During the last 100 years, we have created more wealth, reduced poverty more, and increased life expectancy more than in the previous 100,000 years. That happened because of entrepreneurs, thinkers, creators and innovators.

Thanks, ExtraEagle for the link.

Technorati Tags: entrepreneurs, heroes, cato

1. Don’t start a business teaching how to make money online.
2. Choose non-internet related niches.
3. Don’t focus on making money.
4. Don’t enter a tiny market.
5. Watch out for tiny margins.
6. Look for leverage points.
7. Avoid self-employment thinking.
8. Be aware of your own limitations.

Hopefully eBookTribe avoids most of these pitfalls and becomes a smashing success.

Technorati Tags: business, startup, self-employment

The study measured the top 50 cities in the country. For reference, other cities I or my wife have lived in are:

• #37 Omaha, NE
• #10 Minneapolis, MN
• #14 Austin, TX
• #7 New York City, NY

Technorati Tags: cities, quality of life, rankings

The Rankings

• The top 5 “Good Climate” states are: Wyoming, South Dakota, Alaska, Florida and Nevada.
• My home state, Oregon, is number 10.
• California, just to my south, is number 40.
• The bottom 5 states are: Vermont, Ohio, Rhode Island, New Jersey, and New York.

Why?

In the article, they point out that it is very simple. Basically, the winning climate states are missing one or more of the “big three” taxes: business tax, personal income tax, or sales tax. The losing states have all three types of tax, with one or more of them very heavily weighted.

As a personal observation, the more hostile states also try to extract money in ways not measured here. For example, registering my LLC cost me $55 here in Oregon. If I were to register in California, the fee would be $90, almost double. Were I to be so foolish as to register with California as a “foreign LLC”, the fee would be in excess of $1000. Ouch.

Found via the Carnival of Entrepreneurship #8, and Professor Bainbridge

Technorati Tags: tax, business tax, business climate oregon

I was wrong, he’s very clear about his thoughts, and his friendship with Dave Ramsey.

Debt is EVIL because…
- Every dollar you bring in is instantly diminished in value by its need to contribute to servicing your debt.
- It compels you to do things you would otherwise not do. Debt produces need. Need is completely counter-productive.
- It leaves you vulnerable to short-term competitive or marketplace challenges, economic slumps, aberrant events (e.g, 9/11), etc. that you might otherwise have painlessly withstand.
- It is habit-forming. It is easy to get good at juggling debt, comfortable living in debt. You can get so good at survival skills that they are in the way of developing success skills.
- It is a source of worry, anxiety, and frustration that interferes with wealth attraction, productivity, and even physical health.
- It lengthens the time required to get to your Financial Independence Number, sufficient assets and investments that you never need work or earn another dollar for the rest of your life.

Technorati Tags: debt, dan kennedy

Particularly interesting was the statistic that one in seven were in 13 counties out of the whole nation: L.A., Cook (Chicago), Orange County, Maricopa (Phoenix), San Diego, Harris (Houston), Nassau, Santa Clara, Palm Beach, Middlesex (Boston), Suffold, King (Seattle), New York.

A couple other key quotes:

In most large counties, about one household in 12, or about 8.5 percent, was worth $1 million or more, Ms. Luhr said. An exception was Nassau County on Long Island, where millionaire families were more than twice as common, at 17.5 percent of all households.

The survey found that 29 percent of the millionaire households did not own stocks or bonds and 32 percent did not own mutual funds. One in four had a second mortgage on a home.

Via: My Open Wallet

Technorati Tags: millionaire, statistics

Myth #0: 90% fail in 1-2 years

Actually, more than 50% of new businesses last more than four years. Of those that do close, many do so for reasons unrelated to finances, and were actually profitable when they closed their doors. I don’t know about you, but I’d heard that old “90%” statistic one too many times, and it was making me more nervous than I needed to be.

Myth #1: Do What You Love, and the Money Will Follow

It is important, but not everything. In some cases, too much passion is a detriment to doing what is right for your business or your customers.

“What you think you’re going to start out doing can morph on you,” she says. “If it’s not working, pay attention to the opportunities. I’ve seen a lot of people fail because they got rock-headed and wouldn’t pay attention to the opportunities.”

Myth #2: You’ll Miss the Security of a Job

You may miss the illusion, but the fact is that you have no security when working for others. They can and will get rid of you at the very first instant that it is financially advantageous for them to do so. I’ve been absorbing this one for a long while now, and Steve Pavlina finally made it through my thick head when he pointed out that he feels more secure by having multiple streams of income. If one dries up, he still has the majority of his income, instead of the typical employee situation where 100% of your income comes from just one source.

Myth #3: If You Don’t Grow, You’ll Die

Businesses can be both profitable and stable without having to become world dominating. It makes sense once you take a moment to think about it. Most companies are fairly stable in size after an initial growth ramp, actually.

Myth #4: If It’s Such a Good Idea, Somebody Would Have Thought of It Already

Maybe, or maybe you can do it better. Possibly you could take a proven Microsoft tactic and win by better marketing. Most small businesses are terrible at marketing.

Myth #5: You Can’t Start a Business Without a Lot of Money

Not true in reality. According to the article:

The average entrepreneur starting a one-person business plans to get underway with about $6,000, according to a 2003 SBA study. Businesses that involve teams of founders shoot a little higher, aiming for $20,000 in startup capital. While that’s not peanuts, it flies in the face of the common perception that it takes a great deal of money to start a business.

Link found via Business Opportunities Blog

Technorati Tags: entrepreneur, business, startup, myths

Wow, I’ve got a few books on my coffee table, eh? Those are just the books I am currently reading, or honestly mean to read “real soon now”. My books-to-read are in three main groups: 1) incredible fiction from favorite authors, 2) motivational, 3) knowledge acquisition for my business launch.

The great advocates of user experience over at Creating Passionate Users came up with this idea, which was based on a story they heard which went something like this:

Rather than do the usual “let me introduce myself” speech, this manager walked into the conference room with a pile of books he was reading, or that had been favorites, and laid them on the table and said something like, “Here, take a look at these and you’ll know more about me than I could ever explain. Borrow anything you like.”

So, look at those books and learn something about me, or at least something about me at this particular moment in time. I feel a bit naked, to be honest. Seriously, I think I’ll go read now.

Technorati Tags: reading, books

In a nutshell, she recommends using the corporate world to learn and to gather resources. According to her, once you are about 30, you are pretty much done ascending the ranks. You’ll move at most one rung up or down from there. At that point “they” quit mentoring & teaching you quite as hard, figuring you’ve reached your level. So, that’s the perfect time to switch careers from business drone to entrepreneur.

That’s my interpretation, of course. She says it much more elegantly.

Then once you find yourself stuck,
take your learning chips
and cash out,
moving to the next big game.

Their point, and it appears to be a valid and disturbing one, is that the income gap between the wealthiest and poorest of families is wide and growing wider. In Oregon, it is 10-to-1. The top 5% earns $154,000 on average, while the bottom 20% earns a tiny $17,000. Also, the gaps measured are growing year over year, as the incomes at the top accelerate, and those at the bottom move up only slowly or not at all.

You can go to other blogs for commentary about why this is a bad thing. Of course it is. This blog tries to take a fearless and positive approach. So, my observation is that $154,000 is really not much money at all to put a family in the top 5%. That’s actually a heartening observation, I think. In my best year, I earned almost that much money. If those families’ incomes are “breaking out”, acceleraing into the stratosphere, I want to be there with them!

Seriously, and somewhat more humbly, I think the numbers are interesting because I’ve always felt that I wasn’t really doing that well. This study convinces me that objectively, I was/am doing quite well. If I am not in the top 5%, I am certainly in the top 20% of incomes. Yet, I saw other people doing so well, so much better than me, that I found myself wondering why I couldn’t be so successful.

In fact, I was doing about the same as most of the people I envied, and better than the majority of people in my city. How people in my income bracket can afford to have huge boats and cabins continues to be a mystery to me. I suspect the truth is that they actually can’t afford those things. For years, I fell into the classic “keeping up with the Joneses” trap. I spent myself and my family into the ground trying to keep up with a myth. Part of the reason I stayed in that trap was that I feared to take an honest look at my finances.

Last year I finally dumped my fear and embraced my finances. Things are getting much better for my family, and with continued focused attention, I am confident I’ll be breaking into that top 5% in the next year or two.

Thanks Consumerism Commentary for the link.

Technorati Tags: income, economic policy institute

First, despite all the talk of housing bubbles, the risk doesn’t seem that severe for most of the country. This is along the lines of what Greenspan was trying to say when he talked about there being froth rather than one big bubble. Some areas are going to pop, almost certainly. And since those areas are ones where a lot of media and internet folks live, it will be covered in excruciating detail.

For instance, PMI rates San Francisco as 50.7% likely to experience a decline in prices. Ouch. That will hurt a lot of people, throwing some over-leveraged people out into the street. Now would not be the time to be “flipping” properties in SF or San Diego.

Some areas are still growing

However, despite the fact that Portland Oregon has seen property prices go up more than 30% in the last two years, we are only rated at 10.2% likely to experience a correction. Seattle, 10.3%. I think that is partially due to simple numbers. We’re getting more expensive here, that’s for certain, but we still have homes that a middle-class person could conceivably purchase. Perhaps that is why Portland is still seeing sales accelerate (by 5.87%).

In my view, it is when places get so ridiculously over-valued that only speculators and bank presidents can afford to own there, that the area is ripe for a fall. I’m looking at you San Diego, Boston and Las Vegas.

The top 7 areas most likely to decrease in price:

• San Diego
• Santa Anna
• Boston
• Nassau
• Oakland
• Sacramento
• Riverside

The bottom 7 of the top fifty markets:

• San Antonio
• Nasheville
• Cincinnati
• Indianapolis
• Memphis
• Pittsburgh

Technorati Tags: Housing, real estate, housing bubble, pmi

Confused about what I am talking about? A quick backtrack might help. Everquest is a “MMORG”, a Massively Multiplayer Online Roleplaying Game. Basically, you pay about $10 a month to take the part of a hero (or a villain) in a shared world, where you interact with both monsters and with other players. There are several popular games, such as Everquest, Ultima Online, and most recently World of Warcraft. Many younger people (and some older people) spend hundreds of hours playing these games. I used to do so as well. In the course of the game, you get valuable in-game stuff, such as magical swords, potions, or gold. Other players will sometimes buy these things from your character. Sometimes, via EBay, they’ll play real-world money for your in-game stuff.

For an article on Legal Affairs magazine, one writer decided to find out the tax implications of these transactions.

JUNE 2003. I SET MYSELF THE FOLLOWING CHALLENGE, posting it on my web log for the world to see: “On April 15, 2004, I will truthfully report to the IRS that my primary source of income is the sale of imaginary goods—and that I earn more from it, on a monthly basis, than I have ever earned as a professional writer.”

In the course of this project, I made a total of $11,000 selling on eBay the items I won playing a game called Ultima Online, $3,900 of which was in the final, most profitable month. I reported my profit to the IRS, and I paid the requisite taxes. But after I did so, a troublesome set of questions continued to nag at me—for which even IRS publication 525, entitled “Taxable and Nontaxable Income,” couldn’t provide answers.

Interesting! He goes on to make it even more interesting.

What about the assets I bartered for or won in the game but never sold in the real world, the suits of armor stashed here and there with their easily established fair market value? What if I traded those assets for their value in Ultima Online’s official currency, the Britannian gold piece, rather than for dollars? Wouldn’t it be easy to establish their value in dollars nonetheless and, if I owed American taxes on the exchange, put a number on the deal that the IRS could grasp and love? And what about all the other MMO players out there—how long could the IRS be expected in good conscience to leave the resulting millions of dollars in wealth untouched?

After all, if there is a known, customary conversion rate between Everquest gold pieces and US dollars, wouldn’t a player owe the IRS for gold accumulated in-game, even if that gold was never converted? When I played Ultima Online (in between wives), I bought a million Ultima gold pieces on EBay for $30. That’s a small amount, but many players have several million gold pieces. It starts adding up to an actual, measurable income, even if never converted into real money.
When the author of the piece took his question to the IRS, he found it difficult to explain the context.

“O.K., so I got a fake jewel that’s worth 80 million points, gives me all kinds of invincibility,” said Knight, striving doggedly to nail down what I was talking about. “But I got two of them, or don’t want to play [anymore]. And I can go on eBay and sell my jewel to some other character?”

“Uh, yeah,” I confirmed.

Knight considered the facts and offered a nonbinding opinion: “That’s so weird.”

In the end, the IRS wanted $650 to render a binding opinion, since this would be the first time it has ever been formally decided.

And you thought they were already taxing everything under the sun?

Link via Collision Detection

Technorati Tags: Taxes, Everquest, Ultima Online, IRS, MMORG

The debate about private accounts proposed by the Republicans may be dead, but the essential problem is the same. With the current (negative) rate of savings in the U.S., it is difficult to see how we will grow the economy to the booming levels we’ll need to support the increasingly older and retired population. As I discussed before, I refuse to get all worked up about this issue, since I believe that I can’t personally do much to change society as a whole. What I can do is personally save, and teach my children to do the same. The article puts it very well:

There’s not much we can do about dictating the work habits of people in 2020. They’ll choose their own work habits, and they’ll pass their own laws to try to influence each others’ work habits. That means the only thing we can do now to address the underlying crisis is to encourage saving, because saving means investment, and investment means that when 2020 comes around we and our descendants will have more and better machines and factories to produce more and better food and aspirin and television sets.

In other words: If you want to address the Social Security crisis of the future, you must adopt laws that encourage saving in the present. There’s nothing else you can do.

This article has changed my thinking to realize that my personal committment to saving is not selfish at all, and in fact is a net good for society. That makes it a two-time win, and you can never have enough of those.

Link: Save and Save and Then Save Some More (Slate)

Technorati Tags: Retirement, Social Security

That’s the argument that Abnormal Returns makes.

If we, or our readers, were in the same boat we would probably have exactly the same reaction to the world around us. Their wealth was largely derived under different economic conditions, while the world today has changed substantially. However well-reasoned their arguments might be, they are not infallible. The question is whether you should heed their advice?

Following the chain of references in the article back to the issue of Fortune which sparked the discussion, I find this quote:

An economic tsunami is about to hit the global economy as the world runs out of oil. Or a coalition of communist and Islamic states may decide to stop selling their precious crude to Americans any day now. Or food shortages may soon hit the U.S. Or he read on a blog last night that there’s this one gargantuan chunk of ice sitting on a precipice in Antarctica that, if it falls off, will raise sea levels worldwide by two feet[...]

All questions of paranoia or chicken-little syndrome aside, what steps can I actually take to protect myself from disasters of this magnitude? Well, I can start by asking myself, “will being in debt and being dependent on a single source for my income help or hurt matters?” Obviously, it will hurt. Debt and lack of diverse income streams are not a good idea in turbulent times. Can I do anything else to help protect my family? I can follow the advice I gave in my post on emergency kits, and I can enjoy the relative peace and prosperity my family is currently enjoying.

Technorati Tags: pessimism, peak oil, investing, debt, billionaires

An article on PF Advice has gotten me thinking in a bigger picture.

While most financial experts give good advice on how to prepare a basic emergency finance kit, it’s obvious that they have never lived through a major disaster themselves. Their steps make sense for preparing for a fire such as making an extra copy of all important documents and placing them in a bank safety deposit box. While this will suffice in many cases, it’s not helpful for something like a hurricane or earthquake where you will need that documentation in a timely manner and may not be able to reach it.

His advice in a nutshell

1) Put your emergency kit in a bag you can grab at a moment’s notice
2) Do not lock up that bag.

My additions

1) Put primary documents in the bag, as suggested in the post.
2) Scan and encrypt backup versions of key documents, put them on an out-of-the-area webhost.
3) Include my wife’s iBook in the bag, storing it there at night, to help get access to the extended records online in case of a disaster.
4) Include the backup hard-disk from my G5, as a business-continuation tactic.

Link: Financial Emergency Kit

Technorati Tags: Disaster, Disaster recovery, business continuation, emergency, emergency planning, advice

Rest assured that a planned purchase is usually a reasonable purchase because of the thought, time, effort, strategizing, etc. mentioned above. Please don’t feel bad if you’re spending planned money!

It really works like that

For example, buying gifts this year was much less agonizing than usual for my wife and me. We had a set budget, in cash. We wrote a list of people to gift, and then we bought presents within our budget. It was so pleasant not to “upsell ourselves” and rationalize expensive gifts because they would be “so nice.” It is remarkably exhausting, the mental static caused by wanting to buy something more expensive and fighting back-and-forth in your head about doing it. Interestingly, I only really noticed how exhausting it used to be when I stopped doing it.

As another example, our home repairs have become less stressful. I put aside a set amount of money every month into a sub-account earmarked for that purpose. Then, if we need to spend some money on the house, we just spend it. We try to get a good deal, of course, but we don’t need to debate the priority of new blinds for the front window. We’ve saved for just that reason, and we don’t need to feel any guilt about using the money for that purpose.

But you do spend the money differently

Continuing the blinds example, it is unlikely we’d have ever bought the blinds we wanted if we were just looking at monthly bills, or (the nasty way we used to do it) our bank balance. “It looks pretty tight this month”, we’d say, every time we thought about it. We were leaking money from a hundred small-to-medium holes, yet we wouldn’t buy something we legitimately wanted because it was never the right time.

Budgeting my irregular bills and responsibilities into sub-accounts, what Mary Hunt recommends in her books “Cheapskate Monthly Money Makeover” and “Debt Proof Living“, changes that dynamic. Instead of worrying how we’ll afford expenses which happen irregularly, we almost happily spend the money we’ve set aside for just those purposes.

Believe me, it is a lot more pleasant this way.

Technorati Tags: budgeting, stress

Already, I am liking JenSense very much.

Technorati Tags: Google, AdSense, 2005 best of, 2005 polls

Link: Flipping your start-up the smart way

Technorati Tags: entrepreneurship, start-ups, acquisitions

Link: How I Will Become a Millionaire – And Everything You Need Too

Technorati Tags: millionaire