While Suze Orman has her Action Plan, I have also been thinking of my own. The first is general but the rest should be good blog fodder. They also fit into the concept of Kaizen and continuous improvement. Not really resolutions… I just want to keep making small steps forward.
Project #0 – Make Sure You’re Valuable At Work
I basically think of job security like this. Would life be difficult if you’re gone? Make sure it would be. 🙂 In addition, networking can be hard for the introverted like myself but necessary.
Project #1 – Back to Basics, Conscious Spending
Tracking Spending
People either love or hate budgets. But can you say right now how much your annual expenses are? I think that is more important. I have already estimated that my family spends about $3,500 on housing per month (!) and $1,500 on everything else. But I want to drill down further.
I plan to try out the newest versions of free online money management tools like Quicken Online, Mint, Geezeo, Wesabe, and Yodlee MoneyCenter and review each one.
I’ve already started using Quicken Online for January, and it has already had a lot of improvements since it became free a few months ago. This old screenshot is obsolete.
Critical Examination Of All Expenses
Next, I plan on going through every single expense category one by one (housing, electricity, dining out…) and looking at each with an open mind. Am I willing to move somewhere with cheaper housing? How about when I retire? Should I install a solar water heater? Buy a new car and drive it into the ground, or buy used? I also feel I should prioritize all expenses.
Project #2 – Build an Online Store
I don’t get too excited about selling a physical product as a main job, primarily because it is so labor-intensive if you do the inventory yourself. I’m more interested in either drop-shipping or dealing with electronic product, even though it is a very crowded field. Investigate profit margins. I also like the idea of playing with the back-end software like shopping carts and content management.
At a minimum, it will be a educational hobby with small start-up costs and one that might make some money. Lots of trial and error expected. Want to tell me about any good drop-shippers? I can keep it a secret. 🙂
Project #3 – Rental Property Search and Education
I don’t think the real estate market in most areas will be picking up anytime soon. But with lower prices and real estate agents with more time, I think later this year will be good time to learn about possibly being a landlord. I might hire a Realtor to run some searches, and also do browse some foreclosures. Learn to run the calculations and properly estimate rental income, expenses, and tax benefits.
This way, I can recognize an opportunity when I see it, and act accordingly. As part of being ready, I should also commit some cash to this goal.
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http://en.wikipedia.org/wiki/Efficiency_Movement
kaizen is just a fancy ripoff of something that has been talked about for over 120 years… I think its akin to applied common sense.
sorry for the repeats… it kept showing an error… then all 3 went up at once…
like kaizen, i said the same thing, 3 different ways.
I’m also very interested in landlording and foreclosure properties, although I’m very far away from having the initial cash to participate in a venture like that. I’m hoping you write about your experiences as you attack this project.
Hi MyMoneyBlog,
First, best of luck with your money ambitions in 2009! Analyzing where you’re spending your money with a critical eye is a great first step toward reducing how much you spend. As you probably already noticed, you can get an idea of where you spend your money in “Trends” within Quicken Online, and take it from there!
Also, if you’d like updated screen shots of Quicken Online for your blog, or any other info., please let me know.
Happy Conscious Spending,
– Chelsea, Quicken Online
I’m terrible at networking, it’s already too painful to spend 40+ hours a week with my co-workers. I’m valuable enough that it doesn’t hurt me much – any benefit isn’t worth the time input to me.
I want to learn more about rentals too, some houses are starting to pop up that would be cash flow positive as rentals. Or I may convert my current house to a rental and move up. Let me know if you find any good resources to educate yourself on the biz.
I think everyone should strive to be a valuable employee, but in a large company it’s important not hoard knowledge and become too specialized. You may end up doing the same job for the rest of your life with little chance of promotion.
Also, focus on work that isn’t routine, because they’ll eventually find some technology to replace what you do.
I currently use Mint.com to manage my money online and I am very impressed with it. I started using it 2 months ago.
I am curious about the online money management sites too, I have been hearing a lot about Mint and Geezeo!
Glad that you are setting goals for the year. Especially in this environment, we all need it.
I’ve done all the projects in the last a few and wanted to share some of my lessons on especially project 2 and 3.
Project 2:
Research and searing for the right vendors are the most important. You can build customer base once you have products to sell.
I was out of job at that time, so I was working fulltime 12 hours a day and it took me about 2 months to build an inventory of 900 items selling kitchenware. Not big, but enough to get me started. It’s not easy. It takes a lot of time, patience and research. But once the store is up and running, the hardest part is customer service. I then spent generally 6 hours a day answering emails, packing, printing labels and drive between postal office and Fedex… So, it’s very hard work. My vendor does drop ship here and there for me, but not on all items. Plus, I like to control what I ship. Anyway, after a while, I realize my software engineering job pays more with less time…
Project 3 being a landlord
Now, THIS is a money making machine, if you give yourself time. I started in 1991, and it paid off. The early rentals helped me to buy more expensive commercial building and the rentals I haven’t got rid of is self sustained with positive cash flow and handsome equity. It’s defintely worth doing it.
The key is good location where you can attract good tenants. I bought at University areas to attract grad school students and staff. I also bought in hip areas to attract single professionals. Anyway, buy in an area you would like to live yourself when you were younger and single. And run credit check on your tenants. EVERY TIME! It’s worth the $45.
I second using Mint.com. I wanted something that was sufficient but didn’t take a lot of time. They have had every account so far that I deal with financially (student loan, banks, investments, etc).
What is really impressive is their ‘Trends’ application. This app does an excellent job of showing you in what categories you spent your money on any scale from month to a year. Looking at the Trends really shows me areas that I can improve on in the coming year. I also like that it shows you what other people are spending in your area in the same categories.
Vern is right – he who is irreplaceable is unpromotable.
Jonathan,
Where you planning to look for rental properties?
you probably are not considering California..
My Realtor recommended Albuquerque,NM or Oregon. I am still figuring out where to buy rental houses
just what I was thinking, uncanny. Each item listed above has been in my mind. I figure be nice and helpful at work and they’ll think twice before laying you off even if you’re not excellent at your job.
And I like the electronic/CMS angle, I am sure the margins are better and take less time but I don’t know what that is yet.
I’ve also been looking at Mint and Wesabe and I sort of wish the two would merge, I like the network support aspect but the other is stronger at analysis and reporting.
Finally, owning extra property would be ideal a good way to diversify. My Aunt and Uncle never bought stocks just property, there’s sweat equity if you clean them by yourself between renters but it seemed to pay off in the end.
I think too many people focus too much time on cutting expenses that are really small. Cutting grocery bill by 10 bucks is not worth the time if the time can be applied to macro managing finances. At the end of the day, one wants to afford a lifestyle that is congruent with their income and goals.
I personally think that Jonanthan’s time is well spent on thinking about more entrepreneurial stuff. than worrying about cutting another 100 or 50 bucks in his expenses. His expenses are already congruent with his income and goals. Thats just my opinion.
I rarely do this kind of judgement. But I have read your blog for quite a long time to understand that you might overreaching to cut your expenses.
I believe you are striving for lifestyle efficiency rather than lifestyle minimization, like say, earlyretirementextreme.com
There’s a woman at my bank that’s backed here career into a corner. No one will ever promote her bc she’s so valuable in her current role. She’s not the type to take risks so I don’t see her shopping around for other jobs.
The key to success is to be a fast learning generalist.
Good luck on real estate, keep us informed about that one.
Promotions? Seriously – you are joking right? Generalists like middle managers are a dime a dozen and the first to be canned in a “rightsizing”. You’ve got to be delusional. Specialists are where the $$$ are at.
Ever hear of the Peter Principle? Look it up.
Promotions are so last century.
I’ve tried a few online money management like mint and quicken online as well. I realized it was just as easy to not use them. Maybe if I had more online accounts I could bring together, but I prefer to use a simple excel spreadsheet.
Good luck with all your other goals!
I agree with the part “make sure you’re valuable at work”.
I own a small business and recently we needed to make some cuts.
taking advise from a lot of our customers which are medium to large corporate company’s. this is how it is done.
the first lay off is called trimming the fat.
1) who calls out sick the most.
2) who are the trouble causing employees, like snitches, backstabbers, gossipers.
3) who does just there job, but never really gives any extra effort.
those in those 3 category start from one and work your way to the 3rd
they are the first to go….
usually the employees that are the first to go, they are usually
not to useful to the company any ways, they are part of the fat
that needed to be trimmed.
it is best if you were part of the first batch of the lay off, not to mention that in your next interview. it is best to say the company was getting very slow. had a lay off, I was not part of that one. then another lay off, missed that one also. but unfortunately for me they had a third lay off and I was one of them….
Weakonomics comment is very true – backing your career into the corner
I am looking forward to your budget software comparison article. Currently I use Mint.com and really enjoy being able to track all of my 20+ accounts.
I own a few properties in the New Jersey area. I created an excel spreadsheet that I can easily run the numbers on any property, making your analyses really easy. Let me know if you want me to send you the template.
I highly recommend tim ferris’s 4 hour workweek if you are going to start an online business. he has some good tips on minimizing work.
1) Check out vacancy rates on rental properties in areas you research. WSJ article based on REIS group indicates Charleston SC –one of the top five places to visit in the US had it’s vacancy rate go from 9 to 11% according to their research. Think about the odds of buying rental property there for example.
2) In all of the years I’ve had rental property I’ve met a couple of savvy realtors that know what a good buy really means. To most realtors a good buy is a price where a house will move in the marketplace. Much to much for an investor to pay and come out in the end.
3) Look at Biggerpockets tools section “property analysis”. I find it very helpful to run the numbers against.
4) Rents are terribly flat right now. Look at the “looking for housing” section of Craigslist in the area you’re interested in. That’s your market. If there aren’t any entries, there’s good reason to suspect it’s a bad time to invest.
I tried Project #2 this year… looking to try Project #3 next. I’ll be buying a new home and renting out my old one… Ought to be interesting. My goal is to add one new stream of income every year.
For what it is worth, Mint recently won some magazine contest for best online money management software… I think it was MONEY magazine… (Or Smart Money, I get them all confused…)