October 17, 2019

Just Selling Your Used Stuff Gives Much Benefits

Audio blog if you just want to listen like while doing other stuffs.

Do you have stuffs that you no longer use? Why not sell those stuffs instead of letting them being wasted and filling spaces. Donating them is also a good idea that you will be helping people and making the world a better place and if you are a believer like me, good stuffs comes around.

1. Why you should sell

  • The saying is "your junk maybe someone else's treasure".
  • You free up space and not waste those stuffs.
  • Ofcourse, you get money:
    • If you are in a critical state, that money means a lot to help you survive to get food and water.
    • If you are in financial trouble, that money helps you pay your bills and debts.
    • You can save that money as backup where you may need to use them later on.
    • You can use them to diversify your assets such as buying gold, bitcoin, real-estates, and consumables.
    • You can use them to invest whether in some investment product or your own business.
  • Most importantly, you gain experience:
    • You have gone through the process of advertising and striking a deal with your client, you added a skill in your skill column where who knows you may need it in the future.
    • The more you do, the more easier and fun it gets, the more the experience, the knowledge, and motivation.
    • Marketing is one of the essential skills to get rich.

2. How to sell your item

  • Prepare your mindset to accept failures, do not get discourage by critics, mocks, and rejections.
  • Test your item whether it works properly (publishing your testing process is an advantage).
  • Clean your item and package it well.
  • Survey the market, evaluate your item, and determine your price.
  • Find an advertisement platform or make your own platform or just broadcast to your peers.
  • Place a detailed advertisement and always be honest, open, and polite to your customers.
  • Make a deal once a customer arrived such as price, and delivery method or place and time of meeting, and stick to that deal and be aware of suspicious activities.
  • Proceed with the transaction and keep yourself open.

3. My examples


October 14, 2019

My Steps from Poor to Middle Class to Rich for Independent Singles

0. Keywords

  • Income
  • Expense
  • Asset
  • Liability
  • Saving
  • Study
  • Scholarship
  • Accounting
  • Investment
  • Business
  • Debt
  • Tax
  • Cash Flow
  • Financial

1. Surviving Poverty

When I was artificially poor, I only focus on incomes and expenses to get out of it.
Absolute rule during this time: expense must be lower than income.

A. Cutting your expenses / save / conserve

  • Cutting your expenses is what every singles can do. Start accounting:
    • At least, record your spending at least every week, if possible, every transactions like I did even note how much you spend each time you buy lunch.
    • Even further, do budgeting. I don't do budgeting because: 
      • I'm not interested in buying new clothes, new vehicle, new house.
      • I don't go to restaurants unless friends invite me.
      • I'm not into luxuries and pleasures.
      • I rarely buy snacks and eat on average 2 times a day snackless
      • My laptop and mobile phone and free Internet are enough for my education and entertainment.
      • Enjoy nature, walk around the park, enjoy the breeze, go to the sea, meditate in the mountains, "it is never necessary to buy anything".
  • If your expenses is high but still cannot cut, then it is either you are lazy or spoiled, or you root problem is not expense issue but freedom and independence issue such as:
    • You need to pay tribute for your rituals, village, tribe.
    • You are in a relationship that you often have to spend often.
    • You carry family burdens.
    • In this case, you need special help because it is not about overspending issues.
  • Unfortunately I have never been poor but artificially poor. Let me share my experiences:
    • Even when I was in preschool, I always have a mindset that what my parents gave me is never mine, "it's theirs!", so I almost never ask any items.
    • With that mindset, I became a walking bank, being completely conservative:
      • What my parents gave me, I almost never spent except for lunch at school because I was forced to because the school didn't allow me to go home to cook.
      • My wallet was thick and my shelf was filled with cash that in my 6 years of highschool, I accumulated $500 that my Mother got annoyed with me stacking those cash, and took me to a bank to open an account.
      • During my 4 year of college, I accumulated up to $1000 and I sometimes sneak and used my pocket money to pay my $200 yearly college tuition fee, and most of the time my parents found out and forcefully cover them so I probably would have accumulated $1500.
      • My laptops are second hand laptops after every time my parents finished using them. They bought a new better ones and I volunteered to use their old ones, this also applies for most of my smartphones. Even now as I am writing this blog that I'm still using my Mother's old laptop from 5 years ago. During my college, I used dual core laptop while my friends are already using i5s and i7s.
  • Debt / Loan:
    • Never use debt for expenses such as your bills and the worst is using your credit card for overspending. If you are overspending, put them in the fridge right now and freeze them.
    • Debt should only be used for your own business and investment.
    • Student loan from my point of view is very risky, my opinion is as risky as the stock market.
      • If your tuition is $4000 a year, and you plan to graduate in 4 years, you need a student loan ($4000 + living cost) * 4. Living cost for example is $400 a month in develop countries so it will be $4800 a year. After you graduate, you will be $35200 in debt. If your salary is $3000/month - $400 living cost, you will only be free of debt after a year and two months. NOTE: I haven't include taxes, accidental expenses, your entertainments, and finally are you lucky enough to get a salary of $3000/month? What happen if the average is $1000 - 2000 a month? In developing countries, average salary is $300/month.
      • That's assuming that you graduated and manage to get a job or other sources of income. If you fail, you will be eaten alive.
      • With the current stability of the world economy, conditions are much worse than in the past.
      • During studies you will be burden with graduating and after graduation you will be burdened with them. Therefore, your creativity, innovations, etc are suppressed. Your view will most likely be narrow that you cannot see what you normally can see and miss many possibilities and opportunities.
      • Only go for student loan if you truly enjoy studying and dedicate yourself to expertise and contributions. Always consider that you may remain stuck below middle class.

B. Increase your Income

  • Most people know to increase your income is to get a job and work hard. 
  • I was in Indonesia and after graduating I got a great paying job in a factory as a manufacture engineer where my salary is $400/month if I remembered correctly plus lunch, transportation, and housing covered. 
  • Additionally, I almost never missed over time where the normal time is 07:30 - 17:00, I worked from 07:30 - 20:30. The perks are $600/month and free dinner. I'm usually off on Saturday and Sunday, if I continuously work, I could have gain and save even more. In the end, I worked for 5 month and accumulated $2500. I could have accumulated more if I didn't go to parties and overspend
  • Sell stuffs that you don't need. Trust me, this helps very much. Not only that you get pocket money, you gain more space.

2. Maintaining Middle Class

If you follow my suggestions of how to survive poverty, you will reach middle class. After I reached this, I got a non-binding scholarship and continued to my Master's and PhD. Most entrepreneurs tells you that school is a waste, but not scholarships especially a non-binding one. Not only I'm paid $1400 a month to study, I'm free after I graduate or if I fail, I don't need to repay them. Even more, they free my schedule after I finish all my classes in 2 years. The remaining 4 years, I can do whatever I want, I even sleep 12 hours a day, and in these times I caught up with the news of world, global economy, history, learn about finance, investments, passive incomes, entrepreneurship, and other things. All I'm obligated for are progress every week, publications, and thesis.

A. Liability is what Breaks most Middle Class

  • It is during middle class where most people fall into the trap of liability. Liabilities are things that you have that causes more expenses than income. Food, water, electricity, house, Internet, are maybe necessary liabilities if not over indulge. Examples of unnecessary liabilities are:
    • You get into relationships. Only few relationships are beneficial. Most relationships are expensive if you are a man because most of the time, you pay.
    • You buy a pet, and you need to feed and take care of it everyday, it's not cheap. I haven't mention that you need to pay medical bills if it get sick.
    • Subscribing to entertainments such as Netflix that bills you monthly.
    • Starting a family is initially a liability although the greatest asset in the long run but only if you succeed. You have to pay lots to take care of them. Therefore, don't start a family unless you can afford. Don't you feel sorry that your children have to suffer because of your poverty?
  • This may not be called liability, but when most people earn lots of money for the first time, they are tempted to overspend them in luxuries and pleasures such as:
    • Going to expensive restaurants.
    • Buy new stuffs that you don't need such as new bags, clothes, sandals, shoes, cosmetics, smartphones, devices, you named it.
    • Over enjoying entertainments such as too much going to cinemas, concerts, theme parks, expensive tourist areas, etc.
    • Indulge in pleasures such as messages, hotels, vacations, even red light district. Have you heard, "I don't care how hard you work, if you can't afford then you can't afford", stop over using your credit card.
    • Gambling.
  •  Middle class mistook asset for liability.
    • Your house is not yet an asset until it generate income. Traditionally, you buy low and sell high to get profit, but will you sell? is your profit larger than your house expenses such as your electricity, maintenance, and water bill? the bigger the house, the larger the expenses. Therefore, if you need a house only to live in, buy a house with lower expenses. What real-estate investors do, they buy houses and rent them or do other business with them.
    • Your car is an asset only if its benefits are higher than the expenses. Example expenses are fuel and maintenance. Example benefits are increasing productivity at work and serves well during emergencies. Example business are renting the car or directly become a driver. If the income is greater than the expenses, then it's profitable. It's great that if you can sell higher than you buy for, but that is an extremely rare case. Ask yourself whether its benefits are worth the costs.
    • Larger electronics such as larger fridge and television are liabilities. To be more precise, electronics that consumes larger electricity. Buying electronics that are more expensive but lower electricity consumption generally profitable on the long run.

B. Investment Product

Once people reach middle class, they often have leftover money after spending. They generally store their fiat cash and unaware that their fiat cash are losing value due to inflation and other factors. Finding a good investment takes education and time but you can jump into these investment products immediately:
  • Government bond: in my country Indonesia, the minimum investment amount is $100, the interest around 6% yearly, but the lock term is 1 - 2 years which only invest if you think you will not need the money by then. The government says it is the safest investment because it is protected by the law. If you want to contribute to your country, this is the right investment for you. In my opinion, this is only to protect your fiat, it will not make you rich, try once for experience but think twice for next time unless you are already rich.
  • Certificate of Deposit (CFD): the purpose of CFDs are to lock your money in the bank. if the interest rate are positive, meaning you are lending your money, if negative, you are paying fee to the bank to keep your money safe. Avoid Europe and Japan because they have negative interest, and US because very low. In Indonesia is around 5% with lock term ranging from 1 month, 3 month, 6 month, 1 year, and 2 year with minimum amount $1000 which is still worth considering. For example, if you still don't know what to invest, you can buy a CFD of 1 - 3 month and withdraw once you know.
  • Mutual Fund: definitely a product if you don't know what to invest in because they have investment managers that will decide for you. The good thing is there are lots of products with varying features. There are products with lock terms ranging from 1 day to 1 year, minimum investment starting from $10, risk profile from safe to dangerous. In my case, put my money into a mutual fund continuously and then withdraw them any time when I have a business that I want to do.
Unlike the previous investments which are only to preserve your wealth and earn some pocket money (unless you are rich), the following investments can make you rich but have higher risks:
  • Stocks: they are pieces of company where if the company performs well, more people demands for it and the value will rise, but vice versa as well. In minimum, know the piece of corporation that you buy and you think that it will survive in the future. In detail, investigate the corporation's cash flow and reputation.
  • Commodities: cotton, lumber, sugar, salt, oil, etc. You need study the market and predict which commodities will be demanded in the future.
  • Cryptocurrency: a new emerging monetary system. You have to study the projects and predict which ones will rise in the future.
  • Land and real-estate: the most popular and profitable but very expensive and risky if you don't have any knowledge.

C. Asset Types Diversification

  • Fiat currency: such as the dollar, euro, pound, yen, yuan, etc. Never hold 100% fiat because their histories are very bad. It is monopolized by the federal reserve or the government. Economy will prosper if they do well but history doesn't tell well. For example 1997 asian financial crisis, 2008 global crisis, currently Argentina, Iran, Turkey, Venezuela, and Zimbabwe are examples of failing monetary system. Their cash returns to be as worthless as paper. Imagine that one billion of paper money can only buy you a loaf of bread.
  • Gold, silver, and other precious metals: history proven that they survived for thousand of years and whenever fiat currency fails such as the Roman Empire, the world returns to the gold standard.
  • Consumables: the very basics itself. Having your own food and water storage is much more safer than stashing any kinds of money.
  • Bitcoin and other cryptocurrency: bitcoin was created after 2008 as a response to 2008 monetary crisis. People are losing trust in the governments and developed bitcoin is a monetary system that cannot be controlled by any parties including the government. It works purely by mathematics, network, and the free market of supply and demand. This system is design to give people freedom of financial especially in oppressive countries. Not only that no one can take down bitcoin but cryptocurrencies if used correctly, cannot be touched by any authorities or oppressors.

3. Becoming Rich

A. Asset

  • The rich focuses on the asset column which is anything that generates income for you.
  • The best assets are passive incomes which you don't need to do anything to get incomes, in other words, these assets works for you.
  • Your own business should be your best investment.
  • Business generally have the highest return, expandable or increase its productivity, and you control and own.
  • Some example: monetized contents such as your blogs, websites, video contents, rental properties, and shops.

B. Pay yourself first

Increasing income is what most people know and focuses, decreasing expenses and budgeting are widely known but underestimated, and pay yourself first is the advanced version invented by the riches man in Babylon. After you receive your incomes, pay fixed expenses and invest immediately, not the other way around where you wait for leftovers to be used for investing.

4. Faqs

  • What are the necessities? 
    • Food, water, and house service. To gain them, you have to work. Nowadays, work are a getting a job or doing a business to get money and buy necessities, but that's not necessary it. Work to live is how to get those necessities where the very basic is in nature where find trees to get fruits, go to the mountain for clean water, fish, and hunt.
  • How to get out of poverty?
    • Decrease your expenses or increase your incomes.
  • How to get middle class?
    • Increase your income: work harder, get more jobs, or find other sources of income.
  • How to sustain financially?
    • Start accounting and calculate your budget.
    • Beware of liabilities.
  • How to start investing?
    • Pay yourself first.
    • Find an investment product.
    • Use your leftovers.
  • How to get rich?
    • Focus on assets primarily, passive incomes.
    • Start your own business and regularly invest in it.
  • How to face upcoming monetary crisis?
    • Never hold 100% fiat and diversify such as gold, bitcoin, commodities, and real-estate.
    • Educate yourself.
 

October 12, 2019

My Exercise Towards Financial Freedom and Independence

0. Summary

I wrote this article to further motivate myself to do the exercise that design after hearing many financial advises from the riches. The theory is in https://0darkking0.blogspot.com/2019/10/my-steps-from-poor-to-middle-class-to.html. In summary the exercises are accounting --> budgeting --> pay yourself first --> diversification and investment --> business. Ideally, each exercises runs for a month but you may fast forward, visualize in your imagination, or skip.

1. Exercise 1: noting your incomes and expenses

A very basic and natural exercise but also mostly underestimated. "What? I didn't realize that I spent that much?" Does that sound familiar to you? What's in your mind or in your memory may not be accurate which is why the basic accounting of noting your incomes and expenses.
  • Download a financial app such as Andromoney or use simple software such as Spreadsheet or carry a notebook and note every time you make an expense for a month.
  • Already more than a year, I note my income and expenses as detail as each time I bough my lunch for example on the Figure below.
  • Note your incomes, salary if you are an employee, pocket money if you are still a kid, teen, students, and etc.

2. Exercise 2: create a budget

If you are interested on why budgeting, take a look at https://www.youtube.com/playlist?list=PLwyhDyJ3VORb-RuLRAP87MmqTPa7KhV2L.

Use the notes on Exercise 1 to estimate your monthly budget. For example mine:
  • Income: $1300.
  • Fixed expense $300:
    • Rent: $170.
    • Phone service: $30.
    • Electricity: $50.
    • Gas: $50.
  • Food $22 x 30 = $660:
    • Breakfast: $5/day.
    • Lunch: $6/day.
    • Dinner: $6/day.
    • Snack: $5/day.
  • Backup $140.
  • Leftover = $1300 - $300 - $660 - $140 = $200.
I actually made my most expensive budget. For example, I don't usually do breakfast and snack, and sometimes lunch and dinner are only $4.5 and cut even further if I choose to cook, and never I used all of my backup. Oh, I'm not interested in shopping for more clothes, items, etc.

If your expenses are larger than your incomes, then you have a problem. Either cut more expenses or work harder or sell anything that you no longer need or anything else that can raise your income. Proceed to the next exercise.

3. Exercise 3: pay yourself first

The secret of the most wealthy man in Babylon is "pay yourself first". In my opinion, it's the advanced version of budgeting.
  • Now that you know your budget from Exercise 2, in this exercise, use your calculated budget to calculate the money to pay yourself first.
  • In my case leftover = $1300 - $300 - $660 - $140 = $200 = pay yourself first.
  • No matter what, don't ever use this money for your expenses.
  • For example, if accidental stuffs happens, find a way to generate more income, work harder / overtime, or borrow money.

4. Exercise 4: diversification

Buying gold, bitcoin, commodities, etc are not the most important parts. The most important thing is educating yourself. Holding 100% fiat cash such as dollar, euro, pound, yen, yuan, etc is dangerous because there are many predictions of financial crisis, take a look at what happened at Venezuela, Turkey, Argentina, Iran, Zimbabwe, etc. Read my other blog post https://0darkking0.blogspot.com/2019/09/my-inspiration-for-global-financial.html.
  • Educate yourself.
  • Plan a portfolio of your asset diversification. For example on the left.
  • Diversify your assets.
    • After obtaining your incomes, immediately pay yourself first, and spend it on different types of assets.
    • At the end of your budgeting (end of the month) if you have leftovers, store some of that cash as backup (you decide whether it is 10% or 25%), then spend the remaining on different types of assets.
Maybe some of you like me a long time ago are very enthusiast that you are not patient enough to study first and you are motivated by learning from doing / experience. If that's the case, you can just start buying small for example, buy $10 each of gold and bitcoin and hold rather than you buy lots and you become frighten when the price drops.

5. Exercise 5: investment

  • "If you cannot make money while you sleep, you will work forever", Warren Buffet. Investing your money means, putting your money to work to make more money.
  • The same as exercise 4, use your pay yourself first and leftovers (if any) for investment. However, before that, educate yourself first and allocate investment into your portfolio if you haven't. 
  • In my opinion, your own business is the best investment. However, planning your business or finding a good investment, takes time. Therefore, it is fine to put your money temporary (in my opinion avoid lock terms over 3 months) into common investment products:
    • Government bond: in my country Indonesia, the minimum investment amount is $100, the interest around 6% yearly, and lock term 1 - 2 years. The government says it is the safest investment because it is protected by the law. If you want to contribute to your country, this is the right investment for you. In my opinion, this is only to protect your fiat, it will not make you rich, try once for experience but think twice for next time unless you are already rich.
    • Certificate of Deposit (CFD): the purpose of CFDs are to lock your money in the bank. if the interest rate are positive, meaning you are lending your money, if negative, you are paying fee to the bank to keep your money safe. Avoid Europe and Japan because they have negative interest, and US because very low. In Indonesia is around 5% with lock term ranging from 1 month, 3 month, 6 month, 1 year, and 2 year with minimum amount $1000 which is still worth considering. For example, if you still don't know what to invest, you can buy a CFD of 1 - 3 month and withdraw once you know.
    • Mutual Fund: definitely a product if you don't know what to invest in because they have investment managers that will decide for you. The good thing is there are lots of products with varying features. There are products with lock terms ranging from 1 day to 1 year, minimum investment starting from $10, risk profile from safe to dangerous. In my case, put my money into a mutual fund continuously and then withdraw them any time when I have a business that I want to do.
    • Stock: buying pieces of a corporation. You will gain profit if the piece of corporation you buy increases in value and vice versa. In minimum, know the piece of corporation that you buy and you think that it will survive in the future. In detail, investigate the corporation's cash flow and reputation.
    • Commodities: cotton, lumber, sugar, salt, oil, you name it.
    • Land and real-estates: the most popular and profitable but very expensive and risky if you don't have any knowledge.

6. Exercise 6: mind your own business

Your business is potentially your best investment. "The rich focuses on the asset column", Robert Kiyosaki. Assets are things the generates revenue such as rental properties, stores, and factories. The best asset is passive income where it generates revenue automatically without you doing anything.

This is the step that I'm in, I'm currently trying to find a business that I can do. Once I succeed, I will update this section in the future.

7. Optional exercise 7: leverage

  • Sign up to a leverage platform and deposit money.
  • Predict whether commodities, cryptocurrencies, and foreign currencies goes up or down and put your position.
  • Master take profit and stop loss.
  • Leveraging without basis is the same as gambling, therefore study lots before doing this.
  • If you succeed, you will multiply your money like how gambling does.

8. Faqs

  • What are the necessities? 
    • Food, water, and house service. To gain them, you have to work. Nowadays, work are a getting a job or doing a business to get money and buy necessities, but that's not necessary it. Work to live is how to get those necessities where the very basic is in nature where find trees to get fruits, go to the mountain for clean water, fish, and hunt.
  • How to get out of poverty?
    • Decrease your expenses or increase your incomes.
  • How to get middle class?
    • Increase your income: work harder, get more jobs, or find other sources of income.
  • How to sustain financially?
    • Start accounting and calculate your budget.
    • Beware of liabilities.
  • How to start investing?
    • Pay yourself first.
    • Find an investment product.
    • Use your leftovers.
  • How to get rich?
    • Focus on assets primarily, passive incomes.
    • Start your own business and regularly invest in it.
  • How to face upcoming monetary crisis?
    • Never hold 100% fiat and diversify such as gold, bitcoin, commodities, and real-estate.
    • Educate yourself.