This blog is intended for educational purposes only. None of these posts are meant to give legal or financial advice. If you need advice you should consult an appropriate professional.

Tuesday, July 12, 2011

dividend stocks for passive income

The best way I can come up with to produce passive income is dividend paying stocks.  You buy the stock and collect the dividend.  Easy enough right?  I think a good way to look at this is aim to pay one bill with dividends like internet.  Once you have that covered then aim to cover another expense with dividends.  This technique takes time and money I might add.  You have to have capital to get a return.  So start small and build a dividend machine for financial independence.  There are many good companies that have raised their dividends for many years now.  That's a good way to go.  It's like getting a raise every year.  Now to totally live on dividends is challenging.  Let's face it that would take a lot of shares to produce enough cash to pay all the bills.  Maybe a good way to look at it is replace part of your work income with dividends to make you less dependent on a wage.  I mean any amount of passive income is better than none.  So take it one bite at a time and slowly build those dividends for more freedom.  There are other ways to get passive income like royalties, rent, annuities, pensions, and interest, but dividends are my favorite.  Anybody can do it.  It's very democratic now.  Another good thing about the companies that increase dividends is it will likely beat inflation.  I think it's beneficial to rely more on investment income and less on wage income over time.  This seems to be the natural course of things.  And don't think because you're only investing 50 bucks a month that it doesn't make a difference.  It does!  Any is better than none.  Remember that.  Start small, and stay small if need be.  This is just one idea of many to get off the treadmill.

Is college worth it?

It depends.  If you get an in demand high paying degree I would say yes.  If you're no better off after getting a degree then I would say no.  People come out of college these days with staggering and inescapable amounts of debt.  If you start making good money right away then it's best to pay those suckers off.  Even if you make it through college debt free I still think too many of our young people are pushed in this direction.  What about just getting a job after high school and working your way up.  A trade is another good option or the military.  You could also start your own business.  I would like it if college wasn't pushed as the right path for everyone because it isn't.  And it seems to me that so much of what you learn on campus is just plain useless out here in this rough world.  How about a class on how to survive well on minimum wage.  It is possible you know.  It's best to find some kind of a balance between what you like and what's in demand.  It's still something I'm trying to figure out myself.  And remember if you keep expenses low then income is not that big of an issue.  You can go after something that you like more even if it doesn't pay well.  I look forward to the day when college isn't looked at as a one size fits all answer for the masses. 

Monday, July 11, 2011

debt is bondage

I say avoid any kind of debt at all costs.  A good example is our government.  Just kidding.  Whenever you owe someone money they have power over you.  Americans aren't very good savers compared to the rest of the world.  We want what we want and we want it now.  Even if we have to put it on credit and pay loan shark rates of interest.  You know what businesses are booming right now?  Payday loans, pawn shops, and rent to own places. That's not a good sign.  To say that these places are predatory is an understatement.  They take advantage of the people on the bottom.  How nice of them.  In some states they are illegal.  But let's not forget credit cards, car loans, student loans, and upside down mortgages to name a few.  You can't even escape student loans with bankruptcy.  I was in credit card debt at one time.  It was hard to pay off the balances, but I did it.  It taught me a valuable lesson I will not forget.  Don't borrow money!  Especially when you can't even remember what you bought.  People taking out home equity loans to go on vacation and buy cars is just not good business my friend.  I think if more people saved and borrowed less our economy would be stronger.  Even though a mortgage is considered good debt you still end up paying roughly 3 times the cost of the house over 30 years.  And that doesn't count insurance, property tax, and maintenance.  If you miss a couple payments the company who loaned the money can take your house away from you keeping your equity.  Wait so let me get this straight if I miss mortgage payments you take my house from me and keep the surplus, but if I walk away from a negative equity situation you can sue me for the deficiency.  How is that right?  No thanks, I'd rather make my landlord rich.  My personal preference is no debt for the rest of my life.  I don't want to owe anybody a dime.   

lower expenses for more freedom

I think the key to being free in our money world more than a high income is low expenses.  The three biggies in my mind are housing, food, and transportation.  The more you have to pay out every month the more you have to work.  And even if you don't get your money from work, it has to come from somewhere.  And money is never unlimited no matter how rich you are.  So my idea is keep overhead low.  It's a good idea in business too.  Now it's always going to cost some money to live.  That's just the way it is.  As far as housing live in a small cheap place with or without roommates.  This could mean moving to another area or staying put and finding a low cost place where you are.  The grocery store is money well spent.  No tax, no tip, and lower cost food.  Cars are expensive no doubt.  If you have to have one then minimize driving however possible and take public transportation, bike, and walk.  Layoffs are rampant nowadays.  If your overhead is high it's going to be very painful when those checks aren't hitting your account anymore.  But with low expenses it will be easier.  Combine that with savings and some passive income of some kind and it's even less painful.  Why not build passive income as fast as possible while keeping expenses low.  This is a recipe for more choices in life.  Some people pay a couple hundred a month for a cell phone.  That keeps you chained to the treadmill.  So remember look for ways to cut your outgo and build more surplus.  This gives you more options in this crazy world.

get a deal

I notice that people often times don't get the best deal out there.  It's just too easy to give away our hard earned money to the best known service or the one with the best advertisements.  But I must say that's often not a good idea.  It turns out it takes some digging to come up with the best deal for whatever product you're in the market for.  Research and patience are important when it comes to making a purchase.  When you find the best deal it's good to strike quickly.  It's also good to remember how you get your money.  Most people get their dough from a job so always consider how many hours you had to work to buy the latest trinket you're getting.  A lot of people just don't get the best deal they could.  Why spend more money if you don't have to?