Saturday, January 24, 2015

Sell Your Art of Cafe Press (or a Similar Site) is a print-per-order merchandising website which allows artists to have their work printed on a diverse range of products; from coffee-mugs to women's thongs. It boasts a massive marketplace that is well represented on all major search engines, advertises through multiple channels, and takes the headache out of producing, storing, selling, and delivering your merchandise to your customers. Making the most of Cafe Press and other sites like it, such as Zazzle, requires a bit of a learning curve, and it can take years before you are selling on a regular basis.  Cafe Press is an excellent resource for those who wish to create merchandise form their art but do not have the means to produce product through a more traditional printer or producer.

 The way Cafe Press works is fairly simply. They gathered a large number of products and developed a process for printing graphics on those products.  They also market, to a degree, the products they produce.  Content is generated by the artists who make use of their services, as well as driving advertising of both the artist's products and the service Cafe Press offers.  Cafe Press generates its own lines of merchandise, but the bulk of its focus is on servicing artists who wish to produce a line of merchandise with their art and individuals who wish to create "vanity" items for themselves.  

 Setting up an account and producing products costs the artist nothing but their time and effort.  However, the majority of the cost of each product will go to Cafe Press, who set minimum price on each of their products that is comparable to the price of similar items mass-produced for physical retailers.  This means that in order to generate a profit for yourself, your items will be slightly more expensive than what you will typically find at the mall.  A local retailer may sell a t-shirt with a graphic design for $20, but that is what Cafe Press charges to produce a t-shirt.  Your shirt with graphics may be $25.  You don't pay anything to make your t-shirt available on the market; the buyer pays the production costs and your profit when they order a shirt.  Since merchandise is produced on a print-per-order basis, you don't have to print an item in bulk, and you don't have to maintain an inventory, but you do have to take a smaller profit.

 There are also limitations to the quality of the items being produced.  Generally, the print and merchandise quality are similar to that which you will find in traditional markets.  However, there are size restrictions which must be taken into account when designing your products.  For example, the available field on a t-shirt is 10X10".  Full length prints are not yet available, and size is not adjusted to account for larger shirts.  This means your 10X10" design will look great on a medium or large shirt, but look huge on a small shirt and will appear to float in the middle of the chest on a 3X shirt.  You will need to familiarize yourself with the products offered and the fields printed on those product to best fit your designs to the items.  

 Designing your art for the print process is easy. Each item comes with recommended measurements and DPI. DPI ("digital-pixels per inch" or "dots per inch") determines the image resolution, with most images being recommended as falling in the 200-300 dpi range. It is best to try to utilize the entire image area; a sticker that is a 3X5" rectangle should contain an image designed for this space (unless you plan on cutting your stickers yourself). Also, keep in mind that with most products the background is going to be white, so design accordingly. If you create an image for a t-shirt (up to 10X10") and make the background blue, your white shirt will look like the image is contained in a blue square. This is especially important when designing for black clothing. Unless you create an image with a clear background (possible with programs like Photoshop 7 or later) you will have a color printed as an image background to fill the print field. Even black ink on a black shirt is clearly visible.

 You allow nearly unlimited items and images; I have upwards of 30 different t-shirt designs on one shop. Your shop can also designed with the background color of your choice, uses graphics that you have basically has the look of an independent, professional web-store. Most importantly, a shop takes full advantage of the marketplace and search-engine presence. The majority of my sales come not from direct contact with my shop but from persons who used a search-engine, like, and went to the's market place. This means that you can start generating sales without ever doing any marketing of your shop on your own.  You will even begin to notice that Cafe Press ads on sites you frequent feature your merchandise, thanks to Google Analytics generating advertising content directed for you.

 When uploading images, take full advantage of providing tags and descriptions of each design. These are used to create a presence for your items and images on the market place and search-engines. These tools are invaluable to your success. Tag and describe every image, every item, and every section in your shop. Think like someone who would be searching for your art or merchandise like yours.  In the description, include your website address, if you have one, to drive additional traffic to your other designs.

 This covers the basics of setting up and utilizing a account. Now it is time to deal in the finer details. In order to be successful, you first should understand what to consider "success". Generally, a shop-owner is successful if their shop consistently makes any money. The minimum payout from is $25.00, but I set my payout at $100.00 so I can use those funds to buy my own merchandise and the merchandise of others. If your measurement of success is to earn a living income from, then you will need to expect to work the promotion of your shop 60-80 hours a week, and even then your chance of success is very low. Keep in mind that is a means to a residual income and is ideally used to increase the exposure of your efforts.

 Now, the adage that "if you build it, they will come" does not apply to marketing. In order to generate traffic to your shop, you will need to tell people about your shop through as many channels and as often as possible. This is the time to think like a customer, and the first thing to think about is why are they coming to your shop. They are coming to hopefully buy your merchandise. So, ask yourself, is your merchandise something they would want to buy? The best way to answer this question is by thinking this way; if you saw your item in a mall, and did not know anything about you as an artist, would this item appeal to you? Odds are that if you would spend money on it, someone else will as well. You need to design with this in mind; not only does it need to fit the parameters set by, but it also needs to appeal to your customers. So, you have an appealing design, but what about the merchandise?

 As we have discussed, is on the higher end of price as far as similar items are concerned. Let say you sell t-shirts, like I do. Someone really likes your design, but $24.99 is just not in their budget this month. If all you sell is t-shirts, then this potential buyer will leave your shop empty handed. Maybe they will come back, maybe not. So instead, make certain you offer a range of products at a range of prices. Maybe our customer who was thinking about a t-shirt would be happy with a sticker for $3.99, or even a mini-pin for $1.99 with the same design. Numerous small sales are easier to generate and often more profitable than a few large ones.

 Appealing designs are taken care of, and you have a number of items with different price points to offer. Now, how to get the traffic to come to your shop. I cannot stress enough the importance of tags and descriptions. You are allowed 20 words as tags per image...use ALL 20! Think of every possible descriptive word that can be used about your art. If you need more words, think of variations of those words. Consider the ways your customers might describe your design themselves. Also, include your name; some of your customers might be looking specifically for you. 

 You can select products based on what you think will be relevant to those interested in your designs, but in my experience this does not work as well as simply placing your design on as many items as possible.  Your feelings on a product may differ from your customer's.  Keep in mind that the print-fields on some items are smaller than on others, so when placing your design as many products as possible take the time to review how each of those items looks in order to frame your designs in the best manner possible.

 When designing your shop, focus on grouping the merchandise you offer based on your designs.  In other words, all the items that feature one design should be gathered in one section.  When buyers browse Cafe Press, they may come looking for a particular item, but it is the design that will catch their attention.  Title, tag, and describe your sections the same way you do your merchandise.  Make certain your shop includes information on how to contact you and view more of your work.  Use your website and social media to advertise your Cafe Press shop and interact with your patrons.  

 Finally, consider offering to design items for your patrons as a way to market your art.  Again, Cafe Press focuses on the demand for "vanity" products.  Your customers may like your art work, and may be more willing to make a purchase on a product they had a hand in designing.  While this route may be more trouble than it is worth for the sale of a single t-shirt, someone seeking to order in bulk may make the effort more appealing.

 If you understand the limits and put a little thought into the design and merchandise pairings, Cafe Press and other print-on-demand sites can be an excellent source of residual income, as well as a means to test the marketability of your designs.  It takes time and persistence to be successful, but with no out-of-pocket costs it is a great way to both market your work.  To check out my shop, click here.

Tuesday, January 13, 2015

You, Inc.

 Regardless of who you work for, you are self-employed. You could be a fry-cook at a local fast-food chain or an art-merchandising internet mogul. Even if you wear a name tag and your check comes from some corporate office, the most important name on that check is your own. You work for You, Inc...or at least the most successful individuals do, no matter what their vocation may be. The difference between themselves and others is the choice to be actively engaged in the promotion of You, Inc; the choice to be responsible for themselves and to prepare themselves for opportunities as they arise.

 Consider the basic business model: a business produces goods or services in order to earn income. This income is used to pay for the cost of doing business which is hopefully less than the income earned. Business expenses include overhead; costs like rent, utilities, fuel costs, materials, machinery, and PAY-ROLL. Successful business find the best and most efficient ways to utilize all their resources, from the pens in the offices to the employees on the floor, so that they can increase the margin between income and cost resulting in a higher profit.

 Now consider the average household: the average household produces services (the employees who work for the businesses) and occasionally goods. They also seek to earn an income. They have expenses...household expenses. They have rent, utilities, fuel costs, costs for materials, personal and equipment maintenance...everything a business has. The mistake that most employees make is that they fail to factor in PAY-ROLL when they budget their income. This is the key difference between the average business and the average household. Pay-roll is a given in a business, but is ignored in a household.

Think about it. The owner and CEO of a business, large or small, reap the benefits of profits earned by their they should. It is their business after all; they started that baby from the ground up, and can tell you stories about working out of their garage while hustling all over town trying to win over clients. They deserve to enjoy their profits, but do you know what isn't included in that profit? Their own pay! Even the business owner pays themselves, at the cost of the business, and separate from profits. It may seem intuitive, but it surprises many that the CEO at the top of a mega-corporation has a set wage that his household has to live within...profits are a secondary source of income, even if those earning exceed their salary.

 The doldrums of working a regular job, at the bottom rung of whatever business you are employed at, can be over-whelming. It is hard to go to work in the morning when all you will be doing is working for someone else, taking orders, wearing the uniform, and getting a paycheck that seems to vanish before your eyes. Just the very thought of it makes going to work a soul-crushing task...and when you get home you might just want to mindlessly engage in some banal television show so you can for a moment forget you have to be back at work for the MAN again in the morning.

 That kind of perspective is killing you as an employee. It is precisely where I was several years ago. You, no matter what you do, are probably not defined by your job. Your purpose in life, your passion, is not pushing a mop at the local burger-stop. So, you need to stop believing that it is, that this is all you have, and that you work for someone else. You don't. You are employed at whatever you do at your own volition. You've made a choice to earn an income at whatever level satisfying to your needs. What you forgot to consider in seeking employment is that your ultimate employer is You, Inc.

 As an employee of You, Inc, it is your job to see to your success and happiness. In order to do this, you must find a means to generate an income AND that income must exceed your cost of living. This is something you need to determine before you even begin collecting applications, just as a business needs to know its potential costs before it ever opens it's doors. This requires making an honest assessment of your bills. How much is your rent? What do you spend monthly on utilities? What is your cost for groceries? How much is your car insurance and average fuel costs? What about other regular expenses? If your making estimations, this is the time to estimate HIGH.

 You've taken a look at your basic expenses, but what about your other expenses? The goal of You, Inc. is to be successful and HAPPY! Happiness means different things for different people. For some people happiness is a collecting comic-books, and for others it is being able to jet off to Europe for a couple of weeks every year. You need to include an entertainment budget. Also, you have costs for your personal maintenance (clothes) that, while not every day or even every month, need to be considered. Think about what you spent last year, divide by 12 months, and again, estimate HIGH!

 You now have a monthly cost projection sheet for You, Inc. There may be some places where you can shave off a few dollars, but now is not the time to consider this. The next thing you need to determine is how much of your time you are willing to sell in order to generate the income to cover these expenses. That is the product that you produce at You, Inc: time. Some people have time that is more valuable than others, based on education, experience, and skill-sets. Your time is in demand, especially by you. How many hours are you willing to surrender to see to the success and happiness of You, Inc?

 Let say that you want to have a regular, "full-time" job; 40 hours a week. That's 160 hours a month. Simply take your monthly projected costs and divide them by 160. This number represents the base amount per hour of your time required for you to cover your projected costs. Now, add to that amount another 20%...that is your average income tax (you may need to adjust that amount up or down once you start working). You have now arrived at your minimum dollar value for an hour of your time, at 40 hours a week, to cover your projected monthly costs.

 But, who wants to work at something just to break even every month? No one! That is why you feel the way you do about your job now! Its why your not getting ahead, why you don't see any possibility for something better. You BREAK EVEN every month...or worse, your You, Inc. is operating at a deficit! Nothing is more disconcerting, more stressful, than not having enough income to cover your basic expenses. That is why you need to operate You, Inc. at a PROFIT!

 So, how much more do you want to make? It is a subjective question, dependent on what it is you want to do that makes you happy and how long it you are willing to wait (and work) to make it happen. You could be focused on a "short-term" goal, like spending a year in Europe, to a "long-term" goal, like retirement. Lets say you want to retire, and you plan to do so at the age of 60 with $1,000,000. In planning your retirement, you should really do more than pulling numbers out of the air, but this goal is good enough for our purposes. So, lets say you are 22, that means you need to earn 1,000,000 in 38 years. That's about an additional $27,000 a year, or an additional $12.65 an hour over you projected monthly costs.

You see why not everyone retires a millionaire. Of course, there are other, more efficient means to get to that goal, but that is for another article. The important thing to consider is the formula for calculating how much profit you want You, Inc. to make. That profit does not have to be made on the front-end of your income; it could also be made by shaving off some dollars from your monthly projected costs, if you can go without some of those items built into that budget. Once you discover that magic number that you need to generate as a profit to achieve your goal, whatever that may be, then you need only to engage in the one habit of successful people that the average person fails to grasp...

 Every paycheck, pay yourself first.

 Stay focused on that goal and pay yourself first. Before you spend money on anything else, pay your favorite employee of You, Inc.

 Now, that job at the burger-stop mopping floors takes on a new relevance. It is your current stop on your way to the success of You, Inc. If, after this analysis, you look at the amount your selling your time for and realize that you will not meet your goals at that exchange, then it is time to do something about it. Perhaps it means putting your time back out on the market in hopes of a higher bidder. Maybe You, Inc. needs to invest in product development and you need to go back to school for additional training. In any case, you need to make a change. Don't just sit at your projected cost of living amount (or worse). Do what you need to do to make a profit!

 In the meantime, whether you need to change how you get your income for You, Inc. or you're selling your time at a profit already, keep in mind that the product you are selling needs the best maintenance and promotion. Whatever your job is, take pride in it, do your best, and give it your all. This isn't just some "rah-rah" motivational babble, it is the easiest way for you to improve the market value of your product, time, to your buyers. If you are the mop-jockey at a burger-stop, then you should seek to be an expert at what you do. Know your task inside and out. Look for ways to improve the way the job is done and ways that your customer (your employer) can get the most for the money they are spending on you. Word of mouth is the ultimate advertising, and one day you will submit a resume to another buyer of your time listing the best features of your product AND references from previous customers. Even mopping floors provides opportunities for you to improve and shine. Look for them.

 Finally, think about what you love to do and look for a way to be in that industry. Let's say you love video're a digital cowboy who meets every pixilated challenge with gusto and zeal. You read the magazines about the games, follow the companies that develop the might even buy the merchandise associated with the games. Have you looked up and realized how many opportunities are a part of the video-game industry? Get involved, look for those opportunities and work toward making what you love a part of your income stream. Even a video-game company needs someone to mop floors, and wouldn't you be happier mopping floors there than at burger-stop? It takes time, commitment, and hard work to make You, Inc. a success.

 The nice thing about the process is that with so few people actually making the effort with their own You, Inc's, you will typically find that the little things you do will move you well ahead of the pack.

Save Three Months Worth of Expenses; the Slow and Steady Method

  One of our most common social traps is money. Money represents a form of power in our society, granting its wielder the ability to provide for themselves and make manifest their desires. Money has long been regarded as one of our social ills; it is "the root of all evil" after all, yet it is also the life-blood of our society. Philosophers and economists alike have discussed the pros and cons of money as the basis of trade and alternate systems that might be better in a practical and moralistic manner.  Our society is based on economics; you have to have a means of getting money to survive.

 The point of this discussion is not to promote alternatives to money; alternatives are meaningless when trying to negotiate for goods with a society that accepts little else than the coin of the realm. We are also not going to perpetuate money as a social ill to be avoided; authors of esoteric systems and philosophies often decry materialism encouraging (or enabling) people to live nearly destitute while they profit from the sales of their materials and merchandise. Money is a part of the financial system we are engaged in, thus we must learn how to use it if we are to become relatively more free from it.  Money can either be a problem or a solution, depending on how we choose to use it.

 The trap our society lays with money is an interesting one. First, children are taught to want what is unnecessary. The toy they have is never as good as the toy the do not. Each year, they expect "new" things on their birthday and often other holidays, and we parents take pride in being able to provide for those frivolous desires. An artificial "need" is created, and when the child comes into their own earning power, they discover they can use their money to fulfill that need at will if they have enough money. 

 Second, society has aligned itself so that our basic, real needs (food, shelter, etc) cannot be fulfilled without money. One cannot simply find a cave and move into it, or hunt game in the countryside without paying at least some fee for the privilege. We are required, by law and by social mandate, to engage in the common economy.

 Third, the workforce that supports our society is encouraged to take on their own socially directed requirements well before they have the earning power to provide for their own needs. Most people leave the homes of their parent about when they are 18 and join the work-force, living paycheck-to-paycheck while often going into debt to provide for themselves and their desires.

 Ideally, parents would take steps to help their children avoid this trap, something we discuss in another article. For now, we will assume that this is the trap you find yourself in; you work a typical job (40 hours a week) and earn just enough to pay your bills and provide for the frivolity that keeps you sane when not at work. You may have a moderate amount of debt to a variety of creditors, and no savings to speak of. This will be our starting point. If this is not you, then consider yourself lucky and continue to read as some of the above may still apply or in case some misstep should cause you to fall into this trap.

 Consider the goal of saving three months of your total bills. What is the purpose of this savings?  Are you happy at your job? Recent surveys suggest that majority of US citizens are not. Yet, because you live paycheck-to-paycheck, you continue to go back to your job to sustain yourself.  Employers are cutting costs by cutting employees.  The days of our grand-fathers when loyalty was a factor in the employee-employer relationship are long gone.  If you lose your job, you could lose the things you own, lose your residence, you could even bring your relationship to an end. Far too much rides on your being at work. If you had at least three months of your bills saved, the spectre of unemployment would not loom so heavily over you. The loss of your job would mean that you have 90 days comfortably to seek new employment with no real adverse effect to your life-style. The loss of this burden is a tremendous weight off the shoulders of most. This could also make a menial form of employment a little more tolerable.

 The problem is, once again, you are living paycheck-to-paycheck. There is little or no obvious flexibility in your income to allow you to generate the $3000-$7500 that is commonly three months worth of your finances. We will need to approach the solution to this problem from a variety of directions and through incremental steps. No one approach will be suited for all individuals, and each person will achieve their goals at different rates.

 First, you need a solid assessment of your situation. Make a list of all your regular, monthly expenses, dividing the list between consistent expenditures (those that are the same each month) from fluctuating expenditures. This initial list is for necessities only, not payments to creditors or regular expenditures for things beyond your basic necessities.  Your unnecessary expenditures go on another list.  Your regular, necessary expenditures are for now your focus and priority.

 Round up the consistent expenditures to the nearest dollar individually and multiply each by three. With the fluctuating expenditures, estimate the average monthly amount (estimate high rather than low), and multiply that amount by three. You now have a target amount for each necessary expenditure that covers that cost for three months. It is also a good idea to take your monthly total and compare it to your monthly net income (how much money your bring home each month). You might find yourself with $500 or more in surplus, and wonder where this money goes.

 Begin generating a savings that will cover the smallest expenditures first. Many of us will have some small, monthly expense that can often be covered for three months by setting aside $30 or less and requires no incremental savings for most of us. Simply set the money aside for that one expenditure. Put the cash for that item away; in a box, a book, your sock-drawer... where ever. Eliminate these small items from your list one pay-period at a time.  This self-payment should be the first expenditure from your paycheck beyond any necessary monthly bills.  Pay yourself before you pay any of your creditors, if you can pay your creditors at all.

 Once you reach an item on your list that requires a larger amount than you can comfortably manage in one lump self-payment, break it down into a personal "payment plan", an amount you pay yourself from each paycheck toward covering the savings for that expense. Select an amount that is comfortable for you; as little as $5 or as much as you can handle. The faster you reach your goal, the better, but not if it means that as soon as you reach it you have to begin drawing from it to recover.

 One way to jump-start your savings is to go on a one-month spending diet. Simply avoid spending money on anything frivolous for a month; no eating out, no entertainment, no snacks outside your grocery budget, no new purchases. If you can manage it, you will not only have a nice lump amount to attribute to your rainy-day fund, you might learn something about yourself in the process, seeing just how dependent you have become on frivolities offered by our society.

 Once you save about $200 of your funds for your three-month savings, it is time to start shopping for a savings account, even if you already have a bank. If you have a checking account that you use for your expenditures, then it is unwise to use the same bank for your three-month savings at this time. You do not want your savings adversely affected by a problem with your checking account; if you over-draw your checking account your bank may cover the overdraft with funds from your savings account and often attach a fee for doing so. This is counter-productive to your efforts. Avoid overdrafts, but also avoid risking your "rainy-day" funds. For the time being, find a reputable bank or credit union you do not have a checking account with and open a savings account only.

 You are looking for a savings account that is interest-baring and has no fees; you want the savings to build, not be reduced by another monthly expense. Most standard savings accounts will have a limit of $200 or more to be without fees. You simply open an account when have an amount saved that exceeds the required fee-less limit. If the account offers an ATM card, this can be helpful for making deposits, but not if you use it as a check-card for purchases. Many employers offer direct deposit, often with the option to deposit each pay-period into multiple accounts. Take advantage of direct deposit by sending your self-payment to your savings.

 When you reach the larger expenditures on your list, your self-payment should be whatever you can manage comfortably. Calculate the date that each item should reach its goal based on your rate of investment, and mark those dates on a calendar in pencil. This is a "rainy-day" fund, so should an actual need arise you may need to adjust your dates. Just keep in mind that these funds are for the purchase of your peace-of-mind and relative freedom. Avoiding spending these funds unless absolutely necessary.

 Your list of expenditures was divided into two categories, consistent expenditures and fluctuating expenditures. The consistent expenditures, like rent, are pre-set and offer you no way of reducing them. Your fluctuating expenditures, like utility bills or groceries, do offer you some amount of control. Take control of these expenditures! The internet abounds with advise to reduce your grocery costs through meal-planning, use of coupons, and smart-shopping. Hundreds of solid web-sites offer strategies for reducing your utility costs from installing energy-efficient light-bulbs to local programs that provide energy assistance. For every fluctuating bill somewhere there is a means for controlling it. Money in our society is a kind of power, but it is parcelled out to us in a limited amount. The further we can stretch our dollars, the more of this power we have when we really need it.

 The next strategy toward achieving our three-month savings is find additional funds outside those provided by our jobs. Opportunities abound for generating an income without working for someone else. Start by taking a look at the things you have in your home. You have things you need; clothing, furniture, dishes, and so on. You have things you want; books, games, toys. No doubt, you also have things that you no longer care about or use. Many of those things can be sold through venues like eBay or Craigs List, especially if you are not concerned about getting a "fair value" for the item. If you don't need it, sell it.

 What you do have, you need to learn to maximize. Take care of your things, and learn the simple skills that allow you to keep them in good, working order. Have a small sewing kit for mending split seams, use a canned-air cleaner on electronics regularly, learn to change your own oil and do a tune-up on your car. These are skills that our grandparents honed and why they would consider it laziness and a waste of money to pay someone else to do for us.

 Clip coupons.  Take advantage on sales on the things you need.  Shop at thrift stores and discount groceries.  Buy off-brands.  Shop smarter, and put your saving toward your three-month savings account.  

 If you have something you enjoy doing with your spare time, why not look for a way to earn money from it?  Do you make crafts, art, or baked-goods?  Offer them for sale to your friends and co-workers.  Do you have a hobby like reading, listening to music, collecting things, or playing games?  Write about your efforts and share them with the community on-line, using tools like Google AdSense to earn money for your work.  The more income you generate doing the things you enjoy, the less you need to rely on an income from a job you do not like.

 With that said, find a way to get a job you do like.  We often think it cannot be better elsewhere, or that it is not worth the risk to make a move.  No one deserves to be miserable.  No one is born for the purpose of working for someone else to pay for things they do not need.  Find a job you like.  Pursue whatever training or education you need to do the thing you are passionate about.  

 If you are like the majority of people and carry some debt, you will feel some pressure to address that debt.  Initially, you are building a savings account that is worth three months of your total monthly bills. This is your primary focus. This is a major step in our lives for many of us, requiring a real sacrifice on our parts to accomplish. Do not think to immediately add to that burden by trying to pay off your creditors at the same time. Some of us, when listing our monthly expenditures, included payments to creditors. Some of us did not, but do pay their creditors on a regular basis. The majority of us do not pay our creditors unless we absolutely have to. We were fools to borrow from them, and they were fools to loan money to us. Your first priority is you. Whatever your habits are regarding paying back your debts, do not change them yet. Instead, do not borrow any more money.  In other words, if you are already comfortably paying your creditors, then continue to do so, but if not, then hold-off until you have your own savings.

 Once three months of savings for necessities is achieved, you can begin breathing and living a little easier.  Then it is time to address other issues, like getting out of debt.  Pay yourself first, focus on small expenses to large, spend smarter, and create additional revenue streams.  Life gets easier with a little financial cushion to pad your way.

Understand Your Auto Insurance

  Car insurance has to be one of the biggest scams in the world.  Insurance, in general, is a huge scam, but car insurance and now health insurance gets the extra boost by being required by the government.  What originally was meant to help people now just seems like a profit-driven burden. 

 Insurance sounds like a great idea; pay a small, regular expense to offset a potentially large, unforeseen expense in the future.  In theory, you pay a certain amount each month, say $100, and if a major expense occurs related to your insurance, you tap into those funds to help cover the expense.  The reason that this is better than a savings account is that you also have access to the funds of all the other members of your insurance carrier, so you can cover your unforeseen expenses even if you do not have the money saved yourself.

 Here's the problem.  The insurance carrier is in this business for a profit.  Who can blame them, right?  This means, in order to be profitable, they have to charge you as much as 300% of your potential cost to them.  They determine your costs by estimating the likelihood of you making a claim.  They use statistics based on what is known about people your age, who live in your area, and who drive similar vehicles, but it is still at best a guess.  

 Speaking just about the money, lets say that your carrier insures 100 people for up to $100,000 dollars, and every year 10 of those 100 customers file a claim for the full amount.  That means that their annual output for these claims is $1,000,000.  Divide that $1,000,000 by the 100 customers, and you get $10,000 per customer a year.  Now multiply that by 3, and you get your annual cost, $30,000, to include their 300% profit. 

 That is the basic principle using some very unrealistic numbers.  The bulk of your insurance costs goes to the company; salaries, administrative fees, taxes, advertising, and profits for their stock-holders.  Only a small percentage goes to your actual insurance.

 Generally speaking, there is in reality only one insurance company.  They are all regulated by the government, all set pricing based on a similar rating equation (with a few minor tweaks), and are all required to present a certain amount of solvency per customer carried.  $250,000 in coverage with Progressive is the same as it is with GEICO... it is not like buying a Burger King cheese burger vs. a McDonald's cheese burger.  The state doesn't care who you have insurance with, as long as you have insurance.  The difference is in their marketing and the way the determine risk.  They may offer a few additional products one way or another, but they are all essentially the same via government regulation.

 The reason that states require you to have auto insurance is in case you do damages to someone else.  State governments grew weary of dealing with lawsuits resulting from accidents.  The question that is raised in my mind is; if the state requires the coverage, why not just make it a part of having a driver's license through the state?  Establish a state-managed, mandatory, pooled emergency savings account for all drivers.  There would be no profit motive, and drivers might even be able to apply it to their retirement or other expenses when they could no longer drive. 

 Since this is not the state of affairs, we must deal with how things are now.  How things are now is that because auto insurance is so closely regulated, insurance companies must scramble for every customer they can get.  Most companies sell a 6 month policy, and do not see an actual profit on the policy until you have been a customer with them for three or more consecutive six-month cycles.  In this environment, company loyalty is no longer a way to save money, as getting new customers on the books and then hoping their complacency will keep them long enough to earn a profit is the common strategy.  By shopping around every six months, you are able to keep your insurance costs low.

 Keep in mind when speaking to an insurance company, every question is a rating factor aimed at determining your risk of filing a claim.  If you call in to ask whether a nick on your car-door is worth filing a claim for, you just filed a claim that will impact your future rate even if you do not follow through with it.  With that in mind, start your insurance search by contacting your current insurance company and asking for a record of your claims history.  Insurance companies vary in how far back they go when considering a claim, so get at least two years worth of your records.  Doing this will also be a red-flag to your insurance carrier that you are looking to change companies, which may lead to a discussion about lowering your current rate.  Also, contact your local DMV for a copy of their records of your driving record.  

 When seeking a quote, disclose everything that is requested and on your record.  If the fender-bender you had in the parking lot last summer is not on your record, don't mention it. If you do, it will be included in your record as soon as you say it to an insurance agent. They will verify the information you do give them, so while there is no reason to hide anything in your record, there is no reason to give them anything that is not in the record.  

 When determining your risk, insurance companies consider the following"

-Gender: Can you think of any other business that would get away with determining price based on gender?  Young women are considered less of a risk, and therefore less expensive than young men to insure.  However, this all turns around when your reach your 30s, which means that during the bulk of their driving life women are charged more for insurance.  This could be considered "gender-profiling".  As a woman, you will save money by being on your husband or even boyfriend's insurance.

-Where You Live: State, zip-code, and street address is a rating factor.  Your neighbor may have a better rate because he lives just over the imaginary line.  When Johnny down the street gets in an accident at 16, your insurance rates will go up the next cycle.  Rural living is less expensive on insurance than living in the city.  The less densely populated an area, the better.

-Vehicle: The year, make, and model (and sometimes color.., red is the worst, gray/silver is the best) of your vehicle are all rating factors.  Older costs less.  Safer vehicles cost less.  Less popular models cost less (fewer of them on the road equals fewer recorded accidents in that car).  Liability insurance for a truck costs more than liability in a car because liability covers the damage you cause and trucks can cause potentially more damage.

-Multiple Vehicles: It is less expensive to insure two vehicles on one policy than to insure them separately on two policies.  If you have two vehicles, see about making the least expensive vehicle listed as your "daily driver", while the other vehicle is rated as something other than daily use; farm use, collectible, recreational, etc.

-Usage: Usage/mileage is a rating factor.  Less than 7500 miles a year is best, less than 12,000 miles a year is good.  Used for pleasure is better than personal.  Business use is the most expensive.

-Where You Drive: Where the vehicle is driven is often more important than where you live.  Living out in the sticks doesn't do much for you if you have an hour commute into a major city each day.  If your vehicle is parked at work in a major city, it is more prone to being involved in a claim.   

-Garage: Some companies give a discount for having a garage or covered driveway.  These reduce comprehensive claims.  Purchasing an expensive structure for your driveway can greatly reduce your auto insurance cost.

-Age: Your age is a factor, and sometimes your driving experience (again, what industry is permitted to discriminate based on age?).  Years ago, it was assumed that when you turned 25, your insurance will be reduced.  This is no longer the case, thanks to more accurate statistical tracking.  If 25 year-old drivers in your neighborhood filed several claims, from accidents to hail damage, in the past year, then your rates as a 25 year-old driver will increase.

-Marriage: Married persons get a better rating than single people.  The thinking is that married people have more reason to be cautious, drive safer vehicles, and generally go out less.  Domestic partnership is generally not recognized in the insurance industry.

-Education: Education level is a rating factor with most companies; the higher your education, the less your insurance costs.  This is due to a number of factors; increased education means increased wealth, better living conditions (less crime prone neighborhoods), more reliable vehicles, etc.  Oddly enough, rarely does an insurance company actually verify your level of education.

-Credit:  While some insurance companies claim they do not consider credit, it is almost a universal practice, impacting insurance rates in a number of ways.  In fact, policies can often be cancelled if it is determined that your credit is lacking.  If an insurance company asks for your Social Security number, they are running your credit.  The check will not impact your credit, but opting out of providing your number means they will use your name and address, which can result in an incorrect rating.  You can save yourself some hassle by just providing your SSN.  

 There are two general kinds of auto insurance; liability and comprehensive.  Liability covers the damages you cause to another person or their property and pays nothing for you, your passengers, or your property in the event of an accident.   In most states, liability is all the insurance you are required to carry, and if your vehicle is not worth repairing then carrying the more expensive comprehensive coverage is not worth the money.  Liability can be purchased from any company with little or no concerns as long as they have been operating in your state consistently for several years.  Because of this, you are often best served seeking your insurance from a small insurance office who can connect you with the least expensive carrier.

 Comprehensive insurance includes liability, but also extends to covering damages for yourself and your own property.  This can include when you are damaged by someone who has no insurance, but making that claim will be assuming responsibility for the damages, severely impacting your insurance rates.  With comprehensive coverage, you are better served going with a reliable, well known insurance company.  All companies will raise your rates for filing a claim (even the ones that claim they will not do so eventually), but smaller companies also tend to cancel your policy and may leave you suddenly without coverage and unaware until a police officer informs you during a traffic stop (resulting in fines, fees, and other legal issues).

 Speaking of claims, some carries offer "accident forgiveness".  They will not change your rates for a claim, depending on the size of the claim and how long you have been with the carrier.  However, these claims still go on your record, and will follow you when you shop with other carriers.  Changes in your policy can also result in these claims factoring into your rates, and will impact you if you leave the carrier and then try to return later, so keep this in mind.

 It is in your best interest to shop around every six months, even if you are content with your insurance carrier.  Know how your rating factors impact your costs, and look for a company that considers your combination of factors to be less of a risk.  It is also worthwhile to create a savings account specifically for your vehicle maintenance as well to cover damages that you would be better served paying for on your own rather than filing an insurance claim. 

Tips on Reducing Your Electric Bill

 Other than rent or a mortgage payment, your largest monthly residential expense is probably your electric bill.  Personally, I loathe the electric company, both the utility in Ft. Wayne, Indiana and the utility in Austin, Texas.  They charge too much for their service, provide a regulated, mandatory product, and do some really stupid things with their profits.  For example, here in Austin, the City Council is working with the utility to increase the use of solar energy, requiring businesses to install solar panels and spending tax-payer money to create solar-farms.  Now, I am all for the environment, but it will be decades before these projects see a profit, in the meantime we are hurting financially NOW.  We are also sitting on huge reserves of natural gas; cheap, clean, readily available, and easy to convert into electricity, that the powers-that-be will not touch.  Meanwhile, a massive wind-farm has been built in the northwest of the state to provide energy to Austin and Dallas.  The problem is that they did not plan on how to get the energy from the farm to the cities; most of the municipalities between the farms and the major cities do not want the power-lines running through them.  Even the guy who pushed for the project, Boone Pickens, is saying basically that the project is a bust.

 Hey, City Utilities!  How about just refunding us some of our money back?

 I know, it isn't going to happen.  So, we need to figure out how to keep from giving them our money in the first place.

 Being in Central Texas, the place I chose to start my war against my electric bill was with my Central-Air/Air Conditioning.  Using some simple, logical tricks is already cutting my electric bill down to size.

 The next thing I am dealing with are my lights.  I am going around my house and converting every bulb to the Compact Fluorescent Light Bulbs.  CFL's initially cost for one bulb the same price as a pack of four incandescent bulbs.  They emit the same amount of light with less heat and about a quarter of the watts.  The jury is still out on the actual savings from using these bulbs.  In theory, the bulbs are supposed to last longer, but I am reading mixed reviews.  If they do last longer, then I am saving money on replacement bulbs.  They use less energy to produce light, so it is a given the my energy costs are reduced.  I did read an argument that the heat emitted from a standard bulb reduces heating costs, but I live where I want less heat, not more, so cool bulbs are a plus.  Besides, heating your home by light bulb, even partially, doesn't seem terribly efficient.

 The major downside to the CFLs is that they contain mercury, so they technically have to be disposed of differently than standard bulbs, but I will cross that bridge when I come to it.  There is also the same issues some folks have with other fluorescent bulbs; the irritating hum and the harshness of the light.  These are absent from the bulbs I have purchased, so either the design has improved since these complaints were first voiced or I am not sensitive enough to notice.

 Meanwhile, my electric bill is lower... not necessarily because of the CFLs, but I don't think they are hurting my cause.

 When I used to go to bed at night, turning off all the lights in my home, my living room would be lit up like a Christmas Tree.  There were indicator lights on my computer's hard-drive, monitor, and printer/scanner.  My phone would glow while being charged, as did my mp3 player.  The red "off" lights on my television, DVD player, video-game system, and stereo components all let me know they where "off" while still tapped into the electricity in order to stay lit. 

 The energy being used is called "idle power", or by the much cooler moniker "phantom power", and it accounts for roughly 75% off all power used by household appliances.  Even when your stuff is off, the little clocks, computer chips, and what-not are still doing their thing and sucking power out of your wall socket to do it.

 The solution is simple; use a power-strip.  A power-strip was used originally for computers, and comes typically with some kind of surge-protector component, but the best part of this item is its off switch.  Flip the switch, and everything plugged into the strip is OFF... really off, not "red-light-on-pretending-to-be-off" off.  Every day, before we leave for work/school, we shut-down everything.  Every night, before bed, one charging station stays on, everything else is off.

 And where a power strip is not practical, we just unplug whatever.  Does your microwave really need to be plugged in all the time?

 The next place I look to save money is on drying my clothes.  If I haven't mentioned it, I live where it is HOT.  Crazy hot, "like fry-an-egg-on-the-sidewalk" hot.   I don't know why I have a clothes dryer.  I do what my grandmother did... I hang my clothes on a clothes-line.  I think I spent $3 on the rope for the line itself, maybe another $1 for the hooks, and less than $1 for the 50 clothes pins.  I am fairly certain that my clothes dry faster on the line, and suffer less wear-and-tear than they would in the dryer.  I am making the natural heat of the day work for me.  Now that is environmentally and fiscally sound!

  All these tricks are simple, cost effective, and the WORK.  Managing my air-conditioner, changing our light bulbs, using power-strips, and drying my clothes on a line has helped cut my electric bill in half!  Keep your money in your pocket, and out of the hands of your local utility and City Council.  You are much better at spending it than they are.

How to Save Money by Reducing Your Air Conditioner Usage

  I live in Central Texas, where three of the seasons; Spring, Fall, and Winter, are mild and short.  Summer dominates the year with high humidity, daytime temperatures well over 100 degrees, and nights rarely cooler than 85 degrees.  Last year, it was common during the peak months (May, June, July, and August) for my electric bill to exceed $250 each month.  Like in most cities, the local power company has no competition, and you are required by law to have the utility, so there is little recourse.

 A friend of mine here in Texas is a true energy miser.  He LOATHES air-conditioning, considering it an extravagant waste.  He somehow goes the whole summer without air-conditioning.  Personally, I love having my home cool enough that my wife and I can curl up in a blanket during the summer.  I am all about extravagant waste, but I do not enjoy the bill attached to it.

 So, I have begun doing some of the things he does to keep cool in order to reduce how hard my AC has to work.  So far, these tips (along with some other energy savers) have helped cut my bill in half.

 WINDOWS:  The biggest waster of energy are windows.  Cool air and heat escape through the tiny spaces in the imperfect window frame and the sunlight streaming in heats the air during the day.  One of the easiest ways to reduce your windows impact on your AC bill is to install a set of good blinds or simply hang some heavy, dark fabric over them during the day.  Keeping your home dark, especially during the hours when no one is home, helps keep the space cool.

 Another cheap and simple trick is to install some caulking strips along the window's frame.  The strips are inexpensive, easy to use, and cut down on the amount of air exchanged through those spaces in the window frame.  The downside is they may not allow you to open your windows without removing them, so be prepared to install them for the season.

 Somewhat more expensive is do-it-yourself window tinting.  Like the dark fabric, the tint blocks out the light, in particular UV rays, that heat the air in your home.  A potential hazard could be that while you are home, it will seem darker outside earlier in the day and you will be inclined to turn on your lights earlier, potentially losing the savings gained by the window tint.

 RUNNING YOUR AC:  There seems to be some debate between to AC strategies; run all day vs. turn it off when no one is home.  My friend put it to me this way; AC has to cool a certain volume of air to a set temperature.  Even if you set the temperature when you leave your home at 90 degrees, this means that during a 100 degree day you AC is going to kick-on many times to reduce the whole volume of air in your home back down to 90.  If you come home and turn the AC on to 75, then the AC just kicks-on and runs to reduce your temperature down to 75.  Your AC works harder during the day because it is hotter during the day.  You are better off just shutting it off and keeping your house dark during the day.

 My advise:  If you have something to do just before going home for the day, go inside and turn the AC on, run your errand, and then come home.  Your home will have time to cool down while you take care of whatever it is you need.

 GET OUT MORE:  This should be a no-brainer.  The more time you stay out of your home, the less you need to run your AC.  Go see a movie, see the sights, enjoy the parks, grill outside.  Make the most of the warm weather!  

 BECOME NOCTURNAL:  In Texas, we have a large Hispanic community.  What I have observed is that their families tend to do things at night, outdoors, especially on the weekends.  They take the kids to the local park at night, barbecue at night, and basically socialize all in the cover of darkness.  The only reason I can think of for this is that it is cooler to be active at night.  It is not unusual to hear children playing outside as late as 11 at night.

 The downside is that if you need light to do anything, then you are increasing your bill running your electronics into the wee hours of the morning.

 SECTION OFF YOUR RESIDENCE:  In my home, there are certain rooms that we rarely use.  Using the AC to cool these rooms simply doesn't make any sense, so we cut these rooms off.  We close the vent to the central-air and shut the door.  The result is the AC has a smaller volume of air to cool, and we lower our bill.

 WINDOW UNIT vs. CENTRAL AIR:  Speaking of central air, it is a true luxury.  Window units often cost much less to run.  One strategy is to have window units in your bedrooms, and shut down the central air at night while running the window units for just the rooms you sleep in.  Again, you reduce the volume of air being cooled and therefore your bill.

 USE YOUR FANS:  Fans do not actually cool you down, but help circulate the air around you. Ceiling fans are very effective at lowering the apparent temperature by making use of evaporation of the perspiration on your body to pull heat away. The more evaporation through circulation of the air, the cooler the apparent temperature. This allows you to set the AC temperature higher while still feeling cool.

 Most ceiling fan run both ways, with counter-clockwise typically being a downward flow and clockwise typically being an upward flow.  During the summer, you want the ceiling fan to move air downward, but in the Winter, having the air move upward helps move warm air down from the ceiling and around your home.

 CHANGE YOUR DIET:  Just hear me out.  Instead of eating a hot meal, eat meals that require no heating to prepare; cold-cut sandwiches, breakfast cereals, fresh fruit and vegetables, nuts, ice-cream... whatever, as long as you don't have to turn your on oven or stove.  Most electric ovens work by heating elements to a "cooking" temperature, and when you turn them off those same elements have to cool down.  All that heat spreads into your living space, making your AC work harder.

 I have a seasonal diet; cold foods in the summer, and bake goods in the winter.

 My friend, who manages to live without AC in central Texas all summer long, uses one other trick that I am too much of a snob to pursue.  He spends time in his home in a wet T-shirt, rung-out, stepping up the evaporation process of his fans.  Personally, I am just not that desperate... or single.