The Investing Monk

Top Five Side Hustles That Will Help You Survive Lay-Offs

May 26, 2013 by Vipin Leave a Comment

You’ve just been laid off. That sucks! Now what? Unemployment will only go so far and will eventually go away. So, you need to make money until you get rehired or start your own business. Here are my top five hustles that will help you through.

The First Hustle

This first hustle is not going to make you money, but it is key to your long term success. You need to start networking. Contacting family members and friends is where you start. Ask them who they know so you can contact their acquaintances. Then follow up with your former co-workers and see if you can get contacts from them. You need to expand your network and make sure people are aware of your availability.

An interesting fact is most jobs are found by someone referring someone else. Word of mouth is the most powerful way to find jobs and to get hired. This is especially true if you are involved in a specific industry or trade. People will know about you and can help you out. Never underestimate the power of networking.

The Second Hustle

Review your assets and see if you can sell some stuff. Having a garage sale will get you started, but having your stuff on the driveway week after week will get old. The next step is to graduate to flea markets. It can be a pain transporting your stuff every weekend, but it can be very profitable.

If you have a talent for spotting bargains, you can often purchase items and resale them for a profit. Many people do this for a living, so if you find you enjoy doing this type of business, it could develop into a side project even after you get a job.

Use Craigslist to list some of the larger items and appliances you have to sell. If there is a unique or collectible item, Craigslist may be the best place to sell it. You can screen people by providing a good description and setting a realistic price. You can also purchase items to sell if you see available bargains.

The Third Hustle

Using the internet. If you are not already comfortable with the internet, then start educating yourself now!

In the second hustle, you were selling items directly. By using the internet, you can start selling items on Ebay. I know several people who make good incomes by selling items on Ebay. You do need to invest in a camera to take pictures of the items you sell. You will also need to spend some time going through the Ebay tutorials. They have extensive training. The training will aid in marketing and selling your items.

The Fourth Hustle

Get online and go to your nearest Craigslist site. You can search for odd jobs that fit your specialized skill set. There are also job postings that you can review and see if you are interested in applying.

You can also list your skills and see if anyone wants to hire you on a temporary basis. On the listing from my area, services offered ranged from beauty to writing/editing and included household, skilled/move and automotive.

There is also a category for “Gigs”. Some of the listings included the need for a c++ programmer, a virtual assistant, TV show study. These are short term projects that can get you some money fast.

The Fifth Hustle

Start a business/ find work online. There are many types of businesses you can start online and be able to make some cash. If you have any computer skills or writing skills, you can develop a “Fiverr” gig. There are several websites that you can post something you can do for $5.00. The website takes a commission when you complete the project, but you can make some quick cash if you services are in demand.

The types of “gigs’ range from the Fun and Bizarre – “I will write any message on my lips and take a high res photo for $5”, “I will put your message on my tum tum for $5”. To Graphics & Design – “I will design logo for your website or company for $5”. Other categories include Gifts, Video & Animation, Online Marketing, Writing & Translation, Advertising, Business, Programming & Tech, Music & Audio, Lifestyle and Other.

All you need is some imagination, a computer and a simple skill.

Getting laid off can be devastating. Unfortunately, in this economy, it happens all too often. What is key during this transition period of your life is action and attitude. Taking action, no matter how painful will always have positive results. By taking action you will keep your attitude positive. When looking for employment, having a positive and upbeat attitude is critical.

Remember, the best hustle is taking action, no matter what it is.

What Should You Do With Your Tax Refund 2013

May 25, 2013 by Vipin Leave a Comment

First of all, congratulations on getting a tax refund. This means last year’s tax planning protected you.

For this article, I am assuming the tax refund is net of payments applied to the first quarter estimates and the tax planning for next year is complete. For most people, this will not be an issue, but if you are starting to pay Uncle Sam when filing your taxes, consult a tax professional, they can help you with tax planning.

The next assumption is the tax refund is net of spiritual obligations. All the major religions in the world have some form of tithe or obligation that is paid. Each person’s situation is unique, so the tax refund amounts are assumed to be after the spiritual obligations are addressed.

Another assumption is your retirement account has been taken care of. For most wage earners, the contribution made from your paycheck into your 401K or pension plan will take care of this. If you are self employed, you should be taking care of this as part of managing your business. If you do not have or have not funded your retirement account, the refund should be used for that purpose first.

What you should do with your tax refund will depend on the size of the refund, what your current economic situation is and if you have already made plans for the refund.

The following are just guidelines and should be modified to fit your situation.

The Small Refund

If your refund is small, say $100 or less, then spend it on something fun. You have worked hard all year, treat yourself and your loved ones to dinner out, go bowling, buy a computer game for the kids. Sometimes having an unexpected treat can be therapy for the whole family.

The Medium Refund

The size of this refund is probably the most difficult to deal with. It is not big enough to have a major impact on a bill or purchase, but still big enough to make a difference.

The size will vary depending on your income level. For a single mom, $300 would be a lot of money, while someone who is making $80,000 a year, $300 would be on the smaller side. What is important is that it can make a difference even if it is small.

I suggest you split the refund into thirds and do the following:

The first third should be set aside for “fun”. (You can see a theme developing here.) You should use this to treat yourself and family. This should be done guilt free as you used Uncle Sam’s Bank as your savings account. Celebrate having saved some money!

The next third should go into savings. Unless you have six months of cash available to you, saving some of the refund in an “emergency” fund will help give you some peace of mind. This should be in a place that you can quickly get to.

You should not feel guilty about using it in an emergency or when an unexpected expense arises. A good example would be getting a flat tire. Instead of putting the cost of the tire on a charge card, you could use the emergency savings to pay for it. Having cash available for unexpected expenses can be liberating.

The final third of the tax refund needs to do one of two things. Service debt or add to investing assets.

Depending on your situation, servicing debt could be the most prudent course of action. Reducing credit card debt should be the first priority for everyone. The current interest rates on credit cards is horrendous. Paying an extra 10% to 23% on a purchase every month eats away at your cash flow and limits options. By far, the first priority should be to eliminate any credit card debt.

If you are meeting your monthly obligations out of normal cash flow and credit card debt is gone or at a minimal level, the other option is to start or add to your investing account.

What is an investing account? It is an account you start with the idea of building capital to purchase or invest in income producing assets. This is where you eventually purchase assets that pay you instead of the asset losing value. This is the key to financial wealth.

The Big Refund

The big refund can be a game changer for some and can be a signal tax planning is needed for others. What you don’t want is to have a large refund every year. That means you are overpaying your taxes. By reducing your payments to Uncle Sam, you can use the extra cash flow to reduce debt or increase your investing account.

The first thing you do with the big refund is to have some “fun”. As before, spend some of it on you and your family. Depending on the size of the refund, you may even want to use it for a vacation. For some families, that is what the tax refund is for. It funds some or all of the summer vacation.

The next item to spend at least half of the big refund on is to reduce debt. Target credit cards first then look to see if an auto, boat or personal loan can be reduced or eliminated. Having one less bill to pay every month can be liberating.

Next look to see if you need to fund an emergency savings account. You may only need to have $500 or $1000 set aside.

Finally, with the rest of the monies, start or continue to fund your investment account. After a few years your investment account may be ready to purchase an income producing asset. With a big refund, it may push you over the top an you can start investing in mutual funds or have enough cash to start a stock portfolio.

To summarize, there are many ways to use your tax refund. First, treat yourself and family. Then reduce debt and start funding your investment account. Only you can make the right decision.

Filed Under: Investing Advice, Personal Finance Tagged With: tax refund investing, tax refund what to do

Five Must Know Personal Finance Basics

May 24, 2013 by Vipin Leave a Comment

What are the primary financial basics everyone needs to know? Below is a list of some key concepts that will help to build a solid foundation.

Budgeting

Of all the financial basics, budgeting is the most critical skill to master. Knowing how much money is coming in and how much is going out is basic.

Most people know where their income is generated from. Most people have a job and the paycheck is the major or only income source. Having to live from paycheck to paycheck makes a lot of people keenly aware of how much money is coming in.

What most people don’t realize is where their money goes to. We now live in a society where you can buy most anything 24 hours a day. Coupled with the rampant materialism, keeping track of where you spend your money can be a difficult task.

Actually, setting up a budget is fairly simple. The hard part is developing the habit of tracking income and expenditures on a weekly or monthly basis. The exercise of recording transactions will help clarify where the money comes from and goes to.

For the individual, you have the flexibility and freedom to “work” your budget. You can make adjustments and reap the benefits and consequences in the privacy of your own mind.

When you are married or have someone else you are sharing your life with, budgeting becomes complicated and stressful. Key to making the process as easy as possible is to:

agree on goals
be honest with each other
be flexible
be gentle with each other
set a time (weekly or monthly) to work on the budget together

Budgeting provides the information to help make decisions. It provides a road map to help make daily decisions.

Saving

Developing the habit of saving a portion of your income consistently can be key habit that provides security in old age. Savings will also provide options and opportunities in the future. In the US, the habit of “saving for a rainy day” has been lost. For 2013 the United States is projected to rank 18^th out of 26 of the most industrialized nations in the world. Only Hungry Korea, Canada, Japan, New Zealand, Finland, Estonia and Denmark rank behind us.

Having savings provides an asset that can help in a multitude of ways. If you develop enough savings, you can invest in income producing assets. Wealth builds on wealth.

One of the shortcomings of the US educational system is the lack of financial training. Fortunately the internet has an abundance of information about saving, investing and managing finances. The bedrock of all financial success is the habit of saving.

Compound Interest

Gaining an understanding of how compound interest works and its power over time is a key concept. Learning about the impact of compound interest early in life will allow a few savings “seeds” to grow into “trees”.

An example is putting $1,000.00 into savings. After 20 years it will grow to:

At 2% interest – $1,485.95

At 3% interest – $1,806.11

At 4% interest – $2,191.12

At 5% interest – $2,653.30

If you add $1,000.00 each year for 20 years the results would be:

At 2% interest – $26,269.26

At 3% interest – $29,482.60

At 4% interest – $33,160.32

At 5% interest – $37,372.55

As you can see, over 20 years the compounding effect can be tremendous. The earlier you start, the more impact compounding has.

Insurance

Understanding and using insurance is another basic skill to have. We all know insurance is required if you own an automobile. New legislation is requiring all US citizens to have medical coverage as of January 1, 2014.

So, what is the big deal about insurance? In a nutshell, it helps to moderate risk. This is the risk of loss due to injury, accident or death.

What type of insurance coverage do you need. How much coverage do you need of each type. And, how much should you be paying for it. The answers to these questions change over an individual’s lifetime. They must be assessed periodically. Grasping the concepts and knowing where to go to get correct and relevant information is key for everyone.

Diversification

This concept not usually on everyone’s must know list, but I feel it is an important concept to grasp and apply.

The ability to protect yourself from risk by putting your assets in different investments is the most common application. However, you need to understand income sources need to be diversified.

Relying on one job for your income can be very dangerous. Long gone are the days when you started with a company and 30 or 40 years later you retired with a pension. In today’s world, you are the “Chief Executive Officer” of your life. You can specialize in a profession, but you need to be flexible in your skills set to be able to change jobs, move into a different career or move to a different area of the country.

There are no guarantees in life and you have to acquire, nurture and develop skill sets and income sources to protect yourself and your family.

Spend time exploring this concept. The more diverse your skills are and the people you know, the better off you will be.

The above are what I feel are must knows for everyone. If you develop an understanding of the above concepts, you will have a sound basis for developing and growing a viable financial future.

Filed Under: Personal Finance Tagged With: Basics of personal finance, best personal finace advice