Money Blue Book

This topic has been discussed and debated by many in the financial community and is regarded as controversial by some. Numerous bestsellers have been written on the subject.

Traditionally, when it comes to making money, most people share the same mentality - “If I work harder in my job, put in more overtime hours, I’ll get ahead and make more money.” Unfortunately, no matter how many hours they put in, they’ll forever be constrained by the laws of nature. There is only a finite number of hours you can work in a day during which you can exchange your available working hours for monetary compensation - essentially, trading hours for dollars, or trading time for money.

The New Approach

The new approach is hard for many to accept as it requires a different understanding beyond what we were taught as children. The new approach places lesser priority on active income and a greater emphasis on passive income generation. Active income would be money earned while putting in your hours sitting at your office desk (trading hours for dollars). But passive income would be money generated from sources such as stock investments, real estate appreciation, rental income, and even advertisement revenue earned by websites that you own. The limitations of the old approach to money are obvious.

You Are Constrained By Time

By trading hours for dollars, you are foregoing time that could be spent tending to other things in your life such as friends and family. You are choosing to spend your time in an office, rather than accomplishing your other hobbies and interests. You don’t want to spend precious time working, but you know that to earn those dollars, you need to trade for them using your available hours. The less you trade in, the less you’ll earn.

Nowhere is it more poignant than in my own full time job. I blog part time and in my full time, I perform contract work. I earn an excellent income rate but I only get paid when I work. If I stopped trading in my hours, I stop receiving dollars. If I want to make more money and hit extra overtime pay of time and a half, I have to keep trading in even more hours. Of course, no matter how many hours I work, I am always limited by the ever present constant - there are only 24 hours in a day.

You Are Taxed Unfavorably

When you trade in hours for dollars, your earnings are usually taxed immediately and you receive very limited favorable treatment in taxation. The deferred taxation offered by 401k and other retirement investment vehicles are the few taxation breaks available to you. The majority don’t even take advantage of this! While businesses can generally use their pre-tax dollars to deduct many of their business related expenses as well as any losses from business related activities, you must use your own after-tax income to purchase most of your day to day items.

Your Ability to Trade Hours for Dollars Will Eventually End

None one can live forever, and eventually there will be a time when you can no longer trade hours for dollars. You will either become too old, too sick, or too injured to work. The moment you stop working and the moment you stop trading hours for dollars, the money will stop. If you had planned ahead and provided for your retirement savings or obtained adequate health insurance prior to sickness, you may be better protected. But that of course depends on how you prepared in advance, and many don’t.

Don’t Ditch Your Job, But Start Learning About and Focusing on Residual and Passive Income

So what now? Certainly, there is no reason why anyone should neglect an active income source, aka a job. A real job provides social stability, an occupational purpose, and a generally predictable source of revenue. But don’t forget the importance of passive income. Learn to plan your finances and understand passive income sources. Invest in the stock market. Invest in affiliate programs. Start an income producing website or blog. Invest in a potentially profitable business run by others. Invest in appreciating real estate. Such sources allow you to earn income even when you are not actively working or trading in your hours. Even when you are sleeping or resting, your passive income sources are still producing for you. Start your progress towards financial freedom today. I’m personally still a very long ways away, but I am slowly inching towards my goals.

Recently I went to eat at a local casual diner. There were very few customers but yet the service was still terrible. Our waitress made us wait and delayed in taking our order or even offering us water. The water never came until I raised my hand for another waitress to bring it to us. Our waitress never offered us much service. It was only a quick evening snack so the bill came out to only about $11.00. I had initially decided not to tip at all because the service was so lousy but decided to at least chip in an extra $1.00. When the waitress saw her tip, she became enraged! She began whining and complaining very loudly and angrily to no one in particular but clearly and purposefully within earshot of us, while her mild mannered manager tried to calm her down to avoid a scene. Eventually her obnoxiousness made me stand up and confront her verbally. The manager ultimately offered us an extra dessert to make peace and apologized for her behavior.

Voluntary Compulsory Tipping

Afterwards, the incident got me thinking about how tipping has gone from being a gesture of good will to a mandatory social custom. The tip is supposed to be a sign of appreciation for a job well done and purely voluntary. Although the amount is never legally required, failure to tip in certain situations can now result in embarrassment, or even feelings of guilt. That is the part I don’t understand and find very frustrating. If tipping is meant to be a show of gratitude for a job well done, then how could people still demand a generous tip even when the service was shoddy or negligent. When the server ignored your table the whole evening and never remembered to fill up your water glass, why does he or she still get indignant and become outraged when his or her lack of consideration is returned in kind.

Only in the U.S. Do People Tip

The United States is one of the few countries in the world that practices widespread tipping. Most parts of the world don’t have such a social custom. In fact, in most parts of Asia, it’s even considered rude and impolite to tip, implying that the servers need to be paid extra to do a good job. In other parts of the world, tipping is associated with bribery and is thus frowned upon. So why are we the only ones that practice that? I am actually a very good tipper when good service is offered, but I find tipping’s socially mandatory nature very distasteful. All it does is cause pricing confusion and create awkward situations. At the very least, we have to go back to when tipping was purely optional with no expectation that it would be offered.

While I was researching some finance related topics for my blog, I saw this on TV. Okay, I know this clip has absolutely nothing to do with making money or saving money, but I just had to post it. Poor thing..I’m sure she’s hiding in her room right now..but it’s just too funny.

Thanks to her brilliance, I now know why one fifth of Americans can’t locate the United States on a map - that’s because we don’t have maps! At least she gave a decent shout out to Iraq and uh…South Africa for some reason..

I think the principal from Adam Sandler’s movie “Billy Madison” put it best when he said:

What you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.

I’m not sure…but I didn’t feel it was all that difficult of a question. What do you think? Well, at least she looked great right?

I have been exercising a money saving habit that has netted me many freebies over the years and has also enabled me to acquire goods and services at reduced prices and rates. We should all be aware of this simple but oftentimes forgotten phrase: “the customer is always right”. Such a simple phrase, but what does it mean? It means that as the customer, you are almost always entitled to the benefit of the doubt and that it is the duty of the service provider to meet your needs, to the best of the provider’s ability.

What this also means is that as the customer, we must always demand satisfaction and nothing less. I am not advocating mistreatment or the making of gratuitous demands, but I believe consumers should always receive in full the benefit of the bargain that they paid for, which would include good service, clean facilities, and timeliness. If you are not satisfied with the product or experience, always bring this to the attention of managers, supervisors, or owners. The upper management types have a greater a vested interest in responding to their customer’s satisfaction needs, and are almost always more willing to please.

My Starbucks Experience

Case in point. I visited a Starbucks in Washington D.C. close to where I was working not too long ago and was horrified to see several fruit flies hovering inside the pastry display case. This disgusting sight continued for several days and I finally brought it to the attention of store management. I also emailed Starbucks.com numerous times to complain about the problem. After several email complaints the display case was finally cleaned up. Later, I was pleasantly surprised to receive an apologetic letter from Starbucks headquarters in the mail along with several vouchers for free Starbucks drinks.

Companies want to keep their customers happy and complaints made directly to their corporate headquarters will often result in them addressing their problem more rapidly. Oftentimes the corporate office will send you free coupons or vouchers as a sign of apology to retain you as a future customer. I’ve also received discounts on hotel stays due to complaints about excessive construction noise in the past. Take full advantage as no complaint goes unrewarded! Just remember to be polite but very firm.