Ah, the holidays are great for spending time with family, wearing ugly sweaters, and shoving enough shrimp cocktail, turkey, ham, cheese, fruitcake, cookies, Australian wagyu beef and more into our pie holes to make Homer Simpson blush. It’s the holidays! We can eat as much as we want! ‘Tis the season for eating guilt-free. Or is it?

I wouldn’t dare suggest that you or I should maybe put that 6th cookie back on the plate but maybe, just maybe, these 5 creative holiday workouts can help us to sneak in a few extra ways to burn off some of the excess calories we will be ingesting over this holiday season.

TOP FIVE CREATIVE HOLIDAY WORKOUTS

#1 The Sneaky “Family Time” Workout

The only thing worse than refusing a second helping of Grandma’s cornbread pudding is refusing a second helping of Grandma’s cornbread pudding and then telling everyone that you are “off to workout”. The dirty looks that you will get from your not so dedicated family members that are still busy shoveling in seconds and thirds can be amusing but a difficulty that you should avoid if at all possible. Rather than ditching the family to go workout, instead suggest a game of football, soccer, or basketball with the whole family. Be sure to give any family member not up for some “good ‘ol fashioned family time outdoors” your best look of disappointment.

#2 The “Challenge” Workout

Choosing a goal of some kind that requires physical activity to accomplish is a great way to not only have some fun working out but also to give yourself some added motivation. Choose a fitness challenge and then see where you stack up!

#3 The “I Want to Look Like Them” Workout

If you are a guy that was dragged by your significant other to watch the newest Twilight movie (or maybe you wanted to go but hey, whatever – we aren’t judging you here… really…) then you can at least appreciate the hard work that went into leading boy/man Taylor Lautner’s gaining an extra 30 pounds of muscle for his role.

While your motivation to have otherworldly 6 pack abs like Mr Lautner is riding high, start following the Taylor Lautner workout routine. If it doesn’t interfere with your runs to the store for more hot chocolate to dunk your cookies into that is. Of course.

As an added benefit, Mr Lautner’s diet plan is actually perfect for the holidays.  He comments, “[I was] doubling the amount of calorie intake I had before, which was just really tough, eating every two hours,” he explained. “It was the hardest part for sure.” Oh yeah!! “Honey, bring out the third round of dessert. Hurry, it’s almost been 2 hours!”…

#4 The “Punish Yourself” Workout

Sometimes you just need to really pay some penance for your holiday eating habits. When you have been naughty rather than nice at the holiday dinner table then you need a workout like the 300 workout or the Navy Seal workout to atone for your calorie misdeeds.

#5 The “Video Game” Workout

OK, we are really scraping the bottom of the barrel here but for those of us lazy, ahem, I mean “ultra-relaxed” folks who just can’t get out from in front of a TV screen for more than a few minutes then this is the workout for you. Break out the Wii or the Kinect and just start moving around. Seriously, your family is worried about your health. Just get off the couch, grab the controller, and start moving your body parts around. No really, we are talking to you. Wait, how did you just bowl a strike without even getting up from the recliner… Oh well…

Author Bio: Joel Ohman is a serial entrepreneur, a Yakezie member and sponsor, and a previous contributor on Financial Samurai with an article on domain name investing. His latest project is a cool workout tracking website with 1,000′s of exercise videos, 100′s of workout plans, and a workout tracker with points, badges, leaderboards, and all kinds of stuff to make working out actually… dare we say it… fun!  

Joel even started a Financial Samurai fitness group which I’ve got to figure out.  

Photo: Me in the subway.  Just kidding.

There have been numerous studies performed over the years which clearly outline the social benefits of homeownership. In the mid-2000’s it was nearly impossible to argue against the advantages of owning a home. Research showed that homeownership led to increased education for children, lower teen-age pregnancy rates and a higher lifetime annual income for children – and these are just the advantages to family life. This doesn’t even account for the advantages versus the alternative (renting).

The government has seen this research and done their best to encourage new homebuyers to enter the marketplace. Are the statistics they are looking at still accurate? Should homeownership still be the American dream?

If you aren’t disciplined enough to save up 20% of a home’s purchase price, you shouldn’t be buying. Forever soaring home prices used to reward these risk-takers with an inflated net worth and a false sense of wealth; but having 0% equity in anything can hardly be classified as “ownership.”

What if I can come up with data that discourages people from purchasing a home? My goal is not to turn off everybody (my back-hair accomplishes this) but rather turn off those that aren’t ready.

The Discouraging Data

While I may not be very inclined when it comes to Microsoft Excel; my girlfriend can be referred to as The Sultan of Spreadsheets. Her job is to extract the data; my job is to manipulate it.

Together we looked at the following information.

States

Homeownership by State

(2010 rates – Source: infoplease)

The Happiest States

(2010 – The Gallup-Healthways Well-Being Index Survey included questions about job satisfaction, healthy behaviors, physical health, emotional health, and other aspects of everyday life)

Average Salary by State

(2010 Bureau of Labor Statistics)

Average Credit Score by State

(2011 Credit Karma)

The Hypothesis

The states with the highest percentage of homeownership should have the best credit, the highest salaries, and should be the happiest states.

Results & Notes 1

• West Virginia is the least happy state.
• West Virginia has the highest percentage of homeownership.
• West Virginia has the 3^rd lowest income.

Results & Notes 2

• Hawaii is the happiest state.
• Hawaii has the 2^nd lowest percentage of homeownership.
• Hawaii has the 3^rd best credit score average.

Results & Notes 3

• Mississippi is the 3^rd least happy state.
• Mississippi has the 3^rd highest percentage of homeownership.
• Mississippi has the worst credit score average.
• Mississippi has the lowest income.
• Mississippi has the highest poverty rate.

Conclusion 1

My hypothesis (and what the government expects) was found to be inaccurate. It was actually the exact opposite. The state with the highest homeownership (WV) turned out to be the least happy state. The unhappiness could be because of the people purchasing the homes. The average salary of West Virginians in 2010 was $35,370. I tried to find a correlation between the low income and the high percentage of homeownership, but there is none. The average West Virginia home value (according to Zillow) is $92,900.

Even if they financed the entire amount (including taxes, insurance, and PMI) – the monthly payment is an affordable $595. If budget were a problem, they would be higher on the poverty list, not the unhappy list.

Conclusion 2

Hawaii is considered to be the happiest state. They also have the 2^nd lowest percentage of homeowners. You could say that this is a bad example because Hawaii is just different. The language, the lifestyle, the remoteness…Each of these attributes allow Hawaii to be a dream in itself. Who needs a home when you can sleep on the beach and not be bothered?

While it’s true that the island is different, the lack of homeownership cannot go unnoticed. I say this because Hawaii has the 3^rd highest credit score average. It’s not like they are ignoring modern civilization and using seashells as a viable form of payment. They are swiping (and smiling), but not buying.

Conclusion 3

Mississippi proves my point. What happens when people who shouldn’t buy houses, buy houses? Sh*t hits the fan. Any underwriter (or human) can look at the above statistics and conclude that Mississippians should not be purchasing homes. Having the lowest income available and the worst credit score average hardly gives you the criteria to have the 3^rd highest percentage of homeowners. It’s no wonder they have the highest poverty rate!

My only concern is that Mississippi is only the 3^rd least happy state – that reeks of too much optimism.

Readers, what are your thoughts on homeownership? Is it still the American dream?

This is a guest post from Funancials – The Funny Money Blog.  Funancials is 25 years old and unsure whether he wants to dive into the American dream of homeownership.  Share some advice to him!

Photo: Not a rental, PD.

Facts About Insurance For Leased Cars

Leasing a car is a convenient way to get more car for less money. But that doesn’t mean you can skimp on auto insurance – in fact, a lease may require you to buy more even coverage. Since the leasing company owns the vehicle, it wants to protect its investment in case you’re in an accident or your car is stolen.

Before you lease your next car, here are a few things to know about car insurance for leased cars.

1. Coverage is mandatory

Before you drive off the lot in your new car, make sure you’re covered. If you don’t already have car lease insurance to transfer to the new vehicle, you’ll need to buy it before you leave the dealership or leasing office. Most states require some minimum level of liability insurance, and your leasing company may require more than state-minimum levels. Find out more with our Auto Insurance Coverage Guide.

2. Your limits may be higher

Leasing companies often require high liability insurance limits for your leased car. Some may require you carry a lower deductible too, or make you put money in reserve for the duration of the lease if your deductible is higher.

3. Collision and comprehensive may be required

In addition to the basic liability insurance for leased cars that is mandated by most states, you may be required to carry collision or comprehensive car insurance, too. Collision insurance pays for damage to your vehicle if you hit someone’s car, another vehicle hits you or your vehicle rolls over, regardless of who is at fault. Comprehensive coverage helps pay for damage to your vehicle from events other than a car accident, like theft, vandalism, and certain natural disasters.

4. You’ll need to pay for original replacement parts

Some leasing companies stipulate in the lease agreement that if any repairs are made as a result of a comprehensive or collision claim, you must use only Original Equipment Manufacturer (OEM) parts, which are often more expensive than after-market parts. Fortunately, there is a low-cost option available with most car lease insurance policies that covers the difference between the cost of factory parts and generic parts.

5. Gap insurance can protect you

Gap insurance provides extra protection in addition to your basic car insurance for leased cars. If your leased vehicle is stolen or totaled in an accident, this optional coverage fills in the gap between the lease amount still due on the vehicle and what your insurance company would pay for a regular collision or comprehensive claim. Learn more about gap coverage and how it could protect you.

6. There are still ways to save on your car insurance

If you insure multiple vehicles with the same company, or if you bundle your car and homeowner’s insurance, you may qualify for substantial discounts on automobile insurance. If your driving record is clean of any accidents, or if your new vehicle comes equipped with an anti-theft device or passenger restraint system, you could save even more depending on where you live and on your insurer.

Readers, do you lease or own your car?  What other expenses about leasing might one not think about?  Why would you ever consider leasing a car if you know it’s cheaper to buy?

Regards,

Sam

Ever wondered how much of your income tax pays for national defense? A number of online tools exist to help you answer that question. However, because each tool calculates government spending and taxation differently, you’ll find a wide array of answers. Below are various ways to figure out the answer.

The Data Viz Challenge Winners

Roughly 40 design teams competed for $10,000 in prize money offered by Google and Eyebeam Art & Technology Center. The challenge was to create engaging data visualizations that make it easier to understand how the government spends our taxes. Winners were announced on Tax Day—April 18th.

The following designs offer the most useful data for researching your personal tax contribution to national defense:

WhereDidMyTaxDollarsGo.com: The winner of the competition, this site asks you to enter your annual income and filing status. Based on your input, it generates a series of tables and charts telling you how your 2009 taxes were spent by the government during 2010. One table reports your federal taxes owed, applying the standard deductions and breaking down your obligation by tax bracket. Two more tables show your Social Security and Medicare taxes for the year. Based on these numbers, the site reports your total taxes owed and your effective tax rate for the year.

WhereDidMyTaxDollarsGo.com lists spending on national defense at 17% with an additional 3% for veterans’ benefits and services.

Every Day Is Tax Day (fchasen.com/taxday): The contest runner-up takes an interesting approach to understanding how the government spends your hard-earned tax dollars. First, you enter your salary and the tax year. It then uses an image of a wall clock with various colored bands around the edge to illustrate how much of your work day is spent generating income for government departments. Like WhereDidMyTaxDollarsGo.com, clicking on a particular department allows you to drill down even further to see how that department spends your money.

According to the site, if you made $50,000 in 2010, you spent about 23 minutes each work day generating funds for the Department of Defense, which equates to about 4.8% of your total income and roughly 22% of your taxable income. This number doesn’t include contributions to other defense-related departments like the Department of Veterans Affairs and the Department of Homeland Security.

Stockmapper.com/taxMapper.html: This site allows users to see total federal expenditures and spending by category. It reports numbers nominally, adjusted for inflation, and as a percentage of total federal expenses . While the site reports that national defense is just over 20% of all government spending, a helpful slideshow correctly points out that spending (including national defense) has decreased over time when viewed as a percentage of U.S. Gross Domestic Product (GDP).

WhatDoYouWorkFor.Appspot.com/index.html: Similar to Every Day is Tax Day, this site asks users to enter their income, work schedule, filing status, and tax year. With that information it produces a color-coded calendar illustrating what portion of your annual work schedule is dedicated to each government spending category. According to the site, if you made $50,000 in 2010, you spent roughly 25% of your time generating revenue for the federal government and 5% of your time providing funds to pay for national defense.

CanIGetAReceiptWithThat.com:  According to the site, if you made $50,000 in 2010 and your filing status was single, you paid $2,513.29 towards national defense. With that money you could have bought 418 Chipotle burritos; 663 McDonald’s hamburgers; 1,262 Red Bulls; 1,675 cups of Starbucks coffee; 456 packs of Marlboro cigarettes; 3,351 bottles of Bud Light; or 8 iPods.

YOUR OFFICIAL GOVERNMENT RESOURCES

In addition to the various visualizations provided by the Data Viz Challenge, the White House offers a website called “Your 2010 Federal Taxpayer Receipt”. Users enter their social security, Medicare, and income tax payments in separate text boxes then choose their income level. The site produces a taxpayer receipt that breaks down spending by category and subcategory and lists amounts in dollars and as a percentage of total expenditures. According to the site, national defense accounted for 26.3% of spending in 2010.

Envision World Peace If You Can

While the previous sites list defense spending in the 17% to 26% range, the following sites call for a reduction of military spending, and report numbers that are much higher:

TrueMajority.org/ csba/priorities.php Founded by Ben Cohen of Ben & Jerry’s fame, True Majority reports military spending at over half of the government’s budget (50%+). The pie chart on this site shows defense spending dwarfing other categories.

WarResisters.org/pages/piechart.htm War Resisters League, another site seeking to reduce military spending, issued a pie chart showing military spending for 2009 at 36% of the budget with an additional 18% of the budget spent on past military campaigns.

Other sites also report military spending as a similarly large portion of the budget. According to the War Resisters League website, the Center for Defense Information reports defense spending at 51% of the budget, and the Friends Committee on National Legislation reports it at 43% of the budget.

EXPLAINING THE DIFFERENCES

Given the same user inputs, each of the sites mentioned above calculates government spending and personal taxes differently. The White House tool calculates tax bills that are much lower than the Data Viz entries (of course they would!). Certain sites report defense spending as low as 17% of total the total budget, while others report it at over half of the budget. So, how can you tell which numbers reflect a more accurate analysis of military spending?

The truth is, although the numbers differ greatly from one site to the next, they’re all accurate. They just rest on a vastly different set of assumptions and calculations. Many of the sites use different sets of data. And although all of the Data Viz designs use the same data set (provided by WhatWePayFor.com), they employ different calculations to arrive at varying answers to the same question. Because the reported numbers differ so vastly from one site to the next, you’ll want to keep the following factors in mind when researching your contribution to defense spending:

Not Your Standard Deduction: When calculating each user’s tax bill, some sites use a standard deduction while others do not. This can significantly affect how much money sites report for your taxes owed. To complicate matters further, rather than just applying a standard deduction, the White House site includes certain tax exemptions available to many taxpayers.

Give and Take: Sites also calculate spending differently. Some sites base their calculations on federal expenditures only, while others use both federal receipts and expenditures. Obviously, factoring the money received by the government will effectively reduce the overall tax bill.

Taxable Income: Because sites like “Every Day Is Tax Day” and “What Do You Work For” report how much of your work day or year is spent earning money for the federal government, rather than how much of your taxes go to the federal government, the numbers can seem a bit misleading. For instance, you might use “What Do You Work For,” discover that you only spend 5% of your work year generating revenue for the military, and think, “5% isn’t so bad.” However, it’s important to keep in mind that only 25% of your annual income pays for taxes, so while you’re only giving 5% of your income for national defense, it equates to 20% of your total tax payment.

Discretion Advised: Another important factor is whether a site uses discretionary or total spending in its calculations of government expenditures by category. Because Social Security and Medicare are mandated by law, and funds are collected separately by the government, Congress has no choice in how to spend that money. Mandatory spending takes up a large portion of the total budget, and can devalue the spending choices Congress makes. According to one site[6], national defense represents 20% of total spending (including mandatory spending), but accounts for 57% of discretionary spending. For this reason, some sites choose to report mandatory spending separately or exclude it altogether.

Underestimating the War on Terror: When calculating government spending, many groups choose to use budget authority, rather than government outlays. Budget authority uses spending authorized by the government, while outlays refer to actual spending in a particular year. Because the government often requests and authorizes additional funds during the year, budget authority doesn’t always provide the most accurate data.

So while the 2009 Federal Budget authorized $38 billion in spending for the War on Terror, the War Resister’s League relied on the previous years’ spending data to conclude that this was figure was hugely underestimated. They added an additional $162 billion to bring their number more in line with previous years’ spending (a subsequent check with Wikipedia confirmed that President Obama asked for an additional $130 billion in 2009 to fund this effort[3]).

The Defense Spending Shell Game: The Department of Defense is just one of several departments that carry out activities related to national defense. The Department of Homeland Security (including the Coast Guard) and the Department of Veterans Affairs have obvious ties to defense and are often listed as separate spending categories. The Department of Energy includes nuclear weapons. NASA is listed under Science & Space, but often carries out defense activities. Many other departments finance activities that most would consider related to national defense. When researching how the government spends your money on defense, make sure you know what departments a site includes in its spending calculations.

PAYING FOR OUR PAST SINS

A final factor overlooked by many spending calculations is interest incurred on debt from past military conflicts. When our government borrows money to finance a war, we have to pay the money back. While we record the amount borrowed as defense spending, we often end up paying significant amounts of interest on money borrowed to finance those wars. This interest is typically recorded as spending to pay down the national debt, but since a good deal of this debt can be directly linked to military activities, groups like the War Resisters League include a portion of these interest payments in their calculations of defense spending.

Works Cited

[1] “CSBA: TrueMajorityACTION.org.” TrueMajority.org. Web. 02 Aug. 2011..

[2] “The Federal Pie Chart.” War Resisters League. Web. 02 Aug. 2011..

[3] “Financial Cost of the Iraq War.” Wikipedia, the Free Encyclopedia. Web. 02 Aug. 2011..

[4] Matthews, William. “New Tools Calculate Your Tax Dollars at Work – Nextgov.com.” NationalJournal.com. Web. 02 Aug. 2011..

[5] Visualize Your Taxes: Grand Award Winner | DataVizChallenge.org. Web. 02 Aug. 2011..

[6] WhatWePayFor.com. Web. 02 Aug. 2011.

[7] “Your 2010 Federal Taxpayer Receipt.” The White House. Web. 02 Aug. 2011.

Readers, what do you think should be the right amount of national defense spending as a percentage of total spending?  Are you willing to contribute more of your income to defense spending?

With Europe in debt crisis, do you think Germany has the responsibility, especially given its past war crimes to bailout the rest of the Eurozone?

About Check N Go

Check N Go has been a leader in online payday loans and check cashing services for over 15 years, helping to build legitimacy to the consumer lending industry through their work with the Consumer Financial Services Association. Check N Go sets high standards for responsible and ethical lending.

The following is a guest post by Jasmine from Check N’ Go.

With the miserable state of the economy today, some are desperate to find ways to reduce their debt without filing bankruptcy or losing their home and savings.  The sad reality for many is that bankruptcy and foreclosure are the only events on their financial horizon.

In order to attack debt and free yourself from financial woes, it’s going to require some creative use of existing resources and changing the way you approach debt reduction.

Change Your Habits

For those with large amounts of credit card debt, it can be difficult to find the extra money to pay even the minimum balance on some of their cards. But a little effort can go a long way and extra cash can be made available for paying more than the minimum on at least a few credit card balances.

But this will entail some lifestyle changes. Reducing the amount of money you spend on convenience such as fast food, lunch out at work or luxury weekend dates can provide an untapped resource for cash that can be used to pay more than the minimum on credit cards.

What about downsizing your car? Taking public transportation more often? Imagine the money you could save by not having to fill up your gas tank every week!

Living beyond available means is probably the most common way many people get into debt in the first place! Lean towards a simpler way of life and not only will you pay off your debt faster, you may even learn to appreciate the freedom simplicity offers.

Get A Low Interest Credit Card, Or No Credit Card At All

Another method for reducing credit card debt is to shift the balance from your high interest card to a low interest one. Beware though! Credit card companies are catching on and imposing fine print penalties for trying to carry over debts.

While shifting balances from higher interest cards to lower interest cards is a time honored tradition among those looking to reduce their monthly payments, consumers must use this process carefully now, as credit card companies are now offering introductory 0% interest for six, eight or twelve months with fine print that consumers often miss.

Little known to most consumers, there are now catches involved with that 0% introductory rate that often require consumers to not transfer their balances to other cards for a period of time that is longer than the introductory rate.

Shifting balances from high interest cards to new no interest cards is great, as long as consumers follow the rules. If not, consumers can often find themselves in a worse situation than before. Transferring balances frequently, or “card-hopping”, can incur significant penalty interest fees if not done correctly. If a consumer is looking to transfer their debt to a low interest card, from a high interest card, get an airmiles card, or any other benefits type card for that matter.  This can allow for travel and vacations without costing a significant amount of ready cash.

Take Out The Big Guns

Other options for bringing down your debt could be taking out a home equity loan, cashing out a 401K, taking a loan against a life insurance policy, borrowing money from friends and loved ones.  However, these options are often out of reach for most consumers in serious financial trouble.

At that point, you should look into trying to settle your credit card debt, for less than the total owed. You can try renegotiating the balances on credit cards and loans directly. Not all credit card companies are going to go for this, especially if the consumer has chronic late payments or overcharges. But if the majority of your payments are on-time and within their credit limits, debt settlement can be a great alternative for reducing balances and interest on debt.

If renegotiating does not work, often the threat of bankruptcy will force the credit card company’s hand to reduce the balance or interest on a card. The credit card company does not want a consumer to default on their debt, as they rarely get paid anywhere near the balance owed in a bankruptcy settlement.

If all else fails, or the debt amount is too extreme, bankruptcy may be the only option. Prior to filing for liquidation or restructuring, you should exhaust every other method available, both common and uncommon.

Darwin is the author of Darwin’s Money where he takes an evolutionary approach to money. In this rapidly changing world, there are always new opportunities to save money, make more money and expand your horizons.

If you’re anything like me, you’re constantly thinking about different business ideas and models that could work out. Through either addressing an unmet need or making something better or inventing the next Facebook, you could be deriving a nice side-income outside your routine day job and have an eventual payday down the road when you want to quit or move on to the next thing. I just watched The Social Network the other night and it put me in the mood to start thinking more about business startups again. I’ve split out a few ideas and ventures I’m involved in by “Old Economy” and “New Economy”. They can both earn you a handsome income and even turn into a full-time gig. The New Economy ventures tend to be more “Scalable” though.

Old Economy Side Businesses

Real Estate - This is one of the most common side-gigs people employ to diversify their assets and income. We all know someone who owns rental real estate somewhere. Some of my co-workers just own a single dwelling, while another friend of mine has blown up into multiple apartment complexes on a college campus. It’s worked out quite well for him since the competition is limited, price increases are virtually guaranteed and protected from recessions, and he pays a property management company to handle everything from tenants to repairs.

One of my financial regrets is that I’ve never gotten around to buying a rental property. I entertained it a few times, but always became distracted or it was a bad time. If something landed in my lap and I had the liquid cash, I’d consider it. For now, I’m focusing my time on some of the new economy ventures below.

MLM – You’ve probably heard the jokes about Amway, or you’ve been approached by a friend or co-worker with an “incredible business opportunity” to get in on the ground floor of a revolutionary new business model. This is called multi-level marketing where one sucker has to sign up more suckers beneath them in order to keep the pyramid going. In some cases, they’re actually selling something with some value, albeit at an inflated price (to pay associates and run money up the pyramid).

I’ve known probably a dozen people now that have joined the likes of ACN, ShopToEarn, Amway and other outfits. To date, none of them are active any more. The income dried up and I suspect they grew tired of harassing their friends and family to sign up for scammy conferences at the local Howard Johnson. We do have one friend who sells jewelry through Lia Sophia. She actually makes a few grand a month. She pretty much hosts shows every weekend and is constantly trying to sign new people up and book new shows. She works hhard at it – selling overpriced fake jewelry. I’d have to say she’s the only “success” story of the bunch. But she seems to be the exception rather than the rule. I dunno. I could never do it. If you have it in you to make selling a scammy product or service your life, then more power to ya. MLMs have been around for decades and they always will be. But like drug-dealers and musicians, there are millions chasing the big-time, but only a couple ever make it to the top.

You’ve Got Skills - Surely, over your lifetime you’ve accumulated some sort of trade or skills that could earn you extra money on the side, right? This could be anything from playing piano at weddings to photography to computer repair. This isn’t an optimal, scalable way to make money on the side since your income will ALWAYS be proportional to the amount of your personal time you spend on jobs. But if you need additional income, it’s a means to an end.

New Economy Side Businesses

Blogging – You’re Already Doing It! Just about everyone’s blogging these days. You might not even know it. By simply using your Facebook profile to share your opinions and life experiences, you’re micro-blogging. Sometimes, I see people using their Facebook profile to share tips and links like a Hot Groupon deal or pushing their scammy MLM business (argh). Now they’re monetizing. The next phase is what I do – blogging routinely via a formal blogging platform like WordPress. My blogs have led to some freelance gigs and now I have friends referring me to help others out with starting a website and SEO. See that progression? What might have seemed like a “nobody makes any money” boring blogging venture has fanned out into all sorts of additional income opportunities. My primary constraint really, is just time!

Outsourcing - With US costs at 5-10 times what developing world costing is for equivalent quality and talent, why would anyone pay US wages unless they really had to? Companies are moving more and more in this direction and the web has virtually guaranteed all services will eventually be sourced to the most efficient locale. The problems have often been time zones, poor quality, lack of visibility and complacency. But companies are under pressure now to continually reduce costs.

My friend and I recognized this need. He’s a Civil Engineer with a PE and I can run a site and attract traffic. He happens to have cousins overseas who actually do great CAD work (Computer Aided Design). So we brainstormed and came up with what we feel is a brilliant business model. We’ve started a CAD Outsourcing venture. Basically, instead of paying $50-$70 to a US-based engineer, simple CAD services can be sourced through our outfit for a fraction of the price – around $12 starting. Everyone wins! They get to work through a licenses professional engineer in the US to get the job quoted, we then send the info to our group of engineers in the Philippines, they do the work, we provide the content back tot he customer and everyone wins! The engineers are making more with us than they were at their old jobs, the US firms are paying a quarter or less for their services, and we collect the spread between our costs and income.

These same concepts could be applied to dozens of business ideas that are probably spinning around in your head right now.

What’s Your New Biz Venture?

Sunil is the author of the Extra Money Blog, a blog that discusses how to get more out of life, whether it is more financial abundance, freedom or the flexibility to design a life on your own terms.

Did You Know that you can make a lot more by working overseas and save a significant amount in taxes at the same time?

The US tax system is not the most lenient by any means. American tax payers shell out effectively almost 50% of their incomes to the Government year after year.

When a US Citizen goes to work abroad, the first $90k of income is shielded from income tax by the IRS. Married couples get twice the exclusion at approximately $180,000. And since a couple can live relatively well-off on just one US salary in most countries, many couples and families find themselves not paying US income taxes at all when working abroad.

Why Would Foreign Companies Hire Americans?

Foreign companies have always desired hiring Western expatriates because of the vision and experience expats bring to the table. Think about it, most economies around the world are developing and emerging today, whereas the West has been there for years now.

As a professional working in the West, you are perceived as having already seen the future of companies in these emerging countries. You know what works and what doesn’t. You can anticipate potential problems that can prove costly for these companies.

When a company in an emerging economy hires a Western expat, the company brings in someone from the future back into the past. Can you think of a more favorable advantage than having seen the future already? Can you see why it makes sense to pay 30 to 40% premium for such experience?

Why Would an American Want to Live and Work Abroad?

Let’s see. Perhaps a better view of the world? More awareness? Memorable life experiences? Something new and different from the routine? Or perhaps 30 to 40% more in salary? A lesser or no tax burden at all and therefore a lot more savings and possibly expedited retirement? Or maybe several semi retirements?

Maybe these are too dull of advantages to be taking about. Let’s talk lifestyle. What about the opportunity to travel to different countries on a routine basis? The USA is geographically placed in a spot from which it is rather difficult to visit most countries due to the length of travel, not to mention super expensive.

Vacation time is scarce in the US, and when people get vacation time, traveling to Asia or Australia is often not at the forefront of their minds, considering that it takes almost 2 days just to get there, not to mention recovery time from jet lag. Heck, even Europe can become an eternal trip from the West Coast, just ask Sam.

Or what about easier day to day lifestyle demands? Maids and drivers available 24/7, at a meager salary of less than $250 a month combined. Door delivery of produce, dairy, groceries, or whatever else you want. I call it life on demand. In the US, the most you have is TV on demand. Air conditioned transportation, malls just like back home and in many cases even bigger and better. The list goes on.

Three Countries to Note

There are always exceptions to the norm, and I know you are thinking that not all of what I said can be true for all countries. Sure, there are countries that don’t fit the bill, but let me clarify by saying that the scope of this discussion is meant more for emerging markets and those with more favorable employment laws and regulations compared to the USA.

Let’s take these three countries for example: India, Singapore and the United Arab Emirates.

In Singapore, taxes are capped off at a certain ceiling, therefore you have all the incentive to make more money. The lifestyle is amazing, and the country is as developed and advanced as any other that you can think of.

In India, you have all the luxuries one can dream off in a lifetime. True, India has a progressive tax system just like the USA, but it has several legal means to avoid taxes as well. By investing your earnings in certain government sponsored securities, not only do you benefit from interest income and capital growth, but you also get to offset your wage income and shield it from taxes. Very unique and favorable tax planning scheme that I have not heard of anywhere else.

In the UAE, such as Dubai or Abu Dhabi, there is no tax system at all. The Arabs don’t believe in tax (free money). This is considered unjust, or “haram” in Sharia Law (Muslim). This is where the US tax exclusion comes into more meaningful play. If offered a salary above the US tax exclusion for married couples, a couple could shield the first $180,000 of income, and only pay tax on the earnings exceeding the exclusion cap.  If a US Citizen couple makes under $180,000, they pay zero tax.

Working in the UAE is particularly favorable for someone who is not a US Citizen. US is one of just a handful of countries that taxes on a global income basis (meaning income earned from anywhere in the world). Let’s say you are a citizen of the Philippines and go to Dubai to work. Because the Philippines doesn’t tax on a global basis, you are only liable for taxes in Dubai, where you work. And because Dubai has no tax system, you keep every bit of your earnings.

So Why Don’t Many Pursue This Route?

The grass can always appear greener on the other side, doesn’t matter which side you are on. There are some challenges involved in just packing up and moving seven seas across for work. Let’s discuss a few of these.

Fear of uncertainty is likely the biggest factor. Most people don’t like uncertainty. Just think about what happens to the stock market here in the US when there is just a little bit of uncertainty in the air. Can you imagine what must be going through people’s heads when making a decision as big as living and working overseas?

Another reason is lack of awareness. One cannot pursue what they don’t know. I hope this article touches on at least some of the points that spurs some curiosity in you to look further into similar opportunities.

Many also don’t want to quite give up their civil liberties just yet. It is highly unlikely that one goes to work in a country that is not pro-USA. But even then, as a US Citizen, you are after all a foreigner in another country. And despite the reasonableness of laws and regulations in most countries (such as India which is very much pro-USA and the largest democracy known to mankind today), there are countries like the UAE where the laws are skewed to favor the local Nationals (or citizens) whenever a dispute rises.

Finally, getting such jobs abroad is not easy. Because there are fewer companies and therefore opportunities, companies are looking for the best of the best, the cream of the crop. The positions are simply limited. So even if you want to, it doesn’t necessarily mean you can. The landscape is more competitive than getting into a high level position at say a Google or a Microsoft.

Concluding Thoughts

Whenever this topic comes up in my circle, I see that there is a lot of interest, but also a lot of questions due to uncertainty. What I always say is that most decisions in life are reversible. One can try working abroad for a bit, and if it doesn’t work out, one can always come back. That is the beauty of possessing a US Citizenship, at least for now.

Does working overseas sound like your cup of coffee? Why or why not? What’s missing or unclear from this article? Would love to hear your thoughts on this topic . . .

Sunil
Stirring Thoughts

I had no idea what I wanted to do in the future.  I only knew that I didn’t want to continue working at the bank.  I needed some way to support myself, and it would have been foolish to just quit such a well paying job.  I needed to figure out a few things first.  I needed to figure out how much money I spent each month so I could comfortably build a sizeable savings in order to figure out what I wanted to do with it later.  I detail this process here:  How I Was Able to Retire at 24.

I threw around a lot of possible scenarios including starting businesses and biking across Africa, or moving to France to study French.  I didn’t know what I wanted to do, but I knew in time an idea would come and then I would strike.

How much do you need to leave your job and start your own business?

It’s different for everyone, but depends on a few things.  First you need to find your “sustainability” rate or how much you spend each month (your upkeep costs).  If this is $2,000 a month, you need to save $24,000 in order to live for a year without any income.  Multiply this number by 150% to take into account any unforeseen expenses and taxes.  This is $36,000.  Now, if you need $5,000 or $10,000 to start your business add this to your number.  The numbers are going to be different for everyone depending on what your “sustainability rate” is, and the estimated costs for starting your own business.

Finding the idea

Living in Chicago, parking has always been a huge pain.  Parking in Chicago is expensive.  Chicago also has a private army of parking ticket enforcers that ticket and tow cars mercilessly.  Parking at sports venues is the worst.  My friend Jeremy Smith lived in Wrigleyville right next to the stadium where parking is so sparse that parking space owners will rent out their space for games by holding up a sign, waving a car into the space, and taking cash.  The idea was formed to implement this through an online parking reservation system.  This guaranteed spaces for buyers, and easy listing and peace of mind for sellers.  SpotHero was spawned.  We decided to go into business together and Co-Founded SpotHero.

How we started

We set up an S Corporation, and each put in $5,000 from our savings for a total of $10,000 we would invest in the business.  That was the easy part.  Finding people we trust to work with to develop the application that were also cost effective and got things done was another thing.  We used 99 designs and Crowdspring for a logo and some design work.  These websites are a great way to get work done in a cost effective manner while being able to have an idea of how much it’s going to cost beforehand.  People bid for your project or you can set how much you’re willing to pay.  However, the drawback is you’re only doing a project and once you pay, it’s over.

We were looking for people we could trust and have more of an ongoing relationship with.  There are so many ways to do things.  The amount of choice can be overwhelming.  Especially without a technical background, you are at the will of whatever they say.  I’ve never coded anything in Python before.  How am I supposed to know if the task was supposed to take 2 hours or 10 hours?  There’s a wide range of hourly rates for work.  If someone’s rate is $100 and they take 2 hours to do a task that someone with a $50 rate takes 10 hours to do that’s a big difference.  There’s no way to know until it’s too late.  Then there are the technical decisions.  Do we use a CMS?  Code in php or python?  Which database to use?  These are things I had not been familiar with at all.  With all these things to think about, what were we to do?

We looked to our personal network of friends and family.

I reached out to bloggers I had interacted with over the past year with my blog Lifestyle Ignition.  My Uncle made the introduction to someone who became our programmer.  We were able to work out an agreement where we would pay some money up front, and then more later on, once SpotHero started taking in revenue.  This allowed us to save on development costs in addition to forging a long term relationship with someone who had a vested interest in the entire project’s success.  For a design team, we wanted someone local where we could talk to and interact with instead of over the phone outsourced far away.  SpotHero’s other Co-Founder Jeremy had a close friend who owned a design company.  We had a meeting and were able to work out an agreement.  It can be overwhelming to get everything together, but finding people you can trust and get along with makes things much easier.

Ideas are just ideas.  Execution is everything

There are tons of good ideas out there.  I come across good ideas every day.  Though it’s not every day you find someone you believe in, get along with, and trust who is motivated to put those ideas into action.  Because without action, ideas are just ideas and nothing more.  We are both financing the startup with our own money and currently living as cheap as possible while we bootstrap this startup to launch.  Since SpotHero has a revenue generation model from the start, we hope to grow and become profitable from the earnings from commissions we will take by facilitating parking transactions.  However, we are not opposed to raising capital under the right circumstances.

Capital expenditures have three major areas.  Design, programming, and marketing.  We made estimates based on research for each item, but the estimates are hardly ever correct.  The most recent purchases we had never even heard of a few months ago.  (Github, Balsamiq Mockups, etc.).  If something goes over budget, we try and scale back the scope of the idea.  We want to get a working product up and running as soon as possible.  We have foregone many features we once thought were critical in the name of getting the product out there sooner while saving time and money.  We also try and use other services in the framework of our application where possible to save on capital expenditure.  For example we plan to use Amazon FPS for our payments processor because we can use their framework, instead of building our own.  This saves time and money, in addition to lessening complexity and increasing security of the site.

To be an entrepreneur is to turn ideas into action.

There are a million aspects involved in turning the ideas into action that I have never encountered before.  It takes a willingness to adapt and to constantly work hard in the midst of an uncertain far off future pay off.  It feels great though to be working on something I am passionate about while creating something of value.

Now, the first thing that comes to mind is, well what happens when that money runs out?  I am hoping that my start up becomes profitable before that happens.  This might sound scary to some, but I am willing to take the risks if there is a chance I can do something I am passionate about and live the life I want to live.  Will I succeed or fail, I have no idea, but I’m willing to take the risks to try.

Take a look at this scenario:

Would you rather make $15-000-$30,000 a month and “work” only 2-4 hours a day? Or, would you rather make minimum wage working 12-18 hours a day for two years with a 25% chance of selling your business for $100 million dollars and netting yourself a cool $25 million? If you don’t, all you are left with are your experiences.

To me the general tone is not so much about specifics regarding money, but a mentality.  Do you complacently accept something that is comfortable, or do you take the risks for greatness?  I go for taking those risks.  Complacency is evil.

Mark Lawrence is Co-Founder of SpotHero Inc. and blogs at Lifestyle Ignition.