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Saturday, December 31, 2011

Money Monks do it for free - The Library

Unlike some of the other financial independence websites that write about their journey after the fact, I am not yet financially independent, and am writing about my journey while I'm making it.

One aspect of this journey is making some lifestyle changes that involve making more money, or saving the money I am already making. One thing I am going to be doing to save money is utilizing free resources as much as possible. one of these is the local public library.

I actually do own quite a few books, and even though most of them I didn't purchase (either gifts or free) I did buy a fair share of them. In hindsight it seems like a fairly extravagant waste of money, given that there is a free library a mere 3-4 miles away full of most of the books I could ever want. If they don't have it, you can usually request it be ordered or shipped in from another library.

Before today I hadn't been in a public library for at least a decade, so it was interesting. Honestly not much s different, that is probably the strangest part. I was also surprised at how nice the local library is here.

Apart from just books they have free DVD rentals, with a healthy selection. Free internet use as well, if you need it. Basically a great resource for saving money.

Reading is a fairly frugal pastime to begin with, and if you eliminate the only cost, well now it's perfect. I got 4 books today, some on economics, finance, and a true wilderness survival story. Lets see if I can read them all before they are due in 4 weeks.

If not, I can renew online. They didn't have that when I was a kid!

The Money Monk

Thursday, December 29, 2011

A different way of thinking about paying off your house

For most people these days renting is a better financial decision than buying, but there are still many of us who do have mortgages.

If you're interested in financial independence, which I am, then the plan has to be paying off any debts as quickly as possible, mortgage included.

For normal debts, I recommend following Dave Ramsey's 'debt snowball' system until you have nothing left but the home loan. Then it's time to pay off the house, too.

But what is the best way to do it? Conventional wisdom on paying off mortgages early just says to add as much extra to your monthly payment as you can afford, and put it towards the loan principal.

This will certainly get your house paid off sooner, but paying extra on a normal mortgage isn't going to affect anything other than the pay off date. It won't lower your monthly payment, or change the interest rate. By itself this isn't a necessarily a big deal, but part of my all-encompassing plan for wealth, freedom, and financial independence is well, freedom.

One of the best ways to have freedom is to be financially independent, but I haven't gotten there yet. Second best is to at least have a chunk of savings that mitigates risks and keeps you from being a total slave to your job or current income source. This is especially important in today's economic climate, where you have to accept job loss as a very real possibility.

So putting a huge chunk of change towards your mortgage every month doesn't seem like the best idea, because you can't get to it in the event of an actual emergency.

So what about an alternative plan: Taking the money that I would put towards extra mortgage payments and just add to my savings? If you are putting some effort into intelligent investing you should be able to beat the modest percentage that you are paying on your home loan, which will magnify the effect as well. When your savings reach a point when you can pay off your house loan and still have enough savings for a well stocked emergency fund (no less than 6 months of expenses) then you can pay off the loan. So you should come out ahead at the end of an equal time period, right?

It depends. Most home loans are structured so that the majority of your payment for the beginning years of the loan go almost all towards interest. Very little is going towards reducing the principle. So extra principal during this time makes a bigger than expected difference in the payoff date and total interest paid. The difference isn't huge, but it is such that you will probably end up paying a little more if you do it by holding the money aside instead of the conventional extra payments.

So you need to do the math, and evaluate your risk tolerance . I would personally prefer to have $50K sitting there and owe $100K on the house, than to owe $50K on the house and have no savings. But maybe you want to split the difference, its up to you. Just make sure you do the calculations and make an informed decision.

-The Money Monk

Wednesday, December 28, 2011

How much money can you make with a blog?

Anybody who takes the time to write a blog or contribute to a website of any kind, has at one point or another thought about what it would be like to be able to live off the income generated by a popular, successful site.

That gets people thinking "how much money CAN you make with a blog?". For those that already have a blog or website that is generating income, the question becomes more of 'how much SHOULD you be able to make", but either way the point is the same.

So what kind of revenue numbers should bloggers expect to see? Since there are myriads of ways to make money with your site, I am only going to be dealing with Adsense, since its the easiest and most common way that bloggers monetize their sites.

My research and personal experience has shown me that you should be able to expect around $0.50 to $2.00 per 1,000 views on a given website. Keep in mind that this is a long term average, and is what you would see after at least 10,000 views or more have been logged. On any particular week or month you may get 1000 hits and only get $0.10, and another month maybe 500 views and $7.00. So its just an average.

If you are consistently getting less than $0.50 or so per 1000 views, you should look at optimizing your ads. I will cover specific techniques for doing this later, but a couple of things to look at would be ad placement, design/color, etc.

If you are always getting more than $1.50 to $2.00 per thousand hits, then congrats you are doing very well at converting your traffic to money. Don't be upset if you can't get really high monetization rates though, it just isn't always possible. Focus on increasing traffic instead.

That should give you guys a general range to expect and a benchmark for trouble shooting various techniques you may want to try.

-The Money Monk

Tuesday, December 27, 2011

5 Ways to Save a Bunch of Money on Christmas

Christmas can be a hard time for people who are trying to be frugal. People feel obligated to buy gifts, and don't want to appear selfish or cheap by giving gifts that aren't worth that much. If you aren't careful you can spend a ludicrous amount of money on Christmas, and totally ruin a budget or savings plan. And many people do. It's too late for this year, but here are some tips for saving money on the holidays.

1. Cut back on the number of people you get gifts for.

It's simple: You shouldn't be getting gifts for everybody you know. Random office people and extended relatives don't all need gifts bought for them. Stick with close family and and friends. If you want to do something for others, a simple card is fine. Just don't spent a fortune on cards, they can be expensive too.

2. Talk with family about an alternate gift giving plan.

The normal way gifts are usually done is to for everybody to buy gifts for everybody else. This usually leaves everybody with a big pile of crap and a big pile of bills. Talk to your family about gift price limits, or even a 'secret santa', where everybody brings just one gift with no name tag, and they are passed out randomly.

Basically just work hard to change the commercial status quo that surrounds the holidays. Maybe talk to them about what you are trying to achieve with your financial independence plan, and that you don't want anybody spending money on you either.  Just beware it's an uphill battle. People have insanely ingrained notions about what you are 'supposed' to do for the holidays. Your best bet is to start talking to your family about it even before thanksgiving, before they all get overcome with the Christmas (spending) spirit, and can think about it semi-rationally. 

3. Stick with gifts that don't have a specific value attached to them.

If you have decided you must buy gifts for certain people, and are self-conscious about appearing too poor/frugal/cheap, then get gifts that they won't be able to tell how much they cost. If you get a Best Buy gift card for $10 they will know you spent $10, but if you get a piece of artwork, for example, they will have no idea how much money you spent on it. Wine works too, as long as they aren't a wine connoisseur or something. Anything really unique or rare or foreign will be appreciated regardless of what it actually cost you to buy it. At a recent Christmas party I went to an individual gave some kind of fossil. It looked classy was obviously unique, even though he later told me that particular fossil is fairly common and it likely wasn't very expensive at all. That is a perfect example of what I am talking about. 

You could also always go the 'Costanza' route and give fake charity donations in their name. 

4. Take the long view.

As with any other area, planning and patience are key. Don't wait until December 20th to figure out what you are going to be doing. Get things like wrapping paper, cards, bags and bows now, AFTER Christmas, when you can get them for pennies on the dollar, and use it next year. This goes double for decorations. If you must have a tree use a fake one and get it after Christmas when they will be practically giving them away. This goes for lights and all that too.

Buy gifts throughout the year as well. This will reduce the hectic last minute scramble, and drastically reduce the amount you are having to pay all at once at the end of the year. You also will have plenty of time to wait and jump on great bargains instead of having to get whatever you can last minute. If you see something nice for a great price you don't even have to have anybody particular in mind.

5. Cut down on travel costs.

Drive instead of fly. If you have to fly, buy the tickets as early as possible. Stay with relatives instead of at hotels. Do whatever you can to mitigate the costs of any traveling you have to do. Maybe even don't go home for Christmas every year. It's not mandatory.

- The Money Monk

Friday, December 23, 2011

Traffic or Monetization?

Part of the Money Monk core mantra is "make money' so I will often cover topics on making money. Specifically via the internet. 

Which is more important for your website, a high volume of traffic, or a super optimized, efficient revenue system?

Very simply, traffic. Always. Traffic is THE driving force behind all internet revenue. Whether you are selling a product, a subscription, advertising, or even reliant on donations, it doesn't matter. Traffic is EVERYTHING. It doesn't take a genius to figure out a couple ways to make money off of a website that is getting 10 million views a month. On the other hand, even if you ARE a genius, you won't be able to make much money from a website that is getting 100 views a month.

Even if you become a monetization master and become adept at squeezing every ounce of money out of the hits you get, and get 20-30 bucks per thousand views, you aren't going to get much money if you only have a thousand views a month. Now another person may get only 75 cents per 1000 views, but they are getting a million views a month, they are making a nice supplemental income.

Of course the optimal situation is to get both high traffic AND efficient monetization, but the key thing to take away is that the traffic is what is key.

So until you are getting at least thousands of views a month, your time is better spent trying to build traffic than trying to get money out of your existing traffic. You will be surprised just how easy it is to make money from your sites or videos once you have the traffic. Focus on what matters.

-The Money Monk

- The Money Monk

Thursday, December 22, 2011

Increasing Income

If you are reading this it is probably fairly safe to assume that you have some level on income. Although the unemployment rate is very high now (~9% if the official figures are to be believed), the remaining 90% of people still have an income. Even some of the unemployed have income in the form of unemployment benefits. 

That is why a lot of what I will cover in this blog will be about saving money; because it is something that can be applied by everyone, and because it is something that Americans have become terrible at. We are great at making money, terrible at saving it.

If you truly want financial independence however, it is imperative to save AND try to create addition income.  Especially if your current income is very low. For an individual making 25K a year and already living very frugally, it is probably easier to create an additional $2000 of income than it is to shave another $2000 off your yearly budget.

Conversely, if you are making 150k a year, and living the typical lifestyle of Americans in that income bracket, Then you are probably paying 2000 a year on pet food, car washes, yard maintenance, cable, etc. So in that case it is probably easier to trim some fat from your spending than it is to increase your already-high income.

In either case though, increasing income will bring you to your goal of financial independence more quickly, so look for the opportunity to do so whenever you can. Actually, scratch that. MAKE the opportunity. Many people go their whole lives waiting for opportunities.

In the future I will go in depth on the different ways you can increase your income, particularly using the internet. But for now here is a list of ways that you can explore to increase your yearly income, at least temporarily:

- YOUR JOB: Try to get a promotion, a pay raise, work more hours, get certificates or skills that will get you a raise, whatever you can do to get more money from your existing job. Especially if you have a high hourly wage or salary, where even a modest % raise or a couple hours or more work will give you a decent chunk of change. On the flip side, if you are making minimum wage at McDonald's, you may be better off spending 6 hours a week on other money-making ventures rather than working 6 extra hours, as that would only give you like 35 bucks or so after taxes.

- GET A NEW JOB: Most people get stuck in the mental rut of just existing. but there is no reason why you can't poke around and see if you can get more money doing something else. And even if not more money, maybe better hours that allow you to work on other ventures, or closer jobs that take less time and money to commute to. 

- SELL SOME STUFF: This is a one-time influx of cash, and can't be done forever as you will eventually run out of cash, but it is a great boost to savings and it will help you live more free at the saem time. People are slaves to their stuff. You may be surprised at how much stuff you have that you just never use that can be sold for quite a bit of money. Sports and exercise equipment you never use, clothes, the jet ski you never use, whatever. Just make sure not to replace it with more useless junk. In the future I will go over many ways to sell things, and how to maximize your profits doing so.

- MAKE A WEBSITE, BLOG, OR VIDEOS: It is incredibly easy (and free) these days to make sites blogs and videos. Something that I will go into much much more later, and is covered in detail in my book "The Secret of the Internet". With adsense, youtube partners, and other easy to use it is easy to get a couple bucks a month with a blog or youtube channel that doesn't even take that much time. And if you do spend time and effort, you can go from a couple bucks a month to literally a full-time income.

Always work to CREATE new sources of income. The more varied the better. You will have less chance of total failure, and more chances of one source really taking off and creating great wealth and independence.

-The Money Monk

Wednesday, December 21, 2011

Bargains vs Savings

A lot of individuals, even those that are frugally minded, don't have a good grasp of the difference between a bargain and a savings. And if you aren't careful, a failure to recognize the difference could cost you money.
You'll see people buy something on sale and claim they 'saved money', when really all they did was find a bargain. The difference between the two is important, but simple enough:

- A SAVINGS is when you are able to spend less than you ALREADY had planned or budgeted. The result is that in the end you have MORE of your income remaining than you planned or expected.

If you pay 150 bucks a month for electricity, and by using a clothesline instead of a dryer you end up paying only 140, then you saved $10. you  have $10 that you can put into a jar that you wouldn't have otherwise had. If you buy beans anyway, and find a coupon for $0.25 off, then you saved 25 cents.

A BARGAIN is purchasing something for less than market value. The result is that in the end you have LESS money remaining than you were planning or expecting. This is true no matter how extraordinary the bargain is.

If you find a gold coin worth $1500 on sale for $10 and buy it, you did not save $1490. In fact, you spent $10 more than you budgeted that month. So you have $10 LESS money that month than you would otherwise.

So while in the earlier example the coupons for the beans represented a savings since you were going to buy them anyway, a 50% off coupon for a restaurant is not a savings if you weren't already planning on going there. Be very careful with coupons because this is what they are designed to do: get you to spend money that you weren't otherwise going to, simply because it appears to be a bargain. I strongly encourage coupon use, but only if it's done PROPERLY.  Don't play their game. Remember, if it wasn't making them money they wouldn't be doing it.

Now it's true that getting things at a bargain can give the opportunity for a profit, and that shouldn't be overlooked. From the previous example, you could instantly sell the gold coin for a $1400 profit, and that's good, but it doesn't mean it's a savings. And while I encourage the buying and selling of items for a profit, I don't recommend speculating with budgeted money. Because the profits you envision won't always pan out.

I would always have a stash of cash ready to take examples of profit-making opportunities like that, but don't spend money that you don't have - even to make more money.

-The Money Monk

Tuesday, December 20, 2011

5 Meals for $1 or less

     Food is one area where people waste extraordinary amounts of money. Going out to eat is one of the easiest ways to waste hundreds of dollars a month. Even fast food value meals will now run you 6-8 dollars, to say nothing of the quality of the food.

And typical ‘sit-down’ restaurants will cost you even more, especially once tip is considered. I don’t like to eat out much anyway simply because I hate wasting so much time, let alone money.

Aside from eating out though, many people still spend way way too much money on food. I don’t recommend following a Monk diet for decades, but it is an easy way to shed dollars from a budget when you are in the frugal, savings-building period or focused on debt reduction.

During these periods my goal is usually $1 per meal or less. It sounds extreme, but it is totally possible. And unlike what many people say, you can do so very healthily.

Here are ten meals you can have for $1 or less.

1. Oatmeal – Buy generic brand, its no different. A full meal of oatmeal will probably cost you around 25 cents, so even if you add in raisins, or other fruit, some milk, or a small amount of honey or sugar you are coming in easily under the dollar mark.

2. Omelets – eggs are currently around 2.50 to $3 a dozen. So you can have 3 eggs for $0.75. That gives you a little leftover to add a small amount of ham or vegetables, and you can still come in around a dollar. If you get canned mushrooms, olives, etc they last longer.

3. Pasta – Now obviously Ramen noodles falls under this as well, and is an easy addition to this list. At about $0.30 and 5 minutes, you can’t go wrong. However, don’t overlook regular pasta as well. It is very cheap and if you buy it in bulk and don’t waste money paying for a brand name, you can easily get a meal of pasta with sauce for $1.00

4. Chicken and Rice – You should be buying rice in as large a bag as possible. If you do, the price of a single serving is so small its almost hard to calculate. So basically this meal is to just have about $1.00 worth of chicken with rice. This is one of my staple meals.  Buy the chicken when it is on sale and freeze it. A lot of stores will mark down their rotisserie chickens at the end of the evening, around 8-9, and you can get them for $5 instead of 7 or 8. Buy as many as they have, take all the meat off, and freeze it. You can easily get 5 servings of meat off of a chicken, making it $1 each.

5.  Sandwiches – There are a multitude of different sandwich combinations you can make that come out to less than 1 dollar.  You can find a loaf of bread for less than one dollar. It won’t be any exciting multi-grain with pictures of autumn harvests on the wrapper, but it will get the job done and each slice will be around $0.10 or less. Buy lunch meat that is cheap, or even large hams for less than $2 a pound and use that. Incidental veggies can be had pretty cheap, and I recommend growing your own for most of that stuff anyway.

- The Money Monk

Principles of Frugality

      The only way to gain financial independence (other than an inheritance or lotto or something) is to build up a substantial amount of money. The only way to do this is to A) Make some money, and B) SAVE it instead of spending it.

Now focusing on making more money is a legit strategy for reaching financial independence but, as our own government has shown, it doesn’t matter how much you are bringing in if you are spending even more.
Americans have become masters at making money, and all but the poorest of us have enough to build up some savings but for one thing: The spending is out of control.

If you want seriously cut your spending you have to redefine wants and needs. Nothing can be off-limits. To this end, frugality is a legitimate tool, and necessary for most people. And as such will be a major focus of this blog.
Most other books and blogs seem to teach frugality for its own sake. As if saving money is meaningful in and of itself. I disagree. I am naturally a spendthrift. I don’t LIKE having to be frugal. However, I am very good at it. One reason is because I am doing so for a specific reason: to more quickly reach financial independence. If you are have to be frugal forever and still stay poor, what’s the point? By focusing on Frugality AND increasing income, I will much more quickly reach that goal then just doing one or the other.Then I will get to a point where I don’t necessarily HAVE to be frugal. At least not nearly as stringently.

Being frugal for your entire life and doing nothing to change your income or reach financial independence is crappy, and no way to live. Do it for a reason, and it becomes much easier to justify those sacrifices.


Even the most expedited plans to reach financial independence take at least several years. Most take much longer. That is a long time to go being super frugal and never spending money on ANYTHING, even the things you care about a lot. Most people can’t even do it. The easiest way to survive is to save on stuff that you really don’t care that much about, so you can spend a little on the stuff that really matters to you.
If you just really really can’t stand eating super cheap food all the time, that’s fine, as long as you are saving in all the other areas. If you want to go to the movies once a week, that’s ok if you never eat out and are only spending 80 bucks a month on food, for example. So I would pick one or two small things to spend money on that really make your life more enjoyable.


You don’t necessarily have to give up certain things if you can find cheaper ways to do them. If you love watching movies, try getting Netflix instead of going to the theater once a week. Or go to the library instead of Redbox. Or even buy the $10 or $15 DVD that you can even sell for a couple bucks later, instead of paying $20+ for 2 people to go to a theater.

Just remember That your frugality has a purpose: to eventually put you in a position so you don’t HAVE to be (as)frugal.  As Dave Ramsey says, “live like no one else so you can live like no one else.”

- The Money Monk

The Money Monk Method

      It didn’t take me long to decide that the standard way everybody thinks you should work make, spend and invest your money was NOT what I wanted to do. What did take me a while was figuring out how I should do it. Luckily there are a lot of smart and creative people out there and I borrow heavily from a lot of their concepts. The one thing I noticed though, was that they each only address one aspect of working and financial life, and ignore the rest. They are rarely a complete system. They usually emphasize one of three Financial Lifestyles: Frugality, Income Creation, or Investing. They rarely offer a comprehensive system or lifestyle philosophy that encompasses all 3.

Robert Kyosaki’s  advice to stop working for money and make your money work for you is great. But it’s hard to implement when you are working at McDonald’s and don’t have any money.

Dave Ramsey has some of the best advice about getting out of debt, but then what? It is all predicated on the standard 9-5 job, work 30 years and then retire scheme. NO THANK YOU.

Jacob Fisker and his Early Retirement Extreme method is the exact mindset I was looking for when it comes to breaking free from the 30 year job grind, but what if you don’t want to live on $7,000 a year for the rest of your life?

It is possible to have it all? To get financial independence and a substantial amount of wealth without having to be a wage slave for 30-40 years first?

I think it is possible, and while I haven’t done it yet myself, I have seen plenty of people do it, and applying the right principles has already given me results the confirm the validity of the concept.

The three ideals I am interested in cultivating are Freedom, Financial Independence, and Wealth. This will differ from person to person, and will control what you do to reach those goals.

The basic Money Monk concept is a mixture of the works of all the people I listed above, as well as other, and some of my own personal brand of mad-genius.
It is more of a financial and life philosophy than it is a system, but there are several key principles at the root of it all:

The Money Monk Commandments -An ever-expanding List:

- The 3 main goals are Freedom, Financial Independence, and Wealth.

- The 3 main Financial Lifestyle choices designed to reach these goals are Frugality, Income Creation, and Investing.

-How much you care about each goal will guide how much of each lifestyle choice you implement.

- At some point, you do have to work to earn money. (However, this does NOT necessarily have to be a standard job as most today would describe it)

- Financial Independence is reached when savings reach about 15-25 times your yearly budget.

- Financial Independence can be reached by increasing savings, reducing budget needs, or both.

- The consumer culture is poisonous to freedom and wealth building, and must be discarded.

- Frugality is necessary, but must be targeted and (preferably) temporary.

- You must learn to recognize the real monetary value of items and actions

- Successful investing is situational, not absolute