November 2006

Building a Better Blog for 2007 8comments

Would you like this entire series in a convenient downloadable PDF? Check it out!

For the entire month of December, The Simple Dollar is running a special series on building a better blog for 2007. These posts assume that you’re already blogging, that you have a passion for improving your blog’s long term traffic, and that you’ve gone through many of the ups and downs that come with blogging (big spikes in readers, periods of slow or nonexistent or even negative growth in readership). This series is borne out of the success I’ve had with The Simple Dollar, which is the culmination of many years of lessons learned as a less-successful blogger.

Without further ado, here are the posts. There’s some more explanation at the end.

1: Essential Reading
2: Love What You Write
3: Addressing Your Readers
4: Define Your Own Success
5: Don’t Leave Them Hanging
6: Don’t Be Insular
7: Keep Something In Reserve
8: Reach Out
9: Be Yourself
10: Length Doesn’t Matter
11: Respond to Comments
12: Inspire Yourself
13: The Content Comes First
14: Money Doesn’t Matter
15: Don’t Give Up
16: Be Lucky
17: Guide Your Users
18: Leverage the Past
19: Search Engine Optimization Doesn’t Matter
20: The Mini Audience
21: Don’t Chase Away Your Readers
22: Social Bookmarking
23: Don’t Know It All
24: Use the Senses
25: Write in Series
26: Post Consistently
27: Engage the Casual Visitor
28: Talking To Other Bloggers
29: Don’t Clutter It Up
30: Don’t Forget the Fundamentals
31: Celebrate With Your Readers

The goal of these posts is singular: each post is devoted to a specific aspect of building a healthy long-term readership of your blog. I’m not going to write about optimum ad placements or Google keywords or how to cut down on spam comments; there are countless other resources for that. Instead, this series seeks to grow your readership in a healthy fashion, from which will come nothing but success.

Why write about this topic on a personal finance blog? The biggest reason is that many bloggers (and especially personal finance bloggers) are interested in long term growth. We’re interested in building a relationship with our readers, one that will grow over time as more and more people find our blog. We’re not in this just to dump out a lot of posts – we want people to be able to find our site, get interested in it, visit it regularly, and tell their friends about it. We want to be able to share our ideas with a wider world.

Hand in hand with that comes the fact that bloggers of all stripes are interested in long term earnings. Along with that relationship and larger reader base comes the potential for more ad revenue, and thus more money earned from the hard work of regular, consistent, quality blogging. We’re not out to become millionaires, but we would like to at least see some return on the investment of our passion.

The biggest reason for blogging (for me, at least) is the desire to teach what I’ve learned to readers who might be interested. A solid slice of the readers of The Simple Dollar are bloggers themselves, who face many of the issues that I also face on a daily basis. I learned many lessons from earlier attempts at blogging, and applying what I learned here at The Simple Dollar (so far) has brought success far beyond what I hoped for – I was hoping for regular traffic at this level around the one year mark, not in just over a month – so it makes sense for me to share what I’ve learned.

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Nourishment on a Desperate Income 82comments

A single pennyAt a certain point in my young adult life, I reached a crossroads of intense poverty. Although I was working and going to school, I literally had no extra money to spare with the engines of tuition, supplies, and rent grinding me down. I lived in a tiny apartment with only running water, a hot plate, and a small number of pans for supplies, and I had reached the point where I was literally looking for money in the streets on my way home from work or class and trading in aluminum cans for their nickel refund. During one month, I was reduced to only spending $10.71 total on food (I actually raised more than this through aluminum can returns), a fact that I recorded studiously in my journal. Yet I wasn’t malnourished, I did not resort to dumpster diving, and I didn’t actually steal anything, although I had to ask for a few free things along the way. We’re not talking about a few days until the next paycheck, we’re talking about the edge of poverty.  How did I do this?

What follows is a list of twenty suggestions and tips on how to eat well and survive with very little money. Some of these tips apply in the city and others in rural areas, but many apply to both. Obviously, using such things as homeless shelters for a warm meal is always an option, but many people have too much pride to do such things, so I’m excluding anything that is an obvious handout.

1. Cook at home. Never eat out. Dining out is so much more expensive than eating at home that the two are incomparable. Stay at home and make your own food rather than eating at a restaurant. It’s often more work, but it’s also money in your pocket.

2. Stews and soups are miraculous. A big pot with boiling water and whatever you can scavenge dumped in together is the staple of the poor man’s diet. You can dump in whatever you’ve got, along with those free salt and pepper packets, and turn up with something edible and at least remotely nutritious.

3. Keep a hen or two. This seems somewhat silly, but female chickens are very good at producing food. You can unabashedly feed them whatever scraps you have and they produce eggs very regularly. If you’re careful, you can keep them in a small cage in your own apartment; a friend of mine kept one in a pet porter for several months. Just be aware of the smell; you should line their living area with paper and expect to clean it a lot. You can do this by using scavenged newspapers and rotating them daily, but leave the papers that the chicken scratches together for a nest alone.

4. Dress as well as you can and keep yourself clean. If you don’t do this, you’ll feel worse and you’ll also be profiled, both consciously and unconsciously, by those around you. It’s much easier to scrape together some food if you bother to keep yourself reasonably clean and presentable.

5. If you live in an area with a recycling policy, take advantage of it. Finding four aluminum cans can quickly turn itself into a meal. Finding twenty or thirty cans can be a bonanza. States in the United States that offer cash for each returned can include California, Connecticut, Delaware, Hawaii, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont; nations with such programs include Austria, Belgium, Canada, Denmark, Finland, Germany, Luxembourg, Netherlands, Norway, Sweden, and Switzerland.

6. Get some exercise. Don’t sit at home and bemoan your situation. Get out and walk around a lot. See what there is to see within walking distance. Not only might you find some opportunities for food, but you’re training your body to process what you do eat more efficiently, and most of all, don’t worry about the caloric loss, because the efficiency you’ll gain will over the long run counterbalance the excess calories you’ll burn.

7. Grow some of your own vegetables. Even when I lived in the city, I would fill up large pots with dirt and use them to grow my own vegetables. Since you’re on a rather restrained diet, foods with plenty of starch are good; try growing potatoes, as they’re heavy in starch and are very easy to grow. Just cut up a single potato into smaller pieces (six will work) and bury them deep in the soil, water them occasionally, and wait. You can find usable dirt and pots in all sorts of places if you keep your eyes open.

8. Time your visits to the grocery store for the times when they re-stock the perishable items. If you time things well and know some people, you can usually get stuff at or near expiration date for free or for a pittance. They often restock milk at two in the morning on Tuesdays near where I lived, for example, and there was a friendly guy who would look away while I grabbed a gallon or two of near-expired milk. I wasn’t alone in doing this.

9. Join a church. Quite often, congregations will have a free meal right after church and then another meal on a weeknight, usually Wednesdays. Even if you’re not a believer, you can get away with two free meals a week. If you attend two churches, you can sometimes score as many as four a week (Sunday breakfast and lunch and two weeknight dinners). I usually felt bad about this, so I would volunteer to do some minor work around the church (cleaning, etc.), but that’s up to you to decide. I might also argue the point that spiritual guidance may also help you in other ways, but I’m advising you on how to eat, not what to believe.

10. Don’t fear the leftovers. Leftovers are your savior. Don’t be afraid to make a large quantity of something and then eat it for three or four days. Also, don’t throw away even small amounts of anything if it’s still edible; you can quite often add it to a stew the next day.

11. Have friends over for a potluck dinner. Make something inexpensive for your dish for the spread. Most of the time, people will leave their leftovers behind, not wanting to deal with them, and you’ll have a wide variety of food that will last for days for the cost of only preparing one dish.

12. Don’t be afraid to swap some odd jobs for a meal. This works well in local restaurants, particularly of the truck stop or greasy thumb variety; it does not work nearly as well at chain restaurants or upscale ones. Just walk in and ask to speak to the manager, and offer to wash some dishes in exchange for a meal. This usually works best if you’re presentable; just explain that you’re really hungry and down on your luck this week. Usually in local restaurants, the manager is related to the owner (or is the owner) and, if you look decent, will usually agree to this trade. I’ve found that truck stops will regularly do this.

13. Ask for leftover bones at a butcher shop. A good excuse is to claim that they’re for your dog. Expect to hear a lot of “no,” but boiling these bones for a long time can provide a good deal of protein, particularly from the marrow.

14. Join some clubs. This is particularly true if you live near a major university, as they will regularly have meetings where food is provided. This is particularly true during the first few weeks of classes in a given semester. There are often civic clubs that do the same thing, but you’re much less likely to find out about them. The best way to find out is to go to the local post office and examine the bulletin boards, and ask the person behind the counter there for locations to find civic calendars and postings.

15. Attend farmer’s markets. If you pay attention at a farmer’s market, you can usually come home with some free food. There are several methods of doing this:
+ Look for samples. Often individuals marketing new or unusual items will offer small food samples. Always try them.
+ Strike up conversation with as many people as possible. Talk to a seller for a while before even suggesting a purchase. Find out about them and what they do, but don’t harass them if they’re busy with other customers. Compliment them on the quality of what they’re selling and express regret that you can’t afford any (it’s true, so you shouldn’t feel bad about it). Often, a nice person will slip you an ear of corn or something. Don’t forget who did this favor for you, of course, as you might have the opportunity to pay back their generosity.
+ Wait until the end of the market and approach people for things that will perish. Look for people who have items that will perish quickly, or whose items are near perishing. Stop by their booth when they’re packing up and offer to dispose of it for them.

16. Look in discarded newspapers and circulars for coupons. There are a lot of coupons out there for free or extremely discounted items if you keep your eyes open. I’ve had complete meals for free at fast food restaurants, received small items for free at local grocery stores, and once was able to purchase an enormous box of Kellogg’s corn flakes for less than ten cents that I was able to eat for a very long time.

17. Always attend grand openings of stores, as well as any events with free drawings. Over the years, I’ve won hundreds of dollars in shopping sprees and have been handed tons of door prizes simply because I’ve shown up and milled around. Grand openings are particularly great because quite often the store is giving away a good number of things. Even if you don’t get food for free, you might win something else of value that you can sell elsewhere or trade to someone.

18. Inspect your local grocery store very carefully for prices. Look at their prepackaged soups, such as their ramen noodles. Examine the prices on their canned vegetables and fruits. Learn when there are sales, and buy those things when you know it’s a bargain.

19. When you have to go to the grocery store, use a shopping list and stick to it. Stores are designed to psychologically convince you to buy unnecessary things to increase their profit margin. To combat these psychological techniques, prepare a shopping list before you go and know exactly what you need to get, then when you go to the store, only get what is on your list. Even if you want it badly, buying anything else is throwing money away.

20. Get free stuff at fast food restaurants. If you’re going to be eating dirt cheap, it’s not going to be flavorful. Get free condiments where you can, and occasionally you may get some free food out of the deal. Some recommendations:
Taco Bell or Taco John’s: hot sauce in a variety of flavors. Many Taco John’s have switched to not distributing their sauces in packets, however, making this somewhat more difficult.
McDonalds: ketchup, mustard, salt, and pepper. This also works at Burger King, Jack in the Box, and so forth
Long John Silvers: mayonnaise and tartar sauce
Fazoli’s: Enter the restaurant, sit down at a table, and wait, and someone will eventually give you breadsticks.

I remember the hardness of the days when I had to do these things in order to be able to continue to pay the rent and afford to educate myself at the local university. It wasn’t an easy time, and at times I had to resort to dumpster diving. If it wasn’t for the things I learned myself or heard from others, I simply would not have made it; something would have given and I would have had to put my education on hold or else starved myself.

Poverty isn’t a game. I hope that at least one of these ideas will help you through the poor moments.

Investing For A Child’s Future 1comment

As I read Make Your Kid A Millionaire this week, I found myself stunned at the huge amounts of money that the book assumes that you will give to your child. I can swallow a 529, but a Roth IRA for your child? Buying a home for them?

These concepts seemed like utter fairy tales to me. When I was eighteen, I was basically pointed out the door at home. My parents never paid for a dime of college outside of buying some used textbooks and calling them birthday or Christmas presents, and they’re certainly not providing a Roth IRA in my name or paying a house down payment.

Are such investments for children realistic for most people? Perhaps I have a skewed perspective, but it seems to me that investing thousands upon thousands of dollars a year for a child to spend in his or her twenties when they’re barely out of diapers seems like overkill. Shouldn’t that money be better invested in ensuring that they have every educational tool possible available to them? Isn’t the role of a parent to equip the mind of a child, not to equip their pocketbook?

Is it even good for a child to have that much money handed to them? If my parents had handed me a mutual fund with $100,000 in it on my twenty first birthday, I would have blown it quite quickly on stupid things. Why? I had very little idea of what the value of a dollar was, and I was far from alone when compared to other people my age.

There’s something to be said for learning some lessons about money, and your college and post-college years are the training ground upon which you can show whether you get that money is a tool or whether you still believe that money is happiness. Having a lot of money or a big asset given to you at that age is bound to skew some perspectives.

The real key to the matter is education. As I discussed earlier, educating your child on money issues is perhaps the most valuable gift you can give to them. My feeling is that instead of giving them a big lump sum when they’re twenty, instead you should eke the money out to them over time and teach them how to manage it. They might spend it on stupid things or they might invest it in a poor fashion, but if you provide a safety net of food and shelter and advice when they’re learning for themselves, you can train them how to walk the tightrope when you’re no longer there to support them.

I’m going to keep up my son’s 529, but in terms of investing for his future, I’m going to teach him how to do it when he gets older instead of investing for him and handing him the proceeds.

Saving Money For A Rainy Day 3comments

I have a “rainy day” fund that I don’t include in any of my normal financial calculations. It just sits there, quietly accumulating small deposits and interest. In fact, I don’t even look at the account unless I am considering a major purchase or am coming across dire straits.

How is this different from an “emergency fund”? An emergency fund exists for the sole purpose of maintaining my family’s way of life in the event of a major disaster. It contains months worth of income. My “rainy day” fund, on the other hand, is for more discretionary moments; for example, I tapped that fund in order to buy my wife a gorgeous necklace featuring her birthstone and the birthstone of our son on her first Mother’s Day. My next “rainy day” purchase will probably be a bottle of expensive champagne that my wife will find the day we move into our new house, likely this summer (no, she doesn’t read this blog; she often says she can’t imagine anything more boring … little does she know …).

How do you build a “rainy day” fund? First, decide on a regular amount small enough that it won’t bust your budget wide open if you start saving that amount. Then, open a high-interest savings account at an institution that you currently do not bank at; I use HSBC Direct for this purpose. Set up an automated deduction plan that pulls out that tiny amount every so often (for me, it’s $25 a week; it was $10 until fairly recently) and then forget about it.

Why don’t you add it to your normal financial calculations? This is more of a personal decision, but I view the “rainy day” fund as something special for special occasions. Although I am very strict about my budget, I work hard for financial freedom and I want to be able to, on occasion, splurge for a special item without wrecking my financial discipline. When I calculate my change in net worth each month, I don’t include the account because I view it as having already been spent. This forces me to be even more careful about my monthly budget.

My rainy day fund enables me to do something special every once in a while without decimating my budget, and treating it as money already spent causes me to be even more disciplined about the rest of my finances.

25 Rules to Grow Rich By #14: Paying for College 3comments

The Simple Dollar is running a series in which we re-evaluate Money Magazine’s “25 Rules To Grow Rich By”. One “rule” will be re-evaluated each weekday until the series concludes; you can keep tabs on the action at the 25 Rules index.

Rule #14: Aim to accumulate enough money to pay for a third of your kids’ college costs. You can borrow the rest or cover it from your income.

This rule is utter rubbish. Let’s say that you have a newborn child today. How can one reasonably estimate what the cost of higher education will be in eighteen years? The simple fact of the matter is that you can’t, and thus this rule is nonsensical. We know that the cost of education will grow over the next eighteen years. We just have no idea how much.

There’s also a massive difference between the cost of your local state school and the cost of a top-notch private institution. Which do you think your child will be attending? For my parents, they didn’t believe I would attend college at all. For me, I want my child to attend the best school that he can get into, so I’m saving assuming that he’s going to MIT.

So, I check MIT’s financial aid site and it reports that the cost of undergraduate tuition per year right now is $33,600. So, in order to pay for four years of tuition at today’s cost, I’d have to cough up $134,400.

On the other hand, what if I were to send him to the local state school? The cost is about $6,000 a year for in-state tuition. So, to pay for four years there, I’ll have to save $24,000. Right now, I’m saving with a target amount between these two boundaries.

What about room and board, living expenses, and the tuition rise between then and now? I’ll deal with those when the time comes, but for right now, I have a tangible and sensible target to work towards, rather than an arbitrary number. So, let’s rewrite that rule.

Rewritten Rule #14: Aim to accumulate enough money to pay for what four years of undergraduate tuition would cost for your child at the institute of your choice on the day he or she was born. The rest can be borrowed or covered when the time comes.

You can jump ahead to rule #15 or jump back to rule #13.

Make Your Kid A Millionaire: Age Thirteen to Adulthood 0comments

This week, The Simple Dollar is conducting a detailed review of Kevin McKinley’s Make Your Kid A Millionaire. This title focuses on the role parents play in building a net worth for their child, both financially and psychologically. Does this book provide some interesting insights, or is it merely a repeat of the power of compound interest? This week, we aim to find out.

As your child becomes an adult and leaves the nest, you might be in a financial position to continue to help them with the major obstacles in their life. Most of the remainder of the book deals with these positions and what you can do to help out.

The first suggestion is to get your child a Roth IRA as soon as they start earning income, and it also is one of the best suggestions in the entire book. For most children, when they get a teenage job, the last thing they think about is retirement. I know I didn’t think about it when I was fifteen years old and working as a farmhand; I was busy spending my income on music and girls. What can you do as a parent to help? The best thing to do is offer to match what they save themselves (in a savings account) with an equal amount in a Roth IRA. You can pitch it to them as literally doubling their money. Obviously, no teenager will be willing to sock away all their money, but you can convince them to sock away enough so that their Roth IRA begins to build a balance in their mid teen years.

When I read this, I used myself as an example. Through my high school and college years (ages 15 to 23), I earned about $100 a week, on average. I could have easily put away $20 of it into savings. On my 23rd birthday, if it earned an average of 10% a year, I would have had $12,772.33 in my Roth IRA. Let’s say I never put another dollar into it for the rest of my life. At age 60, I would have had $434,309.70 in my Roth IRA. That number alone might just startle you into considering such a deal with your child.

After college (which the book recommends you help pay for with a 529), you might want to help your child out with a home purchase. The book offers several suggestions on this topic, from offering advice to making a payment for them (a single extra payment at the start of a mortgage can knock years off of the end of it) to paying part or all of the down payment. This felt like the strongest part of the book, as it combined advice for discussing these financial assistances along with the mechanics for actually doing it.

The book also offers advice on what to do with your money when passing it on to descendents, including the interesting topic of passing money straight to grandchildren. This is especially important if your estate is large enough to be concerned with an estate tax, as most people wish for their family to reap at least some of the rewards of their hard work throughout their life.

Tomorrow, I’ll offer up a buy or don’t buy recommendation on this title.

You can jump quickly to the other parts of this review of Make Your Kid A Millionaire using these links:
Overview
Prebirth Through 6 Years
Ages Seven to Twelve
Age Thirteen to Adulthood
Buy or Don’t Buy?

Make Your Kid A Millionaire is the fourth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

The Simple Dollar Morning Roundup: Waiting On My Laptop Edition 1comment

Where are you? You should be coming soon! I just watched the UPS man drive by…

Tips From Adam Sandler’s Bulk Shopping Trip This is why I dearly love the Frugal Duchess; only she could come up with some sort of personal finance insight from reading US Weekly magazine. Why am I wasting my time reading Forbes and Money when all of the hot financial goodies are squeezed in between the latest K-Fed news? (@ frugal duchess)

Do You Know What A Dollar Is Worth? Do you want to know what education really buys you? Freedom from backbreaking physical labor, that’s what. (@ 2million)

ING Direct’s New Electric Orange Checking Account I only hand-write roughly one check a month as it is, so this account seems like a stellar deal to me. The only thing that makes me kind of fuzzy about it is the lack of an easy way to write a check in a pinch, but I guess the money they’re saving in check management is being passed along as a nice interest return instead – 3.3% APY on all balances? Wow. (@ bank deals)

What Money Can’t Buy 0comments

Early this morning, I was thinking about Julia, the first girl that I ever had any interest in whatsoever. I have a lot of faded memories of sitting in the park with her on the swings, talking about everything and nothing, and of hiking through the woods. I only got to know Julia for a few months; she died of leukemia when she was twelve and when I met her she was already sick.

I cherish those memories of Julia because they were these isolated moments in time, a point where I was beginning to leave the beaches of childhood and wade into the waters of adulthood. I can still picture her the last time I saw her, walking really slowly through the park towards her home.

There is no price I would not pay in order to give Julie the chance to grow into adulthood. I would love to see her now with a husband and a child or two, doing whatever her heart desired. But it was not to be, and all that I have of this wonderful person are a few faded memories.

Money can’t buy back time. Every night, when your head hits the pillow, you’ve just spent another day of your life. Did you tell your wife that you love her? Did you hug your child? Did you go for a bike ride through the park just to feel the wind in your hair? So often we skip these things in the pursuit of money, but years later, it is not the chase for money that we remember.

Money can’t buy happiness. If you woke up in the morning and found that your parents had passed away, would you feel any regrets? Is there any amount of money that would replace those regrets? What about your husband or your wife or your child?

Money is not the goal of life. Money is only a tool to help us live our lives, to enable us to find room for the things that money can’t buy.

Sometime today, tell someone important to you that you love them. That one moment that it takes to tell someone how you really feel about them is more valuable than anything else you could be doing in that moment.

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