On Friday afternoon, March 11th, the largest earthquake in Japan’s history hit with a magnitude of 8.9.  The devastation of the tsunami is unbelievable and my heart goes out to the victims and family members of this tragedy, which is still ongoing.

I’m sure many of us would love to do something, anything to help our brothers and sisters out in Japan.  The best and quickest way is to donate money to organizations who have the infrastructure and processes set up to help.

To donate money to the Japanese earthquake relief efforts, please visit the Red Cross’s site here.  You can also donate money by mobile phone to the American Red Cross Relief by texting REDCROSS to 90999.  Every time you text REDCROSS, $10 will be debited to your phone bill and a donation will be made.  The death toll has breached 10,000.

I encourage those of us with blogs, Twitter accounts and any online presence to help spread the word.  Japan needs all of our support right now!

Highlight Posts From Around The Web

* Vietnam Travel On The Cheap by YoungandThrifty.  Vietnam is one of the countries I’d love to visit, but haven’t yet.

* Do You Ever Wonder Where It Went? asks Sustainable Life Blog.  Jeff wonders, when looking at his W2 where all his money went.  Mine all goes to taxes!

* Confession: I’m Scared by Broke Professionals.  The Brokes are buying a house and they are worried.  I had the same concerns when I bought my first property a decade ago, but that lasted for about a week, because the feeling of owning is priceless.

* Thinking Before Paying To Save Money by Money Reasons.  Get rid of the spend more save more mentality!

* Blogger Tax Deductions by Wealth Informatics.  Some good tips for those of us who are blogging or running and online business.

* Top Reasons To Quit Your Job on Frugal Zeitgeist.  Stress is the secret killer.  After a couple years, if you are still stressed to the point of chronic body pains, I’d seriously suggest doing something else.  Check out Aches & Pains Of Overlooking Proper Ergonomics on Untemplater if you are having some issues.

Favorite Yakezie Writing Contest Essays

The second Yakezie Writing Contest ends on Wed, March 16th at 6pm.  The first, second, and third place essays will win $600, $300, and $100 that will go towards their education.  Here are my favorite three, and there are many more great one!  Have a read and vote!

* #49: Memories - An enormously powerful story about a daughter who lost her father to alcohol.

* #39: Peaches and Cream – A very difficult story about a girl who went through betrayal and then forgiveness.

* #56: A Mixed Plate – A humorous post of growing up as a multi-cultural person and accepting people for who they are.

Stand strong,

Sam

You might have heard recently that an unemployed architect by the name of Mark Epple found a whopping 12 carat, yellow diamond ring when he and his family was skiing in Vail.  The first thing that came to mind was who wears a 12 carat diamond ring?  That must be so gaudy!  My second thought was what is an unemployed guy doing spending thousands of dollars flying his family to Vail to go skiing?  Each lift ticket costs $100, not to mention lodging and food for the family.  Finally, I wondered whether I would return the 12 carat diamond ring if I was unemployed.

It’s easy to argue not to return the ring.  Anybody who can afford a 12 carat diamond ring probably isn’t hurting for money.  It turns out the original owners have a vacation home near Vail, so that sort of proves the point.  Based on the new rule of engagement ring buying, a husband can get away with spending up to the value of his car for his bride to be.  Cheap car, cheap ring!

And based on my 1/10th rule of car buying, one doesn’t spend no more than 1/10th their annual gross income on a car.  In other words, this couple is earning at least $2,000,000 a year.  Furthermore, they probably have personal property insurance coverage like so many do with expensive jewelry.

It’s also easy to argue for why one should return the ring.  If you lose something of value, you certainly hope someone will have the decency to return what doesn’t belong to them.  I’ve lost everything under the sun before and am so grateful when someone returns my lost item.  Furthermore, it’s not like you can easily sell a 12 carat diamond ring without bringing any attention to yourself.  The largest engagement ring I’ve ever seen is 6 carats, and that was just ridiculous.  Finally, if you do happen to return something of great value, more often than not the person will likely reward you for your good deeds.

What would you do?

HIGHLIGHT POSTS FROM AROUND THE WEB

* Why Pursue A Side Business When You Already Have A Successful Career? asks Sunil.  Sunil writes some excellent thought pieces on online income and entrepreneurship.  He is also a Yakezie Challenger and regular commenter here which I appreciate.

* How To Find The Best TV Price by Car Negotiation Coach gives some great tips on what to buy and how much to spend.  His comments were very helpful in my quest to understand the home theater set up given I’m thinking of getting an LED TV and use my existing receiver and HD cable box.

* How A Home Based Business Helps You Save On Taxes by Spruce Up Your Finances.  Some helpful tips for those who are looking to save taxes and work from home.

* Overheard In The Break Room by Retire by 40 is a great self-made video highlighting why we are out of shape and broke.  Love this videos.  It goes back to one of my key tips that people need to stop being delusional.

* The Second Yakezie Scholarship Is Now Live!  The Yakezie launches its second Scholarship initiative to college students who are paying their own way as well as high school students and below.  We’ll be giving away $1,000 to the best three essays.  Please help spread the word!

Regards,

Sam

You guys have really rocked the discussions with multiple 100+ comment posts this year!  You’d think this was a big blog or something.  I can’t begin to thank you enough for your contributions and what I’ve learned from you.  A post recap of 2010 is a good exercise to not only discover what worked best for some guidance in the new year, but to also give new readers a chance to catch up via one easy page.

There are literally 36 posts in the queue for 2011, with some of them just screaming to get out.  Why has the queue gotten so large?  Two things mainly:

1) Using a wine terminology, it’s good to give each post a chance to breathe.  Often times there’s so much discussion that to post a new post the very next day feels off.  This is the main reason why I don’t post everyday.  A topic needs to be sussed out thoroughly before we move on.  I like to respond individually to all comments who require a response.  Also, I love reading all the other great blogs out there every other day.

2) I guess I just like to write a lot.  There is always something ridiculous going on in the world that needs addressing.  If you are a blogger who is afraid of running out of ideas, don’t be.  Just read the newspaper, turn on the TV, or go out and socialize with friends.  Remember, if you can speak forever, you can blog forever!

For 2011, I probably should only have a queue 10 deep because I’ve found multiple times that I forget what I wrote just a month ago, and sometimes the topic gets stale or irrelevant.  Let’s add that to the blogging new year goal!  Happy reviewing.

TOP POSTS FOR 2010

CAREER

* The Dark Side Of Early Retirement (150+ comments) – Open your eyes and realize that not everything is as it seems.  If you go out for a $100 per person dinner, of course you will rave that it was one of the best meals you’ve ever had.  If you don ‘t, you’d feel like a fool for spending that much money.

* The Curse Of Making Too Much Money And Not Pursuing Your Dreams (160+ comments) – Is a story about my friend Lyndon who makes $300,000 at a prestigious firm, who isn’t entirely happy because all he dreams about is becoming a professional photographer.  Golden handcuffs really are hard to break!  You can read the follow up post Wealth Is An Illusion Of Happiness (95+ comments) after.

* The Comfortable Lifestyle Business Or The Big Payout? (80+ comments) – A question my VC/Internet poker buddies always talk about during our Friday night games.  $20-30,000 a month working 4 hours a day or a chance for mega-millions?  You decide!

* How to Make Six Figures At Almost Any Age (100+ comments) – It’s true, you can make over $100,000 if you want to.  I explain to you how.  But, if you don’t want to, no sweat and don’t throw rocks at me!  Just telling you that it’s much easier than you think.  Hopefully, after you read the ideal income for maximum happiness post, you’ll decide to give it a shot.  I entered this post in Free Money Finance’s bracket challenge for charity.

LOVE AND LIFESTYLE

* Do “C” Students Deserve “A” Lifestyles? (75+ comments) – I think I’ve discovered why there are so many personal finance issues in the world.  People are delusional.  Not everybody can be the best at whatever they do, yet everybody expects to get compensated like the best.  When they don’t, things get out of hand, like buying a $50,000 BMW when you only make $50,000!

* How To Get Your Super Motivated Boyfriend To Marry You (60+ comments) – Is one that’s dear to my heart because it got rejected by Wisebread (who are great folks btw) for a guest post, and helped give me the motivation to start the Yakezie Personal Finance & Lifestyle Network and write even more freely here on Financial Samurai.  The gist of the post is to give insight to women on the massive pressure society places on men to succeed.  It’s seldom talked about because men are supposed to never cry and always be strong.  Once you understand your SMB, you will win his heart.

* The Mental To Physical Connection For A Healthier Lifestyle (85+ comments) – Discusses the importance of creating a symbiotic relationship between work, writing, and physical activity.  When we were in school, it was instilled in us to study hard, play sports, and delve into the arts.  We lose all that when we grow older and tend to just focus on work.  We gain weight, forget how to play a musical instrument, and lose track of our youth.  Bring it back.

* West Coast Living – Yes It Really Is That Much Better! (100+ comments) – Is a response to reader’s displeasure when I openly and honestly inquired about how East Coast living is because a friend was considering moving from California to the East Coast (90+ comments) for a job interview.  I’m not sure why readers had to bash the West Coast so much after the East Coast post.  Perhaps it’s a reflection of something?  Or maybe some of you are just meanies!  I donno.

* Is There Ever A Right Time To Upgrade Your Engagement Ring? (80+ comments) – Is a discussion about a friend who never thought he was going to get married until one day he found a women 10 years his junior.  What ensues is kind of ridiculous, and I decided to write the new rule for engagement ring buying (80+ comments)  to counteract her ridiculousness!

* How To Get Girls If You Live At Home With Mom And Dad (100+ comments) – Is a tongue-in-cheek discussion of how to make the best of a non ideal situation thanks to the economy.  My attempt at humor doused with a side of truth.

BIG GOVERNMENT & PERSONAL FINANCE

* Be A Sloth And Don’t Roth! Why Converting To A Roth IRA is A Mistake (125+ commets) – It’s important to wake up from your dream state and realize that not everything the government tries to tell you is good.  With logical reasoning, buttressed by simple mathematics, you realize that having a Roth IRA puts you in donkeyville.  The comments by Joe TaxPayer are particularly money.

* Insuring The Uninsured Is Worth It (140+ comments) – Was written after President Obama rammed his healthcare bill through.  I strongly believe that nobody should ever die or go broke due to a lack of health care in America.  Disease and sickness attacks everyone, not just the poor.

* Millionaires Need Love Too Ya Know (100+ comments) – Is a discussion with a millionaire buddy who feels he is 1000% entitled to collecting unemployment benefits even though he’s financially fine.  “I paid hundreds of thousands into the system, I sure as hell plan to get some of that money back!”

* Someone Always Farts In A Crowd – The Moral Hazard Of America (50+ comments) – Discusses my encounter with a rascally kid who lets out a big one during a show.  Someone is always letting one go, and often times you don’t know who.  Hence, you might as well let one rip as well and blame someone else!

* Don’t Have Children If You Can’t Take Care Of Yourself (140+ comments) – There are 140 million orphans in the world.  If you can’t take care of yourself first, perhaps it’s a good idea not to have children before you can.  Perhaps even consider adopting.

* Renters Should Pay More Taxes (120+ comments) – A post discussing how we shouldn’t put the burden of all local taxes on the homeowner since renters enjoy the local parks, libraries, and public services as well.  Renters seem to constantly fight for equality, so let’s do that by making renters pay a Renters Tax just like homeowners pay property taxes.

* Only The Poor Or Super Rich Say Money Can’t Buy Happiness (130+ comments) – Let’s face it, money does buy happiness because it can buy you fantastic experiences.  Furthermore, you never have to worry about money again once you have money.  Don’t be tricked by researchers and the guilty rich.  Find out what the secret income level is for maximum happiness (80+ comments).

THANKS AGAIN!

The discussions have been phenomenal thanks to all of you.  For 2011, I will endeavor to provide an equally wide variety of posts for us to ruminate over and learn from.  If you are the editor of the New York Times or Word Up Magazine, yes, perhaps we should speak about some collaboration!

Next up, predictions for 2011!

Cheers,

Sam

 The following is a guest post by a regular reader who just turned 30.  Hope you guys enjoy and help her share in her thoughts!

So often we let society overly influence how we feel and act. I could go on for hours about topics like body image, nutrition, and politics but for now let’s just touch on age and children.

Maybe I’m on my own in this, but it annoys me that society teaches us that couples should raise a family once they’re married. While I have no ill feelings towards you wonderful parents out there, it frustrates me that I still find myself doubting my lack of interest in having kids because it’s abnormal, against the grain.

TO HAVE OR NOT TO HAVE

More couples are choosing not to have children though and I commend them for knowing what’s best for them and not succumbing to the wishes of their parents, friends, siblings, in-laws, second cousins, and everyone else that undoubtedly approached them countless times with: “When are you having kids”, “You’ll love having a family,” “Your life will be more complete with children”, “You really should start a family now before it’s too late”, “You’ll regret it later if you don’t….” etc etc. Admit it – it’s still a bit odd for a happily married couple not to want children.

If you find yourself struggling with this weighty decision, don’t feel ashamed if you aren’t jumping for joy at the thought of having kids. Instead you should embrace your ambivalence! I think many people underestimate the option to say “no”, and often each spouse doesn’t equally evaluate the lifestyle and financial impacts of this huge decision. Deciding to wait or not to have kids doesn’t mean you’re cold, heartless, or a kid-hater. Sure people may question your decision but they wouldn’t be the ones raising your kids anyway, so who cares what they say.

If you worry about if you will regret it later, there are always other options like adoption, foster care, mentoring nephews/nieces, volunteering with kids, or even just getting a pet to care for. I’d strongly advise against letting fate decide. If you’re not using protection you’d better be 100% ready to have kids! I know many couples that got pregnant on the first try.

THE HILL IS JUST A LAUNCH PAD FOR NEW THINGS

On to the topic of age, I recently hit a milestone birthday entering a new decade and turned to my mother for moral support. “I never worried about turning older” she said with a straight face. “The only birthday I really remember impacting me was when I turned 60, and that was just because I’d been looking forward to it for so long so I could start getting the senior discount when I go to the movies!” How adorable is that?

My mother’s easy going attitude and positive outlook has been a great anchor in my life and I hope to be as happy as she is when I reach 60! It’s still scary thinking about aging, but I’m determined not to let a number define my level of happiness. Instead of fearing getting older, I want to look forward to being a little old lady with lots of wrinkles from all the smiling and giggling I’ll be doing

I’d really like to slap the person that came up with the phrase “over the hill”. Sure we can’t stop the aging process but why do we have to dread that when we reach middle age, it’s only downhill from there? Shouldn’t we strive to die at our happiest and at the peak of our lives? With an over the hill mentality, it’s no wonder people have mid life crises thinking that things are just going to get worse as each day, month, and year passes.

AND SO WE CONTINUE

Our thoughts and feelings are more powerful than we give credit and I believe they can influence us physically too.  If you want to have children, go for it, but don’t judge others for not wanting the same things you do.  If you believe you are young, you are!  Start thinking positively, avoid stress and pessimistic people, and you’ll see the world of difference.

Carpe Diem!

Regards,

Never To Wonder

Twitter is a truly amazing platform.  I’m impressed with how some can literally Twitter all day and not get tired.  There is definitely an addictive element to Twitter which makes the program so alluring.  There are a ton of announcements of self greatness which I am very fond of reading for some reason.

Twitter Love Examples:

* “I rock because I created an awesome commercial about my product!”

* “My stock picks are up huge and outperforming the markets!”

* “Check out my net worth, killing it up 10%!”

* “Take a look at my new Gravatar picture!  What do you think?  Ain’t I cute?”

* “Happy birthday to me!  Come celebrate with me over on my site!”

* “Thanks!” -> What?  “Sweet!” -> What? “Cool!” -> What?

Let’s be honest, we love talking about ourselves.  We love consuming things until we barf.  If this wasn’t the case, Twitter wouldn’t be the hit it is today.  I wonder though, what would happen if we created a Twitter War where everything we wrote was disparaging and angry?

Twitter War Examples:

* “Shut the hell up already!  Nobody cares about your stupid book!  We got the last 32 tweets!”

* “If you are such a social media guru, why are you begging for money online?”

* “Instead of talking about how rich you are, why don’t you go choke on it instead?”

* “You look 10 years older and a little heavier.  I almost didn’t even recognize you in your new gravatar picture!”

* “Listen dork, just ask her out already!  It’s so obvious you have a crush on her since you insta-response every time she writes!”

* “No, I don’t want to follow you on the new Digg or Tip your damn post!”

* “Didn’t know there are full time jobs that pay you to tweet all day  Oh wait, there aren’t.  Get back to work!”

Do you think a Twitter War would generate a lot of followers and new ideas?  I wonder what would happen.  Hmmmm.  Just do me a favor.  Please tell @Financialsamura to SHUT THE HELL UP if I’m being too obnoxious on Twitter!  That way, our War can begin!

Cheers,

Sam

The Bay Area is full of entrepreneurs.  There’s something in the air that creates an almost godly electric spirit that causes people to work hard and innovate.  As 2011 nears, more and more I hear about how small business owners are clamping down in preparation for next year’s tax hikes.  Clamping down is generally not a good term to use if you are a politician who wants to create job growth.

Let’s say you make roughly $3 million in annual gross revenue from your internet business like my friend Zach does.  Not bad, but not exactly big money if you take into account his cost structure.  If his pre-tax operating profit margin is 25% after he pays the salaries of all his employees, the rent, and so on, Zach is left with roughly $750,000 subject to taxes.  If his tax rate goes up from 36% to 39.6%, for every dollar he makes over $375,000, he will pay roughly $25,000 more in taxes a year in 2011.

Well guess what?  My friend is letting go of one of his junior programmers who makes roughly $85,000 to pay for next year’s $25,000-$35,000 tax increase!  My friend feels bad letting his 2006 college graduate employee go, but he has no choice since revenue has declined since 2007, and the government is tightening the screws.  Zach believes that 2011 revenue will be worse next year than this year, and is budgeting a decline.  Thank goodness for 99 weeks of unemployment insurance!  And no, it’s not reasonable for the junior programmer to just go work in fast food after only several weeks of looking.

DON’T LISTEN TO THEIR LIES.  THEY AREN’T IN IT FOR YOU.

I’m trying hard to understand why the Obama administration wants to keep unemployment levels high?  Small businesses make up 90%+ of all employers, and 75% of the net new jobs in our economy.  Why doesn’t the Federal Government realize that punishing small business is bad for good people?

The reason why the government want to raise taxes on others is because they want more power.   By raising taxes on the majority of people who employ others, the government takes away the power of freedom and creativity.  Think about it for a bit.  Let’s say taxes are at 100% i.e the government owns you. In this 100% taxation environment, you become a zombie with no spirit.  As soon as the government announces they will lower taxes to 95%, the masses start stirring and productivity increases.  But, as soon as taxation goes to 0%, the people will do as they please, develop their own power, and in the minds of politicians overthrow the government!

Power is intoxicating, and I don’t blame politicians for craving power.  After all, their whole job is about creating attention, popularity and gaining power.  It’s just important for people to realize that not everything is what it seems.  Don’t listen to politicians who tell you that they want to promote economic growth and job creation. It’s just not true.   If they did, they wouldn’t be raising taxes in a weak economic environment.  What politicians want to do is to create the worst economic environment possible so that they can give themselves a low hurdle.  If you are at the bottom, there’s only one way to go but up, and they hope to capture all the glory when things eventually start to turn.

So to all the faithful liberal-voting small business owners who are pro tax increases and big government spending, listen to your leaders and fire your workers.  Feed their egos and feed their hunger for power.  You are doing the right thing as a citizen of the United States of America!  Go USA!

Readers, why do you think politicians want to disincentivize small business owners?  Do you think there is this cure for power lust?  If so, what would you suggest?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our E-mail or RSS feed.

I don’t talk much about my finances, but I will tell you that I’m in the process of refinancing a couple mortgage loans down by 1% each.  The interest savings is tremendous, making me very positive about consumption trends going forward as 10 other people I know are also refinancing.  It behooves you to at least call your local bank and check their latest rates.

It does make me wonder with the strength of the stock markets lately, how the bond market can still be so frothy to provide such record low interest rates.  Do remember that the higher treasury bond prices go, the more yields fall.  Could there really be deflation on the way?  I highly, highly doubt it but the bond market is telling us otherwise.

To humor our minds, lets say there is deflation on the horizon.  What would you do with your spending habits?  You’d probably stop consuming due to the assumption that whatever it is you want to buy will be cheaper in the future.  As a result, you’d hoard cash and de-leverage.  Bingo, that is exactly what plenty of folks are doing, including myself.  This self perpetuating mentality is very damaging to economic progress.  In addition to delaying consumption, you will probably seek ever higher yields.  With the 30 year treasury yielding 4% right now, it sure looks like a buy compared to only 2.85% on the 10 year.

When talking about deflation, keep in mind that money is simply a medium of exchange.  The more money currency you have, the better as the strength of your currency improves vis a vis the goods and services which it can buy.  Frugality really is en vogue again, and I just can’t wait until Samurai September when I spend the whole month buying nothing!

POSTS THAT CAUGHT MY EYE:

In “A Teacher’s Reply To Criticism”, Budgeting In The Fun Stuff responds to E-dog’s scathing post against teachers.  A very thoughtful response given BFS’s husband is a teacher.  I for one believe teachers are highly underpaid.  A merit based system that rewards great teachers is a great idea as well.  Great teachers have meant the world to me, and I am forever grateful for their tutelage.

In “How To Simplify Your Life”, Forest provides some great tips on simplifying your home, finances, and wardrobe.  I absolutely hate clutter and try and donate several bags worth of stuff to good will every month or two.  I try and by quality clothing that lasts for a while, and all my retirement finances are automated so I appreciate what Forest is sharing.

Darwin highlights “The 10 Dumbest Uses For Your Tax Dollars In The Stimulus Bill” in his anti-government rant.  I just want to say one thing, “Don’t touch my Ant Talk sessions!”

Everyday Tips and Thoughts asks, “How Realistic Is It To Retire By The Age Of 40?”  At 42, Kris provides a very cynical answers to the possibility i.e. “better start saving at birth!”  Good stuff.  I fully plan to try to retire by 40, but it doesn’t necessarily mean that I will.  Saving money, making money, it’s all just a game frankly because really, how much do we really need to survive.  Not much!

In “Destination Wedding Or Traditional Wedding: Which One Is Cheaper“  Young and Thrifty brings up a fun topic that sometimes costs and arm and a leg for hosts and the attendees.  I’m down with both since weddings are so fun!

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our E-mail or RSS feed.

This is a guest post written by Mike, a financial planner / web entrepreneur who is pursuing his dream of running his online business. You can follow his progress at The Financial Blogger (RSS Feed).

3 years ago, I was told by many bloggers: “You will never make money blogging. And if you do, $200/month will be your highest peak ever”.

Three year ago, The Financial Blogger was averaging 500 visits per month and I was ecstatic when I made my first deal of $10 for a link.

Three years later, I now run three financial websites, bought 2 of them and flipped a blog within a year. I am now able to work 1 full day per week on my online business (while I still have to keep my “day job” in the meantime). I really like buying and managing finance blogs as I think it is currently one of the best investing opportunities we can find.

When I asked Sam if I could write a guest post for Financial Samurai, he asked me to include more details on how I appraised blogs and how do I decide or not to send $10K over the wire (or more!) simply to buy a “.com”.

Look at Blogs as a Real Estate Investing Opportunity

When I first started my blog, I went into a partnership with one of my friends (who is the co-founder of our company). He has been in the website industry since the 90s, well before the .com bubble. He told me to picture a rental property in order to understand how a website can generate income and how it should be valued. He actually wrote an interesting piece about the difference between real estate investing and website investing recently.

His main point is the following:

When you value a rental property, you will most likely pay between 10 to 15 times the yearly revenue. Therefore, if the property generates about $40,000 in rental income, you will pay between $400,000 to $600,000 to purchase it.

When you value a website, you will most likely pay 18 to 24 times the monthly income. Therefore, your investment return can easily reach 50% the very first year!

While both type of properties will generate monthly income, the first one will be paid over 20 years (if not more) and the latter will take less than 2 years to be reimbursed. So now that I have proven that there is a great investing opportunity, how do you value a website?

A few months ago, we purchased Green Panda Treehouse. This is a great personal finance blog aimed at young college graduates to help them manage their personal finances. Since I am still in my 20s, I thought it would be great to add my financial expertise and write more about topics such as asset allocation for beginners or tips for first home buyers (since I have a banker background). So let’s take this example:

How Did We Value Green Panda Treehouse:

There are several metrics when we are about to purchase a website. So before we even start with the calculations, we are looking at minimum requirements. The site must be:

- At least 1 year old (in order to have valid traffic data and to have it recognized by Google).

- Minimum of 10,000 visits per month (it’s easy to build a blog with 3,000 visits/month, since we are looking to save time, we need a good visitors base).

- Minimum of 50% of visits coming from search engines (we don’t want to have boosted traffic from social media since those readers don’t stay long on your site, don’t click on ads, don’t comment and don’t register to any of your RSS feeds).

- Minimum of 300 RSS readers (just to make sure you have a community following you).

- Must not be a Page Rank 0. PR0 websites means that Google doesn’t like them. While I don’t give very much weight to PR, I just want to make sure it’s not 0 because I don’t want my blogs to be penalized by the search engine.

- Must be under monetized. While I am not the biggest pro in monetization, I like to find blogs that are under monetized according to my knowledge. It gives me confidence that I will be able to get my investment returns faster than 24 months.

Green Panda Treehouse met all those pre-requisites. Therefore, we went ahead and did some calculations. Since the site was big (around 10,000 visit/month) but not huge (over 35,000 visits per month), we were able to apply the 18 to 24 months of income rule. For bigger websites, you certainly have to add a premium for the brand, size of community and future income potential.

How do you assess income?

Before putting a number on a website, I like to look in-depth at the different sources of income. I don’t like blogs that are dependant on just one source of income (commonly Adsense or Text links). This makes the business risk greater than well diversified income sources.

In fact, there are a lot of income sources for a blog and I would like to see all of them (in various proportion) such as:

- Adsense

- Text Link

- Banners

- Affiliates

- Products (ebooks, services, paid newletters, etc.).

The more diversified the sources of income, the more I will be willing to give 24 to 36 months of income (since you can really consider it as a business and not a small sideline).

You can have additional weight if you have been monetizing your blog for several months. If you can show an uptrend for more than 6 months, you can definitely talk about potential future growth. If not, I think the word potential is overrated in the internet world. Everybody talks about “potential” but nobody develops it because “they don’t have the time”… right!

Other particulars

There are a few particulars to look at before buying a website. This is more looking towards what you are looking for and what you want to buy as a blog. You can look at the following points before you start shopping:

Niche Content

Do you want to talk about personal finance in general or a specific aspect such as frugality or investments? Obviously, an investment blog will be worth a lot more because advertisers will pay more to show investing products versus coupons.

Popular posts

I’ve seen some blogs getting 30 to 40% of their traffic from only 2 or 3 articles. You want to make sure that you have several popular articles in Google so you can count on a steady traffic base. If most of your pages viewed depend on 1 or 2 keywords, chances are that most of your income depends on the very same words. Therefore, it adds to the risk.

Restrictions

Some blogs are very personal and related to its author. While this can be the purpose of a blog, there are some blogs where readers are less attached to its author than others. While you want to have a strong community, you don’t want it to be too strong either. A lot of readers may leave if you don’t have the same writing style or train of thought of the previous owner.

Some also consider offering a writer’s position to the previous owner to make sure they keep their readership (We kept Stew who was writing 3 times a week on Gather Little by Little for example). It’s not a bad idea at first since it gives you the time to “break-in” your new readers.

Does buying/selling blogs constitute a good business model?

I personally believe that there is a huge investment opportunity in the blog management business since we are currently in a very inefficient market. Since there are not a lot of buyers and that blog valuation is still complex and a standard method has not yet been determined, there are several gems available for a very small price. Our most recent purchase; Green Panda Treehouse was a perfect example.

On that note, if you ever consider selling your blog or if you have any questions regarding blog valuation, don’t forget to shoot me an email at thefinancialblogger (at) gmail (dot) com!

Other resources:

I’ve written a few other articles about how to value and to buy another blog, you can read them here:

How To Buy A Blog in 3 Easy Steps

How To Buy A Blog Step 2: Assess the value of a Blog

How To Buy A Blog Step 3: Finalizing the Transaction and Integrating the community

Also, if you want to learn more about how to buy, build and sell a blog, I suggest you register to my free newsletter where I discuss how I am building my online company one blog at a time!