Saturday, June 23, 2007

Money and Emotions

Hello everyone.
Today's post was going to be about how to generate an alternative stream of income by writing for "". However, because that post would be relatively straightforward and short, I've decided to write on a topic that has been swirling around in my head for a little bit of time.

Before I get into today's topic, which will be money and emotions, though, I'd like to tell you that if you go to, you can find out everything you need to about how to create an account and get paid for writing on any topic that you find interesting.

Now, onto money and emotions.

Ok, so I'm a big fan of Suze Orman. And one of the reasons that I'm such a big fan of hers is not because of any particular advice that she gives - Suze's a famous financial advisor who has her own television show on CNBC - but because she is one of the few prominent media personalities who acknowledges that all of our financial decisions are fraught with myriad emotions. The more literature that you read on investing and personal finance, the more you will hear the refrain that in order to be successful with money, one must remove all emotions. To some extent this is true. "Some" is the operative word however.

For instance, if you buy a stock just because you hear a lot about it on tv or on a hunch, without performing a "discounted cash flow analysis" - a process that allows you to determine what a stock's true value is based upon certain growth assumptions - then you are investing with emotions. This is bad. Similarly, if you sell stocks that you have long-term confidence in and that have good financial fundamentals, just because the price goes down for a few months or some media pundit says they're bad, you are also investing with emotion. In these instances, it pays to remove emotions from the equation.

But I believe that in almost every other instance regarding money, it pays to take your emotions into account. Why? I'll explain.

Americans have a ten ton elephant under the rug in their lives. No one wants to talk about money! It is considered taboo, disrespectful, and for most people, it's just downright awkward. In my family, as a child, all of my basic needs were provided for, but we definitely experienced times that were rough (i.e. being evicted from our apartment and having to live with relatives for two years). I could always sense that there was anxiety surrounding money. Some of you may have had experiences similar to mine. I believe that most of our ideas regarding money come from our parents and closest family members, like most of our world views.

So if your childhood was littered with arguments about money, you will most likely be tense when confronting the issue. If there was never enough to go around, you may feel the need to hoard and store up without considering the needs of others. (I struggle with this a lot.) Or you may shop compulsively to overcome that feeling of deprivation. If your parents were wealthy and always gave you what you wanted and you never had to work, you may be a spendthrift who doesn't know the value of a dollar. Or you may have learned the virtues of investing your hard earned dollars if you come from a wealthy family.

What our parents and closest family members communicated to us as children, both implicitly and explicitly, affects our money decisions considerably. I know that my respect for money comes from the fact that I used to always see my mom pick up pennies when she saw one in the street. To this day, I too never hesitate to bend and pick up pennies, nickels, dimes, and quarters that I see on the sidewalk. My mom also gave me and my siblings a biweekly allowance that we had to preserve until the next allowance period. Fortunately, I always managed to have money left over. This financial paradigm I adopted undoubtedly came from my mother.

If we can realize what beliefs and emotions we have tied up with our money, then we can take better control of our financial lives. We can control our impulses to buy those new jeans - when we already have plenty of them - if we understand where those impulses come from.

Make a vow to understand your own money psychology and take control of the financial reins in your life.

Thanks for reading and please feel free to comment or email me at with any questions. Until next time...

Sunday, June 17, 2007

Way #4 to Generate Income - Domain Name Buying

Hello everyone.
It's good to be back after a weeklong hiatus. Today's post is going to be about Way #4 to generate an alternate stream of income - buying domain names.
First of all, you might ask yourself, what is a domain name? Well, a domain name is basically a website's URL (i.e. Here, the domain or the host of the website is Yahoo! But let me explain a little further.
During the late 90s, there were a lot of small Web companies with names like or or even Some of these companies -these dot coms - survived and did well. But others went bankrupt and were put out of business. Subsequently, Internet users weren't visiting that now defunct site and so the name was less lucrative. That's where domain name buyers come in.
Because these website names did not generate a lot of traffic after the companies went bankrupt, some of the more enterperneurial websurfers out there decided to go to or and try to bid on different domain names.

Okay, now, you may say to yourself. I know how this works. But how does it makes money? Good question. Well, just as advertisers pay bloggers each time a blog visitor clicks on a link, if you buy a domain name, anytime someone visits that website with the domain name you own, and clicks on an advertiser's link, you get paid. The trick is to buy domain names that are common enough that lots of people visit the site.

Think about things this way. Whenever someone is looking for something, she doesn't always Google it. If a woman were looking for wedding dresses, she might go to Or if a guy were looking for a new stereo system, he might go to, where he would find tons of advertisements for stereos and other audio/visual equipment. The owner of the domain name '' makes money in her PayPal account everytime someone clicks on those advertisements.

Go to, create an account, and check out the site to learn about how to bid for domain names functions. Also, here is the link to an interesting Business 2.0 article about one of the most successful domain name buyers of our time - Kevin Ham.

Thanks for reading and I hope you all enjoyed. And please feel free to post any questions or comments.

Sunday, June 10, 2007

Way #3 (Alternate Income Streams) - Blogging for Cash

Hello everyone.
I hope that all of you had a wonderful weekend. Today's post is going to be about how to make money through blogging. Since you're on my blog, I will assume that you know what a blog is, and not insult your intelligence. However, in this post, I will outline different ways to attract viewers and subsequently advertising attention to your site, so you can make some money.

In order to have a successful blog that people want to look at, you must have something interesting or worthwhile to talk about. For me, it's obviously personal finance. Ever since high school, I've been intrigued by the way people handle money - largely, I guess, because I didn't have particularly copious amounts of it growing up.

So after you figure out what you'd like to write about, be it baseball, politics, personal finance, or home decorating, you want to go to and set yours up. It's really easy to do and Google makes the whole process user friendly. You have the ability to add "page elements" such as links to other websites, news articles relating to your blog topic, and AdSense to your blog. AdSense allows advertisers to place ads on your blog and through the 'pay-per-click' model, whenever someone clicks on an advertisement on your page, you begin receiving checks.

So, in order for blogging to be lucrative financially, you have to post consistently and have a relatively large following of readers who click on ads. How does one go about building this large following? One of the methods I've used is creating a group on the Facebook ( and inviting all of my friends. Word of mouth is very powerful, I've found, in the internet age and if a group resonates with someone, he or she will join it. My Facebook group contains a link to this blog and I'm also in the process of creating a MySpace page to connect with even more people.

In addition to using social networking sites to draw more people to your site, if you include fun features such as daily quotes, or video clips pertaining to your blog topic, readers will be more likely to return. For instance, I am in the process of developing a podcast for Gen Y Financial Freedom in order to inform more people and increase financial literacy. All of this will and does make for a more heavily-trafficked website.

In my next couple of posts, I will talk about other ways to use the internet as a cash-generator. If you have any questions, please do not hesitate to post them or ask me directly by email at or Thanks for reading and I'll see you all back here tomorrow.

Monday, June 4, 2007

Way #2 to Generate An Alternative Stream of Income

Hello everyone.
In my last post, I outlined five different ways to generate an alternative stream of income. I also said that I would dedicate an article/post to each one of them. Last time, I spoke about stocks, stock price appreciation, and income from dividends. Today, I will discuss rental property.

A lot of personal finance gurus talk about how buying a home is one of the best investments you can ever make. And in some instances, it may be a good purchase. It allows you to "build wealth" through equity and moderate price appreciation, and you can live in it and enjoy plenty of memorable experiences with family and friends.

But I disagree that it is the best investment one can ever make. Not if you want to get rich! If you want to get rich, you will think of a home as a liability, not necessarily an asset. Why is this? Well, when you buy a house, you usually have a real estate agent help you and he or she generally gets a 3 or 4% commission on the purchase price. There are also closing costs, which include document preparation fees, wire transfer fees, inspections - to see if you're in a flood zone, and title insurance and escrow fees. All of these fees can easily add up to several tens of thousands of dollars.

And on top of this, every month, you have to pay property taxes and the mortgage. This greatly decreases your cash flow - the income you use to survive. However, if you buy a property, and rent it out, while living in it, you have turned that liability into asset. Why? Because the renters who inhabit your house are paying you to be there. Here's a greatly simplified example.

Let's say that you've bought a house in College Town, USA, where the median house price is $225,000. (Median means that half of the prices are above this number, and half are below.) After including all costs for various types of insurances, property taxes, and the mortgage payment, the monthly bill for this property is $1,650. If this property has three rooms, in addition to a basement (where you'll be living), after performing thorough credit and background checks on the tenants, you can rent out each room for $550 ($1650/3) a piece.

Most students - and their parents for that matter - would jump at so great a price. By renting the rooms at $550 a piece, you are breaking even, which means that your revenue is covering your expenses and there is no profit left over. But if you've done your research beforehand, and you know that there is an impending housing crunch on the local campus, or the neighborhood is hot, you could raise rents by a moderate $100 a month for each room. This would mean $300 in profit per month, or $3,600 a year. And this is in addition to the renters paying off your mortgage.

Of course, things are much more difficult than I'm making them appear here, as you will have leaky roofs and other problems that as a landlord, you will legally be rquired to take care of. But if you maintain your property well, buy properties in areas that have favorable demographic trends (i.e. the South, with baby boomers headed there for retirement and the explosion in Mexican population growth), you can profit nicely, albeit slowly as a landlord.

The Internal Revenue Service and the tax code also provide one advantage to the small property investor. The government allows you to use $10,000 worth of contributions and gains from your Roth IRA to purchase your first home, provided that Roth IRA (a retirement investment vehicle) has been open for at least five years. So if you think you want to try your hand at property investing, and want to save for it in an a tax effective way, open a Roth IRA. For more information on what this is, check out the post entitled, "How to Open a Brokerage Account/Different Types of Accounts."

Landlording is not for everyone, but it is a way to put extra cash in your pocket while putting a roof over your head at someone else's expense. I recommend picking up Robert Griswold's "Property Management for Dummies." It's a good resource to get started.

Thanks for reading and please feel free to post with any questions or comments you may have.