car. In December 2009 I bought a brand new car.

I purchased a 2010 Toyota Matrix from a dealer, priced at $17,490, with a $1000 rebate for being a recent college grad. The Kelly Blue Book value of the car, at new, was $20,049.  My purchase price was $16,490. With taxes, registration, and fees, I forked over $19,009.  Well, I actually forked over nothing – NOTHING DOWN.  Instead I signed a promise to buy the car over the next three years.  (As a somewhat-savvy consumer, I secured a 3-year financing plan with 0% interest.)

Why did I buy the car? I purchased the car because I was living 40 miles from my job and commuting an hour each way (through San Francisco, across the Golden Gate Bridge and back), and there wasn’t sufficient public transportation to get me to and from my job – at least at the time I bought the car.

I have since owned and paid for the car for 12 months – which means I have already spent $6,800 on the car payments.  I have a remaining $12,200 left to pay on the car over a 2-year period.

We all know that cars are expensive – but how expensive are they really? The actual cost break-down:

Keeping and maintaining a car is incredibly expensive. Here is a breakdown of my monthly costs of car ownership (calculated from the aggregate of one year of driving). Looking at it on paper, I’m stunned. The cost of the car has been unbelievable. In one year, this is what I’m spending:

Car payments – $529 per month

Gasoline: (20,000 miles total, 25 mpg average, gas price is $3.15 in California, $2520 annually for gas) – $210 per month.

Maintenance: for one year (4 tune ups at $109 each) – $436 annually (for year one only), or $36 per month for maintenance.

Insurance: AAA Insurance – $109 per month.

Tolls and Fees: Crossing the Golden Gate Bridge every day ($5 each way) – $80 per month.

Parking: I’m lucky to have mostly free parking, unless I drive downtown. I spend about $50 a month in various parking fees. If you count the parking tickets from San Francisco’s crazy street-cleaning schedules and signage, then I spend an average of $37 a month in parking tickets (Thanks to Mint for alerting me to this). – $87 per month.

Drumroll, please.

Every month I spend approximately $1051 on my car.

$1051! What would I do with $1051 per month!

In addition, I have a substantial amount of debt from undergraduate and graduate student loans (more on that in a post coming soon) that I’m currently working hard to pay off. My student loan payments are to the tune of $700 per month. I’ll be honest: I struggle to make the car payment and the student loan payments each month.

Today: the current situation

In November, I moved back to San Francisco, because I couldn’t stand the long commute. Commuting through city traffic is tiring and psychologically draining – I quickly remembered why I disliked driving so much. In contrast, San Francisco is a hub of public transportation options – sometimes better or worse, depending on the neighborhood that you live in.

I now live 8 miles from my job in Sausalito. The drive takes about 15-20 minutes, depending on traffic. Parking at my job is easy, but parking in San Francisco is a nightmare – it can take up to 40 minutes to find a parking spot.  I have the option of purchasing a parking spot – but those cost upwards of $300 in a city like San Francisco, and I can’t stomach how much I’m already spending on the car alone.

I now have alterative means for getting to work – I can bike to work a few days per week, depending on the day and the weather. There is also a bus line that goes to and from my work on the hour, and takes about 30-40 minutes to get to work (it doubles my commute time, but I don’t have to worry about parking, driving, or concentrating on the road).

The (easy) conclusions – and some further hesitations

I’m starting to think that it makes sense for me to sell my car. Here are the reasons:

Living in a city – with ample public transportation, alternative car-sharing options, bicycle riding, and walking – makes having a car a luxury, not a necessity.

Getting rid of $12,200 of unpaid debt is a good thing. I simply don’t have the money – and thinking about paying for the car with my future earnings un-nerves me.

There are additional costs to car ownership – insurance, gas, parking, maintenance – that will continue to add up over time. (To the tune of about $450 per month, even after I’m done making the car payments)

The current value of my car ($14,000) is more than I owe on my payments ($12,200).

It aligns more with my current values in landscape architecture, city planning, and environmental behavior.

I like walking. I also enjoy busing, biking, and exploring different forms of public transportation.

To further underscore the reasons I should sell my car:

A car is a depreciating asset, and will not add any value over time. Struggling to make these payments does not help me reduce or eliminate debt in other areas of my life.

Public transportation to work costs $4 each way, or approximately $160 per month.

If I also choose to use a car-sharing program (like zipcar or city car share) on the weekends, I would spend between $50 and $75 for a half to full day of weekend use – but the cost would be elective, and not fixed.

If I don’t spend the money on the car, I can spend the money on: ___________ (fill in the blank: student loans, emergency fund, freedom fund, retirement savings, 401K, Kiva Entrepreneurs, etc)

I’m not sure where I’m going to be living in the next 3-5 years, and one of my dreams is to live abroad for a year and learn a new language. (If I do this, I won’t be taking a car with me).

No decision is permanent. If I do end up absolutely needing a car in the future, I could always buy a new car. Selling this one does not mean that I’m never allowed to own a car again.

Last minute hesitations: Some of my fears.

I am a little bit worried that it’s a mistake to sell my car after owning it for one year – it seems that I run the risk of losing the most money that way. Some people tell me that I should wait it out for the next two years, buckle down, and just finish making the payments – because I need a car and can’t possibly live without one. (Is this really true?) People also suggest that it’s foolish to buy a brand new car and sell a car within the first year of ownership.

However, I also know that sunk costs are sunk costs: what I’ve already spent on the car is gone. What I spend in the future is still up for determination. Do I want to spent $1051 per month on a car for the next two years? (that’s $25,244!)

It seems painfully clear, on paper, that I should sell my car. And yet I get in and drive it every single day – to teach swim lessons after work, to go to dinner parties, to meet up with people at new events, on trips to Tahoe, on excursions beyond the city limits to do fun things.

I am somewhat afraid of selling my car. I’m worried that I’ll miss it a lot after I sell it – and I will wish that I hadn’t sold it. Psychologically and emotionally, I’m attached to it.

Also, I’m stubborn: I don’t to admit I made a mistake in buying the car in the first place.

Tell me, what should I do? Can I afford to sell my car? Can I afford not to?

Saving for retirement is sexy.

Posted on by Sarah K Peck

Do you speak retirement? Most people don’t. Personally, I like to sit around a campfire and talk about compound interest and exchange rates, but I sometimes get distracted by the chocolatey-smores and marshmallows – Oh wait. Perhaps that’s just me?

Retirement is something you probably don’t want to think about or talk about. It’s kind of boring* and it’s usually full of complicated numbers, jargon and equations that don’t make too much sense.

(*Or is it boring? I now find it really interesting, but it took a while of struggling to understand the concepts before I got the hang of it.)

401-k-what, Roth-how?

So you just graduated. You’re more excited about your paycheck (and the fact that you have one), and paying your rent – than you are about understanding that 4% your HR department keeps talking about. Quite frankly, it’s a lot easier to ignore retirement and leave it until later – but how much later?

In the beginning, all of the numbers and jargon are really confusing. But being confused isn’t a reason to wait until later.

If you don’t get it now, you probably won’t get it later, either.

At my first job, we weren’t eligible for retirement benefits until after our first 6 months of employment. During that time, I spent many, MANY hours setting up sessions with our Vanguard representative and talking to HR about our employee benefits. I read the entire employee manual, and, still confused, pestered our finance department and HR about economics lingo, profit sharing, and retirement benefits. I read a whole bunch of books. It is confusing. I learned a lot. I probably annoyed more people than I would have liked, but sometimes you have to pester people with questions to understand what it is that you’re trying to do.

The point? First, ask lots of questions, and if you don’t understand the answer, keep asking people questions until you are confident in what you’re doing.

Second, I learned a lot, and I kept good notes, so this post should help you learn a bit without necessarily having to do quite as much work as I did.

What is retirement?

Retirement is that wonderful time when you get to stop working and do nothing for the rest of your life. Well, that’s how some people look at it. Not everyone wants to retire – many people will continue to work part-time well past age 65 and into their 70’s and 80’s. The idea, however, is that saving for the future will afford you financial independence, give you something to live off of in your old age if you do choose to stop working, and help to finance all those pesky medical expenses that tend to appear as our bodies get older and weaker.

How to save, how much to save, where to invest, and how much you need are the essential questions of retirement planning. (Some great resources I like are listed more extensively below. I am not a financial expert so if you want to talk to a financial planner or retirement expert, try another blog.) This post is just a frank recount of what I’ve learned over the past year from reading and experimenting.  If you’re new, confused, or struggling to understand some of the basic tenants of personal finance – particularly about retirement – this post tries to keep it simple and relatively easy to understand.

How much are YOU currently saving?

With a few exceptions, when I talk to my friends in their 20’s and 30’s – most of my friends admit to not having anything saved for retirement or not knowing anything about what, how, or why to save for retirement. I don’t care if you think you’re going to work until you drop, or if you’re in between jobs – having savings for the future is going to be crucial.

Having savings is having freedom.

Saving for the future means you have the option of doing what you want.

But for some reason, most people aren’t saving money. They don’t know how, they don’t know why – or they aren’t aware of the implications of not planning for the future.

I’m scared. You should be scared.

From what I can tell, there are several big problems our generation is facing:

  1. You make less than your parents did at your age. “The average salary of 25 to 34 year olds has fallen 19% compared to 30 years ago (adjusted for inflation).” (From Forbes Blogs, Sept 2010)
  2. Life is more expensive relative to previous generations.   Cars, homes, ipods, technology, gadgets, and excessive consumerism stretch our-already limited budgets. And if you think life is expensive now, watch the costs get more expensive as you get older
  3. There are fewer 20-somethings working in today’s economy.
  4. Many people in their 20’s aren’t saving much, or anything, for retirement.
  5. Generation Y-ers are straddled with debt from student loans, cars, and homes.
  6. Benefits aren’t the same. Not all jobs come with great benefits packages. Read the fine-print: is your job covering your needs?
  7. Government social security and medicare aren’t sufficient to cover the costs of your retirement needs.
  8. We are going to live a lot longer in retirement than our parents or grandparents will. They are going to kick it around age 80 or so. You might live until you are 100. Or later.

For an internet-savvy generation, and for a set of self-made talent with lots of smarts, this surprises me.

You’re the ONLY one who can put you first. Put yourself first. Save smart. Saving for retirement is putting pennies in the bank for your future self. Plan for your financial independence. Enjoy your freedom.

What’s the point of retirement?

Why do you care about retirement? Why should you bother thinking about it today, right now, and get it figured out?

In short, here’s what I came up with: we are going to work for about 30-40 years of our lives, give or take a few years. Then, around age 65, you’re probably hoping to “retire.”

Answer this question: how are you going to live from age 65 to age 100+? Not only does your current income have to support your lifestyle now, it’s also somehow supposed to fund 35+ years of your life when you won’t be working anymore.

If you work half your life, and are retired for the other half, does that mean that 1/2 of your current income should be saved for retirement? (And if so, are you currently saving 50% of your income?)

Fortunately, the answer is no; you have time, compound interest, and probably a few employer programs working for you, especially if you start saving at a young age.

The general estimates suggest that you should save between 10% and 20% of your income each year for retirement. And if you are planning on taking any significant amount of time off – say, to have a baby, travel, or go back to school – you should factor that into your planning and bump up your savings accordingly.

Barrier # 1: Not knowing about retirement (or saving).

Hopefully I lit a fire under your ass with a bit of fear-talk above. I worry about my future. I want to achieve financial independence, pay down all of my student loans, and never HAVE to work for anyone because I need the money. I want to work doing work I love, because it makes me happy – not because I need the money. (I assume you have similar goals).

In simple terms, retirement means saving for the future.

The first barrier to successful decision-making is information. People just don’t know much about retirement. Retirement is confusing. There is a lot of information out there. Not understanding it is not a reason to not think about it. As with anything else, start learning.

So, stop being stupid. I was stupid at first – and I felt dumb not knowing any of this. So I’ll save you the trouble by compiling some great resources for you.  Here are some useful tools (none of these are affiliate links) to start learning:

Great Resources:

Barrier # 2: Not having goals for the future.

Okay, so now you have a vague idea of what retirement is and why you might need to save money. Perhaps you’re now so psyched to save money that you’re ready to do it – NOW, TODAY.

Good! But how much should you save?

Well, that’s step two: Figuring out your personal financial goals.

Is retirement for everyone? Not everyone needs to save for retirement. Figure out what YOU want to achieve in your current, future, and elderly retirement ages, and then put that plan into action.

Some people suggest that retirement – and working a 9-to-5 job for 40+ years and then not working – is an outdated model. There are a couple of schools of thought on this regard.

  • Some people don’t plan to stop working at age 65. This is called the “work until you die” mentality. You don’t neccessarily have to plan for retirement – just plan to keep working until you kick it. For some professions, this makes sense (many construction jobs have a high death rate in just a few short years after retiring, unfortunately, and so even though they have pension plans and built-in retirement benefits, the workers have a low rate of realizing their deferred earnings). For others, they want to live within their means their whole life – and they plan to work through retirement.  If you don’t mind working until you’re 95 and in a walker, do nothing.
  • Wealth Accumulation. Some people want to be millionaires before they hit the big 4-0. These are your frugal, penny-pinching, or otherwise regular friends who set themselves up for success with goals, automated finances, and direct deposits. Saving money and accumulating wealth is about spending less than you make (by saving more OR by finding ways to earn more), measuring what you do spend and learning about your spending habits, and figuring out a realistic plan that works for you – often through automated finance plans or thrifty money-making plans. Alternatively, many people promote minimalism as an alternative to excessive consumerism (and thereby can earn more money by spending less), or alternative lifestyle designs.
  • Saving just enough. Other people want to strike a balance: they accumulate enough to live off of but not so much as to leave a legacy or will behind.  This plan does not mean you don’t save money. You just aren’t interested in accumulating excess wealth. (See Chris Guillebeau’s description)

Here’s the point. Write down your financial goals. Here are some good examples of great goals.

  • Pay down your [school, car, loan, house, credit card] debt. Basically, get out of debt.
  • Save an emergency fund.
  • Save 10% in a retirement fund each year.
  • Have $100,000 in retirement savings by age 35.
  • Build an investment portfolio.

So, Sarah, what does that mean for me right now?

A general rule of thumb that helps me figure out my retirement savings (and I am not a financial planner, so go to one if you’re confused because they are experts and they are great – and by all means, take my words with a grain of salt): You should *roughly* have the equivalent of one year’s salary saved in your retirement fund by the time you reach age 30. If you’re hoping to make $50,000 a year by the time you are 30, then aim to have $50,000 in your retirement account by the time you hit age 30.

For example: if you start working at age 22, with $5000 in the bank, you’ll need to save about $400 a month to reach $50,000 by the time you hit age 30.  There’s a handy tool on wallet pop that I like to use to calculate my savings over time.

(Note: the inputs I used were $5000 to start, 5% interest, $400 per month, ignoring taxes and inflation for simplicity).  Go plug in a few numbers and see what you get.  It will get you on track.

And if you read this far …

You’re the ONLY one who can put you first.

Put yourself first. Save smart. Saving for retirement is putting pennies in the bank for your future self. Plan for your financial independence. Enjoy your freedom.

… Saving for retirement is sexy.

Sexy, I said it.

Sexy, because being smart is hot. And people who know what to do with money and how to plan for the future are smart. Because it’s YOUR life. And if you’re frittering your money away on things and people and excess, perhaps you’re not thinking clearly. It’s your life, your choices, and your future.

I strive for financial independence.

I will get there one day.

I want to pay down my student loans in the next 6 years (by age 33).

I want to be a millionaire by age 40.

I have an insance amount of gratitude for the financial gurus and blogging pioneers that talk honestly and openly about debt, saving, making mistakes, tracking your spending, and achieving financial independence. I only wish I had learned more and started younger.

So, hop to it.

Start saving.

—-

Like what you read? Like us on facebook. Got a question or a comment? Leave it in the comments below.  This blog is a work in progress and I appreciate any and all feedback. Also, you can find me on twitter. 



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Budget sense: how much money does food cost me?

Posted on by Sarah K Peck

So you’ve graduated from college and you’re (hopefully) not living at your parents house anymore.  You have a job, and even though it’s not THE job that you eventually want, you’re on track to start making your way up the ladder and working towards the career you want to have.

Your days have changed a lot from college – you no longer wear sweatpants to class, you have to brush your hair and your teeth every morning, you have an alarm clock that goes off exceptionally early, and you don’t live off of ramen noodles and beer.  There aren’t any dining halls for you to eat lunch in the middle of the day, and your parents aren’t around to feed you dinner. When you get home, you have to cook yourself meals – and perhaps prepare a lunch for the next day.

New workers often anticipate that they’ll be able to do more with their paycheck than they really can – forgetting how many bills there are that add up each month (gas, electric, cable, water, heat, garbage, rent, renter’s insurance, car payments, fuel, and food, to name a few). Some things can’t be compromised – the gas you pay to get to and from work in your car, perhaps, are fixed costs that use up part of your income. Other parts of your paycheck are more flexible: you have choices in how you spend your money, and there are lots of ways to save money if you know how.

Food can be an unexpected cost – see tips for saving money grocery shopping. If you buy lunch for $10 a day every workday, you’re spending $200 a month – or $2400 a year – just on your lunch.  If you go out to eat for dinner for $20 – that includes the meal, drink, and tip (not including the driving and time to get to and from the restaurant), seven days a week, that’s $600 a month – just on dinners.  That’s $7200 a year.  Just for eating lunch and dinner, you’ve just spent $9600 on your meals.  That is quite a chunk of money.

On top of that, perhaps you go out to fancy dinners once a week – or dinners with friends.  And, you have to feed yourself breakfast in the mornings and meals on the weekends – so perhaps another $400 a month on groceries. What about that breakfast coffee and bagel you get every morning before work? $5 a day adds up to $100 a month – another $1200 out of your pocket.

Guess what: you’re easily spending $10,000 a year on food.

It’s easy to overlook the cost of food, because it adds up in small quantities on a daily basis.  Unless you’re superhuman and can get by without eating on many occasions, food will be an expense that you have to manage.  Here are some top tricks for the budget-savvy.

1. Make your own meals at home. Cooking meals at home can add up to a lot of savings by the year’s end.  Double your savings by cooking for two – and have the leftovers for lunch the next day.

2. Buy a coffeemaker. Don’t, don’t, don’t buy coffee from a coffee shop.  $4 a day can quickly turn into $6 a day or even $10 a day – and that’s just on breakfast, before work starts.  A coffee maker can be as cheap as $20 (although if you want to learn to make your own lattes, perhaps $60-80 might get you a nice machine). Think about buying one for work as well as one for home if you’re a coffee fiend.  Drink tea? Buy an electric kettle to plug in at work.

3.  Make your lunches. A loaf of bread, a jar of peanut butter, and a jar of jelly will set you back $12 — and make you at least a week’s worth of lunches.  That’s less than $2 per lunch.  Try to find a food shop that will sell you a sandwich for less than $7!  Not in the mood for PB&J? Frozen burritos, frozen lasagnas, turkey sandwiches, even salads will be less than half the price if made from home.

4. Buy snacks in advance. The same advice for lunches applies to snacks.  Never snack out of a vending machine (it’s unhealthy, for one) – the markups can be as much as 500% or more.  If you’re a twix lover, go to costco and stash a box at your desk. Unhealthy, yes. Also cheaper.

5. Cook mini-breakfasts on the weekend – and freeze them for later. A good friend of mine bought single-serve microwavable tupperware and makes a week’s worth of oatmeal with fresh fruit in individual serving cups.  Total cost? $5 for the large can of oatmeal and $5 for the bag of frozen fruit.  She can make a month’s worth of breakfast oatmeal from the two.  That’s $10 for breakfast for a month.

6. Make a budget for eating out. The first step to any budget is knowing what you’re up against – so take note of what you spend each day (save those receipts! And keep a notebook!) to know what your monthly expenditures are.  Can’t keep track? Use your debit or credit card for only food for two weeks and look at your statement to see what your expenses were.  You may be in for a food shock.

7. Try a  “cash envelope” for food for the week. A good way to start any budget is to limit your spending by using only cash.  If your weekly expenditures are $250, try taking $200 out each week and seeing if you can make it work.  Leave your credit cards at home and only use your “lunch money envelope” for food purchases.  Watch where your money goes and learn more about your spending habits – small steps are the best way to budget success.
The bottom line? Food is expensive – and necessary.  Keeping your options open and using your money wisely will lead to financial health and security.  You’re not made of money, so choose what you want to buy carefully. Happy eating!