Why Vegemite is like personal finance …

It occurs to me that, at the age of 49+, that I still like Vegemite, that quintessential Australian curiosity very loosely labeled as ‘food’.

If you don’t know what Vegemite is, let me give you a few brief ‘highlights’:

- Vegemite is a salty black spread that is best used VERY sparingly on toast or dry crackers;

- Aussie children are almost weaned on it … it’s the only way to learn how to like it!

- It’s predecessor is Marmite, an English product derived from animal fats;

- Vegemite, on the other hand, is made from the sludge left over from pouring beer out of its vats (really!)

- It used to be fed to pigs, because of its very high Vitamin B content, until an Australian Food Scientist discovered how to refine it slightly and feed it to children [kids = pigs?]

Even though I actually LIKE Vegemite, I can understand that to most people it is totally inedible:

I met a food scientist who was working on a project to create Vegemite cookies to help feed the less-fortunate in Africa (again, because of its super-high Vitamin B content); this came on the back of the very successful Milk Cookie project which helped to bring Calcium to places (like Africa) where the shipping and transport of dairy products would be just too difficult.

Unfortunately, they had to cancel the project … there was just no way to make the Vegemite cookies taste good!

Now, I can actually relate to how bad this stuff must taste to others (yet tastes so good to me … in moderation!) because I was traveling to Amsterdam and in the clothing store (that I stopped by to buy a hat and scarf for the bitterly cold winter weather) there was a jar of candy on the counter …

… actually, it was liquorish – so, I took one and almost spat it straight out … it was THAT horribly salty! Apparently, it’s a delicacy in Holland on par with Vegemite (and, as bad tasting to the uninitiated).

One man’s food it definitely another man’s poison.

But, to get an idea as to how popular Vegemite really is – despite the taste (!) – here are three anecdotes for you:

1. Kraft bought the rights to Vegemite at some point, and if you visit their offices in Northbrook, Illinois (as I have) you will see its logo displayed very prominently on the wall above the receptionist’s desk. Not bad for a product only sold in a country of 20 million people (and, stocked in the USA almost purely for visiting Aussies).

2. Vegemite is inherently kosher (apparently pig food isn’t as unkosher as pigs-as-food) , but when Kraft decided to cut costs and take it off the kosher list (meaning that religious Jews in Australia could no longer buy it … a very small minority, in a very sparsely populated country), there was such an outcry that Kraft had to certify Vegemite as kosher again.

3. When we came to America, we brought 6 huge jars with us (and, brought more back on every trip home); this is not just us: my wife accidentally met a girl who was also relocating to Chicago … they were both at the supermarket checkout with a few of these large jars and (naturally) got talking.

So, what?

Well, there is a personal finance message and it’s this: one size doesn’t necessarily fit all … what one person likes may not suit the other at all.

That’s why when Steve asked me why I recommend that you put aside 2 year’s living expenses in retirement (as opposed to zero dollars before retirement) in your ‘emergency fund’, I can’t really disagree when he says:

Adrian, what you said makes sense in most cases I suppose, but ,each case /person will have different circumstances ,even after retirement.Some sort of funds set aside seems a wise move.You cannot fore see very situation that might arise,especially at an advanced age.

So, yes I agree that there is no magic in the 2 years’ number: put aside 1 year, 18 months, 2 years, or more …. I don’t really care!

And, does it really matter whether you meet the 20% Rule or make it, say, 15% or 25%?

Probably not …

BUT, the principles behind these rules – indeed, the whole methodology that I am slowly unfolding in these posts (in the random, shambly way that bloggers like to follow) – is One Size Fits All.

Why?

Because the principle is simple: Find out how much you need to make (and why and by when), then work out how hard you need to work (financially) and how much risk you need to take to get there, then go for it!

But, if you stray too far from the the guidelines that I provide, the chances are that you will not be investing enough to make any sort of meaningfully large Number by any reasonably soon Date.

Second guess the Been-There-Done-That Multi-Millionaire who has a passion for sharing his hard-won personal/financial experience at your peril

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Monetizing your passion …

If you want a business but don’t know where to start, think about monetizing your passion.

By that I mean, find out what it is that you like to do in this world (golf? personal finance? knitting?) and parlay that into a business.

Here’s somebody who turned a passion (and talent) for jewellery made from twisting little silver-plated wires into a $600k+ p.a. online business that teaches others how to do the same!

That’s why I recommend that you start today …

… whether you have any idea what/how to start your business or not, start by writing a blog.

It can tell others how to do whatever it is that you do (if you are already an expert), chronicle your own journey to ‘expertness’ (great way to get started, even if you don’t know much about your passion at all), or it can simply be a collection / review of others who are experts.

Down the track, you’ll have enough randomized blog entries to create some of your own information products … all neatly reviewed, scrubbed, and honed with the volunteer assistance of your readership.

What do you think I’ve been doing with this blog all of this time?

Seriously, if you think this is hard, check out this story of a 9 y.o. who decided to (successfully, I believe) help pay for his own heart operation by writing/selling an e-book:

http://steve-olson.com/9-year-old-helps-pay-for-own-heart-surgery-by-publishing-estory/

Inspirational, true story even without the business/money lesson that I had to wrap around it!

If you ever needed inspiration to START NOW …

… here it is.

All the inspiration that you will ever need to get started NOW.

5 Steps Toward Financial Independence – Reworked

Happy Holiday Weekend – which is now already fading as a distant memory of fun and relaxation, as your work cubicle begins to close in on you ….

… although I’m still (technically) on vacation, I’m cutting my blogging-vacation short out of sympathy and because I’m just bursting to share this post with you

Sarah Winfrey – on Wisebread – provides her 5 Steps Toward Financial Independence … I want to share them, then rework them slightly for you.

First, Sarah says:

Whether you’re a brand new grad or regrouping after a layoff or other financial difficulties, you may find that it’s more difficult than you’d imagined to wean yourself from any monetary help you’ve been getting.

1. Get a Job

2. Know Your Expenses

3. Commit to Saving

4. Prioritize Essentials

5. Give Yourself a Deadline

It’s generally good advice, and you should read the whole article here, but this wouldn’t be $7million7years if we didn’t have our own take on things:

1. Get A Job

Losing your job (or graduating college and finding it hard to find that ideal, first grad. job) shows you how fickle the world of employment can be. There’s no safety in employment any more, so you may tempted to become your own boss. But, there’s no safety in business either!

Look, I love the idea of people going it alone and starting a business, but a job provides three things that you might need:

- Cash to live off

- Starting capital for business and/or investing (your ‘war chest’)

- A safety net, in case your first business or two fails.

So, I recommend that you go ahead and get a job … and, start that business on the side!

2. Know Your Expenses

This one is easy … if you try the ‘no budget budget’ ( http://7million7years.com/2009/05/04/i-hate-budgeting-so-ive-only-ever-tracked-my-expenses-once/)

Hopefully, you already tried this – when (if) you were working – but, now’s a great time to try this again … just for one month.

3. Commit To Saving

Now, this should be easy: if this is your first job, then you’re used to living off nothing, so 50% of something must seem like a HUGE payrise to you. Regardless of whether this is your first job, or you are reentering the Rate Race (I mean, work force), you should treat this as Found Money and aim to save 50% of your income.

If that’s not possible, work your way back from 50%, all the way down to 1% if you need to …

… just remember that your eventual target should be AT LEAST 10% of your net income over and above whatever goes into your 401k.

Why?

Remember that business/investing war chest?

You need access to your money, so start building your savings outside of your 401k, as well as continuing to fund your 401k. But, you should simply treat anything that goes into your 401k as a safety net, much as a high-wire artist treats their safety net as something that’s there but NEVER to be used … except if you fall!

4. Prioritize Essentials

Remember that ‘no budget’ budget?

Now’s a great time to go through it with a fine tooth comb and identify any excesses … and, eliminate them.

And, to help you stop spending money unnecessarily, it’s time to stamp out that Impulse Buying Bug once and for all!

The best tool that I have found to help you do that is the Power of 10-1-1-1-1 card, which should be laminated and sitting in your pocket – well worn from overuse: http://7million7years.com/2009/04/23/the-even-greater-power-of-10-1-1-1-1/

5. Give Yourself A Deadline

Sarah means this as a deadline for getting your financial house in order, but $7million7year readers have a much more important deadline: Your Number / Date.

In case you missed the last three years of posts, here’s where to find:

- Your Life’s Purpose,

- Your Number, and

- Your Date.

By the time you work all of this out, you’ll be in a hurry to get a job and start your active business/investing program

You gotta have a hobby …

I don’t collect bees!

My hobby is personal finance: talking about it, writing about it, reading about it, thinking about it …

… strangely enough, making money is actually not my hobby [AJC: although, I far prefer it to the alternative ] although making money gives me the credibility to do the talking/writing.

Anyhow, one of my latest readings is a series of e-mails that is a section-by-section delivery of what Malcolm Hughes also sells as an eBook.

Presumably, when reading these e-mails, you will get SO EXCITED that you won’t be able to wait for the next FREE e-mail, so you will fork out your money for the eBook – ‘Millionaire Stealth Secrets’ Handbook.

Surprisingly, I found that I can wait

For a ‘Millionaire Handbook’, there’s actually NO advice on making/keeping money that I can see, unless you count e-mail upon boring e-mail of goal setting / visualization / dreaming mumbo-jumbo as ‘millionaire advice’.

In fact, the first piece of sensible advice that I can see is the following passage from the 28th e-mail in the series (!):

Listen to this…   Every single hugely successful person in the history of mankind has failed at least once. In many ways, they had to in order to succeed. Richard Branson [billionaire founder/owner of Virgin Records/Airlines/Credit Cards/etc./etc./etc.] was almost put out of business by the Royal Mail strikes of 1971. His mail order record business relied on the post to make money. Instead of ruining him, it made him stronger and he began opening his record shops. He was also nearly liquidised by Coutts Bank for being £300,000 in overdraft!

But whatever had happened, there would still be a Richard Branson. In fact, if Coutts Bank HAD liquidised him, he might have been even richer by now! You see, what CAN happen to a person when he/she fails is that he/she realises at least 3 things that he/she would not have realised had he/she not failed.

1.      Money is actually easily replaceable

2.      There is nothing to fear about failure

3.      Failure is SOMETIMES necessary and ALWAYS fruitful

Fear of failure is one of the key hold-backs that stops people from stepping out of their comfort-zone, so this is good – and true – advice.

Unfortunately, IMHO the rest is BS

Straight from the horses mouth …

I thought that we had successfully debunked the power of intention, when we showed that our readers – some of who may have tried to manifest money over the past year, but most of whom would have not – greatly outperformed a group of people who most assuredly did try and manifest significant amounts of money.

But, Napoleon Hill is the ‘godfather’ of intention, so go who am I to argue?

Dress to suit your audience …

I’m sure that Miley thinks she looks great … and, I’m DEFINITELY sure that her audience does, otherwise why would they come to her concerts in droves? It sure ain’t for the singing

But, as cool as she may (or may not) be … she had better not be dressed like that when she’s going for:

- a job interview

- a bank loan (well, in her case this might be OK)

- a sales presentation

- etc.

In other words, it’s not important how you look, but that you fit in with how your audience EXPECTS you to look.

When we have a Life’s Purpose that transcends ‘today’, you can make these kinds of short-term trade-off’s – you know, the “but my friends are all …” kind – because you KNOW that you have a long-term pay-off (your Number/Date, allowing you to live your Life’s Purpose, which probably includes your dream lifestyle) that your friends are simply unlikely to ever achieve!

Let me give you an example of dressing (or presenting yourself) for your audience:

When I first started in business, I had three modes of dress:

- Smart casual for my clients, who were all tradesmen: I wanted to dress nicely (to present a good image) but not ‘stuffy’

- Suits for my corporate clients: my other business was much more corporate; whenever I had a client meeting, I would dust off my ‘power suits’ and ties (nowadays, you can dress more casual, but ONLY if your client does, also).

- Suits WITH gold watches/cuff-links/jewellery: for my meetings with the bank … I always want to leave my banker with the impression that I don’t NEED the money

Now, this doesn’t mean that you can’t dress like Johnny Rotten after hours!

If that’s your ‘thing’ go right ahead … I mean, you gotta live, right?

BUT, make sure that your fashion accessories of the bodily kind can be TOTALLY hidden from view, come Monday!

Body piercings are fine; tongue/eyebrow/lip/ear piercings are not.

Small earings are fine; multiple piercings and ear ‘plates’ (the ones that enlarge the holes on your ears) are not.

Hidden tatoos are fine; visible ones are not.

Why?

Because the majority of people who you NEED to help you become successful (bankers, clients, partners) are nowhere near as broad-minded as you think!

Now, before you accuse me, my staff broke all the ‘rules’ … but, I was able to look beyond the physical (even if I had to endure a raised customer eyebrow or two), but don’t limit your market to me and the two other CEO’s out there who are as broad-minded as I am.

Let me give you another example:

A close friend of mine is CEO of a small public company. Interesting.

What his clients don’t know is that he has wall to wall tattoos on his body. Amazing.

BUT, he has to keep his shirt buttoned up (including his neck) and his sleeves all the way down to hide them … I guarantee that he regrets his tattoo decision for this reason.

So, that’s the sad truth about freedom of self-expression today; maybe it will change in a few years, maybe it won’t. Just don’t take the risk, if you want to reach your Large Number by Your Soon Date … it’s probably not worth it.

BTW: Nowadays, I don’t dress to impress anybody …

… on the other hand, I’ve already reached my Number. Have you?

I’m Angry!

I have created a new Facebook ‘fan page’ for this blog; it would be GREAT if as many of my readers as can be bothered, clicked on this Facebook widget then clicked the “Like” button on the Welcome! page that it will direct you to.

Oh, you can also sign up for the new $7 Million 7 Years monthly newsletter … these two simple steps will keep you in touch with EVERYTHING that I am doing both on and off this blog AND give you access to lots of free stuff that I don’t get the space to cover on this blog.

Once you’ve done that, come back here to find out why I’m angry …
__________________________
It’s funny, I’m an enthusiastic-about-life-and-all-of-its-opportunities type of guy with a fun/happy demeanour …

… yet, apparently, I am angry.

In fact, I am angry … it’s just that I didn’t realize it!

Let me explain …

I’m exploring the options of publishing v self-publishing our first book (‘our’ as in me and Debbie, my co-author), and John T Reed (who makes a VERY good financial argument for self-publishing) says [emphasis per John T Reed's original text]:

I once read that all good non-fiction books are written in anger. At first I was taken aback by that, then I realized it was true.

Think about it. There are generally already a bunch of books on any topic that you would choose. If the subject has been covered adequately and correctly, why write a book about it?

If you do write a book,you are implicitly saying that the world needs this book. Implicit in that is the accusation that the existing books are either incorrect or incomplete or both.

Think about it, indeed!

Look at how many books Amazon lists for the topics that I write about:

Finance – 23,637

Investing – 19,615

Personal Finance – 36,613

Real-Estate – 9,716

Small Business & Entrepreneurship – 23,172

That’s a helluvalottabooks

Now, take a look at how many personal finance blogs there are:

- Technorati lists 586 for finance, 163 for real-estate, and 1581 for small business

- DMOZ (the open directory project) lists 761 for personal finance, alone!

- But, I think the real number is in the tens of thousands, I just don’t know how to find them all!

My point being, why would I – of all people – write a personal finance book and blog? Remember, I don’t need the money!

When I read John T Reed’s comments, I knew he was right … I am angry!

I’m angry at all of those personal finance authors and bloggers who have absolutely no idea what they are talking about … particularly the ones who purport to tell you their methods to make you rich.

Their sub-text (weakly disguised as ‘advice’) really says: “start as poor as your audience, so start a blog, write a book and make millions for giving others advice on some THEORY of how to make millions”.

And, the frugal authors and bloggers of this world have a lot to answer for; convincing people to sign up to a life of self-imposed slavery for a retirement that’s only a little better than ‘do nothing’.

So, this does sound like I am angry …

… but, it doesn’t make me wrong

When is cheap debt expensive?

Dave Ramsey says to use Gazelle Intensity to pay down all debt, before even thinking about investing. Yet, would he consider running his (rather large) business without an overdraft, or leased cars, equipment, and/or furniture?

I doubt it … he needs to preserve his capital, and put it to better use by growing his business investment (more stock; better marketing; more staff; more training; etc.; etc.)

So, why should personal finance be any different?!

But, Dave Ramsey would argue to pay off all debt, whether it is ‘good’ (e.g. produces income) or ‘bad’ (e.g. credit card loans for consumer goods, like that LCD TV that you just bought).

If you are a regular reader of this blog, by now you will know that my view differs markedly; I say:

Once the debt is incurred, it is no longer ‘good’ or ‘bad’ … it becomes either ‘cheap’ or ‘expensive’.

And, as I mentioned in a previous post …

You should only pay off your ‘expensive’ debt!

What makes a debt ‘cheap’ or ‘expensive’? What is the yardstick interest rate? 2%? 5%? 11%? 19%?

Any, all, or none of the above. You see, it’s relative:

- Debt only becomes ‘cheap’ when you have something that produces a better after-tax return [AJC: probably, a MUCH better return to account for the fact that paying off the debt is a GUARANTEED return].

- Otherwise, by default, all debt becomes ‘expensive’ and you should do as Dave Ramsey suggests.

Fortunately, finding suitable investments to offset the need to pay off relatively low-cost debts such as student loans and home mortgages is as easy as finding some great value stocks, a cashflow positive real-estate investment or three, or a small business to buy or begin …

… provided that these are things that you are:

1. Passionate about,

2. Educated in, and

3. Convinced are needed in order to achieve your Required Annual Compound Growth Rate to reach your Number.

I recommend that – if you are pursuing a Large Number / Soon Date - you must pursue your investments with Cheetah Focus … a great example is provided by Eric [AJC: emphasis added]:

I graduated college 2008 from the University of Texas. worked at an oil and gas company in Houston named Flour Daniels. they had massive lay offs in 2009. I worked for a year and managed to save well over 50% of my pay. I reinvested it all into the stock market. I set up a regular investment account and a Roth IRA.

To date my Reg. Stock account is up 30%+ and my Roth IRA is up over 60%. and I still have another month to increase my yearly gains for it

I have had no prior experience with investing/trading. I played safer stocks/ETFs .. Bought on dips and sold when it would pop.

Oh and I also took out a loan from Citi bank.. who sent me a 10,000 loan offer in the mail with a 2% interest for the life of the loan. LOL.. I had to take it. I threw that into stocks also.

Any how my point is. If i had focused on paying off my $28,000 college debt I would have missed all of last year gains. I just made it a goal to beat my debt interest. and I did!

Currently I have enough money to pay off all my debt. but of course i’m not going to do it. I took out 2K from my portfolio to invest in an online woman’s clothing site. We have great style at affordable prices. we are not making huge profits.. but we are selling and that is encouraging.

Did you notice in the image (above) why the gazelle has such intensity?

It’s because the cheetah is coming up fast and furious on his tail ;)

What the wealthy buy on pay day …

This guy is a network marketing guru; but, don’t let that put you off … this first video [to watch just click on this link] is a first-class explanation of what the rich do that the poor and middle-class do not.

BTW: the first half of the next video that will pop up after this one, is also very good … but, I stopped watching when it started to get into Network Marketing.

Don’t let that stop you if you have an interest in learning more about MLM; as Seinfeld would say: “not that there’s anything wrong with that!”