Uncomfortable Truths about Getting Rich

It turns out that money is important for more than just buying beer and the occasional video game.  Recently, I read an eye opening book, Rich Dad Poor Dad,  that puts you into the mindset of how the rich think about money.  Its a great book but I have to tell you that it really is hard for me to accept some of the points that the author makes.  The eye opening thing I realized is that I don't actually like or really even care about money.

This is a problem.

Here are a few things I learned recently that have made me squirm:

1.)Pay Yourself First

I always thought this meant buying myself that shiny new iPod before paying the taxes.  The reality is that the book recommended that you put aside 30% of your income to invest in assets.  Assets are things that make you money like rental properties.  That is a lot of money and a lot of possible angry bill collectors.  They call this motivation to go out and "invent money".  This is also money you need to be able to risk (aka: lose).

2.) Outsource

This goes deeply against my middle class brains, but living richly means delegating.  Hire a cleaning lady, a plumber, or whatever professional you need to do your work.  A rich person values their time.  Delegating the tasks that you are not needed for frees you up to make the money or spend your time wisely with the family.

3.) Borrow to Invest

I don't like being in debt, but the author of Rich Dad Poor Dad believes that you should use the bank's money to invest and not your own.  This makes sense for real estate since essentially your tenants pay your debt off and you use the banks money to pay all your liabilities.  Obviously, if you really believe that an investment will give you a 20% return then getting the bank to loan you 4 times your savings will net you a much bigger return.

Goo Throwing, Sub-Consciously Trying to Get Fired...

Well, this blog post is going to be more about me me me me since this is supposed to be a microscopic look at me taking a shot at the indies.  In the spirit of the guys at Internet Business Mastery who recommend to "just do it" I have started this blog in the past two weeks.  My reasoning is that I since I am learning about this topic I might as well immediately start applying the principles I am learning.  So, that is one of the biggest reasons that this blog exists - its a bit of goo I am throwing at the wall and hoping it will stick.  At the very least, I will get myself into the habit of blogging and otherwise doing the things you need to do to be "it" on the web.

Of course, I do this stuff at work - but corporate do-nothingery does not really generate an audience or interest.  Who can blame people, if you can read a blog about your work and like you are lucky.   Where I work, we are not there - even if the actual work can be interesting at times.   + SharePoint will kill all but the most interesting of topics.

Speaking of work, I've been in this mindset lately of self-destructiveness at work.  Sabotaging myself.  This is something I need to keep in check, but it is tough to work at my type of job without being engaged in it...  As corporate as it is, I need to be innovative to keep things going and to keep myself sane.  Right now, all my energy is being applied to the potential new business.

But, creating bad feelings at my current job is not fair or even a good idea for me.  Things will come to a head in the next year though because I have stopped learning there (very bad sign for me).  But, I am thinking that maybe it would be better for me to transition away from my current job as a consultant (prob be a better deal for them anyway).  This would would give me the freedom of place (and some of time) as I try to develop a business.  + it would ensure some kind of cash flow for me as well as keep there critical systems maintained (and hopefully transitioned).

Anyway, just some thoughts from a deck in Pennsylvania inspired from some incredible summer weather.

Will the iPhone Developer Registration Ever Come?

Well, I have been hacking away at the iPhone SDK and while I cannot talk about it I do like playing around. But, I am getting a bit impatient - how long should I wait until I get "blessed" by Apple and will be able to actually put my apps on my phone. Got to admit that I am getting impatient - on one hand I just want to see the new shiny apps for the shear fun.

All this time invested in learning the Mac software could all be totally wasted if Apple just decides to withhold their blessing. It is a risk in this game and I could be spending this time on other business opportunities. So, this is the Fear and Uncertainity post...

Well, once this thing comes out of beta I will be expecting the registration but for now I think I will start to focus on other internet business ideas - at least until the conference on the 9th.

Ways You Can Make Money Online

So, like many people out there I would like to get some independence from my job.  In order to frame this better, let me describe three ways of generating cash:

Earned Income - Income from a regular job or consulting done on an hourly basis.

Passive Income - Money that simple comes in as a result of an established work process.  IE: Rent from property you own or sales of a product that you have already established.

Portfolio Income - Money that is generated through your investments.  IE: Stocks or real estate going up in value.

Most people depend on Earned Income they receive through their job while waiting for retirement to access their Portfolio Income.  The dream for me would be to earn all of my income as Passive and Portfolio Income.

In order to do this, I believe that it would be necessary to get some freedom of place and eventually time.  As a brainstorming exercise I thought it would be fun to list out the different ways to earn money online without a traditional job.

1.) Consulting - you are essentially your own boss, but you are still stuck in the trap of time = money.  However, if you are efficient or savvy you can free up a lot of your time to work on your passive income (no boss over your shoulder).

2.) Online Professor - you can teach at an online university getting benefits similar to #1 if you have the right degree/experience.  Your need at least a Master's degree for this option.

3.) Virtual Assistant - if you have office skills you can hire out your expertise to people online at hourly rates.

4.) E-lancing - you can actually hire yourself out for almost any type of work that can be done remotely (programming, web design, graphic art).

5.) Create a product - this is where things cross into the Passive Income realm.  If you create a product you could start to create a business that will run itself (selling software, e-books)

-it is possible to outsource or automate most of the tasks required for a lot of business

6.) Investing - this requires money and knowledge (neither of which I have right now).  But, if you invest your money correctly you can have it work for you.  This is the best way to truly have money work for you and it can be one fully online.

(Time = Money) is a Bad Idea!

Last week, I heard this really simple but counterintuitive idea from the two guys who do the Internet Business Mastery podcast. They basically said that you have to stop thinking of time as being equal to money. That is, most people think that if they work longer hours at something that they will get paid more.  I know that when I think of how to earn more money I immediately think of consulting.

Their point was really that you need to find a way to bring in cash-flow that doesn't require your constant attention.  The way to do this is through automation.  Let's take this example: the problem you are solving is teaching people how to do bicycle maintenance.  One way to do this is to hire yourself out as a consultant; if you valued your time at $50 / hr you could probably replace the income from your present job if you worked 40 hrs/week.

This model is good, but there is a another way: if you were able to create a video or e-book that really showed people how to do this and priced that at $50 then you would be solving the same problem.  Your customers would be getting a better deal because a one time cost of $50 is much less than a few hours of $50/hr consulting fees.  You would be getting a better deal because your product will be making money for you while freeing you to do other things.

Essentially, this is the difference between owning a business and a  business owning you.  Under the second model, you will be earning income long after you have lost interesting in being a bicycle tutor.

Is $4.99 the magical price point for the iPhone AppStore programs?

I have been thinking about this for some time now; I want to buy iPhone apps (Spore!) and I would like to turn my own programming projects into a business. After doing some research I found a site that sells mobile phone applications right now for Windows mobile and Blackberry. The site's name is Handango and you can buy programs on that service for as low as $7.99 to about $199 (ignoring developer packages). The existence of services like Handango proves that a market does exist even though I have a hard time contemplating spending $50, $30, or even $20 on the products I saw there.

The iPhone may well be different because the iPhone is a fun device that people just want to play with and the apps just look good. Plus, the iPhone will have its store in front of every iPhone user’s eyeballs. That is 5.7 million as of today and some people think that number will reach 14 million by the end of the year (arstechina). These numbers are compelling and developers only need to reach a small slice of this market to create a sustainable niche product.

So, I have been playing with numbers to see what a fair price would be for this type of product. The price point I think is the best bet is $4.99. Now, I am not involved in marketing so take it with a huge grain of salt; but, this price is low enough that as a consumer I wouldn’t spend much time worrying about the purchase decision.

I estimate that a developer will see about $2.49 of $4.99 after the Apple cut and taxes. So, if you can reach .5% of today’s iPhone market you would earn about $70,000 after taxes. Over the year, this amounts to about one person’s salary. In terms of units sold, you would need to sell 2,375 copies each month to be sustainable.

After considering all this, I think it is a safe bet that something will happen with the AppStore and independent developers could benefit. It will be interesting to see what happens over the next few months as this market develops.

Edit: Since last posting this I have found another blog post about iPhone pricing: http://www.marco.org/288. This developer things that $10-$15 is a better price range. We shall see what happens in June...

Who am I and what is this blog about anyway ???

Right now I work for a medium sized company where I essentially do system analysis and programming for teams of psychological researchers. Before this, I went to school for psychology and spent some time in the mental health field. I love my work and the company I work for is a decent place. But, I don't really feel satisfied with just being an employee and lately I have been thinking of trying different things out.

The first thing I tried was to go back to school and get a master's degree. I did this, but what that really did was just give me another bullet point on my resume. New degrees don't really change things - they just open up new job titles. I also came to realize that "moving up" in the corporate world really means becoming a manager, then a director, and so on.

The thing that really changed my attitude and opened up a world of possibilities was the Apple announcement that software developers would be able to sell their applications for the iPhone through an iTunes-like "AppStore". At the time, the implications seemed to be that one developer, or small teams of developers, could make a business out of something they loved to do.

I am very excited about the AppStore, however the real implication of the announcement for me is that I have started to investigate the world of internet business. There are people who have made livings by simply writing blogs, selling their products on eBay, developing software for the Mac and so on. The interesting thing is that people have managed to simply make modest livings by focusing on their particular niche.

So, now let me bring this post back around to the question of "what is this blog about". As I have been listening to podcasts and generally educating myself I realized that this path I was going down is very risky and if I wrote about it honestly then the possibility exists for some high drama. To be honest, from my perspective this world of internet business seems a little pipe dreamy. My plan is to follow this pipe dream and this blog will document the ultimate success or failure of this adventure.