2. The love of debt. My parents don’t have high incomes, but hate looking like they don’t make that much money. That means they love to do stupid things like remodeling the house. They of course have to go into debt to pay for their bad habits.

3. Obsession over money. The poor are often the most obsessed about money. Their self esteem is tied to their personal balance sheet. This causes problems because this unhealthy obsession compounds issues #1 and #2.

4. Belief that it’s impossible to save. Whenever I talk to people about saving money, most tell me that they are barely getting by as it is. The funny thing about that is that usually people are fine taking on extra debt to get things that they want to buy. Apparently it’s easier to make payments to someone else’s bank account than your own.

5. Lack of consciousness. If you don’t hold yourself accountable for what you spend, money will literally disappear. I personally used to ‘lose’ hundreds per month, even when I made less than $1000 per month. I honestly could not figure out what I spent it on.

6. Belief that ’something always comes up’. If you don’t force yourself to save before you spend money, there will never be any left over to save. I’m pretty sure that’s one of the unwritten laws of the universe. :)

7. Lack of long term perspective. Our world is all about instant gratification. This causes us to spend money we do not have to buy things that we do not need.

8. Being broke. It’s easy to feel broke when you are. To change, you first have to decide that you want to.

Back then I didn’t know the first thing about running a business. I also didn’t have a clue about what kind of businesses could  be run online. I definitely didn’t know how to put a website together, let alone market one.

You Have To Start Somewhere

The seeds that grew into the online business I have now started with thoughts that I began to have a long time ago. I remember having thoughts like, “If I could just make an extra $300 per month somehow, life would be so much easier”. I had a girlfriend in college that I liked a lot, and thoughts of getting married and paying for another person honestly freaked me out. I couldn’t wrap my mind around how that would be possible.

I also saw my parents’ struggle with money, and that didn’t help me to feel super secure about my future.

Somewhere along the way I developed a desire to have a different type of life. I didn’t want to face the difficulties that other people faced. I didn’t want to have to figure out how to put food on the table or wonder how I was going to pay the mortgage next month.

However, the problem at the time was that to me, money was the hardest thing in the world to make. According to my parents it still is. I have since realized that this is only true for people who believe it to be. Sometimes it can be pretty hard to get rid of beliefs that your parents pounded into your head. For me, getting rid of those beliefs was a long and painful process. I can tell you from experience that the only way to overcome that belief is by becoming more conscious and being willing to admit that you are probably holding on to a lot of things that aren’t true.

Making money is a simple matter of perspective. The world will pay you what you believe you are worth.

I discovered that almost everyone I knew who had a lot of money, had their own business. I have an uncle who is a dentist, and some close friends who have made a lot of money with a variety of businesses. They all make way more than my other friends who are highly educated corporate types. Don’t get me wrong, I see the value of education, but my friends with businesses are the ones who make the most money.

Please don’t take offense if you’re the corporate type. You have more connections and potential than the rest of us. However, some of you will rely on your education alone instead of taking action that could produce more wealth in a faster time period.

Why I Chose To Start An Online Business

Choosing an online business was kind of like ‘love at first site’ for me. I had a friend who had a website (it didn’t make much money) and one day he showed it to me. He told me that he was making a little bit of money by promoting eBay. I was blown away by the fact that you could make money that way. The poor guy – I wasted literally half of his day asking incessant questions about it.

What I do now is quite different than what was presented to me that day, but that conversation was enough to get a lot of wheels churning.

The coolest thing to me about starting a business (or multiple businesses) online is that the world is your marketplace. I have seen online revenue because of people in India, Russia, the United States, Canada, Hungary, New Zealand, Japan, England, Ireland, Singapore, Malaysia, the Philippines, Mexico, Brazil, and a lot of other countries. Online, you are connected to nearly 2,000,000,000 people who have access to the internet and that opens the doors to the possibility of producing a truly awesome amount of income.

The funny thing is that while I’m pretty good at what I do, there are people who are way better. I have a close friend who has made over $1,000,000 this year (it’s September) from his online business.

The upside to running your business online is huge, and that’s what initially attracted me to it.

What I Do For My Online Business

Essentially, I run a group of sites that provide people with information. If you would like to see an example of a site that has a similar business model, you could take a look at About.com. They provide informational articles about a variety of different topics. The biggest differences between About.com and my sites is that mine are a lot smaller, and are generally built around one specific topic. I would love to have a larger site like About.com someday but frankly, it’s a lot to take on and I’m doing really well with what I have.

So, I choose single topics that I can create sites around. Where About.com has sections for Acne, Business, Cars, Pets, and just about everything else, I choose to create sites about one and only one of those topics. MoneyBlogger.com (the site you’re reading) is one of those sites. I provide information about one topic, money. Money is actually a fairly large topic that can attract a variety of people. I can provide information about increasing income, saving, budgeting, investing, getting loans, finding deals, making smart financial choices, and a lot of other related topics.

How This Business Produces Revenue

Any web page or site that gets traffic is worth something and as long as you know how to produce traffic, you can create online revenue. There are three basic methods that I use to produce revenue:

1. Google Adsense – Adsense is a free program that connects you as a web site owner with hundreds of thousands of advertisers. Google runs the whole thing and allows you to use their ads for free. You get paid when people click on the ads. Google charges the advertisers when this happens and you get a cut of it. Clicks on my websites are usually worth somewhere between $0.25 and $2 each. My sites produce more than 4500 clicks per month that are worth an average of about $1 each.
2. Selling products for other people, otherwise known as affiliate marketing. I basically recommend products and services that the visitors to my web sites need and want. This is usually fairly easy because the visitors are generally already looking for solutions to their problems. I introduce them to products that solve those problems. I then show them where they can buy the products and I get paid a percentage of the sale. My sites produce more than $3000 per month in commissions of this type.
3. Creating my own products and selling them. This method may seem pretty difficult, but it isn’t as hard as it would seem. I usually only design products to substitute for products that I already know are selling. I don’t create any hard products, they are generally informational products that teach concepts to people who are willing to pay to learn. I actually like this option quite a bit because it’s fulfilling to create products that provide better information than the stuff that’s out there. This part of my business produces more than $5000 per month.

Managing three separate methods for making money might seem complicated, but it really isn’t that tough. Usually I start by inserting Google ads first and then work from there. Once a web page starts to produce with Adsense I know that the traffic has value and I can try to make more money through affiliate marketing, or by selling my own products.

How My Web Sites Get Traffic

There are a lot of different methods that can be used for getting traffic, but I haven’t found very many to be useful. Most of the stuff I’ve read about building traffic online has been nothing more than well crafted nonsense.

I personally focus most of my efforts on building true value. In other words, I try to create the best site out there about the topics I cover. To be honest I don’t always succeed (at producing the absolute best site), but usually my sites are good enough to make an impression on the people that read them. Obviously, it takes a while to make that happen. MoneyBlogger.com, for example, is a pretty new project for me. At the time that I’m writing this article I have just started turning it into a useful resource. It will take quite a while to turn it into something that people can use and use well.

Over the next year or so, I will do everything possible to make this site as useful as possible. I’ll provide lessons, articles, and videos about a lot of different topics that help people to earn and save more money.

This approach is really useful in a lot of ways. First, I usually find that a lot of people find out about my sites through word of mouth. This aspect of traffic will only happen if you are truly dedicated to creating something that’s valuable. I find that most online entrepreneurs are looking for gimmicks. They don’t care about providing value and that’s a huge reason why people struggle to create profits from their sites.

Since my web sites are useful, I get linked to from a lot of other sites. That brings a lot of traffic from those sites, and also helps me to get a lot more traffic from search engines like Google, Yahoo, Ask, and Bing.

Google is by far my largest traffic source. My approach fits well with the system that Google uses to determine which sites come up first. Since people generally like my sites, they link to them quite a bit. I get links from personal blogs, company sites, Facebook profiles, and from a lot of other places. Since Google uses links as their primary method for deciding who comes up first, my sites always do well. As more and more time passes, my sites get more and more links from other people so I get more and more traffic from Google (and make more and more money). I think it’s pretty likely that my online business will eventually produce more than seven figures per year.

How I Put Sites Together

I like to take the easy approach to putting sites together – I use a free piece of software called WordPress. It’s very easy to use and you can try it out for free by signing up for a blog on WordPress.com. This setup tends to give you quite a few advantages with Google and also helps you to get people to come back to your site. Blogs generally make it easy for people to find the most recent updates and if there’s one thing I’ve learned from my time as an online entrepreneur, it’s that people LOVE updates.

I use a site called ProudDomains.com to buy my domains (.com, .net, and .org names), and a service called Host Gator for my web hosting. They both have really good customer service and that’s the most important thing when it comes to online business. If I have a problem with one of my sites I can either make a phone call or talk to a customer service rep on live chat.

If any of you have questions about getting a site up, you can shoot me an email at damien[at]moneyblogger[dot]org.

How I Choose Topics For My Web Sites

Choosing the topics is the easy part. I create sites around topics that I’m really interested in. I love the topic of money – I like making it, saving it, investing it, and to a certain degree I like spending it. I find money fascinating and I know without a doubt that 40 years from now I will still find it fascinating. It makes it pretty easy to put together resources that teach people about money when I love learning it myself.

The best technique I know of for knowing what type of web site to start is to look at topics you like to read about. I LOVE to learn about money. I spend half of my day reading about finances and watching Warren Buffett videos on YouTube. In the last few days I’ve ordered four new books about different aspects of finance.

Since I have such a passion for financial topics, starting a site about it is a no brainer for me.

Another thing that I consider when looking at potential topics is whether there is already a profitable site built around that topic. You may think that I would prefer that there isn’t a site, it’s actually the opposite. I want to see at least one successful site that’s built around the topic. That way I know that the market is large enough to work with. If I see a bunch of sites built around a topic, then I know that the topic is probably exceptionally profitable.

There’s no secret that money is a large enough topic to work with, in fact money has several subtopics, each of which are large enough to work with. I know of profitable web sites built around personal finance, business finance, making money, taxes, asset allocation, stocks, macro, and many other topics.

My Overall Strategy

My strategy is simple. Find a topic that I love, make sure that there is already a profitable web site in that space, and work hard to make sure that my web site provides remarkable information. If you can do that, you can make obscene amounts of money.

Recognize that you and only you can change your financial life.

Along the way, excuses will enter your mind. You are going to tell yourself that you can barely pay the bills and that your kids are too expensive, that you lost your job, or that you have been through unexpected emergencies.

However, if you really want to change your future, it’s time to take a hard look in the mirror. There’s no way around it. You can change your financial future, but those changes will be difficult because your mind is what’s keeping you poor. This article will help you to understand the level of sacrifice that will be required to build true wealth.

2. Save no less than 10% of your income. It doesn’t matter how much you make right now. You must save at least 10% to change your future. It doesn’t matter if 10% is $20 per month or $20,000. Either way, you probably believe that saving 10% is impossible.

Almost every person I have talked to about money believes that their income lines up almost exactly with what their needs are. I would be willing to bet that most of you believe that.

If you believe that you are barely getting by and that you need to spend everything you make, let me ask you a few questions:

• Have you ever made less than what you currently make?
• Do you have kids who you used to take care of that now take care of themselves?
• Have you remodeled your home?
• Have you borrowed money to purchase a vehicle?
• How many times do you eat out per month?
• If you had $10 less each month, would you die?
• If you had $100 less each month, would you die?
• If you had $500 less each month, would you die?
• If you had $1,000 less each month, would you die?

Interesting to think about, isn’t it?

If you have ever made less than what you make right now, don’t tell me that you need every cent you make. Unless you died of starvation when you were living on less, that time period was a more accurate representation of how much money you actually need.

My parents make more than three times what they made when they took care of six kids. They now only take care of themselves, but believe that they desperately need all of their income. They’re in their late 50s and don’t have a dime of savings. $%!+!!

If you ask them, there’s absolutely no way that they could live on less. They used to live on 66% less and take care of 4 times as many people. Sorry Mom and Dad, inflation doesn’t explain this discrepancy and you’re falling victim to the same mental obstacle as everyone else. You will continue to believe that you need every dime you make, no matter how much you make.

To save 10% of your income, you need to change how you view and use money. Your 10% needs to be taken out first, and sent to an entirely different bank account, preferably at a different bank than where you keep the rest of your money.

3. Create a small emergency fund. The 10% that you save is NOT to be used for emergencies and that means that you’ll need a separate emergency fund. At first this fund needs to be enough to cover a car breaking down or similar expenses. $1,000 will usually do.

Since most people don’t have such funds, emergencies turn into debt. Debt then turns into less income and that turns into less savings.

Down the road, it would be wise to save enough money to live on for six months or so. This can protect you from job loss or another financial set back.

4. Pay down and then eliminate debt. Debt is the largest obstacle to building wealth. Bad debt, such as credit card debt, is especially damaging. You not only have to deal with the effects of bad credit, you also decrease your available income because of interest payments.

Do NOT sacrifice the 10% you need to save to pay down your debts. Your 10% is going to be to increase your income and income is crucial to financial freedom.

In order to effectively rid yourself of debt, you need to increase your available income. This can usually be done by listing out all of your debts and paying off the smallest one first. After you have paid off the smallest debt, you will have more available income because you won’t have to make the payment on that debt. 100% of the income increase should be used to pay down the second smallest piece of debt. Once that debt is paid off you will have even more available income, and this will compound each time you eliminate a piece of debt.

When you have eliminated all of your debts, you will have, in effect, purchased more income and purchasing more income is a critical aspect of building true wealth.

5. Perfect your credit score. There will be times in your life when you can use light financing to purchase additional income. You don’t want to leverage credit to the moon, but credit is a very useful wealth building tool.

You will never be able to use credit as effectively if you don’t have a solid credit score. You will already be at a huge advantage with this if you attack and eliminate your debt. 30% of your score is calculated by looking at your debts. 35% of your score is calculated by looking at your payment history.

Here’s an example of why you will need solid credit to purchase additional income:

Let’s say that over the next 10 years, you are able to successfully save 10% of your income. The average American household makes about $40,000 per year and saving 10% of that each year will give you $40,000 after 10 years.

We can safely assume that you won’t be able to purchase an investment property with $40,000 cash, but there’s no doubt that you can with some light financing.

Let’s play safe and say that you will buy a small investment property – a three bedroom town house for $165,000. You have your $40,000 in cash which means you will probably finance about $130,000 after the fees are added in. That means you’ll be looking at a payment of about $1,100 per month on a 15 year mortgage at 6% interest. This is easily covered by renters, in fact in the area where I live you are looking at about $1,300 per month in rent from a town house in this price range. I understand that each area is different, but there are similar opportunities in plenty of places. The numbers will look a little different in a different area, but you should be able to get the general idea.

The key now is that you have an extra $200 per month in cash flow (never buy an investment property that can’t cash flow) and you still have the $333.33 that you’re supposed to be saving each month (assuming you haven’t increased your income by then). That means that you have an extra $533 per month that can be used to attack the 15 year mortgage. What does that mean for the mortgage? It means that it will only take 10 years to pay it off and after that you will have effectively purchased $1,300 per month in extra income which means that you now make $55,600 per year. You have also not lost the $40,000 that you saved because at that point you will have the $165,000 in equity in the townhouse.

If you need to get a 30 year mortgage to get the property to cash flow, use that instead of a 15 year mortgage.

The most beautiful part of this is that it’s likely that by then you will have appreciation in the value of the home itself and that will mean more rent. However, the conservative $1,300 per month would mean everything in the world for many people when the time came to retire.

This of course all relies on the fact that you have solid credit when you go to purchase that property. If you don’t, the numbers won’t work out how they need to. That said, if it’s going to take 10 years to save the $40,000 needed in this example, you have absolutely no excuse for not having perfect credit. Anything negative on your credit report will be gone by then and your score will be incredible if you remain debt free and make on-time payments.

As you can see, you need both solid credit and your 10% savings to make financial moves like the one we made in this example.

6. Increase your income. Building true wealth will obviously be significantly easier for those who can increase their regular income. If you can get a promotion at work, a second job, or are able to start a successful side business, it’s really going to help.

Remember during this process that wealth isn’t created from one day to the next. It takes many years to create true wealth and this stops most people from starting down the path that leads to it.

There are literally millions of people in our country who could have successful side businesses if it wasn’t for fear of failure. I would be willing to bet that you have thought of ways that you could make extra money dozens of times in your life, but have dismissed those thoughts because of fear or laziness. Most of you could increase your income by simply listening to those thoughts and acting on them.

The easiest way to increase your income is to work a little more. Take on one shift a week serving tables and add the money to the 10% you’re already saving and you’ll be amazed how quickly you’ll get somewhere.

A small increase in your income today can lead to huge financial changes in a few years. Compound interest is a truly amazing concept that few people understand, let alone utilize. Combine that with the power of leverage (through real estate or other means) and your dollars can go a long way.

7. Avoid bad investments. Stay away from stupid get rich quick schemes and investments into ideas that aren’t yet making money. Professional athletes are infamous for losing their wealth on bad investments. The most famous string of bad investments by an athlete was by Raghib ‘Rocket’ Ismail, who allegedly lost millions and millions of dollars investing in B.S. inventions, bad companies, and other unprofitable ventures. You can read more about that sad story here.

The most common of all bad investments is investing in the start-up companies of family and friends. Once you get your hands on some money, you can plan on being hit up by family member after family member. Everyone will want a piece of the pie and each person will have what they consider to be the best idea ever for making money. These are the classic bad investments that the wealthy are able to avoid. You have to learn how to say no to create wealth.

If you insist on making these poor investments, you’re buying lottery tickets and can expect to lose all of your money.

In most of these cases, you will be the only option for your family members. This is a monstrous red flag that shows that they are not able to make the business go on their own. If the business idea was a truly great one, finding an investor wouldn’t be difficult. If they knew how to run a business, they would know of avenues where they could secure financing.

8. Make wise investments. A certain level of risk is certainly ok when it comes to investing. However, you have to make smart choices or you will obviously lose all of your money. Stick with long equities (consider timing) and real estate that you know can cash flow until you get your feet wet.

One rental property is a great way to get started – after you’ve saved up a significant down payment. I can’t stress this enough: don’t buy a property that won’t cash flow. I have a lot of friends who tried to get rich by building extravagant homes during the last real estate boom. Most of those homes were foreclosed on in the last year. If they would have stuck to smaller projects where rent could cover the mortgage, they wouldn’t have ended up upside down.

One friend of mine bought a nice little town house that worked out really well. He ended up cash-flowing about $200 per month, even though the basement wasn’t finished. He then decided to spend $15,000 to finish the basement and after that, the property cash flowed more than $1,000 per month. The deal worked out so well, he decided to buy a second unit in the same complex. His financing was a little more expensive on the second unit, but it still worked out amazingly well.

At that point he was two for two, and that’s where he got greedy. He used his excess cash to build a $450,000 home. It seemed like a good idea at the time because real estate was running up like never before. By the time he finished the home, real estate had fallen dramatically. His two town homes still cash flow – and all the extra cash is dumped into the mortgage of the larger home. Purchasing a third town house obviously would have been a much better idea. My friend is now trying to figure out how to get out of the mess he made and isn’t coming up with any answers.

9. Protect your wealth. Health catastrophes, car accidents, and other issues can cut down your wealth like almost nothing else. Cover yourself well with insurance that covers your health and your vehicles. Health problems can cost hundreds of thousands of dollars and that load will crush almost any financial foundation.

Divorce is another hugely significant wealth killer. Be extremely careful if you decide to marry and make sure to find a spouse with whom you share life goals. Be sure before you pull the trigger, even if it means waiting for years to get married.

Conclusion

Building wealth happens primarily between the ears. It takes a wicked combination of mentality, discipline, and persistence. Master those traits and you will master the world of money.