Money Blue Book

This is a guest post from Marc Pearlman.

When people ask me if they could be successful at day trading, my first response is, “Do you know what day trading is?”

Most people don’t. You might think day trading is about finding the best online brokerage, grabbing a stack of financial reports, arming yourself with financial blogs and news and then diving in.

What many would-be day traders don’t realize is that success doesn’t come from the uncanny ability to analyze balance sheets and fundamentals like Warren Buffett. And even if you have the ability to interpret charts and price action–the primary skill for day trading–this is secondary to having the strict discipline of adhering to specific rules and guidelines.

Without these rules in place, day trading is like a child playing with a chainsaw. (more…)

My Dream Of Becoming An Internet Entrepreneur and Working For Myself

I am a part time (almost full time now) blogger who spends a great number of hours working on the Internet from home every night. For more than a year now, I’ve been quietly earning a sizable and consistent amount of money through blogging and my internet marketing efforts. As a multi-year veteran now to the world of making money online with a blog, I’ve joined a rather unique and eclectic group of young and emerging internet entrepreneurs – individuals who have not only successfully harnessed the power of the Internet to generate real money, but who have managed to turn seemingly unassuming websites into rather lucrative income producing automatons. While the phenomenon of blogging for money on a part time basis is certainly not new, the idea that one can actually become a full time professional blogger (a problogger of sorts) and generate not only a stable, but a sustainable income at a high velocity through mere blogging alone is quite a surprise to many (particularly among my friends and family).

I’m sure many of you are already well aware of a number of fairly successful bloggers and established Internet entrepreneurs like John Chow, ShoeMoney, and Darren Rowse of Problogger fame – online personalities that dominate the so-called “make money online” niche. Most of these semi famous Internet tycoons have been in the news for some time and have had many years to perfect the art of both online and mainstream personality-based sales pitches. Much of their mystique, self perpetuating hype, and authoritative attention stems from the sheer amounts of money they have raked in through their blogging and online entrepreneurial activities, and the continuous reminders of their financial success to their readers in the way of monthly income reports and screen shots of high dollar amount affiliate income checks. However, the ones you usually don’t hear about are those of us like myself who also run pretty successful operations of our own, but who have generally chosen to remain contently semi-anonymous and out of the lime light. While I’ve enjoyed a pretty lucrative career thus far in terms of the income streams that I’ve been able to pull through my collection of websites and online businesses, I made the conscientious decision early on to remain in the online shadows and out of the way in terms of real world publicity and attention. Not vying for the social media spotlight for ego-stroking purposes has allowed me to quietly generate a pretty prolific online business without the complicated hassles of unnecessary attention or even the critical scrutiny that the well known online bloggers at center stage face. Have you heard of the term “Millionaire Next Door” ? Well I’d like to think of myself as the “Blogger Next Door” – one of a growing number of unassuming and self made entrepreneurs who enjoy their relative anonymity and are content to blend in with everyone else in cyberspace while they quietly build their online fortunes.

Working From Home As A Full Time Blogger Is A Difficult, But Emotionally and Financially Rewarding Profession

My goal today is to simply break out of my usual personal finance subject matter for a moment and perhaps share some tidbits to encourage and inspire fledgling writers and aspiring entrepreneurs who have been quietly sitting on the sidelines – individuals who want to believe, but are afraid to take the first baby steps towards the world of self employment and Internet-based incomes. Admittedly, the journey from entry level writer and semi techie egghead, to nearly full time super affiliate power blogger is a very difficult and time consuming process, particularly in the early stages. Despite its rather ephemeral and unestablished nature, the seemingly unrealistic fantasy of being able to work from home and generate a full time income from just blogging alone is very real. While I have yet to make the final leap to full time blogger (I’m still a part time attorney), I am living proof that working from home and working for yourself is entirely and ultimately possible.

I stumbled upon blogging and the whole online business model a few years ago in 2006 quite by accident. One day I was tinkering with my free personal Xanga blogging account (this was back in the old days when Xanga.com was still popular) and I suddenly noticed the banner ads and affiliate links in the website margins for the first time. Examining the html source code, I finally realized and discovered that there was a whole marketing and income producing mechanism underneath it all that was quietly profiting from all of the user generated content that Xanga consumers were creating. From then on I decided to investigate further and figure out how the blog content and advertisement scripts were integrated into a workable business model – and the rest is history. A blog, or a weblog as it is officially called, is nothing more than an online diary of sorts sorted in reverse chronological order according to article post dates. Blogs are uniquely advantageous for monetization purposes because of the regularly updated and archived nature of their content. Simply put, Google, Bing, Yahoo, and all of the other search engines love blogs for both the fresh and timelessly relevant content they churn out, and generally prefer to rank them very highly for organic search engine traffic – which when translated into practical terms, equals dollars and cents for savvy entrepreneurs.

Now that I’ve worked for myself and have finally tasted financial success and professional freedom, no longer will I ever go back to working for someone else. No longer will I ever want to go back to the emotional and professional constraints of working the traditional full time desk job and devoting my efforts towards benefiting someone else’s company or firm.

I attended law school and graduated to eventually work as an attorney (law school is overrated in my opinion). But anyway, in one of the lawyer jobs I held before I pursued my dream of becoming self employed, I used to work for an overbearing and very unprofessional alpha-female attorney. Despite my best professional efforts at the job, I felt absolutely miserable working as an associate attorney at her small solo practitioner law firm – and never felt so unfairly scrutinized, treated so condescendingly, and persistently set up to fail. But because it was her law firm and because she was my boss, and also because I wanted to keep my precious full time job, I humored her belligerency and endured her belittlement and unreasonable demands for weeks and months. Despite my seething frustration, the fact remained that it was her personal law firm and I was merely a replaceable cog in a bigger machine – and thus I swallowed my pride and did as I was told. But eventually I had enough of the disrespect and quit the firm, literally storming out at the end of one working day without looking back – going from having a full time job that paid the bills to immediate unemployment.

Now that I am a semi full time blogger who runs a variety of part time real life business ventures and operates his own part time legal practice on the side, I use tragic memories of my working past to motivate myself. Whether you no longer want to work for anyone else or whether you were forced out of your previous or current job due to the economic recession or as a consequence of layoffs, it’s time to consider chasing the dream of becoming self employed and finally throwing off the shackles and emotional constraints of the traditional “trading hours for dollars” working life. It may be a scary first step to take, but the potential rewards and financial upside are worth it.

How Much Money Do Bloggers Make From Their Blogs? Answer: Depends On Blog Niche, Your Tech Savviness, and Effort That You Put Forth

When I talk about bloggers, I’m not referring to full time freelance bloggers and online newspaper writers who crank out articles for others. Those types of freelance writers who produce text based content for blogs that are owned by other people only generate a few dollars or perhaps just a measly $1.00 to $5.00 per blog post that they write. In this article, when I’m talking about bloggers and webmasters who are able to generate a very good part time income supplement or even a full time living from their blogs, I’m talking about those who own their own blogs and websites – entrepreneurs who serve as both website owner and chief content producer.

So how much income exactly do average bloggers earn from their blogs assuming a reasonable measure of built up success? That’s not an easy question to answer. Because the amount of money that bloggers make from their blogs varies so greatly depending on the type of advertisers that a website can attract, that statistic is highly dependent on the subject matter of the blog. As a general rule of thumb, the most lucrative and financially rewarding websites and blogs tend to be those in the financial niche where credit card issuers, online banks, brokerage firms, insurance companies, and mortgage lenders are better equipped in terms of financial capacity to pay a lucratively high price to affiliate publishers for customer and new sales referrals. While not as financially lucrative, other blog content niches such as entertainment, gossip, fashion, clothing apparel, legal services, health care, weight loss, shopping, computers, electronics, and dating are certainly financially worthwhile in their own rights and can be immensely profitable as well. However, successful online entrepreneurs who are able to multi task and pour in significant amounts of time and effort on a consistent basis may be able to target different content niches with a diverse portfolio of actively updated websites. Obviously the greater the content diversity from a variety of different websites with appropriate targeted traffic to match, the greater the pool of prospective advertisers to generate income from. The key is to also truly enjoy what you write about. The blog traffic, blog comments, and relevant advertisers will naturally flow thereafter.

Making a decent full time income online by working as a blogger is very much possible but it does require an enormous amount of time investment and educational self training, especially upfront during the initial stages when the financial rewards are still miniscule or non-existent. Whatever you do, absolutely do not quit your full time day job until your part time blogging efforts start paying off. I started blogging part time while I still had a full time day job – spending my off hours teaching myself the intricacies of blogging, website design, and Wordpress blog optimization tricks. It also took a great deal of time to learn the fundamentals of Adobe Photoshop graphic manipulation and the intricacies of basic Wordpress PHP programming for blog theme tweaking purposes. While the barriers to entry are extremely low for blogging as a profession and almost anyone and his/her grandma can get started at any time without paying a dime, there is no guarantee that the process will be easy (and I can almost assure you that the journey will be difficult and sleep depriving). A five figure income per month is possible if you pick the right niche and work extremely and exceedingly hard, but it’s not the norm. Most of you (more than 95%) will probably fail due to blogger’s block, frustration, and lost of interest – but the ones who can persist will succeed in time. Nothing in life is guaranteed but if you put your mind towards blogging and don’t burn yourself out – $100 a month, $1,000 a month, and perhaps even $10,000 a month of passive income is reasonable with the correct mix of content, the right blog niche, and a lot of search engine traffic generation luck.

Much of the information needed to get you started as a professional blogger can be obtained online for free and there is no real need for you to purchase or spend money on E-books or on the make money online books being sold at bookstores. But if you really want a good primer to get you started, I’d recommend something like Darren Rowse’s book – ProBlogger: Six Figure Income Blogging. Anyone who is a wannabe blogger knows about the original pro blogger himself – and ranked by experience rather than age, he’s the granddaddy of us all. Alternatively you can always just visit your local public library and borrow the books for free. But my advice is to just follow your favorite bloggers online and read through their past blogging post archives to get the information you need. You’ll get more real world practical advice on blog writing techniques, search engine optimization tricks, and website business maintenance pointers from these updated daily blogs than you’ll ever glean from mere stale books alone. The world of blogging for income and the fickle nature of search engine traffic generation techniques are constantly evolving so it’s best to stay updated on the latest news by reading from actively updated blogs and websites than from constantly reviewing some ancient textbook on the subject.

If you want to know exactly how much money I currently generate from my online businesses and from this personal finance blog in particular, unfortunately, I won’t be able to share that information in great detail at this time. If you must know a little bit, I will put this forth – this personal finance blog generates in excess of $100,000 in organic net profits per year, most of it without substantial effort on my part. I do not pay any money for advertising, I absolutely do not sell text links, I don’t do paid reviews, and I don’t engage in any pay per click Google Adword advertising – it’s all organic search engine based. Regarding the specifics of my income breakdown, I wish to stay silent on that for now. Perhaps in the near future I will share more about my online income sources and real life business ventures in greater detail with readers. For the time being, I don’t plan to share any pictures of fancy checks or reveal the specifics of my income sources from my blogging operations – you’ll just have to take my word for it. But it’s perfectly okay if you don’t believe me. Like I mentioned early on, I’m not interested in capturing attention or attracting a loyal zombie following – just hoping to inspire a few people and motivate some of you to a call to action.

Never Stop Learning And Chasing Your Entrepreneurial Dreams

To get the blogging and website business know-how you’ll need to run a successful blog, you’ll need to strive towards constantly educating yourself on all aspects of blogging. The facets are broad as blogging encompasses everything from the fundamentals of writing to grammar, basic web programming, graphic design, salesmanship, multi tasking, negotiation skills, and efficient time management. It will take months, even years before you will become a fully self trained expert on the blogging business. I started the early research and tinkering process in 2006, but didn’t start running my first few successful online blogs and start seriously generating a stable income sufficiently large enough to replace my day job wages until 2008. From the time I truly started writing and promoting this particular financial blog you are reading, I didn’t generate a sustainable full time income until 12 months thereafter. There will be times when you first start out that you will feel like no one is reading your work and that you are writing for yourself, but that’s okay. We’ve all been there before and that’s perfectly normal in the beginning. It’s a lonely process at the start but with time, your efforts will pay off. Meanwhile, to this very day, I still spend hours and hours every day reading blogs about blogging and scouring the web for any new morsels I can uncover about website optimization, how to generate more search engine traffic, and how to capture blogger traffic. As far as I’m concerned I will forever be a work in progress. There is so much to learn and my self driven educational enrichment will never cease so long as I continue to blog for a living and make money online (view my beginner’s primer on how to get started).

While I have my own convenient and jack-rabbity-fast high speed broadband connection at home, sometimes I just want to get out of the house for a change of scenery. Ever since I began the gradual transition from traditional office life to the work from home routine, I’ve noticed that it can sometimes be pretty boring working from the confines of one’s own house or apartment all the time. While working from home on the computer is great because it’s nice to be your own boss, loneliness and lack of human contact can become troubling issues, especially if you are working by yourself all the time. While it’s certainly very convenient to do business related work from one’s home office (necessary supplies, kitchen amenities, and even bathroom conveniences are only a few steps away), the work at home experience can be plagued by boredom and frequent feelings of isolation. Once in a while, I just want to pick up my laptop and head out to some cafe, restaurant, or public location, and momentarily work at an Internet accessible place where there’s random people milling about. That way I don’t feel so cut off from the real world.

One’s Home Office Can Be Any Cafe, Restaurant, Or Public Park With Free WiFi and Electrical Outlet Access

Since I’m trying to transition into running my own home based businesses full time and no longer work frequent contract attorney projects as a result, I no longer have an Internet equipped office computer outside of my home that I can go to everyday to get me in the right day job mindset. Sometimes it’s difficult to work from home because it just doesn’t feel like a real work zone and it’s so easy to get distracted and sidetracked. After all, my bedroom, home office desk computer, and television entertainment gadgets are only a few feet apart from each other. So at least once or twice a week, I enjoy driving out to local public places to swap my home office for a more productive working environment.

As a savvy saver and frugal fellow, I prefer to seek out suitable local neighborhood businesses and public work spaces that offer free but necessary business amenities like convenient restroom access, proximity to drinks and food, and most important of all – free or very affordable wireless internet access. While not all places provide truly free wireless Internet for customers (instead requiring them to purchase usage time or limiting free surfing to only an hour or two), there are places that do provide this particular perk. Free Wi-Fi hotspots are everywhere – at the mall, the park, in public places where people gather – you just need to know where to look. Many major fast food chain restaurants and many sit down coffee cafe shops provide free wireless hotspot services for customers to enjoy. Often times they don’t even require you to purchase anything – although I’d recommend that you at least buy a coffee or a light snack. You don’t need to purchase a three course meal, but on principle, you don’t want to be a freeloader do you? Speaking of eating and working at the same time, I do however at times question the wisdom of placing an expensive laptop in very close proximity to food and drink. Just be careful – your laptop and your caramel macchiato drink don’t mix!

The last few days, I purposely visited various popular WiFi hotspot locations to confirm and inspect the business’ free wireless Internet service offerings. Below, I’ve listed the places I’ve found to be the most widely available and easily found free wireless Internet locales. So long as you have a portable notebook computer that is WiFi enabled that you can suitably lug around, you are good to go for free web surfing. All you’ll need to do is run the wireless signal manager, search for the target business’ public wireless network name (also called the SSID), and you should be able to connect instantly to the WiFi service. For habitual free WiFi hotspot seekers who browse the Internet for hours at a time, I recommend investing in extra long lasting laptop batteries. Some of the places below either don’t offer electrical outlets for customers to use, or simply don’t have sufficient numbers to go around.

Some Of The Top WiFi Hotspot Places To Enjoy Free Wireless Internet

1) Panera Bread – This place is one of my favorite free wireless hotspot destinations for unlimited use. Panera has become a very popular choice for young professionals and home business types who want a relaxing place to access the web for free, while enjoying a tasty sandwich, hot soup, or one of their delicious salads at the same time (please bring back the Fuji apple chicken salad). There are lots of tables and electrical outlets available, but single Internet users should focus on the small tables, and leave the bigger ones for groups. The cafe is a common meeting location for small businesses and sometimes you’ll see such meetings take place in corners – as the place has sort of a trendy, Internet cafe vibe to it (at least that’s the case for the one near where I live). Panera Bread is a popular choice for free WiFi seekers but its popularity also causes greater strain on the shared Internet connection. I found the WiFi access speed to be very slow during peak usage times. Avoid using the WiFi from 12 pm to 2 pm if you can since that is when most people try to get on. Panera also heavily filters out many (ahem) questionable websites – I’m sure some of you hanky panky web surfers are disappointed.

2) Corner Bakery – Right around the corner (pun very much intended) is the Corner Bakery, which offers free WiFi for unlimited use and is also a great place to relax, eat, and surf the web for free. There is no obligation to buy anything either, although Corner Bakery offers quite a selection of pretty decent pastas, sandwiches, and soups. Corner Bakery franchises seem to be located mostly in the major states. As for the WiFi, I think few people are aware that Corner Bakery offers free wireless Internet for patrons, which probably explains why there’s less connection crowding. The WiFi speeds were much faster and less congested than that offered by other restaurants, including Panera. Electrical outlets are not plentiful, but they are available at certain tables.

3) McDonald’s – While McDonald’s used to charge for extended wireless Internet usage at participating restaurants, they’ve recently started to offer free unlimited WiFi use. Free WiFi access is now being offered at most McDonald locations. There is no obligation to buy – just power up your laptop computer and surf to your heart’s content. However, you might want to get used to nosy people peeking at your screen over your shoulder – McDonald restaurants are usually filled with all sorts of interesting characters. Also, aside from the unhealthy aspects of McDonald’s fast food choices, one other big problem with McDonald’s is that their restaurants lack electrical outlets. I wasn’t able to find a single outlet for my laptop.

4) Starbucks - While Starbucks coffee shops have started to offer free wireless internet access for coffee and tea drinking customers, this top free WiFi hotspot needs a little asterisk next to it. While WiFi use at Starbucks is indeed free, it’s only currently free for a single use of two consecutive hours at a time. Since Starbucks switched from T-Mobile to AT&T, customers must now register their Starbucks Card and use it at least once a month (buy a drink with it), to receive two consecutive hours a day of free internet use. While it’s not unlimited use, I needed to mention Starbucks, if only because of the fact that they have locations almost everywhere.

5) Caribou Coffee – I like Caribou coffee drinks much more than the unremarkable ones brewed at Starbucks, so I prefer to hang out at Caribou more often than I do at Starbucks. However, Caribou locations are not as widely available as Starbucks. But at Caribou, WiFi internet use is completely free and usage is unlimited. There is no demand that you actually purchase a drink, but it’s probably advisable to do so as a courtesy. If you want to use your laptop in a trendy environment decked out in wood to look like some type of ski lodge, Caribou’s the place to be. Plus, their daily trivia questions are not only whimsically interesting, but getting them right can also help you save a few cents off your drink!

6) Schlotzsky’s – Schlotzsky’s, like the slogan says, has a funny name, but provides serious sandwiches. If you enjoy relatively healthy deli sandwiches, subs, and wraps, this is a nice place to hang out. This New York style deli sandwich chain provides free wireless Internet access for its customers through its Cool Cloud wireless network. Most locations also provide free computer workstations for laptop-less customers to jump online and browse.

7) Public Library – While there seems to be plenty of odd and quirky folks who hang out at public libraries, not to mention the hordes of kids everywhere, I like public libraries, mostly because of the comfortable presence of people that it affords work at home entrepreneurs like myself. Most local libraries provide a wealth of free county sponsored services, including free wireless Internet access. Your tax dollars pay for them so you might as well take full advantage when you can. Most public county libraries also have free computers for patrons to use although sometimes you’ll need to sign up for a library card to access them. Because there are usually a large number of simultaneously connected users, public library connections are notoriously slower than average. I recommend bringing along electrical extension cords in case available electrical outlets are not conveniently located next to your desired table. Based on my observations, public libraries seem less strict about patrons stringing cables and cords around anyway.

8) Local University Library or Study Lounge – I recently returned to my alma mater’s university library to see if I could still access the library’s internet connections for free. Unfortunately my old school doesn’t provide free WiFi access for non active students, even for an alumnus such as myself. Students are required to log onto the network with secured passwords, and unauthorized laptops are denied Internet access. However, at another local college, I was able to access the school’s free wireless signal from a study lounge area, despite not being a student there. While not exactly publicly available, the signal wasn’t restricted. If you’re lucky to find a free university library WiFi signal, you’re quite fortunate. University wireless signals tend to be extremely fast and rarely congested – perfect for home business workers who want a change of scenery.

9) Unsecured Wireless Router – This one is controversial, but another interesting way to work somewhere besides from your home computer is to find a public work space where you can obtain a freely available WiFi signal from some random person’s wireless router. While most home network owners are getting better at securing and protecting their wireless broadcast signals, there are still some people who either purposely choose not to or neglect to do so (like my neighbor). If you don’t have ethical qualms about doing so, it’s an option. Be careful though, open wireless networks make it easy for hackers and evil-doers to access your computer and intercept data that you submit through the connection. I don’t think it’s very likely as it requires some fancy knowhow, but it’s a possibility. Keep in mind, while I’ve done this before in the past, this grey area practice is fraught with debatable legal issues.

10) Public Parks or Certain Downtown Areas – In the downtown city area close to where I live, my local city government has decided to shell out money to provide free public WiFi access for all city residents that frequent the heavily trafficked area. The wireless signal area is populated by restaurants, shops, and lots of open sitting spaces – perfect for those who desire to work on the Internet and enjoy the great outdoors at the same time. In major metropolitan areas like New York City, there are lots of public places where the city government has provided complimentary wireless Internet signals for free public use. The only drawback with these places is that electrical outlets are usually nonexistent.

For those of you who are fortunate to have a stable job and blessed with being gainfully employed, congratulations and more power to you. For those of you who are currently unemployed or out of a job, I feel your frustration. I’ve been there before and know how scary and uncertain the experience can be.

In this fluctuating and unpredictable economy, you never quite know what is lurking around the corner. Life comes at us fast and sometimes job stability, occupational predictability, and all positive aspects of full time employment can disappear in a flash. Sometimes it can be due to our own fallibility and less than perfect work performance, and sometimes it can be due to slowdowns in the economy at large. Life is unpredictable and it’s hard to be certain whether there is such a field that’s a sure thing anymore. During the past few years, jobs and careers related to the real estate and housing market were hot and in great demand. However, years later, with the collapse of the housing bubble, many of the jobs previously fueled by the burgeoning real estate market have mostly disappeared. Even upper echelon MBA-type financial positions at top firms like Merrill Lynch have been down sized and trimmed back, resulting in many educated employees suddenly out of work.

If you find yourself one of many who have been laid off, I feel for you. I’ve been through a sudden job lay off before and it’s not an easy feeling or experience to go through. Not only does it put you in a sudden cash flow crunch, but it forces you to scramble around in desperation to find employment quickly. For those who have a wife, husband, or children depending on that income, the extra financial and familial pressures make the process even more urgent. However, it doesn’t have to be the end of the world. There are systems and governmental assistance programs in place to help guide and cushion you during those periodic times of unemployment – namely in the form of unemployment insurance benefits. Don’t let those invaluable financial benefits and entitlements pass you by during times of need – seize them immediately.

Do Not Let Petty Shame Or Guilt Prevent You From Filing For Unemployment Insurance Benefits – It’s Your Money and You Are Entitled To It

I’ve filed for unemployment benefits several times throughout my working career thus far. I will admit, the first time I filed, I felt a tinge of shame and guilt. I felt like it was a hit on my aura of financial independence and a stain on my own sense of masculine pride. As someone who was raised to believe that an important aspect of a man’s duty and responsibility was to provide for himself and his family, it was difficult for me to depend on governmental handouts for the first time. To me, receiving unemployment benefits meant I was now on welfare, and no better than some unmotivated or lazy 40 year old bum who lived in his parent’s basement like some financial leach on society.

However, now that I’ve had experience with being the recipient of unemployment benefits, I now understand what it truly is. To receive unemployment insurance benefits is by no means the same as receiving public welfare. It’s a genuine financial safety net that is subsidized by employers in a socialized manner to help decent working people get back on their feet quickly with as little financial destruction or burden as possible. While unemployment benefits provide free money for times when you’re not working, a fundamental and required tenant is that the recipient actively pursue employment leads while drawing on the temporary financial perks. Being a recipient has no effect on your existing credit score and the mere act of filing has no effect on your future employment prospects. The small amount of compensation provided isn’t sufficient to save or grow rich on, but is just enough to give one a semblance of financial continuity and feeling of self reliance until the person can get back on his or her feet. It helps those who want to help themselves.

Who Pays For The Funds Dispersed For Unemployment Benefits?

Unemployment benefits are provided by a special jointly run fund provided by federal and state payroll taxes called the Unemployment Insurance program. No part of an employee’s actual paycheck goes directly into this unemployment fund (unlike social security) but is instead indirectly funded by employers through a special unemployment insurance tax that they pay. Almost all employers are required to pay unemployment insurance tax to help fund this public service. Unlike worker’s compensation, the employer does not pay unemployment benefits to laid off employees directly, but payments are instead issued by the responsible state agency as needed. Even if an employer goes out of business, unemployment benefits can still be distributed out to the company’s now unemployed workers because funds are socially subsidized by other active employers who pay into this pool of shared funds. When you are out of work for whatever reason, it’s in your own interest to apply for unemployment benefits as soon as possible. Even if you refuse to file for it, you should know that you are still indirectly paying for this socialized governmental service.

Remember, there is no shame in taking on this temporary financial safety net as a short term stop gap measure – it was designed for you when you need it the most. The money is rightfully yours because your employer pays into the fund on a mandatory basis. Without its existence, you theoretically would have been given higher pay. If because of pride, you refuse to take this temporary governmental handout, ask yourself this question – will pride put food on the table for your family in the meantime until you can find your next job? Will pride pay for necessary groceries or pay for a roof over your held until you can secure that next job interview? Think about it. Desperate times require desperate measures. I personally view unemployment benefits as part of my emergency fund measures.

As Soon As You Become Unemployed, Apply For Unemployment Benefits Immediately

The most important thing to know about seeking unemployment benefit compensation is to file as soon as you become either partially or fully unemployed. Even if you suspect you will be able to file a new job relatively soon, it’s still in your best interest to still file for it sooner than later. There is almost always a 1-2 week lag time between filing and when you receive benefits. Frequently, there is also a mandatory one week waiting period during which the first week will not be compensated for. The benefit clock starts when you file so if you wait around to see if a new job is forthcoming, you may miss out on much deserved unemployment entitlements. If you wait several months after becoming unemployed to file, you won’t be able to claim for the non-working months that have already passed. You can only claim for the time that comes after the moment you file, so don’t delay – get credit for every single moment you remain unemployed.

Even if you are confident that you have sufficient pre-existing emergency funds to live off of, it’s better to file and not risk the chance that your emergency funds ultimately run out. You don’t want to look back later down the road only after draining your bank account completely and racking up unpaid credit card bills, and realized that you ought to have applied for unemployment benefits earlier.

Where Do You File For Unemployment Benefits?

Unemployment benefit applications should be filed in the state where the work was performed. Check out this official U.S. Department of Labor List Of State Unemployment Agencies to determine the correct filing location. Most states today allow unemployment benefit applications to be filed via telephone, in person, or through the Internet. If you want to avoid the stigma or emotional embarrassment of filing for this entitlement in person, filing via phone or through the Internet is a great way to circumvent this problem. Not only that, those methods are also quicker ways get your money more expeditiously.

As mentioned, unemployment filings are made with the state unemployment agency in the state jurisdiction where the work was performed. If you lived in New York and worked in New York, you need to file your claim with the state of New York. What about those who lived in one state, but worked in another? In my case when I filed way back when, I lived in the state of Maryland, but worked in Washington D.C. Since I performed my employment in D.C., my place of unemployment benefit filing would be in D.C. since that’s where my employers actively paid their unemployment taxes to. I could still file with the state of Maryland, but would ultimately be referred by the unemployment hotline and managing system to seek benefits from Washington D.C.

Who Is Entitled To File For Unemployment Benefits and How Much Money Can You Expect?

Generally (individual state laws vary), to qualify for unemployment benefits, an applicant must (1) meet state eligibility requirements regarding how long the employee has previously been working and how much money the employee has earned, (2) make continuing and regular application updates to the managing state agency, (3) be continuously available for work and actively seeking work, and (4) not be subject to any disqualifying employment factor.

To be entitled for unemployment benefits, employees must have become unemployed through no fault of their own (although definitions on fault vary by state). Generally those who voluntarily quit their jobs or were discharged from their positions due to willful misconduct can’t qualify. However, if you were laid off due to downsizing or were discharged due to simple lack of work, you will probably be entitled to benefits. Once approved, to continue to draw on your weekly unemployment checks or direct deposits, you will required to submit weekly updates of your employment and income status either by phone or over the Internet. During that time, you are expected to actively look for work. Obviously the benefits will stop as soon as you become gainfully employed again. While it’s somewhat unlikely the state agency will know if you go on vacation during that period of time instead of looking for work, you should also know that by doing so, you are committing fraud and may be required to pay the benefits back along with penalty fees if discovered. I know some people who did decide to take a brief vacation while still drawing on unemployment benefits, managing to stay under the radar, but not everyone will be that fortunate. Big brother government has sneaky ways to track you down.

To file for unemployment benefits with your state agency, you will need to provide your name, mailing address, phone number, social security number, working phone number, and may sometimes be asked to provide recent pay stubs. However, with computerized filings, oftentimes you will only need to provide your former employer’s name and address, without having to provide wage or salary paperwork. Your most recent employer will be automatically contacted by the state unemployment agency to verify the circumstances and reasons of your work discharge or layoff. Their response will help determine whether you exhibit any of the disqualifying factors to receiving unemployment benefits such as you quitting on your own, or getting fired because you were stealing from them.

The amount of your weekly unemployment benefit checks will vary depending on your past income and the maximum limits of your filing jurisdiction. For those who are higher income earners, your weekly checks will be worth more. The maximum payout amount also differs from state to state. Just to give you a very rough ballpark figure of how much you can expect, the maximum payout for the District of Columbia is currently $359 a week, before tax. At about $1,436 a month, this definitely goes a long way to help pay for basic living expenses like rent until you can get back on your employment feet.

Usually there is a total amount of benefits that each specific applicant can draw upon before the entire fund for that benefit year is tapped out. But until that happens, applicants can usually receive benefits for 6 months straight (26 weeks) before depleting their entire emergency unemployment benefit reserves. Keep in mind as well, all unemployment payouts are considered taxable income. There is usually no tax withholding associated with unemployment benefits so you may be required to pay estimated taxes to meet your tax obligations.