guest articles

This is a guest post by Leo @ Zen Habits. More information about Leo and his blog is available towards the end of this post.

Life has a tendency to get complicated. We have more to do, more to keep track of, more possessions, more places to go, more paperwork, more incoming information, more to remember. Over a number of years, all of that can get overwhelming — and expensive.

For myself, simplifying my life in various ways has allowed me to reduce my expenses and increase my savings. With math like that, it won’t be long before simplifying will lead to prosperity.

Now, simplifying doesn’t just apply to finances — although it definitely can do a lot for your finances. But it can be applied to all areas of your life, and by doing so, in most cases, I’ve reduced my spending and increased my happiness and overall wealth.

Before we get into the details, imagine a simplified life for a minute. For me, it has meant reducing the clutter in my home, leaving my house free of visual distractions, free of messes (for the most part), and more visually appealing. It has reduced my stress and made me more calm. But a simplified life is more than just reducing clutter — it is reducing your commitments, so you are not so busy. It’s simplifying your work life, your finances, your routines and systems. Imagine a life where you have less to do during the day, time to spend on yourself and your loved ones, time to focus on what’s really important instead of distractions, to focus on the work that’s truly essential.

This is the type of life I’ve been striving for, and it has reduced my stress, increased my productivity, and improved my overall happiness. But let’s take a look at one of the best side effects of simplifying: how it has improved my finances.

Here are just 10 ways:

• Less maintenance. By reducing your possessions, you reduce the amount of maintenance you need to do on those possessions, saving you both time and money. And if you have a drastically reduced number of possessions, you could simplify even further by moving to a smaller home, as you no longer need all that storage space. A smaller home means lower maintenance costs as well.

• Less wasted time. In your work life, you often have way too much to do. But if you focus on what’s really essential in your professional life — those tasks that really make you money in the long run — you can eliminate much of the non-essential stuff, and use your time more wisely. You can now do more of these money-making tasks (and thus increase your income), or work less. You can apply this principle to the rest of your time as well. Less waste can lead to increased income — it has for me.

• Fewer fees. You can simplify your financial life by reducing the number of bank accounts and credit cards you have, thus reducing the number of fees you potentially have to pay. You can also simplify your bill paying by doing them online, by making them automatic, or by paying your bills as soon as they come in — any of these methods can reduce your late fees as well, if you’ve been having trouble paying bills on time.

• Sell your crap. I save money on books (one of my biggest expenses in the past) by selling my used books or getting credit to buy more used books. Many people make a good side income by selling their stuff on eBay.

• Lower transportation costs. If you simplify the things you need to do — reduce your commitments — and thus reduce the number of places you need to go, you have less driving to do. That’s less gas. In fact, simplify enough, and you can get rid of your car! I haven’t done this yet (though many people have), but I have reduced my transportation costs by commuting in to work from time to time (I’m trying to increase the number of times I do this to 4-5 per week). Or simplify even more, and work from home! Another way to simplify transportation is to have one errands day, instead of doing them throughout the week, and plan out the most efficient route so that you minimize driving.

• Less impulse spending. One thing I’ve found is that as I reduce my possessions (and it’s an ongoing process), I also reduce my needs. I know what’s important to me (and again, this too is a learning process), and I know that much of the junk I used to want to buy is actually junk. I still get the urge to buy on impulse, but that’s reduced. A great way to do that is to monitor your urges, and to keep a 30-day list — whenever you want to buy something, put it on your list, and don’t allow yourself to buy it until 30 days have lapsed. Most times you don’t want to buy it after 30 days.

• Less eating out. I used to eat out a lot. Every day. Spent a ton. Now, by cooking at home, and reducing my need to eat out, I’ve simplified my life and drastically reduced one of my biggest expenses. Cha-ching.

• Cheaper fun. Another big expense was going to the movies (twice a week), going to the mall to hang out (inevitable money drain), or spending on other types of “fun” stuff. Now, I have even more fun, with simplified entertainment. The family and I go to the park, to the beach, play sports outside, play boardgames at home, make up a million fun things to do that don’t cost a ton.

• Keeping up with the Joneses - nixed. This is one of the biggest wastes of money, but so many people do it. They want to have a car as nice as their co-workers, or an outfit just as cool, or a computer just as new, or a television with just as many inches. By simplifying, I’ve gotten over that little game, and now I can make things last longer simply because I don’t upgrade every time something new and cool comes out, or every time there’s a new trend. Forget having a luxury car — they’re a huge waste of money and gas guzzlers. The Joneses are idiots anyway (Well, some of them).

• Simple fitness. I used to waste hundreds of dollars a year on a gym, and buy lots of fancy workout gear. Now, I run and bike on the road (who needs exercise machines?) and enjoy nature, for free. I do pushups and crunches at home, and lift a barbell. I also used to spend money on diet food, like Slim Fast or Weight Watchers or Atkins products. Now, I just eat vegetarian, and save a lot of money on meat products as well.

These are just a few ways, but simplifying can reduce your expenses and increase your income — thus fattening your pocketbook — in so many ways. And you don’t need to do it the way I’ve done it — simplifying is an intensely personal thing, and is achieved at different levels and in different areas for every person. But for me, it has not only increased my financial position, but increased my satisfaction with life overall.

About the author: Leo is a father of six kids, a husband, a worker, and a free-lance writer. He currently writes about simple productivity (and related topics) @ Zen Habits. Check out his inspirational post titled “How I Save Money“. To subscribe to Zen Habits, click here.

This guest post is by KMC @ Advanced Personal Finance (while I am still on vacation). More information about KMC and his blog is available towards the end of this post.

When investors talk about diversification, they’re typically referring to diversification of investments for the purpose of reducing risks. But there’s another kind of diversification. It’s called tax diversification and you might be practicing it without knowing it.

Tax diversification is the idea that you should have investments subject to each of the various tax treatments. The idea applies not only to U.S. citizens, but also to those of other countries as well. There are three types of tax treatments for our purposes: tax-deferred, tax-free, and taxable.

The three account types

* Tax-deferred. Tax-deferred accounts are those that grow tax free until they are liquidated, at which time full taxes are due. Examples are the 401(k) and traditional (”deductible”) IRA. You invest pre-tax dollars. The full amount of money goes to work for you, compounding until withdrawn. At the time of liquidation, the entire amount withdrawn is taxed as ordinary income.

* Tax-free. Tax-free accounts use after-tax money to buy investments which then grow without ever being taxed again. Examples are the Roth 401(k) and Roth IRA and municipal bonds. In these types of account, you purchase the investment with your after-tax income. The investment then grows over time. When liquidated, the total account balance is tax-free.

* Taxable. These accounts invest after-tax income. When the investment is liquidated, the earnings are taxed again. An example is a regular brokerage account.

How tax diversification works
In short, you use tax diversification when you split your investable dollars between the three types of accounts. Tax rates and treatments are moving targets. By using tax diversification, you’re hedging. (Click here to read more about hedging)

Why use it?
You simply cannot know what the tax brackets will look like at retirement (unless you’re within a year of retirement, I suppose). Using this technique, you’re spreading the risk of using any one type of account (and also increasing potential returns).

For example, if the bulk of your retirement investments are in a combination of traditional IRA and 401(k), at retirement all of that money is fully taxable. As of today, it’s taxed as ordinary income. If your tax bracket is lower in retirement, you made a shrewd move. If it is instead higher, you lost money by using only the tax-deferred accounts. So whether you think Roths are bad or good, it makes sense to have at least a portion of your retirement savings there.

I personally use this technique in my investments. Currently, I have 8% pre-tax going to my traditional 401(k) and 11% going to a Roth 401(k). We also have a taxable account we fund each month.

About the author: KMC is a thirty-something family man with a wife, three year old daughter and one on the way. After graduating college with $5,000 in credit card debt and $9,000 in student loans, his new wife finally got him to shape up and get fiscally responsible. He went a little overboard and developed a serious interest in personal finance. He currently writes about the topic at advancedpersonalfinance.com. Check out his post titled “The Reported Rate of Inflation is a Lie“. (Feed link to Advanced Personal Finance)

Money, Matter, and More Musings will be featuring some guest bloggers while I am on vacation for the next few days. This is the first of such guest posts by PT @ Prime Time Money. More information on PT and his blog is available towards the end of this post.

My brother-in-law is graduating from high school this week. Naturally, I reflected back to my own graduation, how glad I was at the time to be finished with high school, and how excited I was for college and the future. I also thought back at how naive I was in regards to my personal finances. So, I thought I would draft a letter to all the young people graduating from high school this spring and provide some practical advice geared towards their personal finances.

Dear High School Graduate,

Congratulations on your accomplishment! You should be proud. Newton D. Baker once said, “The man who graduates today and stops learning tomorrow is uneducated the day after.” With that, I offer you these words of advice for your finances as you continue on your journey of learning.

Save. Save a percentage of every dollar you get, no matter if it’s given or earned. I know. I know. You’ve heard this before, but I promise you, along with getting your advanced degree, this is one of the most important things you can do now to secure your future. You may not be earning much over the next few years, but very little is needed now in order to have a big impact later. It’s true that there is more time to save later, but your saving will never be as effective as it is right now. So, if you haven’t already, begin saving and make it a part of your normal routine.

Understand the Cost of College. I really want you to understand what it will take to pay for college. Most of you will either get scholarships, student loans, or some combination of the two. You may not stop to think about the true cost or to fully understand that student loan debt. Please, do not take on more student loan debt than you actually need. You’ll only end up blowing the extra money on “stuff” and food. Lastly, don’t just sign the loan papers and move on. Sit down with someone who can fully explain the debt you are getting into and help you to visualize your future with this debt. Believe me, fully understanding this transaction will do nothing but cause you to apply for just a few more scholarships or grants.

Be Careful with Credit Cards. Now that you’re a responsible member of adult society, the credit card companies will begin soliciting you. Don’t listen to them or their sales pitches. Seek out trusted advice, understand the ramifications, and get a card (for emergencies) on your terms. When you do use the card, use it with the knowledge that you will pay it off the following month. Never view the card as a way to finance your livelihood, and save the big purchases (car, flat screen TV, etc…) for later in life, when you’ve saved for them.

Find a Mentor. There’s always someone else out there who has been through it. No matter how smart you think you are, you can always learn something from others. Find someone stable and successful that you admire and pick their brain for every financial step you take. You will get ahead much quicker by learning from the mistakes and successes of others than by always trying to do it on your own.

Congratulations again on your success thus far. I wish you the best in your future and finances.

Sincerely,

Prime Time Money

About the author: PT is in his early 30s living in Texas where he’s lucky to be married to a wonderful wife who, by the way, worked her way through college. No kids yet, but they have a house on the way, and a fat cat named Larry. Catch PT lamenting about his high school and college years (and all things personal finance) on his blog, Prime Time Money. He can be reached at ptmoneyblog at gmail dot com. Check out his series of posts titled “10 Things That Bring Success in Personal Finance” (Feed link for Prime Time Money)

[This is the third post in the guest author experiment at this blog. Click here and here for the previous guest posts. Feel free to contact me if you are interested in contributing as a guest author.]

One of the most often-repeated advice in the blogosphere is to “live like a broke college student, after college graduation.” The idea is that by reining in your expenditures (broke college students don’t have many!), you will be able to put you bigger paycheck towards savings or debt repayment.

I don’t want to blow my first paycheck(s) on new Pottery Barn furniture, a shiny MINI-Cooper, or really expensive shoes. Well, I do want all of those things, but I know I should save instead. Still, the broke-college-student routine will be hard to pull off - I’ve realized that as I got older, my tastes have definitely taken a turn for the better (i.e., more expensive) things in life.

When I was in middle school, $25 was my limit for a pair of pants. Now I’ve pluck down $100 for trousers from Banana Republic (though I try to look for sales). I considered a $4.50 bucket of KFC popcorn chicken a treat in eighth grade; now I am willing to spend $50 at a restuarant with cloth napkins and something called “ambience” (but only on special occasions, I promise!).

I don’t think I am wildly extravagant, and I’ve certainly not gone into debt paying for a lifestyle. When I leaf through Vogue and see a $4,000 Badgley Mischka dress, I still feel an appropriate shudder at the price tag (and awe at the resplendent beading). But it’s a bit disconcerting to watch my tastes develop and realize that my wallet needs to expand correspondingly. Must… control… impulse.

I guess this is the “lifestyle inflation” that Jonathan at Mymoneyblog warned about. Follow my blog at wellheeled.wordpress.com to read more posts on how I resist (or not).

P.S. Last but definitely NOT least, I want to say thank-you to Golbguru for letting me guest-post, and to his readers for reading!

About the author: Wanda has been writing her own blog “Well-heeled: climbing the networth ladder in heels” since April 2006 and has been an active reader on this blog. She is also into yoga for attaining inner zen.

[This is the second article in the guest blogging experiment at this blog. If you are interested in contributing as a guest blogger feel free to contact me]

So you’ve heard that you can make money blogging.

How real is that potential to generate extra monthly cash without leaving the comforts of your home? And how much money can you really make? If you have done your research, you will find out that there is a lot of “white noise” out there. How do you filter the information available on what works and what doesn’t? It is every beginner blogger’s dream to take that first step to financial freedom.

Why don’t we get started then? Let us set a target of $600.00 a month from your blog starting January 2007. Isn’t that just a nice new year’s resolution? What can you do with all that money…. Good heavens!

Let’s make this a reality in three steps!

Step 1 - Payperpost.com

Average monthly revenue towards the goal - $480.00

Daily time spent - 20 minutes / 2 posts at approximately $8.00 each

Payperpost connects Bloggers with Advertisers. Once you register, you can check daily on available opportunities that you can blog about. Each opportunity will pay you between $5 - $20 approximately. You can take two opportunities maximum a day, just make sure they are not one after another. There has to be at least a post in between them. Each sponsored blog post must remain on your blog for 30 days. In your account section of Payperpost it counts down how many days before payday. And it’s really cool seeing all those “You’ve Got Cash” emails from Paypal!

Step 2 - Google Adsense
Average monthly revenue towards the goal - $75.00 / $2.50 a day

Google Adsense is a very good source of revenue. However, there are a couple of factors that you need to pay attention to, in order to make money. Targeting $2.50 a day doesn’t really seem much, but you need to understand how you can make that money in less clicks - 3 clicks vs. 10 clicks.

Diva tips in optimizing your blog:

• Generate an overall theme for your blog and stick to it. The more theme oriented your blog is, the better success it will have - wedding, relationships, cars, dogs…. etc.
• Blend the color of your Google Ads to your blog. In other words, the Google ad background and border must be the same color as the spot where you are placing it on your blog. Use the same text color for Ad text, post title color for Ad Title and Ad Url.
• Each post title must be clear and straight to the point. Notice I didnt make the post title of this post as WANT TO MAKE MONEY ON THE INTERNET? Do you know how many posts out there with that title?
• Strategize your post - how much revenue can you expect per clicks if you talk about the weather (advertiser’s maximum bid $.50), visa (advertiser’s maximum bid $2.00), lexus (advertiser’s maximum bid $1.15), crystal cruise (advertiser’s maximum bid $3.00), or find love (advertiser’s maximum bid $0.62). How do I know this? This is based on overture’s listing. Why don’t you try it next time you make a post?
• Last but not the least, don’t be shy in posting your adsense. Google allows you three widgets. Make it work….

Step 3 - Tumri Cornerstore

Average monthly revenue towards the goal - $45.00 / $1.50 per day
Never heard of Tumri? Well, you have now. I wish I can say that they are the best kept hidden secret on the net, but they are not. They are a new company and only few blogs are carrying their cornerstore ads.

What makes them special? Tumri takes the Amazon concept a step or two forward. They have nice and exciting flash widgets that display 4 - 5 products at the same time! It draws products from Amazon, Overture, Ebay, and your favourite store! When you are targeting impulse buyers on your site, you need to have a look-at-me-i’m-special presentation that just shouts BUY ME! And that is what Tumri brings to your blog.

Tumri is not like Amazon that you will have to wait until someone buys your product before you generate income. Tumri will pay you for clickthroughs! Here is an excerpt from my email interview with Jason Ng at Tumri :

• We do not violate the Google Adsense terms as we are not ‘contextual’; we do not scan the content of the page. We have behavioral based targeting where we optimize revenue based on user behavior and publishers will be able to completely control what is displayed within the widget.

• The commission that we will payout to you will be based on a combination of click based revenue offers and order based revenue offers. Click based or CPC (cost per click) commission occurs when a valid click is made on any CPC based product offer. Order based commission or CPO (cost per order) occurs when a lead/click is generated from your site to one of our merchant partners and an order is made. You will receive a percentage of that total order amount. After you have selected the product categories that you want to display in the widget, we will optimize the CPC and CPO product offers based on the user behavior so as to maximize your commission.

Payperpost - $480 + Google Adsense $75 + Tumri Cornerstore $45.00 = equals $600! That’s $7200 in your pocket in a year. Can you make more? Of course. Please make me green with envy….

So, who’s game to join The Tao 600 challenge starting January 2007? What an awesome way to start the New Year, don’t you think?

About the author: Imaginary Diva has been a regular reader at Money, Matter, and More Musings for a long long time. Click here to visit her blog. That’s just one of her blogs..she writes on more than half a dozen others.

This is the first article in the “guest blogger experiment” for Money, Matter, and More Musings. Read on.

I am 23 and yes, I have an allowance. Not too long ago, I was an ATM junkie. Almost every time I was out, I ended up at the ATM withdrawing money. It started with $20, then moved up to $40 and even $60. It seemed no matter how much I withdrew, it was gone almost as fast as I took it out. Soda, lunch, and small impulse buys ate away at my mad money. Yet I kept taking it out as though the ATM card was a magic wand that produced funds from a bottomless pit filled with good old green backs.

My merry spending rampage went on for well over year, during which time I was also accumulating large sums of debt. After all was said and done, I could not remember where all of that money went. I averaged $300 a month on nothing. Thirty six hundred dollars in a year that just disappeared. It was then that I realized my ATM junkie days were over. I am not sure why so many of us treat the ATM like a fun house of unlimited money, but I know that I was not alone. The habit to just withdraw what you want is strong with many of my friends and fellow net dwellers.

So what was my solution? I put myself on an allowance. It might seem a bit extreme to some, but this was a big step for me. It was the first step in learning how to budget my money. Each paycheck, I take out $50 in cash for miscellaneous expenses. No more, no less. Since I am paid biweekly, it means that I have about $100 a month being spent on personal and miscellaneous items. It does not end there though. I have learned to keep all of my receipts, and I use those receipts to analyze where my allowance is going. Gone are the days of throwing vast sums of money into the black hole of “I want”.

Looking back, it is hard to believe I was that careless. Now I keep my debit card tucked safely away in my pocketbook. I don’t purchase anything outside of my budget that my cash on hand won’t cover. Every once in a while a special circumstance will come along but that is an extremely rare occurrence. I have been sticking with my allowance plan for over 6 months, and it is paying off. The money that I am keeping is going toward paying down my debt and I feel much better knowing where my financial resources are being used. So if all else fails, consider putting yourself on an allowance. It worked for me!

About the author: Jessie manages her own blog at The Art of Debt and sometimes sells swords to pay off her debt