Thursday, April 28, 2005

How I Got The Vette III

I’ve already discussed the first two points, believing it was possible and investing in myself. Now, I’ll talk about investing in business, or at least what I did that could apply to you. At one point I started my own business. I invested money in stocks, which means I gave a company or group of companies my hard earned dollars so that they could make more money. I invested in my retirement plan, which can be another way of putting money into stocks. I invested in the stock sharing plan offered by my company.

Not all of these ventures were profitable financially, but I always learned something. I first started a business a year out of college. I bought a computer and some design software, left my engineering job and started making silk-screened t-shirts. Ironically, I lost my shirt in the process. I was, however, able to make over $30,000 in revenue, and by the end of that 12 month period I started to get repeat business. However, the profit margin was so low I only took home a few thousand dollars. What I learned was that a good business needs time to develop and cash to start with.

That business folded, I got divorced, moved in with my brothers and teamed up with a few guys from college making web pages. I didn’t make much there either, but because of that gig I got a jump start on the internet and all of my professional work since then has been internet-related.

After I started working full-time making web pages, I finally had a little bit of money to invest in stocks. There’s always an opportunity to make a lot of money there, but it didn’t happen to me. The dot-com bubble burst a few months after I started, so that was pretty much all downhill. By this time I was working at a financial services firm and I was beginning to focus my energy on learning how to make money selling stocks. During that process I learned that this isn’t something that’s commonly taught in schools or in African-American families, which explains a few things that I might have to make time to talk about later.

What I learned was that I could make money when a stock goes up (selling long) or when a stock goes down (selling short ), BUT (and this is important) over the long haul, the only people that consistently make money are the people who do it professionally. Even then it’s not even close to being a guarantee. So, then I finally figured it out. If I was going to invest my money, I was going to rely on the advice of only the best experts. So, I researched mutual funds (a group of stocks whose purchases are guided by professionals) and put my 401K retirement money into the best ones.

Of course, you can’t invest anything unless you save your money, and I wasn’t very good at it. So, I read books that guided me on the best way to do that. My favorite, The Richest Man in Babylon, says to save 10% of what you earn. Use that money to pay yourself before you pay anyone else. The book also talks about how much time it takes to get used to the pattern of saving, and just like in the book described, it took me two years before I could do it reliably.

Now, back to the 401K. In one year, I managed to put $8000 of my income into my 401K. Had I just kept the money for myself I would have had about $6000 in my pocket, since the money would have been taxed. So I saved $2000. Additionally, my company would match my contributions to a certain level. It turned out that by the end of the year, they added $4000 to my 401K, for a new total of $12,000 for the year. Now, instead of $6000 in my pocket over the course of 12 months, I had $12,000 in my retirement account.

It doesn’t stop there, though. Remember those mutual funds I put my 401K money into? Well, they went up and added another $3000 into my account, for a grand total of $15,000. So, by saving $6000 in spending money, I made an extra $9000 in one year; $2000 from the government, $4000 from my company, and $3000 from my mutual fund investment. I didn’t have to work any harder, get a raise, get a better job, nothing. To top it off, because my recorded income was $6000 lower, I got a lower tax rate, which means I got a second tax benefit.

What’s really interesting to note is that with a 401K, you can make a loan to yourself for half the amount in your account. So, at any time, I could take that $6000 in spending money back out along with an extra $1500, and pay myself back at 5% interest. Of course I didn’t do that. Then, I lost my job.

What most people don’t know is that creditors can’t touch your 401K money. If I had gotten into serious debt, my cars, bank accounts, and home (if I had one) could have been taken if I didn’t plan right, but not my 401K. It didn’t get that bad for me, though. I got another job and started saving again.

This time in addition to the 401K, I participated in my company’s employee stock purchase plan. I was able to save money in an account that would be used, at the end of the year, to purchase company stock at huge discount. Not only would they allow me to purchase it at a discount, the 15% off would be based on the lower of the beginning and ending price of the stock. That means if the price went from $10 to $20 or from $20 to $10 I’d still get to pay 8.50 for it. The stock went up, of course, (since I invested in myself earlier and provided the company with the tools they needed to make money) and I turned another $6000 saved into $11,000. That’s $5000 more in free money, in addition to the company matching, tax savings, and mutual fund growth that took place in my 401K that year.

So, now there’s $25K plus in the 401K and $11K in the stock purchase plan. What to do with all this money I’m not used to having? Buy a Corvette!!! Nope. Not yet. The last area of investment, which I’ll talk about next time around, is Real Estate.

Before I stop for today, though, let’s do a quick recap. 1. Starting a business is a solid option. Just make sure you know how much you can make and have enough cash on hand to be able to survive until you make it. 2. Investing in stocks is good too, but plan on spending a lot of time researching if you expect to get a reasonable return. 3. Get all the free money you can. 401K plans help you invest in stocks, can have company contributions added to it, and can reduce your tax payments both when you contribute and possibly by lowering your tax rate. Company stock purchase plans can also be a great source of free money. (On a side note, the company changed the terms of the stock purchase plan the following year. The terms weren’t as favorable and I didn’t participate in it.).

That’s it for now. Get your stuff together and start making some money to get your own Vette.

Wednesday, April 13, 2005

Ultimate Fighter Finale

You missed a great show if you didn't see the Ultimate Fighter Finale on SpikeTV. The first fight was great because the winner was injured in training and couldn't run. The second fight was even better, because both guys showed so much heart that even the loser (he should have won) got the coveted UFC contract. The last fight was kind of lame, because it looked like Ken Shamrock just gave up at the end. You could tell that both Shamrock and Rich Franklin were a little better in executing their strikes, take-downs, submission and locks than the previous fighters, though. Overall, I give the finale a big fat A grade. Maybe I should try to get my old butt on next season's show.

Tuesday, April 12, 2005

How I Got The Vette II

How did I make enough money to buy my new car? You can invest in yourself, Real Estate, or businesses. Let's start with you. Or, more specifically, what I did that could apply to you.

In order to make money, you first have to believe you can. Although faith helps, it's not as nice as knowing exactly what steps you can take. First, find out how other people got rich. Bill Gates (Microsoft), Michael Dell (Dell Computers), and Charles Schwab along with other multi-millionaires and billionaires have auto-biographies describing exactly what they did and who they did it with, or in the case of Schwab, what you can do specifically. In my own research I've found that few successful businesspeople do it alone. They usually come from a family with professional parents, with industry connections, and they work in teams of 2 to 4 people in order to get their first big score.

For those women and people of color out there reading, don't be discouraged. There are a few great resources out there that are specifically catered to us. The Color Of Success and Secrets of Six Figure Women are two titles that got me started in the right direction when it started to look like my only option for success in corporate america was to be a white man.

Do some research on your favorite performers, artists, or athletes. Find out how they mentally prepared themselves for excellence, and try out some of their techniques for yourself. Listen to self-help tapes, or read self-help books. This might sound hokey, but listen to Tony Robbins. He has a whole series of audio CDs that will give you a different perspective on what you can achieve. I went through his whole 12 CD series. I didn't agree with everything, and some of what he had to say was just silly, but most of what I got out of it was very useful. Unless you're already wealthy, or on the path to wealth, always keep your mind open, and ready receive insight. Otherwise, you'll be stuck doing the same old thing you're doing righ tnow for the rest of your life.

Another resource is sales books. They may not directly apply to what you do professionally, but they can apply to pretty much every other interaction you have in life. I have a personal favorite that I'll recommend shortly, but first, here's an example of what happened when I recommended this book to a friend of mine.

He was kinda skinny, shy, and I knew I could always rely on him to be around Friday night if I wanted to do something, because he couldn't get a date to save his life. He told me that he wanted to change his luck with women, and I recommended the book. He listened, bought the book, and not more than a month later he had dates for every night of the week. The next time I saw him, I asked him "what happened?". He said he read the book and he kept notes from the book in his wallet when he went out to "prospect" for women. That's when I realized I had created a monster. I also realized how powerful the book was.

The book's author is Tom Hopkins, and it's title is How To Master The Art of Selling. You don't have to read the book to become wealthy, but at some point you will have to sell your talent, your ideas, yourself to someone else and having the tools to do that will be a BIG help.

Another way to invest in yourself is through continued education. I have a Bachelor's Degree in mechanical engineering. Neither Bill Gates or Michael Dell finished college. I have a higher degree than them, so I should be better off right? Of course not, because they found more valuable things to educate themselves about. Have no doubt that anyone that has achieved anything worthwhile, did so because they taught themselves to do something better than anyone else. If you're not learning something, anything, you're not going to get any further than where you are now. In fact, you'll go backwards. At least it'll seem that way, when everyone starts to move past you in their professional and personal lives.

So, to recap on investing in yourself. 1. Learn about other successful people. 2. Learn about what motivates successful people and what motivates you. 3. Learn, and continue to do so. Next time, I'll talk about investing in business, and how it helped me get my Corvette.

Oh, if you don't yet know who Napoleon Hill is. Get familiar with him real quick. If you've heard the phrase "If you can conceive it and believe it, you can achieve it", that's where it came from. If you haven't heard it before, believe it.

Thursday, April 07, 2005

Google Maps

When I first saw the Google Maps site at I was impressed with the zoom and pan feature. However, since then, I hadn't really thought much about it. Then, today, I found out that they have a satellite view that you can zoom and pan on. Incredible! Just drag the map with your mouse to pan, and move the slider to zoom. I luv the internet.