Archive for August, 2007|Monthly archive page

I am cheapskate, live like a cheapo

Confession time: I’m a cheapskate. Some would say frugal, which sounds much more positive, but in reality I can be a real cheapskate.

I am fairly frugal (though not always), but sometimes I take it too far: I have T-shirts with holes in them, I never buy new clothes, we’re shopping for a new couch because our current one has holes in it, and I ran my current pair of running shoes until the soles fell off.

However, I have gradually learned to be frugal in many ways that I would recommend to others. I don’t think you should have holes in your couch, and you should definitely replace your running shoes more often than I do, but there are many ways to cut back on spending and live a more frugal lifestyle.

Why live frugally? First, because it allows you to spend less than you earn, and use the difference to pay off debt, save or invest. Or all three. Second, because the less you spend, the less you need to earn. And that means you can choose to work less, or work more but retire early. Or take mini retirements. You have more options with a frugal lifestyle.

I know what I’m going to hear in the comments, because it’s been done repeatedly with my other frugal articles: I have no life. This is boring. I might as well live in a box. You have to enjoy life sometimes.

All of which you might believe, but I believe I do have a life. A great one. One where I spend time with my family, where I have conversations and read and get outside and do things that are fun and exercise and focus on what’s important and spend my free time the way I want. This is a good life. Read this article for more.

So, if you’d like some tips on frugal living, here are just a few, from a cheapskate. I should note that I do most, but not all, of these tips.

  1. Go with one car. Many families have two or more cars. Besides your house, your car is probably your most expensive item. If you can do with one, you should. My wife and I both work, and we have six kids, and yet we have learned to manage with one car.
  2. Go with a smaller house. Just because you can afford a larger house, doesn’t mean you should live in one. Live in as small a house as you can and still be comfortable. I don’t mean you should live in a one-room apartment with a family of four … you know what I mean. You can save thousands a year with a smaller house. Many times, if you get rid of a lot of clutter, you don’t need a large house.
  3. Go with a smaller car. Again, you can save thousands by going with a smaller car. A car instead of an SUV, for example, is a big savings. Be comfortable, but don’t overdo it. You’ll save a lot on gas this way too.
  4. Rent rather than own. This will probably spark a huge debate, as it always does. The thing is, just don’t assume that buying is the better investment. If you calculate the interest you pay on a mortgage, the cost of insurance and maintenance, buying is often much more costly than renting … and if you rent, save money, and then invest the difference, you can actually end up well ahead in the long run. Now, it’s not a given, so do a comparison, factoring in all expenses. Here’s a more in-depth article.
  5. Look for used first. If you need something — I mean really need it, not just want it — see if someone you know has one that they don’t use or need anymore. Send out an email to family or friends, or just ask around. You might be surprised. I was about to buy a printer, and then found out my mom just bought a laser printer and didn’t need her old inkjet … saving me close to 100 smackeroos. If no one you know owns one, try freecycle.org or craigslist.org. Then look to buy used, at garage sales or thrift shops. You can find a bargain if you look around.
  6. Eat out less. One of the biggest expenses in our daily lives is eating out — the average person spends well over $2,000 a year on eating out. Restaurants are expensive, including fast-food (not to mention the health hazards). It’s much cheaper to cook your own food. Our family creates a weekly menu, then we buy the groceries, and cook dinner (and lunch) each evening. Lately I’ve even been prepping it in the morning, so it’s a snap when we get home.
  7. Eat out frugally. If you do eat out, check out these money-saving tips.
  8. Brown bag it to work. Instead of eating out for lunch, bring your lunch. More here.
  9. Adopt a minimalist wardrobe. This tip won’t be for everybody, but I try for a minimalist wardrobe. I generally wear jeans or casual pants, a T-shirt or Polo-type shirt, and sandals or shoes. Plain, solid colors are my favorite. Everything goes with everything else, and I don’t have too many clothes. This saves me the stress of picking out an outfit, and I don’t need as many clothes.
  10. Stop online impulse buys. This was a problem for me before I canceled my credit card. I used to buy online a couple of times a week. Now I buy maybe once every couple of months, using PayPal or someone else’s credit card. I’m not saying you have to go to this extreme, but realize that online buying can be way too easy (you don’t even have to go to a store) and therefore, we make too many impulse buys. Buy online if you really need something and it’ll save you money, but beware the impulse buy. See 30-day list tip below.
  11. Don’t shop. Don’t go to the mall or other shopping area or department store to look around and shop. Go to a store if you know what you need, and then get out. Many times people go shopping, with a vague idea of what they want, and get caught up buying much more. Or they go just for fun, as a form of entertainment. That ends up costing a lot. It can really add up. Instead, stay away from shopping areas and find other ways to have fun (more below).
  12. Use a 30-day list. To curb impulse buys, create a 30-day list. When you want to buy something, other than a true necessity (medicine or food, for example), put it on this list, with the date you added it to the list. And make it a rule that you can’t buy anything for at least 30 days after you put it on the list. And stick to it. You’ll find that you buy a lot less with this system.
  13. Cut out cable. I’ve talked about how I cut out cable before. It saves me money every month (in my area, about $60, or more than $700 a year), and also forces me to do things like read and have conversations and go outside. Win win.
  14. Use the library. Instead of buying books, check them out. The library often also has a great selection of DVDs (depending on your area), saving you even more. Now who needs cable?
  15. Find free entertainment. Find cheap ways to have fun. Entertainment often ends up costing a lot of money, if you go to the movies, buy concessions, or go out at night, go to the bar, etc. The average person spends about $1,800 a year on entertainment (not including eating out). Now, I’m not saying you shouldn’t have fun … but there are cheaper ways to do it. Here are a few ideas. Here’s a frugal family’s fun and cheap weekend.
  16. Frugal exercise. Exercise is important, but it doesn’t have to cost a lot of money. Here are some tips.
  17. Stay healthy. Easier said than done, I know, but staying healthy can save you tons of money on doctor’s visits, hospital bills, and medicine over the long run. An ounce of prevention, and all that. Eat healthily, and exercise. Simple and effective.
  18. Commute by bike. Even if you own a car, commuting by bike will save you gas, and get you in shape at the same time. I highly recommend it. Here are my tips.
  19. Carpool or ride the bus. OK, you don’t want to bike it. So find a friend or neighbor who works near you, and arrange a carpool. Or take public transportation. Simple advice, but something a lot of people ignore.
  20. Walk. Often we drive to the corner store, or to a school that’s less than a mile away. Leave a few minutes early, walk, burn some calories, and save gas.
  21. Sell your clutter. This is not so much saving money as making it, but the frugal, simplifying cheapskate, like myself, will want to declutter and make a few bucks doing it. Hold a garage sale or sell it on eBay. It’s amazing what some people will buy. See the Simple Dollar’s post on this.
  22. Frugal gifting. Gifts can cost a lot of money over the course of a year. Look for ways to do it cheaply. Make a gift, or give a consummable. My family enjoys getting and giving cookies, for example. Here are some ideas.
  23. Quit smoking. Not the easiest way to save, I know. It’s hard. But I did it, and so have many, many others. Not only will you save on cigarettes (which are expensive over the long run), but also associated costs (I used to buy a soda or beer to go with my cigarettes) … and of course the huge, long-term medical costs. In less than 2 years of not smoking, I’ve saved well more than $3,000. Here are my tips for quitting.
  24. Alcohol in moderation. If you drink one beer or a few beers a day, that adds up to big money each month. Some drink even more than that. It’s expensive. If you can cut your drinking to the occasional party, and once in awhile with friends (not all the time), you’ll save tons.
  25. Sweets in moderation. Desserts and sweet snacks give us lots of calories with no nutrition. And we pay a premium price for that, in dollars and in our deteriorating health. Cut back on sweets (don’t eliminate them entirely of course) to save money and cut calories.
  26. Drink water. Often we drink lots of calories through sodas, coffee, alcohol, juices, tea, etc. And that costs a lot too. Drink water, save money, save calories. Here are some tips for forming the water habit.
  27. Batch your errands. Instead of running an errand or two every day, batch them into one errand day, and plan your most efficient route, to save gas and time. Also do as much bill-paying online as possible, to eliminate some errands.
  28. Stay home. Becoming a homebody might not sound like a lot of fun, but it really can be. I love staying home with my family. We can do all kinds of fun things at home. Or I can spend a day alone, if the family is at school, and really enjoy it. It’s quiet and peaceful, I can read or watch a good movie or respond to comments on my blog or write. Staying home can save tons, in eating out expenses, shopping expenses, gas, and incidentals.
  29. Stop using credit cards. Credit cards are not evil. And before you flame me, once again, I realize that they can be used to good purpose. If that’s how you use them, then that’s good, skip this tip. For others, credit cards make buying too easy, and end up making them buy too much.Not only that, but if you don’t pay your bill in full each month, they will cost you a lot in interest. The average American with at least 1 credit card has more than $8,500 in credit card debt. Don’t make that mistake. Here’s my story.
  30. Cancel subscriptions. With the wealth of information and entertainment online, do you really need magazine subscriptions? With all the news online, do you really need a newspaper subscription? If you can get DVDs for free or cheap, do you really need a Netflix subscription? Don’t flame me if you think you do need any of these — I’m just asking you to consider whether they’re really essential — the answer might be yes. Also consider other subscriptions you might be paying for — I’m not saying you should cancel everything, but seriously consider whether they can be canceled without much loss of value. Read more.
  31. Make your own. I won’t go into all the possibilities here, but many times we buy things when really, we could make them ourselves for much cheaper if we get a little creative. Now, this might take a little more time and effort, but it can be fun, especially if you make it a family project. We recently made our own (very simple) bookshelves with only a couple of pieces of lumber, instead of buying them. If you don’t know how to make something, search for it online. You’ll most likely find some instructions.
  32. Do it yourself. Instead of hiring someone to do something, try doing it yourself. Sure, it takes some time and effort, but it’s satisfying, and of course cheaper. It’s also educational, if you don’t know how to do it — again, do an online search, read up on it, and give it a go. Frugality freaks are DIYers.
  33. Stop paying interest. I mentioned the interest of credit cards, and auto loans, and mortgages. I consider them a waste of money. I’ve talked about how to live without credit before, and I recommend it for a frugal lifestyle. Consider any other accounts or loans where you pay interest, and see if you can eventually eliminate as much of these as possible.
  34. Reduce convenience foods. Frozen foods, microwaveable stuff, junk food … anything that’s packaged and prepared for our convenience is not only more expensive than something you cook yourself, but also most likely less healthy. I’m not saying to eliminate these completely, but reduce consumption.
  35. Travel frugally. I actually don’t travel (or haven’t for years), but if you do have to travel, some advance planning can save you money. Airfare is most expensive, usually, so look to buy your ticket in advance, and look for deals. Also consider train travel. Shop around for car rental rates, as they can vary greatly (or use public transportation). Look for cheaper accommodations, or stay with a friend or relative. Just a note: I do plan to travel, but not until I finally eliminate all of my debt.
  36. Cut the cell phone. This will not be a popular suggestion either. If you don’t like it, move on to the next one. It’s not for everybody. But think about this: 20 years ago, most people didn’t have cell phones. And miraculously, they survived. A cell phone is not a necessity. It’s a convenience. When people needed to make a call, 20 years ago, they either waited until they got to a destination (wait to make a phone call?! omg!), or pulled over and used a pay phone or a phone in a business establishment.
  37. Cut your own hair. Again, this one isn’t for everybody. Personally, I use electric clippers to shave my head. It’s easy, it’s cheap, it’s minimalist, it’s care-free. I don’t worry about my hair getting messed up, or having to fix it in the morning. However, I’m not saying you should shave your head. Many people cut their own hair, in many simple but nice hairstyles, long or short. Saves money, and time.
  38. Maintain stuff. This is a no-brainer, but we don’t often think about it: if you take care of what you have, it will last longer. You’ll then spend less on buying new stuff. When you buy something worth maintaining, take a few minutes to read the maintenance manual, and create a maintenance checklist that you can attach to the item. For important things like your car’s oil changes or tune-ups, put them in your calendar.
  39. Save energy. There are little things we can do to lower our power bill. I don’t use a dryer or hot water heater, although those are a little extreme. Try these tips.
  40. Save gas. With the rising price of gas (and no end in sight), fuel has become a major monthly expense for many people. Small things can add up to big savings. Try these tips.
  41. Only buy bargain clothing (when you need clothes). OK, so you’re a cheapskate like me who only buys clothes when the old clothes have too many arm or leg holes. But now you need new clothing. I mean really need it. So instead of buying new, look for thrift shops with good clothes. Or buy new, but only buy the stuff that’s 50% off. Look for the bargains, and you’ll save a ton.
  42. Telecommute. Telecommuting doesn’t necessarily give you your dream job, but it’s definitely a step in the right direction. But in addition to allowing you to work in your underwear (and who doesn’t have that dream?), telecommuting saves money on gas, on eating out (if you eat lunch at a restaurant), and on buying expensive work clothes (all you need to buy is underwear, right? And no, don’t buy used underwear).
  43. Plan ahead. Sure, easy to say, hard to implement. But if you make it a habit to think ahead to things that are coming up in your life, you can save a lot of money. For example, if you think about where you’re going to get your meals when you go out to do errands, you can pack a lunch or dinner instead of eating out. If you pack a big container of iced water, you don’t need to buy expensive bottled water. If you know that a birthday is coming up, you can buy a gift on sale instead of spending more at the last minute.
  44. Cook ahead. If you have one free day a week (or even a month), cook food in big batches and freeze in dinner-sized portions. I don’t do this all the time, but I have done it and it saves money (buying big can often save) as well as time. You have to plan it out a bit, coming up with a menu and shopping, cooking enough meals for a week or a month. But once you’re done, your meals each night (and for lunch if you like) are quick and easy. This saves you from eating out or eating convenience food when you’re hungry but too tired to cook.
  45. Wash clothes less. Some people wear clothes and then wash them, but I’ve gotten into the habit of wearing my clothes more than once if they’re not really dirty. I use my nose as a test — I don’t want to wear clothes that smell, but most times the clothes are still perfectly clean. This saves on washing.
  46. Sun-dry clothes. When my parents were young, everyone used a clothesline to dry clothes. Now dryers are ubiquitous, because they’re fast. But if you don’t wash a ton of clothes, it’s not that hard to take a few minutes to hang them up. You’ll save a lot in electricity, plus your clothes last longer.
  47. Eat less meat. I’m not saying you have to become a vegetarian (although you could always give it a try), but once in awhile, eat meatless dishes. Pasta, vegetarian chili (see my recipe halfway down this article), vegetarian Indian or Thai dishes, falafels with hummus and pitas and tomatoes and lettuce … there are plenty of tasty dishes without meat. And as meat is expensive (well, the fresh kind is … Spam is cheap), you’ll save money on meatless dishes. Again, I’m assuming you cook with fresh meat, not canned.
  48. Save on groceries. For my family of eight, groceries is a major expense. With some simple habits, we’ve been able to save a lot of money. See more here.
  49. Frugal Christmas. Christmas is expensive, especially in America (if you live in an area that doesn’t celebrate Christmas with a huge amount of buying, or doesn’t celebrate it at all, skip this tip). People go on crazy shopping gorges. It’s insane. While it makes the retailers and manufacturers happy, it doesn’t make our bank accounts happy. Break out of the cycle and find cheaper ways to celebrate Christmas. Here are some great ways to do that, and here are some more.
  50. Eat a cheap breakfast. Here are some great ones.
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Your First Million Is the Toughest

http://www.fool.com/personal-finance/general/2007/07/16/your-first-million-is-the-toughest.aspx

Chuck Saletta
July 16, 2007

The old saying that the rich get richer is very true. As long as you manage your money well, it’s far easier to make money if you’ve already got some cash socked away than it is to start from scratch. The reason is simple: compounding.

When you’ve already got money working on your behalf, each percentage point of return simply adds that many more dollars to your account balances. After all, if a stock you own goes up in value, it’s far better to own 10,000 shares than it is to own 100.

Start small
Fortunately, anyone with even a little cash to invest can take advantage of the power of compounding. It just takes a little while longer for the rest of us to get to the point where it can really work its magic.

To show how it works, here are a few charts that showcase how many years it takes to reach each $1 million threshold given that you regularly invest and earn a decent rate of return.

To go from $0 to $1 million:

Monthly
Contribution

8% Return

9% Return

10% Return

11% Return

$100

52.9 years

48.3 years

44.5 years

41.4 years

$250

41.6

38.3

35.5

33.1

$500

33.4

30.9

28.8

27.0

$1,000

25.5

23.9

22.4

21.2

$1,291.66

22.8

21.4

20.2

19.1

To go from $1 million to $2 million:

Monthly
Contribution

8% Return

9% Return

10% Return

11% Return

$100

8.6 years

7.7 years

6.9 years

6.3 years

$250

8.5

7.5

6.8

6.2

$500

8.2

7.4

6.7

6.1

$1,000

7.8

7.1

6.4

5.9

$1,291.66

7.6

6.9

6.3

5.7

To go from $2 million to $3 million:

Monthly
Contribution

8% Return

9% Return

10% Return

11% Return

$100

5.1 years

4.5 years

4.1 years

3.7 years

$250

5.0

4.5

4.0

3.7

$500

4.9

4.4

4.0

3.6

$1,000

4.8

4.3

3.9

3.5

$1,291.66

4.7

4.2

3.8

3.5

That $1,291.66 number didn’t come out of thin air — it represents the current maximum monthly contributions available in a 401(k) or 403(b) account for most people. What these charts mean is that you can go from $0 to $3 million in somewhere between 28 and 35 years with a little bit of determination to take advantage of the opportunities you have available. Most of that time is spent getting to that first million. Once you hit that milestone, compounding really takes over to help you reach your ultimate goal.

Get from here to there
The most difficult part is getting started. After all, if you’re not already saving money now, going from $0 to nearly $1,300 a month may seem an impossible task. (My colleagues Dayana Yochim and Shannon Zimmerman at Motley Fool Green Light may be of some help — more on them later.)

For instance, any money you contribute to your traditional 401(k) or 403(b) plan to help you earn your millions will most likely come with an immediate tax reduction. Thanks to that tax break, it’s as if Uncle Sam will kick in a significant chunk of that cash on your behalf, reducing the total out-of-pocket cost of your contribution. For folks in the 25% tax bracket, it works out to an out-of-pocket cost of only $75 per $100 of contributions — a significant savings.

You really can get rich
Once you get started investing, though, the rest is largely a matter of owning solid companies and letting compounding work its magic. Over the past 20 years, for instance, the following companies have all produced decent returns:

Company

Price on
7/6/1987

Price on
7/6/2007

Dividends
Earned

Annualized
Return

McDonald’s (NYSE: MCD)

$6.69

$51.43

$4.81

11.2%

Duke Energy (NYSE: DUK)

$11.06

$18.12

$33.47

8.0%

ExxonMobil (NYSE: XOM)

$11.67

$86.46

$16.64

11.5%

Merck (NYSE: MRK)

$9.71

$49.46

$20.97

10.4%

Honeywell International (NYSE: HON)

$10.56

$59.08

$11.54

10.0%

General Electric (NYSE: GE)

$4.58

$38.48

$9.22

12.4%

Motorola (NYSE: MOT)

$4.35

$17.84

$4.55

8.5%

All values split-adjusted.

Those solid returns came from companies that were already fairly well known, even 20 years ago. Better yet, owners of those stocks earned those returns in spite of short-term problems like Merck’s Vioxx recall and McDonald’s disastrous “Made for You” program. This goes to show that you don’t have to buy the perfect companies to receive solid returns and build your wealth over time. What matters most is freeing up the cash to make those regular investments.

The two most important parts of getting to — and past — your first $1 million in investments are a bit of time and regular contributions of cash. If you’ve got the time but need to figure out where to find the cash, join Dayana and Shannon at Motley Fool Green Light. They’re experts at unearthing the hidden fortune in every paycheck. You can take the next 30 days to look around the service, free. Once you’ve uncovered the cash you never knew you had, your wallet will thank you for it.

Fool contributor Chuck Saletta is diligently working on reaching that first million. At the time of publication, he owned shares of Merck and General Electric. Duke Energy is a Motley Fool Income Investor recommendation. The Fool has a disclosure policy.

Investment for everyone : Free Stock Market Ebooks

Inflation is sky high now and that is not going to stop. I have repeatedly mentioned that property prices in Singapore have been kept artificially low, but now with the surge of investment money with all the high profile acts in singapore, prices are set to soar like never before.

Yes, it will be unprecedented.

Yes, our prices will join the ranks of Hong Kong, Japan soon. If not, we are already on our way there. There is no running away. Especially with Singapore’s policy in welcoming foreign talents, we are already on our way to a vicious cycle.

Cycle 1:

more foreigners >> less housing available >> higher prices

Cycle 2:

High profile acts (F1, IR) >> Red hot asian investment outlook >> more foreign investment coming in >> speculation in properties

There is an urgent need to make your money work even harder for you now. Sometimes I don’t really understand why is it that one can pour some much time into their mundane office work and yet cannot afford to spare some time to sort out what to do with money on their hands. With inflation this high, YOUR MONEY IS WORTH LESS EVERY PASSING DAY.

I have uploaded these Ebooks for you… I believe they are completely free so enjoy!

Introduction to Forex

This e-book explains what the Forex market is all about an how to get started trading it.

Download Introduction to Forex

The Trader Business Plan

In this e-book, Christopher Terry explains how to put together a trading plan including methodologies, goal setting, and record keeping.

Download The Trader Business Plan

Charting Made Easy

This is a great primer for new traders. This e-book covers all forms of technical analysis including support/resistance, trendlines, and chart patterns.

Download Charting Made Easy

The Truth About Fibonacci Trading

Want to learn more about Fibonacci? Here, Bill Poulos takes you step by step into the world of Fibonacci including retracements and extensions.

Download The Truth About Fibonacci

The E-Book of Technical Market Indicators

This e-book contains a wealth of information on market indicators including advance/decline indicators, short sale statistics, and sentiment

Download The E-book of Technical Market Indicators

A Practical Guide To Swing Trading

Larry Swing teaches you all about swing trading in this e-book. In it you will learn about candlesticks, trends, moving averages and much more.

Download A Practical Guide to Swing Trading

Secrets of Millionaire Traders

This covers 25 secrets that were collected from interviews with millionaire traders. There is some great wisdom contained in this e-book.

Download Secrets of Millionaire Traders

Day Trading Mind

This e-book offers some great tips to stay focused on your trading. Mainly for day traders.

Download Day Trading Mind

Pattern Cycles

Here Alan Farley talks about bottom reversals, breakouts, trends, and even Elliott Wave theory.

Download Pattern Cycles

Swing Trading Using Candlestick Charting

In this e-book, John Person explains candlestick charting and pivot point analyis.

Download Swing Trading Using Candlestick Charting

Keys To Top Trading Profits

18 trading champions share their keys to trading profits. Includes interviews with George Lane (stochastics), Larry Williams, and Linda Bradford Raschke.

Download Keys To Top Trading Profits

Three Swing Trading Examples

Alan Farley shows three swing trading examples with charts, instructions, and definitions to get you started.

Download Three Swing Trading Examples

7 Habits Of A Highly Successful Traders

Here Mark Crisp discusses the seven habbits that successful traders have.

Download 7 Habits

Secrets of Successful Traders

Ok, this one isn’t free but it’s very good and has helped my trading. It costs 49 US dollars (£25 or so) and there’s a money back guarantee if it doesn’t work for you.

Click here

amazingly dumb Pagent contestants

how NOT to think on your 2 feet.
yeah its the same ger, i haven got enuf out of her, keke

5 Wealth Lessons From 20 Percent of a Millionaire

i ripped it from somewhere.
direct link

In early 2006 I got serious about the goal of becoming a millionaire, and in this article I’ll share with you five key lessons I learned that may help you increase your financial abundance.

While I’ve long dreamed of becoming a millionaire (who hasn’t?), it was only last year that I began taking it seriously. What motivated me wasn’t the thought of buying lots of stuff or quitting my job (what job?!?) and retiring. Instead I got inspired by the idea that if I could figure out how to earn a million dollars, I could share what I learned and hopefully help a great number of people.

After a solid year of working at it, it’s a bit unclear whether or not I’m a millionaire yet. If I add up my cash, cash equivalents, and tangible assets, my net worth is roughly $200K, so I’m at least 20% of the way there. However, Erin and I own several online assets that are likely worth much more than that. It’s entirely possible that StevePavlina.com could receive a paper valuation of over $1 million due to its income (about $40K/month), its continued growth potential, and its extremely low operating costs. One blog valuation tool estimates this site as being worth over $1.6 million. I have no intention of selling this business though, so I don’t see that figure as particularly meaningful. Consequently, I’ll stick with the 20% of a millionaire tag for now.

I suggest we leave the labeling issues to those who enjoy obsessing over such matters, and I’ll proceed to share the wealth-building lessons I’ve found most valuable. Then you can make up your own mind about how helpful they are to you:

1. It’s damned hard to earn a million dollars from scratch.

This is just common sense, but I have to say it to counter the scammers who preach that you can earn a million dollars via their fast, easy, foolproof methods for only 3 easy payments of $19.95.

Perhaps you can earn a million dollars by using emotional manipulation to sell people useless, overpriced information products, but assuming you’re not a scam artist, you’re going to have to earn the money by providing a million dollars worth of real value. For most people, including me, that’s a huge challenge.

Respecting the magnitude of this challenge actually helps though. If you take this goal seriously, you’ll realize you must make a massive commitment to have a real chance of getting there.

People who say they want to become a millionaire but are unwilling to back it up with hard work are only fooling themselves. It’s not going to happen by itself. If hard work is a dirty word to you, don’t bother.

However, the great thing about this goal is that it’s achievable. People in far worse positions than you have already done it. It’s hard but definitely not impossible. If you accept this, it becomes something of a game. You don’t have to fear failure because you’re expected to fail, and that makes success all the more exciting.

2. Self-interest is insufficient motivation.

Given the magnitude of this challenge, tremendous motivation is required to lay in the course and persevere through the inevitable obstacles.

I found that wanting to become a millionaire for the benefit of myself or my family just didn’t cut it. I just don’t need more money or stuff badly enough to justify the effort. On a scale of 1-10, my level of materialism is about a 3. Even my friends could agree on that during a recent game of Therapy. Give me a fast PC and a high-speed Internet connection, and I’m good to go. I’m sure some people can get excited about earning a million dollars for all the cool stuff they can buy… or maybe for the status and recognition, but those aspects don’t do it for me. I’d rather play disc golf.

Unfortunately, this goal requires a lot more than mediocre motivation. You need to be seriously driven. Anyone who tells you otherwise is probably about to pitch you on 3 easy payments of $19.95. But where is that drive going to come from?

After some serious soul searching, I gave up on the idea of becoming a millionaire for myself. I just didn’t want it badly enough. If I did I’d have done it years ago with my computer games business, which I believe was entirely capable of getting there. I felt like a dolt for dropping this goal, but I also felt a sense of relief about the whole thing. It freed me up to focus on more important priorities like service and contribution.

Ironically it was the decision to put contribution ahead of wealth that led me full circle. Eventually I realized that becoming a millionaire could dramatically enhance my ability to help others.

By sharing what I’m learning along the way (as I’m doing right now), I can potentially inspire others to generate income by providing value instead of thinking they need to scam or trick people to get ahead. If even a small fraction of this website’s 1.5 million monthly visitors increase the value they provide to others as a result of the info I share, something truly wonderful will have occurred.

I also started thinking about what I could do with a million dollars. One idea I find very inspiring is to found a non-profit personal development organization, which would ultimately have thousands of individual groups all around the world. In structure I imagine it being similar to Toastmasters International, which has 200,000 members and 10,000 clubs worldwide. You could find a local group near you filled with people dedicated to helping and supporting each other grow, very similar to a mastermind group. In fact, the Local Groups forum on this site is a very basic first step towards the realization of that long-term vision. Forum members are already having local meet-ups in cities around the world. I’m so excited to see this happening. Best of all it’s 100% free for everyone.

Considering the contribution aspects helped shift the millionaire goal from my head to my heart. I finally got enough leverage on myself to seriously commit to it. I realized this goal was potentially something much bigger than just me and my family, and taken in that light, I felt like I’d have to be a real schlub not to give it my all.

Even though it seems like earning a million dollars is a totally selfish goal, I’ve found that it’s just the opposite. Contribution is a far more powerful motivator than enlightened self-interest.

3. Focus on providing value to others, and the money will follow.

I figured that earning a million dollars should be pretty easy if I could determine how to provide at least a million dollars worth of value to others. Unfortunately I don’t know how to provide a million dollars in value to a single person (and get paid for it), so I figured I’d have to make it up in volume… maybe by providing $1 of value to a million people. I know I can create something that’s worth at least $1 to someone – one good article should do it — so the key is figuring out how to get that value into the hands of as many people as possible.

I think the best way to provide $1 of value (or thereabouts) to as many people as possible is to give it away for free. Who isn’t going to accept a free dollar? While you’d go bankrupt doing this with a tangible product, this can be done sanely with digital content. And thanks to the Internet, it’s possible to reach a large audience at extremely low cost. As for the details of how to create valuable online content, check out How to Build a High Traffic Web Site.

Once you can generate value and get it into people’s hands, the income part is relatively easy by comparison. It’s not automatic, mind you. You still have to set up systems to do it right, but that can be achieved via trial and error if necessary.

Consider this analogy: Suppose you own an empty warehouse, and you have thousands of people passing through it each day. Could you generate some income from those visits? Of course you could. You could sell lemonade, sell sponsored billboard ads on the walls, sell car insurance, solicit donations, etc. Some methods will bomb, but some will prove very effective. Given enough trial and error, testing, and refinement, you’ll eventually establish a reasonable income stream. Generating that foot traffic is the hard part, but in the online world it’s a lot easier because you can offer something valuable for free that doesn’t cost you anything to give away. OK, it does cost you a little because you have to pay for web hosting and bandwidth, but for me that expense is about 1/100 of a cent per monthly visitor. Going back to the empty warehouse analogy, you could do just about anything and earn more than a penny for every 100 visitors.

This site only earns about 3 cents per visitor per month on average, so I can say without conceit that it’s giving a lot more than it receives. I have to believe the 500+ articles here are worth more than 3 cents to virtually anyone who can read. Have you gotten your 3 cents worth from this site yet? What do you estimate it’s actually worth to you?

The upside is that this value imbalance generates massive referrals. It’s the main reason this site has blown past the web traffic levels of every famous pro speaker or author in the field of personal development, even though I’ve never spent a dime on marketing. While others firewall their value behind those 3 easy payments, this site’s content is free. It’s hard to compete with free.

To generate a million dollars in this situation, I can either find a way to provide even more value, or I can get better at monetizing the existing value. My plan is to actually do a little of both by making some changes to the business model this year. Rest assured the articles will remain free. Check back at the end of 2007, and we’ll see how well it worked.

I’m sharing this info with you, so you can understand the underlying strategy of generating income by providing genuine value. Forget about trying to get a million dollars, and focus your energies on providing a million dollars worth of value. If you can do that, the money will come.

For more on generating income by providing value, read Making Money Consciously.

4. Becoming a millionaire requires a significant identity shift.

If you haven’t listened to Podcast #18 – Faster Goal Achievement (18 minutes), you’ll probably find it very helpful. The podcast is about how achieving a big goal requires an identity shift to get there. To become a millionaire, you must become comfortable thinking and acting like a millionaire. If you can’t get there in your mind first, you won’t get there in your reality.

As I explained in the podcast, I realized that if I became a millionaire, I’d have to be comfortable managing larger sums of money. At the time I started on this path, $10,000 was a lot of money to me. But to a millionaire, it’s a relatively puny sum, only 1% or less of their net worth. So I began imagining that $10,000 was just a small amount of money and thinking about what that would feel like. Eventually I began to really believe it.

Secondly, I realized that if I were a millionaire, I’d carry more cash in my wallet. At the time I was comfortable having $50-70 in my wallet. $100 felt like a lot. So I went to the ATM and took out $200 and put it in my wallet. It felt uncomfortable to carry that much cash, but I got used to it after a few weeks. Over time I gradually raised my baseline until it felt normal having $300-500 in my wallet. Now when I have only $200 in my wallet, I sense a desire to go to the ATM.

Thirdly, I realized that to a millionaire, any sum below $100 or so is essentially irrelevant. If you’re already a millionaire, a few dollars here and there just don’t matter. Worrying about those kinds of sums is like fussing over pennies. I started telling myself that there’s no financial difference whatsoever between a $20 dinner and a $50 dinner. Going to a $9 movie is nearly identical to seeing a $90 show on the Las Vegas Strip. Those amounts are just pennies anyway.

As I gradually integrated these internal shifts, my income began to soar. Over a period of 12 months, StevePavlina.com’s monthly revenue went from $2K to $40K. As I made small changes to pretend like I was already a millionaire (in a safe and low-risk manner), I began attracting opportunities to earn more money.

Let’s be clear that I didn’t suddenly adopt foolhardy spending habits, even on low amounts, because a millionaire wouldn’t spend money foolishly. I kept my expenses reasonable, but I learned to stop fussing over amounts that really didn’t matter, like whether or not I should order a drink (non-alcoholic of course) with dinner. I’m never going to miss the $2 whether I become a millionaire or not.

Today any expense below $100 is effectively meaningless to me. $100 isn’t even 10% of a day’s earnings. This makes many purchasing decisions easier, since if the price difference between two items is less than $100 (such as the difference between two iPod models), I don’t even worry about it — I just buy the better model. The price difference is only pennies anyway.

It’s fascinating to me that I adopted this mindset first, and then the income manifested to fit the mindset. I suppose the next step is to start thinking of even larger sums as essentially irrelevant. It might seem counterintuitive that this method works, but it just does. If you want to be wealthier, start thinking like you’re already there.

5. Financial trolls must be shown no mercy.

In the terminology of online forums, a troll is someone who “intentionally tries to cause disruption, often in the form of posting messages that are inflammatory, insulting, or off-topic, with the intent of provoking a reaction from others.” (source: Wikipedia)

After launching the forums on this site over two months ago, the moderators and I gradually developed our troll-squashing shoes. At first we opted to be fairly lenient, giving polite warnings and reminding trolls to follow the posted etiquette guidelines. That never worked. All it did was embolden the trolls to keep on trolling. Every troll ended up getting himself banned eventually, but only after wasting a lot of people’s time. Eventually we learned the best approach was to banish trolls immediately on sight. It seems obvious in retrospect, since the kind of person who’d resort to trolling in the first place isn’t someone who’d genuinely care about personal development, but it was an important lesson nonetheless.

A financial troll is a close cousin to the forum troll, except that financial trolls strive to sabotage your financial pursuits. These trolls can be internal or external. They’re the people who make comments like, “Wealthy people are so greedy. They only care about themselves and will take advantage of anyone to make money.” Financial trolls are also the internal voices that say, “If you make too much money, people will judge you harshly for it. They’ll assume that’s all you care about.”

It’s tempting to listen to financial trolls because their statements are crafted to bait you into pointless arguments. Whenever you take the bait, you lose no matter what because trolls don’t care about arguing logically. If you agree with a troll, you lose. If you disagree with a troll, you lose. You’ll never convince a troll of anything no matter how hard you try. A troll’s agenda is to boost his own ego by making you wrong and by wasting your time. The more time you invest in dealing with the troll, the more you lose.

The only effective way to deal with trolls is to delete them from your life, no questions asked. Just nuke the sucker and move on. With face-to-face trolls, simply leave the room. If you really need a parting shot, consider the way Debra on Everybody Loves Raymond glares at Ray and then delivers the line, “Idiot!” If that isn’t your style, a simple eye roll works pretty well too.

Every once in a while someone sends me an email like, “Oh come now. It’s obvious you’re just in this for the money. Don’t even pretend you care about helping others. That’s just a load of self-serving B.S. You’re such a phony.” My external response is to simply hit the delete key. But my internal response is to recall a line from the movie Ruthless People: “This could very well be the stupidest person on the face of the earth.”

There’s a huge difference between constructive criticism and trolling. The former can be genuinely helpful. The latter never is. By all means listen to constructive criticism, but when you know the other person doesn’t actually have your best interest at heart, hang up on them and get back to work.

Show no mercy to financial trolls, whether they be internal or external. Once you recognize you’ve got a troll on your hands, hit the delete key and be done with it. Invest your time in making a contribution instead of becoming mired in a troll’s trap. When it comes to dealing with trolls, even when you think you’ve won, you’ve lost.

There are more lessons than these, which I’ll probably share in a future article, but the five above should get you off to a good start in generating greater financial abundance. For the most part these items are common sense, but in practice they’re fairly uncommon.

How often do you ignore your common sense and succumb to traps like wishful thinking, with its promise of fast and easy results; trolling, with its lure of intelligent debate; and penny pinching, with its prideful certainty that saving five dollars is better than earning five hundred? If the financial advice you’ve been getting hasn’t proven itself effective, then toss it out and rebuild your financial beliefs from ground zero. If you want to become a millionaire in 10 years or less, you can’t subscribe to the 40-year skimp-and-save approach. Sure you can save your way to a million in 40 years, but you can earn your way there a lot faster.

Discuss this post in the Steve Pavlina forum.