Passive Income - Our Quest for Financial Freedom

Tankless Water Heaters - Advantages and Disadvantages

2008-09-17T15:17:00.000-07:00

For those of you interested in the bottom line on tankless water heaters, here it is. The complete story follows this list.

Advantages:

Definitely saves on natural gas - we use 50-75% less gas. As gas prices have increased, that is worth $14-22 per month.
You never run out of hot water - if you take showers back-to-back (at the same time does not work so well - see the disadvantages)

Disadvantages (or at least things to consider):

Installation is very expensive - probably as much as the unit. I recommend having someone local do it all, so you can get service when necessary.
You can only heat so much water at once - usually 4-5 gpm depending on the temperature of the incoming water. This may be enough to run a shower and something else at the same time, but don't count on it.
Electric units my require an upgrade to your electrical system (they take a lot of power). Natural gas units require large piping all the way to the unit.
If you lose electricity, you lose hot water. Even the gas unit requires electricity to run the fan and controls.
More moving parts means more things to go wrong (and fewer people around to work on them). It has certainly made me appreciate the simple tank water heaters.

The Story

My wife and I live in a 4-plex (all 1-bedroom units) that we own. We are fixing up & living in the bottom two while renting out the top two.

We bought it a little over a year ago, and the water heater was 25-30 years old (gotta love those Rheemglass Fury water heaters). It was also a 40-gallon water heater trying to serve 4 bathrooms while having the additional disadvantage of being seriously corroded by very hard water.

So we decided to take advantage of the tax credits that expired last year to put in a Takagi T-K3 tankless water heater - I figured we should spend about 1/2 as much on water heating, and have "endless" hot water. That is, we could take as many showers as we wanted back-to-back (not at the same time. The previous water heater lasted barely over one shower.

Of course, I searched on the internet for the best price I could find and bought one to install myself. Little did I know what I was getting into...

Installation Location

I had planned to install it in the same place the previous water heater had been - in the middle of the basement, venting into the chimney. After reading the manual (and talking to a plumber), I realized I could not vent it into the chimney unless I lined it or bought a special stainless steel vent to run all the way to the top. Considering this vent material cost about $20/foot, I quickly decided against that.

The plumber informed me that they are best installed on an exterior wall, with the special vent piping running straight up and out. Of course that would require about a 6" hole through the wood at the top of the basement wall. I did not really want to tackle that myself...

Installation Cost

I got a quote from the plumber to install it - $800-$900 including the vent materials. That's more than I paid for the heater!

I ended up spending almost $200 for the vent piping and $100-200 to cut the hole and install the sleeve through the wall. Add in some money for the additional 3/4" black gas piping we had to run, and there is probably $400 in materials. Plus my labor to install.

Definitely more work than I had planned on...

Operation

We had some immediate operational problems that took a long time to resolve. They ended up being my fault (mostly).

Do not install an "excess flow" or "safety" gas valve in the natural gas piping! These valves are designed to stop flow in the case of a hose breaking - when the flow rate gets too high. Guess what - at max burn on the water heater, the flowrate was too high, and the valve shut the gas off. Weeee! Cold water!

Once we resolved that, we dealt with really smelly exhaust (I could smell it on the other side of the house when the water heater was on). It ended up being an easy gas manifold pressure adjustment. Except for the fact that I had to buy an $85 digital manometer to make the adjustment.

After that, we had a continous fan noise. Tech support again walked me through what to do, and I found a piece of packing styrofoam in the fan. Not a huge deal, but annoying.

Most recently, we had a REALLY loud noise periodically (and eventually got an error code). Did I mention that the water heater stopped working late at night when I tenant was trying to shower? Again, weeee - cold water! Turned out this was because of dirty combustion (and incorrect manifold pressures). We still are not sure if it is because of the wrong pressures (and therefore bad combustion) or acidic condensate in the exhaust dripping back into the burner and heat exchanger. I guess we will find out...

Conclusions

Definitely know what you are getting into before switiching to a tankless water heater - I didn't.

If I were doing it all over again, I would get a unit from a local plumber and have him install it, or just get the 50-gallon tank water heater with the best insulation I could find.

It hasn't been bad to work on, but I like hands-on things. I also like now having the knowledge to fix a number of things on my own. At the same time, I like things to work the way they are supposed to.

I will keep you updated on any future issues with the unit. Otherwise, I am just looking forward to enjoying some natural gas savings!

What is your purpose?

2008-08-27T13:59:00.000-07:00

What is my purpose? What am I here to do? I think most of us have have asked ourselves (or God) these questions at one time or another. I admittedly envy the people who have a great answer for this question...

Your Calling

One of the ideas that was rediscovered during the Reformation was the idea of "vocation" or "calling." You see - only those in the Roman Catholic Church had a calling - priests, monks, nuns, etc. were called by God, and everyone else was not.

But in truth we are each called (by God) to do the best we can in the various roles we have in life. Are you a father, mother, husband, wife, sister, brother, son, daughter, homemaker, employee, etc?

Each of these is a calling - something that we are called to do to the best of our ability.

How different would the world be if each of us tried to be the best husband, father, or employee we could be?

Would jobs be better if owners and bosses tried to be the best owner or boss they could? What if all employees were the best employees they could be?

Most people dislike their jobs or at least have many things they would rather be doing. It shouldn't be this way. That job is one of your callings - one of your vocations. You should do it to the best of your ability (even if you aspire to other things).

If you are the best employee you can be in your current role, do you think that improves your chaces of getting a better job down the road? I do. Even if your goal is (as mine was) to get away from being an employee, that's no excuse for being the best employee you can as long as you are in that vocation.

Confessions of a Dishonest Employee

OK - confession time for me:

I was not a perfect employee. Office supplies ended up at my house. I spent time on the clock taking care of personal business.

Of course, nearly everyone does this, so it's OK, right? Wrong? Stealing is stealing. Period. It took me being able to look at this situation from the outside to figure this out.

If your wife called and said your daughter needed a red pencil for a homework assignment - could you bring one from the office, what do you do?

Now imagine that the office supplies are sold in a store at your office - the pencil is $0.10 and the petty cash box is open with noone around. Would you take a dime and use it to buy a red pencil?

The situations are effectively the same, but most people answer those two questions differently (I know I used to).

I was looking at accepting a job offer recently, and I realized a lot of the things I had done wrong in my last job, and I was thinking about how to avoid them in my new job. Would I have been perfect? No. But I like to think that I would have been a lot better and thought about my actions more thoroughly.

Vocation and Family

I really think we have lost the idea of vocation in the family.

Never before have men been so quick to abandon their roles as husband and father.

Never before have women been so quick to abandon their callings as wife and mother.

We have not taken our family vocations seriously, and this cannot help but spread outside the home as well.

To overgeneralize:

Kids have a lot less respect for their parents than they used to.
Husbands and wives have a lot less repect for their roles (and marriage in general) than they used to.
CEOs have less repect for their employees than they used to.
Employees have less respect for their bosses than they used to.

I fear that "pride in your work" and "doing your best" has been replaced with "what's in it for me" and "it's my right".

Instead of maximizing what we get, we should be maximizing what we give. The rewards follow (or maybe they don't - but that doesn't mean we shouldn't do it).

Most things I have done in my life were done selfishly. I need to start doing more for others - taking others into account in my decisions.

And not pretending like I am doing things for others by stealing a red pencil for my daughter either...

So, What's Your Point?

That's a great question - I guess I want each of us to take more pride in our various roles in life. I know I need to do this - especially in my role as husband and son (no kids yet).

And I'm not sure everyone thinks about this. I didn't think about it much until recently, and I don't think many of us do.

These little (or big) actions slide under the radar of our conscience:

Got too much change back at Albertson's and didn't say anything? Congratulations you stole from Albertson's. (Though if you are like me you are quick to go to customer service if you are shorted change!)
Put 5-1/2 gallons in your "5-gallon" water refill? Congratulations - you stole water from Wal-mart. (Ask me how I know about this one - just figured that out a few weeks ago!)
Live with your giflfriend before marriage? "Everyone does it." Increasingly true but still adultery.
Gossip about someone at work? Congratulations - you just broke the 8th Commandment (the one we never talk about).

We need to take our actions seriously. Everyone else (including God) does.

Your True Purpose

Your purpose is to perform your best in the roles you are already in.

Even if you are meant to do bigger and better things down the road, that does not excuse you from doing the best you can now.

I think we all know people that never became great in the eyes of the world but had a profound impact on many people simply by being the best mother, teacher, grandmother, or friend that they could. Always ready with a smile and a helping hand...

If each of us could be like that in each of our callings, I like to think that the world would be a much better place.

Our Gas Saving Electric Scooter!

2008-06-24T14:06:00.000-07:00

I apologize for the delay in following up on my last post, but it took a little work to get the right price on our new toy:

This is the XB-508 electric scooter made (or at least marketed by) Xtreme Scooters, a plug-in "electric bicycle".

We got it for my wife to commute to & from her work (about 2 miles away). Although it only goes 20-25 mph (depending on wind and how many people are riding it), the highest speed limit on her way to work is only 30 mph.

We wanted something that could get her to & from work without her having to get all sweaty on a bicycle, and we figured with plug-in cars on the horizon, someone has to make an electric scooter.

Apparently, they do! Xtreme Scooters seemed to have the most economical choices for what we were looking for - light duty around town. Other scooters are more powerful (closer to motorcycles) and much more expensive.

The best price we found for the model we wanted (actually the XB-500) was at Earth Scooters, but I could not get a hold of anyone there by phone, so I wasn't comfortable paying them online. The best price we found was about $725 for a new one.

We ended up paying $600 for the next model up (barely used) on Craigslist. If you use the IRS mileage rates, this represents about a 30% annual return on investment with our limited usage, even with electricity cost (which should be less than $0.005 - half of a cent - per mile).

This thing is awesome for getting around town. You can put up to two people on it (though 300 pounds is the recommended weight limit), and it has several storage compartments. It is really quiet, and it is nice to have pedals "just in case" - the pedals are not ergonomically friendly, and I would not want to use them very much!

If you are looking for a way to save money on gas around town, consider an electric scooter. Prices have gone up significantly because of increased demand, so looking at places like Craigslist are good alternatives.

One important caveat:

Make sure you know the requirements of your city/county/state for such devices. In Kansas, this cannot be tagged because it doesn't have a license, so it is up to the municipality to determine if they allow it on their roads. I have heard of a nearby town that does not, and someone who had already bought one was out of luck.

Saving Money on Gas - Gas Rebate Credit Cards

2008-06-04T07:46:00.000-07:00

Due to the popularity of the "Improving Gas Mileage" series, I wanted to touch on a couple of other things you can do to decrease your gasoline (or diesel) expenditures.

Today we are focusing on Gas Rebate Credit Cards.

There are a number out there that have special deals on gasoline purchases (which also apply to diesel, I am pretty sure). For a great summary of the available deals, check out:

http://www.creditcardwatcher.com/gascards/

I'd like to highlight a couple in particular because they fit very nicely with my previous post improving gas mileage with TOP TIER fuel.

TOP TIER Gasoline Rebate Cards

Shell Platinum Mastercard - 5% at Shell stations, 1% elsewhere

The Shell Platinum Mastercard (issued by Citibank) gives you a 5% rebate on Shell gasoline purchases. One catch we noted when we signed up is that there is an annual fee if you don't use it at Shell at least 9 times per year. For us that shouldn't be a problem. For more info, click here.

ConocoPhillips Credit Card - 4% at Conoco/Phillips66/76 stations

The ConocoPhillips credit card (also issued by Citibank) gives you a 4% rebate on Conoco, Phillips66, and 76 gasoline purchases, up to $50 per month. You can check it out here.

The ConocoPhillips card has a promotion right now for 10% back for 90 days, but they cap the total rebate at $35 over the 90-day period. This may be a good deal if you don't use much gas, but if you lose a lot, you could end up getting less than with the 4% rebate. Click here for the promotion page.

Now, if you've had some bad experiences with credit cards (and if you've had one, who hasn't), you might not be willing to go this route. I encourage you NOT to get one of these cards just to save money if you (being a stronger person than I) have completely sworn of credit cards or the like. 4 or 5% back on gas is not worth a financial crisis down the road :)

Very soon (hopefully) I will be talking about an upcoming purchase we are going to make to save gas...

Improving Gas Mileage - Installment 6

2008-06-03T07:16:00.000-07:00

We come to the last of the six today, but don't worry, this is not the end (see the bottom of the post).

Improvement #6 – Lighten Your Load

Potential savings: $0 – 78 (0 – 3% improvement)

Cost: a little time

Depending on how much junk you usually carry around in your car with you, the savings here can vary dramatically.

The Department of Energy and EPA advise that, in the average car, an extra 100 pounds can decrease gas mileage by 1-2%.

I personally think that estimate is high, but make sure you aren't carrying around more stuff than you need to. I try to never let the trash in my car get above knee level for just this reason. Just kidding, but I do try and make sure that I am not carrying extra boxes, sports equipment, etc. in my trunk if I don' t need to.

The principal is simple: the less mass you are accelerating and moving around, the less energy it takes. The benefits are more noticeable in smaller cars: the mileage in my old 4-cylinder Ford Escort was significantly lower with two extra people in the car. Those two extra people add about 10% to the car’s weight.

Depending on the vehicle (engine tuning, rolling resistance, etc.), the benefits can also vary. A 10% difference in weight might make a 3% difference in the Escort mileage but only 1% in another car. Dropping 1% of the weight (about 30 lbs) may improve mileage only 0.1-0.2%, which you probably could not even measure.

Nevertheless, carrying less weight around is easy and even a 0.1% savings can add up (about a gallon a year). Just remember not to carry around extra weight if you can avoid it!

As you probably know, it is prudent to carry some emergency supplies around with you – please don't get rid of these!

So much for the improvements. Now for some products to watch out for...

Watch Out for Gimmicks

The September 2004 issue of Consumer Reports® evaluated add-on products that bill themselves as "gas mileage improvers." Unfortunately, none of them live up to their claims. The Fuel Genie, Platinum Gas Saver, and Tornado all cost around $100 but none of them improve gas mileage.

And these aren't the only gimmicks out there...

A friend of mine from church was looking into on-board hydrogen generators where the plans run $40 up to $1000 for the complete "system". After looking at the different options, I remained unconvinced of any scientific benefit (I can give you more analysis if you want, but I don't want to bore anybody...:) ).

Southwest Research Institute (a respected third-party test lab) is actually doing research on one of them right now - so I will let you know if they find anything beneficial!

Most (if not all of these) are just gimmicks like the others that Consumer Reports tested almost 4 years ago.

With many of these products, people looking to save money on gas with these products just spent $100 or more for NOTHING. I can't believe people at those companies sleep very well at night!

Well, that's the end of the six part series, but stay tuned...

Because of the popularity of this series I will be taking a look at other ways to save money on gas that do not involve improving gas mileage in the near future.

Until then, may your gas (or diesel) bills be low!

Improving Gas Mileage - Installment 5

2008-06-02T07:34:00.000-07:00

Almost to the end of the series of improving your gas mileage! This is the fifth of six installments, and I would love to hear any other ideas that you might be willing to share for those of us looking to save money on gas (or diesel).

Improvement #5 – “Breathe Easier” – Change Your Air Filter Regularly

Potential savings: $26 – 78 (1 – 3% improvement)

Cost: $10-20 (but you should do this anyway!)

Cost of my recommendation: $12.50 per year
($50 for AMSOIL 4-year air filter)

I vividly remember at an AMSOIL continuing education class (remember, these are oil guys) they mentioned that the air filter is by far the most important filter in the vehicle because that is where almost all of the wear particles (i.e. dust) get into the engine.

That just floored me because these are guys that make mostly oil products, not air products. That revelation has really stuck with me – I took out my K&N air filter after I learned how little filtration they actually do. Most automobile makers also now strongly discourage use of oil-wetted filters because of the potential to get oil into the MAF (mass airflow) sensor and cause engine problems.

The AMSOIL air filter filters very well and flows as good as or better than any paper filters out there, but the main advantage is the fact that it does not clog up over time.

Think about your furnace filter – you know how it can get REALLY dirty over time? The dirt particles actually clog the filter and decrease air flow (like tennis balls getting stuck in the holes in chain link fence). AMSOIL’s filter is actually really fine, more like a window screen than a chain link fence. When the “tennis balls” get caught by the AMSOIL filter, it just sits on top, and the air can still go almost completely around it.

Being able to let air flow even as it gets dirty means the fuel economy improvement can actually last longer than just the first few weeks after you change the air filter.

You will accomplish about the same fuel economy improvement (at least initially) by either changing your filter regularly or using the AMSOIL filter and cleaning it off annually. I personally prefer to use the AMSOIL filter (for the one car I have that they make one for) because of the superior engine protection – I want to take to best care of the engine that I can, especially if it doesn’t cost any more!

My Recommendation:

The AMSOIL air filter are convenient, relatively inexpensive, and filter very well. Personally, I find it much easier to do all of the maintenance once a year instead of having to remember to do things at different intervals (like every 10,000 miles – a typical change interval for air and fuel filters).

Again, you don’t have to use AMSOIL to get great results. If you bought a high-quality filter like Wix and changed it according to your manual you would get similar results (though it would cost more of your money and time…).

Improving Gas Mileage - Installment 4

2008-06-01T12:09:00.000-07:00

Here is today's installment. You have probably heard most of these before, but these are where some of the biggest improvements can be had:

Improvement #4 – Drive More “Efficiently”

Potential savings: $26 – 525 every year (1 – 20% savings)

Cost: Changing your driving habits (some will consider this too steep a cost!)

OK, this improvement is arguably the most difficult one in the list thanks to human nature, but there might be VERY large savings here depending upon your current driving habits. You can change your driving habits in several ways to improve gas mileage:

A) Accelerate slower and decelerate slower. Accelerating and decelerating account for most of the difference between city mileage and highway mileage, which is why regenerative braking allows hybrids to get comparable mileage in the city as on the highway.

Letting off the gas so you don't push on the brake as much helps just like "feather-footing" it. Just imagine that the harder you push the accelerator or the brake, the more money you are squeezing out your tail pipe...

B) Drive slower (like the speed limit). Maximum gas mileage is achieved between 45 and 55 mph in most cars. Gas mileage drops of quickly above 55-60 mph. You can improve gas mileage 5 – 10% by going 5 mph slower on the highway. Of course that also means you get there slower. I try to go the speed limit not only because it is the right thing to do but also because it saves gas!

C) Use cruise control when possible (on the highway). Keeping speed constant gives you the best gas mileage at a given speed.

D) Turn your engine off when idling. If you have a modern, fuel-injected engine, you can save gas by turning it off if you will be idling over 10 seconds. Yes, you read that right – 10 seconds! That means if you just missed the stoplight, turn your car off to save gas. Someone pointed out that this could produce additional wear on the starter & solenoid. That is true, so I don't do it for 10 seconds, but definitely for longer stoplights, train crossings, etc.

E) Combining trips. Try not to make multiple trips if you can avoid it. We live in a fairly small town, so when we go to larger cities 30 miles away, we try to combine as many errands as possible.

F) Consider alternate transportation. Considering walking, riding a bike, electric scooter, carpooling, or a moped instead of car. My wife was a little shocked when I showed up at her work one day in dress clothes after riding my bike to church and then her work. I try and bike when I can to run errands around town. Of course, it also helps to live in a small town...

Drafting also helps with gas mileage, but it is generally unsafe. If you are close enough to get a significant mileage benefit, you are probably leaving less than 2 seconds between you and the car in front of you.

There are some really large benefits here, but it is not worth the risk. I look forward to automakers figuring out some automatic systems to allow us to someday safely take advantage of drafting.

Improving Gas Mileage - Installment 3

2008-05-31T12:27:00.000-07:00

This one is near and dear to my heart since I sell synthetic oil. In fact, the (used) car I just recently bought, one of the first things I did was change the engine and transmission oil over to synthetic.

As I mentioned before, I sell AMSOIL, so take that into account when reading this. If you are interested in learning more about AMSOIL specifically, I am providing a link here and at the bottom of the page. Consider yourself warned :)

Improvement #3 – Use Synthetic Oils

Going from conventional oil to a high-quality synthetic oil should give you a 1-4% improvement in mileage for each component (engine, transmission, and differential) that you put it in. This is based upon testing as well as my personal experience with AMSOIL. If you change all three (assuming you have a differential), I would expect about a 5% improvement.

Let’s talk about each component individually:

Engine oil

Potential savings: $26 – 118 (1 – 4.5% improvement)

Cost: No extra (for most) with AMSOIL up to $100

Cost of my recommendation:
- $0 (most people spend less with AMSOIL)

This is discussion is going to refer mainly to AMSOIL synthetic oils for several reasons:
1) I think it is the best.
2) It is the synthetic oil I am most familiar with.
3) The one-year/25,000-mile engine oil change guarantee (for personal vehicles) makes it by far the most economical option for synthetics.

Other synthetic oils will give similar benefits (though most not as much), but AMSOIL has the most independent testing done on it that I know of, and they really focus reducing friction in the engine, which leads to better fuel economy (as well as better engine protection).

I started using AMSOIL when my wife and I were each driving 25,000 to 30,000 miles a year. To find out I could change oil once a year instead of every month or two and save money at the same time made me ecstatic (well, ecstatic for an engineer). I couldn’t believe more people (like me) hadn’t heard about it, so I started selling it as well.

Starting from “scratch”, makers of synthetic oil can design it to do almost exactly what they want (if the maker chooses to do that instead of just maximizing profits), making it better at all of the jobs oil does.

As I alluded to above, synthetic oils generally reduce friction in the engine by not having the various contaminants in traditional motor oil. Reducing friction improves fuel economy by having less of the engines energy wasted overcoming friction. It also has the nice side benefits of reducing engine wear and generating less heat.

The automakers are finally starting to catch on (seeing that it helps them meet average fuel economy standards mandated by the government): many cars now come with and recommend semi-synthetic or full synthetic oil changes.

The average full synthetic oil is better than the average semi-synthetic in terms of fuel economy (no contaminants being better than less contaminants).

According to a May 2008 Lubes ‘n’ Greases article, you can also improve fuel economy by going from 5W30 or 10W30 to 0W30 (0.3 to 1.0% improvement, respectively) or 5W20 to 0W20 (0.5% improvement). 0W30 or 0W20 oils are typically only available as full synthetic oils.

Without going into technical detail, in a high-quality synthetic, there is no disadvantage in switching to the 0WXX oils.

Just the other day, I talked to a mechanic that sells AMSOIL. He had just installed AMSOIL engine oil (5W30) in his wife’s Pontiac G6 (two years old, about 40,000 miles). The mileage went from 28.5 mpg to 29.4 mpg using the mileage computer. That is a just over 3% improvement (right in the range we would expect) and will save her over $70 per year in gasoline. At the same time, it costs no more (per mile) for her oil changes.

My recommendation:

Use AMSOIL 0W30 or 0W20 premium synthetic motor oils. You should be able to get the oil and have it installed for around $100 and it lasts a year. For someone driving 15,000 miles a year this compares to 5 oil changes at probably about $30 each, for $150 total, not to mention the time involved to get it changed.

Differential fluid

Potential savings: $175 – 700 (1 – 4% saved for 100K miles)

Cost: $75 $25 for fluid
$50 to get it changed

To me this is a no-brainer for vehicles that: 1) have a differential, and 2) do not have synthetic fluid from the factory. Most newer vehicles have synthetic, but check your manual – if it states that synthetic is required, it probably had it from the beginning; otherwise, probably not.

Note: If you are changing over from conventional to synthetic and you had leaks at the differential, you will want to get the seal replaced at the same time. This would likely be done anyway, but synthetic fluid is expensive to let leak out!

If you do have synthetic from the factory, make sure you change it when required with something optimized for superior fuel economy.

My recommendation:

If you have a differential, and it does not have synthetic fluid in it, get it changed now. If it has synthetic, just make sure you get a synthetic optimized for fuel economy when the manual recommends changing it.

Transmission fluid

Potential savings: $175 – 700 (1 – 4% for 100K miles)

Cost: $220 (automatic) $120 for fluid (typical car)
$100 to fully flush out
$75 (manual) $25 for fluid
$50 to get it changed

Cost of my recommendation:
$50 – 150 (automatic – at next service)
$75 (manual – if not synthetic already)

The potential gas savings in the transmission are similar as for the engine and differential, but the cost for changing over an automatic transmission is significantly greater.

In my view, automatic transmissions are still the least reliable part of the drivetrain, so the protection a good synthetic provides against wear can help reduce transmission problems down the road. This is another good reason to change your transmission over to synthetic.

Most automatic transmissions hold 10-15 quarts, and a good synthetic transmission fluid will run around $5 to 6 per quart more than normal transmission fluid.

Note that there are two different transmission services – 1) drop the pan, clean the filter in the pan, then top off the fluid, or 2) flush all of the fluid out (after dropping the pan and cleaning the filter).

The first usually changes only about 1/3 of the fluid in the transmission, so don’t mistake it for a full fluid change. When switching to synthetic, you will want to do the second option – the full flush – to get all of the old fluid out.

Because of the expense of completely changing all of the transmission fluid, I recommend waiting until your next scheduled full fluid change so that you are only paying to upgrade the fluid. If your manual only recommends the first option above, I would substitute the full flush for the next service.

Again, I have the most confidence and experience with AMSOIL, so that is the fluid I would recommend (surprise, surprise). I have not seen significant test data published by the other manufacturers that would allow me to recommend them as well, but there may be other good ones out there. AMSOIL has their own 100,000 mile guaranteed drain interval for automatic transmissions, or they say to use the manufacturer’s recommendation if it is longer.

My Recommendation:

Automatic transmission – At the next scheduled transmission service (preferably the full change), go ahead and switch over to synthetic. The additional cost could be anywhere from $50 ($5 per quart times 10 quarts) to $150 (my $220 estimate for full conversion compared to $70 for a “typical” transmission service).

Manual transmission – Since the service is much cheaper (usually about $50 to change and $25 for the 2-3 quarts of fluid), I recommend doing this as soon as possible. As you can see, there is a very good payback on fuel savings (not to mention better protection for your transmission!).

As promised, here is a link to the AMSOIL store. Because there are lots of different kinds of fluids, feel free to call me at 816-896-6566 if you have any questions!

The next three don't require as much explanation, but are no less important. Stay tuned...

Improving Gas Mileage - Installment 2

2008-05-30T07:39:00.000-07:00

In a deperate attempt to keep up some momentum here, I am posting

Improvement #2 – Check Your Tire Pressure

Potential savings: $10 – 78 (0.4 – 3% improvement)

Cost: $0 – 75 and time to check and fill up tires

Cost of my recommendation:
$75 one time for a compressor (if you don’t have one)

Tire air pressure has a significant impact on gas mileage. Tire pressure decreases as a small amount of air leaks out over time or as temperature drops through the year. According to the US Department of Energy and the EPA, gas mileage decreases by about 0.4% for each 1 psi drop in tire pressure.

So if your tires are 10 psi low, your gas mileage will decrease by 4%. If you are getting 25 miles per gallon (mpg), that 4% translates into a 1 mpg loss. Low pressure will also lead to increased tire wear - you will have to pay to replace your tires sooner.

At the same time, overinflating tires can be a safety issue. An overinflated tire has less contact with the road and can be more unstable in braking or turns.

You can usually find your recommended tire pressure inside one of the two front doors, the glove compartment door, or the owner's manual (NOT on the tire itself, as I used to think).

These are recommended pressures when the tire is cold, so always check your tire pressure before you drive anywhere.

The cheapest way to check your tire pressure is to carry a tire pressure gauge in your car and check the pressure in the tires once every week or few weeks.

There are a couple of good products out there that make it easier to monitor your tire pressure:

A) Tire pressure stem caps - Tire pressure stem caps screw on to your valve stems (you know - those little things you use to check tire pressure) and turn yellow or red when your pressure gets low. These are also great to keep an eye on the pressure in your spare tire.

B) Automatic tire pressure monitors - These systems add sensors inside each tire and display the pressure of each tire on your dash. A number of new cars now come with this option. They are more expensive to buy and install but much more convenient!

Because most places seem to charge for air now, I have my own air compressor to air up our tires. If you don't have an air compressor, you may want to invest the $30 or so in an air tank.

You can fill this up at your local gas station and keep it in your garage to air up your tires if you need to. You could also invest the $75 or so for small air compressor to take out the middle man.

Having an air compressor is my personal recommendation to make it easy to air up your tires. And let's face it, the reason most of us (well, at least me) don't do this as often as we should is that it is too much hassle (and most gas stations charge for air now).

There are also small air compressors that can run off your car battery - they take a long time but are great in a pinch.

My recommendation:

For the convenience (and increasing the chances that you will check your tire pressure more often), get a small air compressor for your garage. Don’t carry it around with you in your car, though (see Improvement #6).

This improvement was pretty straightforward, but there will be a lot of new information (for most people) in #3 - Use Synthetic Oils. That should be up tomorrow!

Improving Gas Mileage - Installment 1 of 6 (or so)

2008-05-29T15:59:00.000-07:00

With gas now at nearly $4 per gallon, I just couldn’t stand it anymore. I finally had to write down the things that I know can help you improve your gas mileage.

Gas prices have certainly been in the news alot lately, and though (like many of my subjects as of late) it is not directly related to passive income, I feel it is something that a lot of people are interested in, so i am going to share my knowledge (limited as that may be :) ).

Some of these you will know, maybe some you won’t, and maybe this will help give you a reason to do some of those things you know you should!

In this day of ever-increasing gas prices, there are lots of gimmicks out there that promise to increase gas mileage. The purpose of these tips is to cut through the fluff to show you the things you can do that are PROVEN to improve gas mileage. I’m an engineer by training, and I don’t like to present facts without seeing that they are backed up with some sort of proof.

Also know that I have chosen improvements that are easy to implement, produce quick results, and are safe. There are a number of other improvements that did not make the list because they do not meet one or more of the above criteria (for example: over-inflating tires and drafting both improve fuel economy if done right, but are safety hazards).

The improvements are ordered from easiest and highest impact to more difficult to implement or lower impact.

So without further ado, here they are:

1) Maintain Your Fuel System (today's installment!)
2) Check Your Tire Pressure
3) Use Synthetic Oils (engine, transmission, and differential)
4) Drive more “Efficiently”
5) Breathe Easier – Change Your Air Filter
6) Lighten Your Load

You’ve probably heard most (if not all) of these before, but I want to put some real numbers to each of these improvements for you so that you can make a very informed decision about how to implement these ideas.

Each of these six posts will give you the details on one of these subjects – approximate costs, potential savings, and the reasons behind the savings.

I have based the savings and cost analysis on a typical year (except where noted) for the “average driver”, driving 15,000 miles per year, getting 20 mpg, and paying $3.50 per gallon (I still can’t believe that) for gas.

My Recommendations

At the end of most sections, I include my recommendations for the best bang for your buck on each improvement (where applicable). These are the same recommendations I would make to friends and family and if anything don’t go as far as I personally would.

These recommendations are based on what? My experience. That’s all I can talk about. They may not be right for you, which is why I try to provide some discussion on each topic so that you can make an informed decision for yourself. Fair enough? Great!

Onto the “nitty gritty”…

Improvement #1 – Maintain Your Fuel System

Potential savings: $39 – 184 (1.5 – 7% improvement)

Cost: $10-115 and a little time

Cost of my recommendation: $20
- $20 for AMSOIL additives
- Nothing for TOP TIER fuel (in most places)

This really falls into two parts – a) trying to restore your fuel system to its new and clean condition, and b) maintaining that cleanliness.

Not only can this significantly improve gas mileage (average of 2.3% in testing – I have gotten confirmed reports of up to 8.8%), but it can improve the responsiveness and drivability of the car – in other words, help it drive “like new” again.

A) Clean your fuel system periodically

Most gasoline sold today contains only the minimum amount of detergent additives – you know, the things that keep your fuel system clean – that are required by law. This is not enough, as many automobile manufacturers have discovered (see the second part of Improvement #1, below).

Unfortunately, over time, deposits build up in your fuel system causing inefficiencies in your engine. Not only that, the deposits tend to build up differently in different cylinders, so one cylinder might be getting too much gas and another not enough while your car thinks everything is working normally.

This usually increases pollutants considerably as well. Why? Today’s engines are actually very finely tuned to emit very few pollutants IF THEY ARE RUNNING RIGHT. Once the deposits build up and the fuel mix varies between cylinders, pollutants can increase significantly.

So what do you do?

Use a fuel additive to clean out the system periodically. I have seen testing showing 15% reduction in fuel flow in an injector in only 3,000 miles.

The problem isn’t necessarily the decrease in fuel flow (though it’s not good) – the real problem is when one cylinder is getting 85% flow and another is getting 95%. Your car assumes they are all getting the same when, in fact, one may be getting way to much and one may be getting way too little, which causes each to operate VERY inefficiently, lowering your mileage

Unless you have a brand-new car, your fuel system is not perfectly clean. Try an additive to restore power. I recommend AMSOIL based upon the extensive third-party testing that has been done. (I do sell AMSOIL products, but I only do so because I have determined them to be the best products out there based upon independent tests.) There may be other good ones out there, but I have not seen anything comparable.

AMSOIL recommends adding fuel additive every 4,000 miles to keep the fuel system clean. Depending on what kind of gas you are using and how much you care about your car, you can always either wait until you notice a drop in performance (I don’t recommend this – it is tough to notice because it happens so slowly) or try it again after 6 months or a year and see if you notice an improvement.

My recommendation:
Use AMSOIL or another very high-quality fuel additive at least every 6 months.

(For more information on the AMSOIL additive, click here or feel free to contact me directly.)

B) Use TOP TIER gasoline

OK, this doesn’t actually improve gas mileage but it theoretically helps maintain it. A group of automakers (BMW, GM, Honda, and Toyota) jointly developed these standards because they determined that the federally-mandated levels of additives were not enough. The TOP TIER designation was created to help keep the fuel system properly clean.

As of January 2008, this was the list of TOP TIER retailers in the US and Canada. All grades of their gasoline must meet the TOP TIER standards to make this list:

QuikTripChevronConocoPhillips76ShellEntec StationsMFA Oil CompanyKwik Trip/Kwik StarThe Somerset RefineryChevron-CanadaAloha PetroleumTri-Par Oil CompanyShell CanadaTexacoPetro-CanadaSunoco-Canada

As my friend Kevin Burns summarized: “Use red gas stations or Shell.” I’m not sure that works in all parts of the country, but where I am it works pretty well. Thanks, Kevin!

I try and use gas from this list whenever I can, even if it costs a couple of cents a gallon extra, but usually it doesn’t (but not if it costs 10 or 20 cents extra – then my frugality kicks in!).

Even if there is no hard data behind it, the automakers would not go through all of this trouble unless they saw significant benefit to the end user in it, so sign me up – I am sold on TOP TIER gasoline.

(Unfortunately, a similar standard for diesel fuel does not exist to my knowledge.)

Do I need to do both of these?

Yes – at least initially you need to use a fuel additive to get the fuel system clean. Then if you ALWAYS use TOP TIER gas, that should be enough.

Again, you could always check after 6 months or a year by adding more fuel additive. If you notice an improvement, then you probably ought to use the fuel additive on a regular basis. If you don’t notice an improvement, then TOP TIER gas is probably enough (at least until you notice a drop in performance down the road).

Here is what I recommend:
ALWAYS use TOP TIER gasoline unless it is much more expensive in your area or just not available.

Whew! Well, that's it for today's installment. Most of the rest will be shorter (but no less informative, I am sure!). I will plan on putting those up over the next few days so check back often!

Without health, your passive income won't mean much...

2008-03-12T11:00:00.000-07:00

Not directly related to passive income, but an important topic for happiness in life is HEALTH.

Rebecca and I just got back from a 4-day Peak Potentials (T. Harv Eker's company) training called Extreme Health. Although there were some speakers that I would categorize as "fruity", there weren't as many as I expected.

SIDEBAR
Let me clarify that by "fruity" I don't just mean non-Western medicine, I mean the people that want you to go inside your mind to heal yourself or manipulate you to allow your soul to "breathe again". They might work; I am simply very skeptical about these types of healing.

My wife is an MD specializing in Emergency Medicine, and even she really enjoyed the conference.

In terms of specific strategies for improving your health, we looked for several things from the speakers: 1) How healthy did they look overall?, 2) How did they look for their age?, and 3) Was it a program that Harv himself used?

There were four things we bought while there:

1) Raw food - David Wolfe presented on this subject, and his passion and vibrancy really came through. We especially liked his philosophy of just adding some raw foods to your current diet.

2) Mercury test kits - An MD presented on the multitude of ways mercury can affect the body - mainly neurological, but also general fatigue and other very serious diseases. Amalgam fillings is the most common cause. More info at http://www.mercout.com/; check out the video on mercury and live nerves. We highly recommend at least getting tested for this.

3) Gene SNP - They test for 36 common mutations in DNA that can cause susceptibility to certain diseases if you don't get the right nutrients. In other words, it is a test that allows you to know what levels of nutrients are critical for you to get in order to help avoid diseases you are prone to. based upon genetics as well as your diet and lifestyle (from a questionnaire).

Rebecca majored in genetics in undergrad, so we had to get this done. The test is much cheaper than from other places - I suspect because they also provide optional supplements that are tailored to your results. I don't really plan on using their supplements, but I certainly want to know my susceptibilites and that I am getting enough nutrients. More info at http://www.genesnphealth.com/. If you have trouble getting info, you might also contact Suzanne Stradley at 503-661-5050 or suzannestradley@comcast.net.

4) The "Cellercizer" - named not because you have to exercise in the cellar (or will quickly put this there) but because it exercises all of the cells of your body. Rebecca and I were most excited about this one (and are eagerly awaiting its arrival!), so I will give a little more detail:

I first recommend you go to the website and check out the information because I am not going to be able to convey the benefits as well as the guy who developed it.

Click here for more info

It looks like a trampoline but has some important design features that I (as a former engineer) appreciate. He also had a number of testimonials that say his presentation and went out and bought something cheaper before not being able to do some of the exercises (or even hurting themselves when something broke) and ultimately bought a "Cellercizer".

The balance benefits are amazing - he did a great demonstration of this by forcing people (even a yoga instructor) to lose their balance, then not being able to after just 30-60 seconds of bouncing.

Not to mention the strength and flexibility that he can demostrate superior to yoga teachers, and the "Cellercizer" is his only exercise.

He also is incredbly strong (and ripped), but not a big as a bodybuilder by any stretch. he builds all of his muscle just on the "Cellercizer" - no weights at all.

The muscle he has built is also very "soft" - let me try to explain: When building muscle, we typically rip muscle fibers and rebuild them larger, creating a little scar tissue (which is relatively hard) in the process. "Cellercizing" works the body without ripping the muscle fibers, building muscle without the scar tissue.

Again, you can't compete as a bodybuilder just doing this, but I think most people (guys at least) would love to be as muscular as he was.

You can do cardiovascular work very quickly: 2-10 minutes of intense exercise is more effective at fat-burning than a 45-60 minute workout in most cases. (This was mentioned by several of the presenters over the 4 days).

Finally, pretty much anybody can use it. Even people in wheelchairs or walkers can start to use it and often regain mobility by rebuilding muscle, improving circulation, etc.

Moral of the story: If you want to be more fit, this is a great tool to try out - less time, more fun, and better results! (30-day money back guarantee of course)

More Cellercizer info here

Book Review: Be Principled and Grow Rich

2008-02-09T17:56:00.000-08:00

Wow - a new post is WAY overdue! I just read a short book with some great information, so this is the perfect opportunity for a new post. And since stock investing can generate passive income if done right, the post is even on-subject.

Be Principled and Grow Rich by Kirk W. Tofte with Samuel Case

This book was a very quick read, which is perfect for me since I have a relatively short attention span (like start making a sandwich, get distracted by something - anything, really - then find the partially made sandwich an hour or more later - that kind of short).

Not knowing really what to expect, I was somewhat surprised to find that it was a study on improving stock performance using a really simple tool - what the authors call Principled Asset Rotation (PAR). You may have heard about it, but I hadn't, so it was completely new to me.

To boil it down to the bare takeaways:

1) Figure out if the S&P 500 or Russell 2000 performed better last year.
2) If the S&P 500 performed better, invest in large-company growth stocks (ticker symbol IVW if you are into ETFs) the following year.
3) If the Russell 2000 performed better, invest in small-company value stocks (ticker symbol IWN if you are into ETFs) the following year.

If you are interested in the principles behind it (like I am - I can take very few things at face value without understanding the underlying principles), definitely read the book. My brief explanation is thus:

The economy moves in cycles. The stock market is a forward indicator of the economy. Therfore, performance of stocks in certain sectors of the economy in one year predict where we will be in the economic cycle and therefore which stocks will do well.

There were a couple of things I found odd about the book:

1) The authors did not mention exchange-traded funds (ETFs) for using this investment strategy. I think they would be a perfect tool because they nearly perfectly mimick the indices the authors mention (less about a 0.2% expense ratio).

2) They propose several other strategies with historically worse returns (presumably because they get farther away from the underlying principles) because the transaction fees might be "too high" for some investors with small caps. With ETFs (or even the mutual funds they mention), this should not be an issue at all.

These things don't detract from the book, I just thought it interesting...

All of the data in the book ended in 2001. As a former engineer, I couldn't help but run the data from 2002 to 2007. The book's method outperformed the S&P 500 and Russell 2000 over that total time period (like 55% vs. 23% vs. 48%), but didn't do well at all in 2007 (based upon the 2006 indicator).

I suppose when you arbitrarily pick a calendar year, that is bound to happen, but I am certainly impressed with the overall results. (I will also mention that 2002 to 2007 was a little weird as the small-cap value was the choice every year over that timeframe.)

I plan to play with this using a small portion of my portfolio this year, then maybe move a larger portion (up to 25%) into this strategy.

If you have read the book or implemented the strategy, I (and other readers) would love to hear your feedback.

Good luck!

How you do anything...

2007-11-27T09:57:00.000-08:00

...is how you do everything.

Everything you do matters

Harv Eker likes to say: "How you do anything is how you do everything."

At a basic level, your actions determine who you are (or, arguably, who you are determines your actions).

Therefore every little thing you do makes you more like that action

Why so I say this?

Sins - God's Perspective & Man's Perspective

Well, Rebecca and I have been going through catechism at church, and I am learning (or at least more fully understanding) interesting things about sin:

1) We sin pretty much constantly.
2) All sin is equal to God - we have put our own hierarchy on which sins are not too bad or really bad.

For example, not reporting when you are undercharged at Wal-Mart is stealing. So is taking a pen home from work and never bringing it back. So is robbing a bank. In God's eyes, you are stealing in any of these cases.

We tend to make excuses for situations like the first two or think they are "no big deal".

The Little Things Make a Big Difference

So if we want to be people of integrity, we need to demonstrate that everywhere.

If we want to help people, that should start with those we are closest to.

Every little decision you make to take action (or not take action) takes you farther down that path.

I know I have done - in all likelihood - millions of things that I wish I had not (or wish I had in the case of omissions). They did not lead me to become the person I want to be.

For instance, I haven't murdered anyone physically, but I have murdered people in my heart. That is just as bad in God's eyes.

Help!

Unfortunately, it is much easier to see someone else's inconsistent actions than your own. If you are married, you may have noticed that your spouse is painfully good at pointing out some of your faults :)

If you really care about the people you are close to, you can help them out by very gently letting them know if you see them do things that you know are not consistent with the person they want to be - help hold them accountable.

Let me stress that you want to talk about this beforehand with them and make sure they will be receptive to your help :) Otherwise, it call easily come off as overly critical or naggy.

Everything we do makes a difference - let's help each other start acting like it.

Costa Rica summary

2007-11-07T07:41:00.000-08:00

What I left out of our detailed description of the Costa Rica trip was a summary of our Costa Rica experience and how we feel about having land down there.

What I Liked

1) The natural environment. At our lot, the water has 50% fewer contaminants than Evian. Everything is raised "organically" - just because they don't need to use chemicals, etc. All of the food we tried really tasted great. Costa Rica protects the natural environment so that everyone can enjoy it.
2) The people. Everyone was incredibly friendly. Apparently it is a fairly conservative Catholic country and they even like Americans. Can't get much better than that for international investing.
3) The way of life. Costa Rica is very laid back and family-oriented. I can't think of a better culture to spend time relaxing in (not that I know that many cultures...).

Why We Want to Live There

1) It's Costa Rica! I have yet to meet anyone that visited Costa Rica and did not like it. If you are one of those people, I would love to hear why it wasn't for you.
2) The natural food (and water). See above.
3) Plan B. In case something goes wrong in the states - economically (Social Security crisis, anyone?), socially, politically...who knows. I just like having someplace I can go if necessary.
4) The climate. Although it is slightly humid for my tastes, it is not bad. Anyplace that you can essentially go without heating or air conditioning year-round and still be comfortable is my kind of place!

As with anyplace, it is not perfect - the roads leave a lot to be desired, cars are very expensive because of duties/taxes, etc. I strongly recommend checking it out sometime. We might even have a rental villa that we can give you a deal on :)

To find out more about the properties that we invested in, check out: http://www.best-costa-rica-real-estate.com. Unless you want to spend a lot of time learning the culture and finding someone down there you really trust to help you, I think Ventana del Pacifico is a great place to buy (I suppose that's obvious since we bought property with them).

If you are serious about learning more about Costa Rica real estate, I am also happy to answer any questions I can about travelling down there, etc.

Pura vida! (means "pure life", the unofficial motto of Costa Rica)

Costa Rica - Day 5 (and 6)

2007-10-14T15:31:00.000-07:00

What an adventure we had today!

Cristal Ballena to Palmar Sur

We had another great breakfast and then hopped in the taxi to go to the local airport in Palmar Sur. From there, we would fly to San Jose in order to fly back to Kansas City first thing tomorrow morning.

I mentioned in the last post that our taxi driver promised to take us by and see some crocodiles and turtles. Well, we drove through the rather run-down town of Cortes (apparently it used to be the major Pacific port for the southern part of Costa Rica, but that changed once they built the bridge across the Rio Terraba for what is now the coastal highway.

Anywho, all of the sudden we just turned into a driveway along a row of houses with the announcement - "this is it." We got out, walked under the carport and through the covered storage area where they had coolers for fish. Apparently they throw the fish scraps to the crocs and turtles when visitors are there. They ask for a donation (our taxi driver had said maybe 1000 colones ($2)), which seems reasonable. Hey - gotta make a living somehow, right?

Here is a nice little video of them dumping the scraps into the water. How would you like to have that off of your back porch?

Notice no railings or anything. Presumably the kids around there are quick learners. Even though the crocs are well fed, I think they view everything that comes off the porch as food, so don't fall off!

We also saw a croc over on the bank next to the porch (probably 10 m away) with its jaw hanging straight down. One of the people that lived there tried to explain to us that his jaw was broken, probably in a fight with another croc (our driver helpfully interpreted for us). Nothing kept the crocs from coming up the bank and onto the concrete porch from the side, either. Again, don't think I would really want to live there...

We had a good show, so we gave the owners $5 when we left, and headed on our merry way to the airport, glad to have had a very interesting experience!

Palmar Sur

We got to the "airport" in plenty of time and were just waiting for the flight to get there. We were supposed to be there by 10:00 in case of an on-time 10:30 departure. I think we got there about 9:40.

While we were waiting, I noticed a starfruit tree between the covered waiting area and the runway (it was just to the right and a little behind the 2 boys in the picture). There were a lot of fruits on the ground and on the tree, so it was clear to me that noone was harvesting them regularly, so I went over and picked a ripe fruit and starting munching on it. Did I mention I love Costa Rica?!

Patrick (from the developer's office) was on our flight (the only one to San Jose each day), and told us after he got there that the plane had left San Jose around 10:00 and should be there around 10:40, which was closer to on-time then usual, apparently.

After a while, the ticket lady was explaining a situation to me in Spanish. What I got out of her explanation was that the flight had been cancelled because of something.

After talking to Patrick, we learned that a plane had crashed at the end of the runway. (The pilot was fine - he walked away - it looked like the plane had just tipped over on the side of the runway, I am guessing on takeoff.) The airport would therefore be closed to all flights for the rest of the day as the civil aviation authority came down to investigate.

"So what do we do?" we asked Patrick. Patrick advised that he was trying to charter a plane at a nearby gravel airstrip because he had a 1:30 flight to catch out of San Jose to Canada for meetings. He said that we could hitch a ride with him, and he didn't want any money.

Well, after about 15 minutes, it was clear that he was not going to be able to get a plane. So he was going to head home to try and rearrange his flight schedule. Since our flight was the next day, Patrick said we could take a taxi - it would take about 4 hours. He asked a local taxi driver how much it would cost to go to San Jose and Patrick translated $200. Since the airfare was $172 (which should be refunded), that was not too bad.

To San Jose via Taxi

So Patrick hitched a ride with us back to the guest house, and we headed off down the road at about 10:45 to San Jose. Patrick had advised us that we had essentially rented the taxi driver for the day, so we should feel free to stop for a restroom or restaurant break as frequently as we needed to. Once we got on the road, we decided that we just wanted to get there, then we could have an early dinner there.

Although the speed limit on the coastal highway was typically 80 km/h (50 mph, though people would often go 100 km/h), on the roads through the mountains - the vast majority of the trip - the speed limit is usually 50 km/h.

Our driver would regularly exceed the speed limits, and in his high-centered Toyota Hilux 4x4 crew cab, we moved around a lot. We learned that our abs were somewhat sore from our zip line adventure yesterday, and the bracing was giving them an additional workout.

We were making decent time until Cartago (about 20 km from San Jose). Traffic was stuck there, and I don't think our driver knew the area very well. He made a couple of calls, got out of the traffic, drove around for a bit, then ended up in the same line of traffic except like a mile farther back.

He stopped to ask a pedestrian, and it sounded like traffic was not moving AT ALL, nor did it look like it was going to. Then he talked to another driver, and followed him out of traffic and into neighborhoods. Eventually we made if to where a bunch of people were gathered and as we drove across the bridge, we saw A LOT of muddy water flowing very rapidly (picture isn't great, but hopefully you get the idea).

I think the flooding was why traffic was not moving and would probably not be moving anytime soon.

After stopping to ask several more drivers, we ended up on backroads through industrial areas and back out into the country, then got to a small town up in the hills. We took a right, and all of the sudden we were on this really nice paved road.

This wound through the hills around the back side of San Jose. To make a long story short - after stopping to ask around 20 people total, we finally made it back into San Jose and back to our hotel. We got there at 4:45, so it ended up being about a 6 hour trip (apparently the detour took about 2 hours).

People were very helpful in providing directions - not one person that he tried to stop refused to help (try stopping random people in the US for directions). It may have helped that the taxi "badge" on the truck had the Osa province on there, so people may have noticed that he was a long ways from home.

When we got there, he told us how much it was - I thought $210, but when he wrote it out (good idea he had there!), it was $220. Well, since we had not planned on paying for our return trip with cash, we were not absolutely positive we had enough. (We could have always had him take us to an ATM if necessary.)

ASIDE: This is a good place to mention that you really don't need to change your US dollars to Costa Rican colones if you visit Costa Rica. I believe everyplace will accept US dollars. Maybe sometimes you don't get the best exchange rate, but at worst you take a 3-4% hit - most credit cards charge 3% now for foreign currency conversion. We did take a lot of smaller bills, though (Pat - thanks for that advice), because you get your change back in colones. If you give them a $20 for something that costs $5, you get $15 back in colones, which can be inconvenient.

We had a lot of $1 bills left (that explains why), so picture us standing at the back of his truck counting out all of these ones (in piles of 10) to pay this $220 bill. I think we paid about $60 or $70 in ones, the rest were larger bills, thankfully. And we ended up with $22 left over!

We felt really bad for our taxi driver because he still had a 4-6 hour trip ahead of him, mostly in the dark since it would be dark around 6. I would NOT want to do that drive in the dark (not really in the daylight either, but definitely not at night). I guess he made some pretty good money for the day, though.

We got settled in our hotel and walked down to Antonio's Italian Restaurant, which was highly recommended by the hotel clerk (Fernando) as a nice place to eat. It was VERY good food, although it was a little funny to have the Costa Rican staff serving Italian food. Very good and authentic, though. Then we came home and went into a food induced coma in order to get up for our early flight in the morning (the cab is coming at 4:30 am).

Costa Rica - Day 6

Not much to report here. I liked this sign in one of the shops. Apparently ED knows no borders.

We wanted to get some duty free stuff at the airport - coffee for family and us, and at least some sort of Costa Rican liquor (my idea). The Cafe Britt stuff that they had at the airport was really good. They had lots of different varieties - it wasn't all that cheap as far as coffee goes (they had a 8 12-oz bags for $39 special), but it is EXCELLENT.

As far as I can tell, Costa Rica only exports two types of liquor - rum and coffee liqueur. So I got some of each for good measure. (On the US side of customs where we were packing the liquor into our checked bags, we ran into a guy that brings an extra cooler with him going down in order to pack everything in coming back. He recommended using the coffee as padding for the liquor. He seemed to be pretty good at this...)

Rebecca was thrilled to be back in Kansas City, as you can tell by this photo.

Costa Rica - Day 4

2007-10-11T09:10:00.001-07:00

This was our first full day on our own (no part of the development stay) and also the first full day without Nate (he went back to San Jose yesterday when we headed to Cristal Ballena).

Morning at the Hotel

Today we certainly did more activities than any other day in Costa Rica. We got up early to start a walk around the hotel's rainforest path (about 1.25 mi) at 6 am. Although they had guided tours available, Rebecca doesn't really like guides (goes along with her general aversion to people she doesn't know), so we just did it on our own.

We did not see any wildlife (except for the huge spider and web outside of the rainforest), but really enjoyed just walking around in the rainforest. In retrospect, I think it may have been good to have a guide because they know where to look for animals, but there just may not have been many out because of the rainy season.

We got back to the hotel about 6:45a, and since breakfast did not start until 7a, we decided to hop in the pool to refresh ourselves before showering and heading down for breakfast.

The complimentary breakfast was awesome - I especially enjoyed the fresh fruit. That has to be one of my favorite things about Costa Rica - that fact that (almost) all of the food is extremely fresh. They use a few packaged things (like flour, sugar, etc) but not nearly as much as we do in the states.

Design Meeting

After breakfast we had a meeting with the Ventana del Pacifico house designer. (As you can tell, we really planned on buying property as we already had a meeting set up with the house designer.) We had been told by someone else that had bought property (but not yet started the design process) that you had to have one meeting with the designer on site and the rest could be handled remotely.

The meeting took less than an hour (Patrick had told us this yesterday, and the short time surprised us), and the purpose was to 1) know which lot they were designing for, and 2) understand what we (the owner) wanted in a house.

We gave him some details, but mainly general ideas of what we wanted in a house - mainly a lot of outdoor (still under roof) space with a very open feel. I don't want to bore you with details, so we will leave it at that.

He did say this was going to be fun - he really hates ones where the people already have an exact floorplan picked out that does not really take advantage of the lot. Especially as most floorplans are designed for flat lots, and very few Costa Rican lots are flat.

We realized that we could have done this meeting remotely, but I feel that there is real benefit in a face-to-face meeting so that the designer understands the owner as much as possible (and vice versa). We look forward to getting the first draft of the design in about a month!

Hacienda Baru

After another light lunch (and a small nap), we prepared to go on a canopy tour at Hacienda Baru. We had scheduled a time the day before - the tour cost $35 per person (I thought that was fair for 2 hours hiking through the rainforest and sliding around on zip lines), but the taxi cost $50 there and back.

A very worthwhile trip - because it was the beginning of October (a month when then tourist industry is almost shut-down in southern Costa Rica), we were the only 2 on the tour. We saw bats, a couple of 2-toed sloths, a 3-toed sloth, a poison dart frog, a couple of toucans, and lots of leaf-cutter ants.

While we weren't way up in the trees usually (the exception being on one platform 120 ft above the ground) the zip lines across a valley were really an incredible experience. For some it wouldn't have been that exciting, but we really enjoyed it.

And the weather was beautiful - usually it rains in the afternoon in the rainy season, but it was actually cloudy all morning (with a little rain) and the sun came out for a beautiful afternoon.

On our way back, we chatted with our young taxi driver a bit. We had mentioned that we had bought some property while we were there, and he mentioned that he was thinking about getting into real estate (as a realtor, we gathered). He asked if we knew people in the states that were interested in buying property. We said we certainly knew people who would be interested in taking a look (ourselves included). I gave him my contact information (he did not have an email at the time), so we will see if I get an email (I sure hope we do!)

He also asked if we had a ride to the airport. We did not - he said he could take us and show us a place with hundreds of crocodiles and turtles if we were interested. It was behind the house of people he knew.

We came back to the hotel after that, hopped in the pool for a bit, then showered and relaxed before dinner. Mmmm....dinner...

Again great dinner with great food, and we avoided the mistake of having coffee before bed...

Costa Rica - Day 3

2007-10-10T09:10:00.001-07:00

Sorry for the delay - I'm sure many of you couldn't stand the suspense :) Now without further ado:

Day 3

They started maintenance on the guest house today (the workers looked eager for us to leave so that they could tear things apart). This picture of the shrubbery trimming is telling - the top 2/3 that they are cutting off is a year's worth of growth (probably with some trimming along the way). They will use a lot of the cuttings (with leaves cut off) for stakes and fencing - if they stick them in the ground, they will grow, as we noticed several stakes growing as we were looking at properties!

Oh and today is the day we had to pick which lot(s) we were going to purchase. After talking with Patrick (one of Ventana del Pacifico's on-site employees - he is originally from Canada and lives in his custom house in the development), we learned that our "package" provides us with a price freeze of lot types and standard lot/house combinations until June 2010.

Knowing that the price freeze applied to the land as well, we saw no advantage to purchasing more than one lot now, therefore...

we bought lot #37 in NWA-D (after a brief husband-wife pow-wow)

As you might remember, this is the larger lot (0.56 acres) that backs up to a river/creek (and the protected land 150 feet on either side of it). We liked the "in the jungle" feel. Apparently that is similar to the type of lot Patrick has - he made a comment about the lots being priced at a premium for ocean views, but his thought that people who buy in Costa Rica (as apposed to Hawaii or Mexico or other coastal areas) like the rain forest - that is the distinguishing factor.

Patrick also gave us feedback on the things that would be important if we are planning to rent it (which we are, but hopefully not for too long :) ). At the top of the list was a pool - which Rebecca would certainly like - people like to be able to jump in a private pool to cool off after they have been galavanting about Costa Rica.

Apparently pools also don't add significant cost to the property management - the gardner does most of the maintenance, and a pool company comes out once a month to check the chemical balance, etc.

He also mentioned that the highest demand was for 2 BR rentals, less for 3 BR and very low above that (as couples most often vacation as two couples, rarely more).

After we committed to purchase the lot (and put 20% down - less a $500 credit), Patrick took us to the hotel we were staying at for the next couple of days - Cristal Ballena (http://www.cristal-ballena.com/). All of the main rooms and the pool had great ocean views - it really was beautiful!

We just relaxed the rest of the day - hung out by the pool for most of the morning, had a couple of nutrition bars for lunch since we had such a large breakfast at the guest house, then napped a bit in the afternoon.

We had a wonderful dinner at the hotel restaurant - we each got appetizers (not typical) in order to try as much as possible. I tried ceviche - it was delicious! (Rebecca even tried it and liked it.)

We learned an important lesson when we made coffee to have with dessert in our room - don't drink Costa Rican coffee shortly before bed! I don't know if it was the brand (Don Ramon) or what, but we tossed and turned in bed for hours - this NEVER happens to me.

Tomorrow we have our meeting with the designer to start the house design process. This should be interesting...

Costa Rica - Day 2

2007-10-06T13:15:00.000-07:00

It rained overnight last night, and it was pretty much cloudy all day, but the rain held off to give us a good day for looking at lots.

We got a hearty, home-cooked breakfast at the guest house - beans and rice (typical tico breakfast fare), eggs scrambled with other delicious things, toast, and fresh fruit (pineapple, banana, and papaya).

We spent the morning looking at lots in the Chantalis development in 3 different areas:

Estates - generally more ocean views and more expensive. You can build house up to 3 stories tall here.
Rutchailo Verde (aka NWA-A named after the seminar they sold our packages at) - generally flatter, mostly in a valley, and less expensive - more of a neighborhood feel.
El Chiverre (aka NWA-D) - terrain more similar to the estates, but more mountain views and generally cheaper prices.

It was quite an adventure looking at lots, especially since I am from mainly flat areas of the U.S. In order to get from the road to the place on the lot where the best view is, you usually have to go either up or down. The slope is usually good and the wet foliage on top (anywhere from one to 3 feet tall) adds to the challenge and the adventure.

We were warned ahead of time and had brought long pants and closed-toed shoes and socks. We also borrowed Don's organic bug repellent for our ankles. (I don't know if it was the bug repellent or intermittent rain, but I ended the day with no noticeable bites.)

We had a smaller group than normal (8 vs. 14) since we were the last group of the year before the guest house shut down for 3 weeks during the height of the rainy season. This allowed us to all get into one vehicle instead of the normal two.

I think we were the most serious buyers there (Nate came down to get the same deal we got, but knew he would probably not be buying this trip), and it showed looking at lots. We were the ones saying "can you stop here?" or "we want to look at a couple of lots up here."

We certainly got our exercise for the day by lunchtime. Speaking of lunch - did I ever mention that my life is very food-centric? - I am always looking forward to the next meal. Lunch consisted of a good variety of food - baked pork pieces (I don't remember the name), and various other things I can't remember right now. It was all very good, though.

In the afternoon, Don took us down to the beach (Playa Ventanas) - wow! what a beautiful area. The coconut trees grow up to the beach (as does a nice carpet of grass-like ground cover) and the coconuts they drop start to grow new trees.

As 96% of the coastline in Costa Rica is public access (as are all of the waterways), you can just go down to the beach and grab a coconut tree "seedling" to plant at home.

Which brings me to another very important point - the soil in Costa Rica is so fertile that you can drop just about any seed on the ground and it will grow (the only exception is if the plant needs actual "seasons"). This makes it critical to choose what you want growing and keep other things out. We plan to have various fruit trees on our property - starfruits, mangoes, papaya, banana, coconut, and any others that catch our fancy between now and then.

So the beach was nice - amazing views as well as a couple of caves that actually go all the way through a small jungle peninsula. It was mid-tide when we were there, so you couldn't walk all the way through the caves - OK, maybe you could, but the waves were getting quite turbulent in there, so noone was willing to risk it :)

After being there for a while and having some extra time, Don asked us if we wanted to go see a neat waterfall that is not on the normal "tour". Of course, everyone said yes, and off we went.

Apparently the waterfall is on property that used to belong to the developer. Fortunately for us, waterways have public access, so we ccould still visit it. Because of recent rains, the water was really moving (and cold), so we couldn't go as far into the pool as normal, but we enjoyed the natural beauty and got a nice picture of Rebecca, Nate, and I in the pool.

Afterwards we attempted to ruin our dinner at a local tilapia farm where we went fishing, then ate. OK, "fishing" may be a stretch - they put bait on the end of a line attached to a handle for you and you throw it in to the pool they are growing the tilapia in - needless to say it does not take long to catch one.

The appetizers (bocas) we had were a salad, flattened and fried plantain slices (can't remember the name), and fried fish. The fried fish is slightly different than you would see in the states - they still gut the fish, but then they chop it in cross-sections (instead of fillets) and fry everything but the head. So skin, fins, and tail is still on the fish. Don said we had to try a tail or fin as they were like potato chips - he was surprisingly correct.

Rebecca doesn't eat seafood (at least nothing that tastes fishy, which really leaves only lobster), so I was surprised when she tried the fish. I was even more surprised when she liked it - it did not have a fishy flavor because it was fresh - just a few minutes (or maybe hours) from catch.

Apparently the ceviche available in the roadside stands is very similar - they catch the fish (usually Maui Maui) in the morning, make ceviche in the morning, sell it all day, then use any remainder for bait the next day. (If you don't know, ceviche is another boca consisting of chopped up fish that is "cooked" in lime/lemon juice along with cilantro, onion and perhaps other seasonings. It is not heated but the strong citrus juices sort of pickle it, I guess. Rebecca's brother loves it, but it is hard to find in Kansas City because of the general lack of fresh seafood.)

So we demolished the three appetizers, then headed back to the guest house for dinner (after I took a nice dip in the pool). Again, I don't remember exactly what we had for dinner, but it was good! I do remember the bananas foster for dessert, though, which was great even without ice cream.

Nate, Rebecca, and I played a little bit of pool, we grabbed pictures off of his camera (since we forgot ours in the afternoon), and then Rebecca and I spent time deciding which lot(s) we wanted.

We still didn't have complete understanding of the package we bought for $1500 (we were to get it clarified in the morning), so we came up with two options: 1) if we did not have a price freeze on land until 2010, then we would just get a couple of lots and put off building, or 2) if we did have a price freeze on land, then we would get one lot and start the desin process for our custom house.

Our top two lots were (drumroll please...):

NWA-D, lot 37 - over 1/2 an acre and backs up to a river area. This provides the "down in the jungle" feel that we want (and it is cheaper since it is not an ocean view).
NWA-D, lot 7o - this lot was more expensive, but potentially provided mountain views in 2 directions (from the top of a ridge). It also had the slope most of the way down into a valley to get a little of that "in the jungle" feel.

Tune in tomorrow to see what happens!

Costa Rica - Day 1

2007-10-05T14:12:00.000-07:00

This was what we woke up to our first full day in Costa Rica - for being the middle of the rainy season, it sure was a beautiful day!

It apparently gets light around 5 am, and it gets bright so quickly that it really is tough to sleep much past 5:30 or 6 am unless you have done a good job of sealing the light out of the room!

After eating breakfast and checking out of the hotel, we had to catch a flight on the local airline from San Jose to Palmar Sur (near the property we were going to visit in southern Costa Rica).

We were told to be at the SANSA offices by 9:00 am for a 9:30 am flight, which seemed a little tight, so we got there by 8:45 am. Turns out that 9:00 am is fine because it only takes about 2 minutes to get your boarding pass and two minutes to go through "security" when your flight is called. Oh - and the flight often doesn't leave until 10:00 or later.

I have been on small planes in the states, but this was by far the smallest "passenger plane" I have ever been on. That is Rebecca and me in the picture with the only other person on our flight in the background. (He apparently is a Costa Rican - a "tico" as they proudly call themselves - and he tried to bring his new chainsaw on the plane with him. I was glad that they did not allow him to carry it on (or even check it), and I had more confidence in the air safety of Costa Rica after that.)

It is also significant to note that with a full flight, they may enforce a maximum baggage weight of 26 lb per passenger. We would have been in trouble if that was the case, but fortunately, we were less than 1/2 full. (I think it should really be weight of passenger and bag together, personally.)

We arrived uneventfully in Palmar Sur and was picked up by our guide for the next 2 days - Don. It was about a 25-minute car ride back to where we stayed - mostly on the coastal "highway" (the highest speed limit we saw was 80 km/h or 50 mph - largely because of the pedestrian, bicycle, and other miscellaneous traffic, I suspect). The last 5+ minutes was mostly uphill it seemed on dirt roads that 4-wheel drive was very helpful on - though we saw a lot of people getting around OK in 2-wheel drive cars.

We stayed at the property developer's guest house - next door to their house - about 900 ft above sea level (though it was only about 10 minutes to the beach, even on bad roads). Their older developments were in that general area, while the newer developments where lots are now for sale are about 15 minutes closer to Palmar Sur and where the new international airport will be going in.

We had a wonderful lunch - chefs on staff get produce from the local markets in order to prepare meals for the day - in this case a cheeseburger (ironic, isn't it - but Nate said the fresh one was much better than the one in the restaurant) with fresh vegetables, french fries, etc.

In the afternoon, we went to look at properties in the nearby development with houses in various stages of construction. We got a feel for things we liked (open space, integrated into the environment) and things we didn't (closed buildings that don't take advantage of the beautiful environment).

Besides construction details, we also got a feel for lot sizes and shapes and views. There were some lots that were about 1/8 acre (because they were developed just after 9/11 when people wanted to be close again), and it was amazing what could be done with relatively little land.

Many of the lots were also on hillsides for views, which made it convenient to design with several stories (some lots are limited to 1-story construction on the front side in order to preserve views for others).

It was cloudy much of the afternoon, but the rain held off for our construction tour, which we were very thankful for.

A wonderful dinner (fresh prawns, vegetables, and cooked sweetened pineapple in chocolate ice cream for dessert - as well as something else I can't remember) and talking into the night finished off day 1.

Rebecca and I also spent some time determining which available lots we would be interested in seeing based upon views, price, size, and location relative to others. But like Don said, the 2-dimensional maps almost go out the window when you actually see the properties.

Things We Learned About Costa Rica

We learned that because Costa Rica is close to the equator, you get right around 12 hours of daylight year round. Because there is no "daylight savings time" it gets dark around 6 pm. For most people, by 7 or 8 pm it seems really late and you have to fight the urge to go to bed (if you choose to...).

We also learned that bugs are not much of an issue once you get up in elevation a little bit. I guess mosquitoes and other biting insects become a problem around twilight down at the beach, but we never noticed ANY up in the mountains. We did see a number of bugs (and the geckos were on patrol for food), but they just don't bite so they really aren't a problem.

Overall, a wonderful first full day in Costa Rica. Tomorrow we get to look at available lots and try to pick the one we want to buy! No pressure - we have all of about 4 hours to look at scores of lots and pick the one we want...

Costa Rica - Day 0

2007-10-05T14:01:00.000-07:00

Well, we just got back from Costa Rica - what a trip! Instead of trying to sum up everything in one huge post (because there is a lot!), I decided to summarize the trip by days to provide logical divisions and see it unfold from our perspective. (I would have liked to do this every day, but I did not have internet access, and I was not forward-thinking enough to just do it in Word.)

Without further ado...

Day 0

We flew from Kansas City to San Jose, Costa Rica today (September 28, 2007). I travelled with my wife Rebecca and our good friend Nate. Got to watch a couple of movies on the plane, which was a pleasant surprise (Surf's Up and Evan Almighty). By the time we got in - about 9 pm - it was dark, but temperature was still very pleasant (apparently it had been raining in the afternoon).

Rebecca and I had Chipotle (mmm...Chipotle) for lunch and a "dinner" on the plane, so we weren't very hungry, but we shared a delicious ginger/lemon grass flan (more like sweetened butter - quite good but filling) while Nate had a cheeseburger at the hotel restaurant. (I couldn't believe Nate got a cheeseburger at a restaurant in Costa Rica :) )

Focus

2007-09-20T09:09:00.000-07:00

Wow - I can't believe it has been over a month since I posted. My apologies to everyone.

This post is about a topic I have sort of known the importance of for a long time, but I am just recently realizing how important FOCUS is to achieving success (and in a timely fashion).

Successful People

Successful people have focus. They have a drive that keeps them focused on a specific business or dream, and many of them keep pushing that business long after they are successful.

Look at people like Michael Dell and Warren Buffett. I often wondered why you would not "cash out" once you were already a billionaire - why keep working when you have that much money? Because they are focused - the have drive and passion for the business and it is not just about money.

Buffett turned over about $30 billion to the Gates Foundation to distribute because he wanted to stay focused on running Berkshire Hathaway. That's what I call focus - turning over almost all of your wealth to someone else for charitable distribution while you continue to do what made you the money in the first place.

How to Use Focus in Your Life

I don't know where you are in your life, but focus is extremely important. As I began to undertake ventures outside of my regular job, I began focused, but then saw more and more opportunities and therefore lost focus.

In retrospect, I know exactly what I should have done: put all of my energy outside my job into only ONE venture - both physical energy as well as the focused thought to really make my physical energy produce great results.

Put energy into one venture until it is self-sustaining then decide whether to continue to focus on its growth or make it a passive business (or sell it off). Then you can start a new venture once you have been successful with one.

People with several successful businesses did not grow them all at the same time. They focused on one at a time, then moved on to the next.

How Focus Helps

I have only recently begun to realize the power of focus - ironically it is at a time when I am not focused on anything.

From simple-ology (see a future post - I promise less than a month :) ) we know that the quickest way to get what you want is a straight line (i.e. go straight to your goal).

If you have multiple goals at once, you cannot go in a straight line to all of them at the same time, so you end up wandering around, hopefully eventually hitting one or more of your goals.

But if you have multiple goals at once, in addition to all of the basic things of life that have to get done, your "to do list" can quickly become overwhelming. Your brain gets overwhelmed and either gives up or makes you extremely stressed out, both of which provide serious barriers to progress.

Enter FOCUS: by focusing on one goal at a time, you put all of your energy into one activity. Not only does your brain like focused activity much better, but you also feel much more rewarded as you are always making progress towards an identified goal.

My Focus

So right now I am focused on figuring out God's purpose for my life to ensure that my focus is consistent with His purpose.

See I believe that God has given us certain abilities and passions in order to accomplish certain things in this world. Each of us has different gifts, and I believe that we were meant to use those gifts for His purposes and enjoy our "work" using those gifts.

I do not believe that we were meant to do work we don't like or be content with dead-end jobs. We are to use our gifts to accomplish things we are passionate about. "Work" is intended to be satifsfying, not meaningless.

I know that I have been blessed with some wonderful innate abilities (as have you), and I want to maximize my use of those to God's purpose in the world.

P.S. I will let you know when I have it all figured out :)

Other Passive Income Blogs

2007-08-13T15:04:00.000-07:00

Never one to hoard all of the glory for myself (at least I like to think I am getting better at this), I want to share some of the other good passive income blogs I have found, along with my comments on them:

Blogs (in no particular order):
1) http://www.geniustypes.com - great blog on trying to develop passive income (further proof that I'll never figure out search engines - comes up #2 in Google on "passive income" but #11 on "passive income blog")
2) http://www.theroadtoperfection.com/ - although not many new posts will be added, this is an interesting story of a college student getting very close to financial freedom - Jeremy and I keep in touch to keep each other motivated and welcome others to help
3) http://www.netpassiveincome.com/ - great site for online passive income development, especially blog related!
4) http://income-opportunities.blogspot.com/ - depite the similar website name, we are not related :) Apparently Malathy is in India, but that doesn't keep him from highlighting some interesting opportunities.
5) http://www.kchut.com/ - mostly online oriented, again, not necessarily passive (but most online ventures lend themselves to being passive - except blogging, of course, unless you can get other people to blog for you...)

I will highlight more as I run across them. The beautiful thing about the current internet is the ease with which you can find people that share your interests.

We need to get a passive income mastermind group together... (for any literary types the "..." is my version of foreshadowing)

Speaking of groups with similar interests - Anyone ever played Kiyosaki's Cashflow 101 board game? Great game that really helps develop some passive income knowledge and strategy. If anyone in the central Kansas area ever wants to play - let me know!

Amazon Context Links

2007-08-10T07:34:00.000-07:00

So Amazon has an affiliate program where you get paid if people buy stuff from Amazon by linking from your site.

SIDEBAR
From a moneymaking standpoint, Amazon is not that great because it only pays 4% to start up to 10% based upon your volume of business - but when I have checked Amazon always has the lowest prices, so I strongly recommend them as a place to buy books, especially when you get free shipping on orders over $25!

They recently (I assume - it's in beta) rolled out a new application (or "app" to use the "lingo") that scours your text for search terms and makes those words "live" where you get a preview if you hold your mouse over it and can click it to go to Amazon to buy.

e.g. if I wrote "Harry Potter and the Goblet of Fire", this should become an active link to Amazon where if you hold your cursor over it, you will get a preview of the item, which you can then click on to go to Amazon.

I think this is really cool (putting on my "old man hat" for a minute) - it's incredible what that there technology can do these days. Seriously, I do think it is cool, and given my experience with Amazon being very cheap, the idea seems really cool, if it works.

After some trial and error (and consulting the all-knowing Google oracle), I figured out how to incorporate this into Blogger.

Please give me feedback on these context links:
1) Do you like them or not like them?
and of course,
2) Let me know if they are not working for you!

Thanks for your help!

Costa Rica Update

2007-08-09T06:37:00.000-07:00

This has been a long time coming because I have more details on Costa Rica. (For those of you that didn't see the "formal" site before or just want a refresher - I love the pictures - check out: http://www.best-costa-rica-real-estate.com/).

Rebecca and I are headed down to the Costa Rica development September 29/30. (We will probably spend a few extra days in Costa Rica truly vacationing as well.) We are awaiting approval on the mortgage to finalize our plans - we hope to have that by next Wednesday.

The mortgages are done just like any other mortgages in the United States or Canada with somewhat higher interest rates (8.25% and up), but typical 30-year rates, up to 90 or 100% financing. There does appear to be a 3% origination fee, however. Overall, a very good program (so I've heard) compared to others for international investing. Since I've not done other international investing, I can't speak from my own experience on that one :)

If and when you come down with us, you have the opportunity to purchase the same "option package" that we did. I am slightly jealous (and extremely happy) that anyone that comes down can get the same package I did (recall that I changed plans and attended a seminar in Orlando just to get this deal). It costs $1495 USD.

This is what you get:

1) Price-freeze on lot/house (combination) until June 20, 2010 (about the time the international airport 20 minutes away goes into service).

2) Referral program - you make 3% commission on anyone you refer that purchases property and 2% commission on anyone THEY refer. (Kinda sounds like network marketing, huh?) With the average purchase being around $300,000 USD, a referral would be worth about $9,000, which would pay for this package and several trips down to CR.

3) $1500 travel voucher if you purchase a property. (i.e. if you buy something, you get this package FREE)

4) Reduced property management rates (I am checking on whether it is 10% or 20% to manage your property as a vacation rental - typically these rates are around 40% if you have looked into this in the states).

5) Millionaire mentoring - webinars with Ed Mercer (the owner of the development). In addition to being very successful, Ed is of the highest integrity, cares so much for other people, and just radiates positive attitude - a great combination in anyone, especially a future neighbor.

They will never offer this package again (they offered a similar package at a recent seminar, but as I understand it did not have a price freeze until June 2010 and had 20% property management fee instead of 10%).

Again, if this sounds interesting to you, let me know ASAP as we will be making travel plans in the next week or two. I am checking to see if this would be available for future trips down to CR, but frankly, I feel very lucky that they are even offering it for one trip.

Commercial building downtown

2007-08-03T18:44:00.000-07:00

I haven't written anything for awhile. That either means nothing interesting has been happening or I have been so busy that I haven't had time to write. I think a bit of both...

Rebecca (my wife) and I went and looked at a commercial property for sale downtown yesterday. Now it is downtown retail space which I normally wouldn't have much interest in except that it has 2 upstairs apartments as well, and boy are they cool!

The property is listed at $99K. The two upstairs units rent right now for $350/mo each, but they are much larger (and cooler!) than the apartments in our 4-plex that we have rented for $400/mo each. We think without doing anything, we could raise the rents to at least $950/month total.

These apartments have hardwood floors, lots of brick (in the larger one especially), I would guess 12-foot ceilings through most of it, and dining rooms! The larger one even has a beautiful wood staircase up to a "penthouse" room on the roof. From the outside it looks like someone plopped a small house on top of the roof. The penthouse has hardwood floors, a baseboard heater (window A/C could be added, I think), and access to the roof, where there is plenty of space to hang out, BBQ, watch fireworks, etc.

Needless to say, I like the apartments, but I am not going to get all emotional and do something stupid! (at least I hope not!)

The retail space could potentially lease for about $800/month. There is also a 2500 ft^2 concrete basement under this the building with tons of shelves. Great to storage - either for the retail lessee (you know, the person that leases the space - I just know that term because I looked at a lease today) or someone else that needs storage.

Right now, the apartments are occupied (no surprise at $350/mo) but the retail space is not.

Where it gets tricky (for me) is the fact that it is commercial property. A loan on commercial property will be at higher rates (typically around prime with a small bank, currently 8.25%) than residential (where even for investment property we might be looking at 6.5-7.5%). They also typically want a lot of down payment. Oh, and interest rates adjust to the index rate every 3-5 years (so it is not a fixed rate). And terms are generally not as long (20-25 years).

We don't have a lot of money laying around right now (really not any with our upcoming Costa Rica purchase), so the down payment becomes a little tricky. Also, if we are looking at 8.25% with a 20-year term, we might just be break-even on cash flow even with a renter in the retail space.

There are also several repairs that need to be made. Nothing too major, but probably $5-10K (up to $30K if you wanted to make it really nice). Factoring all that in makes it less of a slam dunk than I first thought.

I think it could be a very good property, though (at the right price). I will keep you informed as to what happens!

Passive Income

2007-07-29T14:42:00.000-07:00

Although this blog centers around passive income and its usefulness in providing financial freedom (see previous post for definition of FF), I don't think I really did a good job of defining passive income.

This is a fundamentally important concept, so I want to spend a post on it.

Definition

Passive income is income received while you do nothing.

Passive income is typically either investment income or income from PASSIVE businesses. By passive businesses, I mean one in which you can completely walk away from for a year and it will be making more money than when you left. (Hint - it still requires someone to be minding the business, it just doesn't have to be you!)

There are VERY few truly passive income investments (usually you are doing at least a little bit of decision making - e.g. whether to buy a certain mutual fund or stock), but I use the term for any income where you can either set it up and forget about it or you have the ability to highly leverage your time using: (1) systems, (2) other people or (3) assets (money or other assets).

Passive Income Example

As an example, let's look at the credit card tradelines I previously discussed.

The money I make from authorized users (usually about $100 for 5 minutes worth of work) - good compensation for the time as I am leveraging an asset (good credit), but not passive income.

I also get paid a fixed fee for referrals - not quite as good a compensation for the time as I am not leveraging anything.

Finally, I get a % of earnings from the referrals as long as they are earning money - THAT is passive income. Once I get referrals set up, I continue to earn and collect income without doing anything (except cashing the check - whoops, direct deposit has even eliminated that "hassle").

Passive income and THE BLOG

Now in this blog, I will discuss a lot of activities that are not truly passive, but at the very least I will try my hardest to avoid trading time for money (where you are compensated by the hour, month, whatever).

Some will have more involvement from me than desired (at least initially), but the hope from each is to be able to either turn it into completely passive income or produce great compensation for the time involved in order to invest that money in other investments or businesses that produce passive income.

I hope you will see the same usefulness in each of these opportunities. I realize that everything that I try (or even hear about) is not going to appeal to you, but my hope is that this blog provides you a "smorgasbord" of opportunities from which you can pick and choose.

Making money with your good credit

2007-07-27T17:33:00.000-07:00

Many of you have now heard of this - it has gotten a lot of press recently, but I got involved with this back in April, before most people had heard about it.

The subject is "seasoned tradelines" or "piggybacking" - companies help people improve their credit (for a fee of course) by adding them as authorized users on credit cards of people that have good credit. This improves the credit of the new authorized users and does not affect the credit of the primary cardholder.

The company helping people improve their credit gets paid for playing "matchmaker" (and their knowledge and expertise of how to best improve someone's credit). The get paid by the person with bad credit and pay part of that to the person with good credit in order to use their authorized user spot.

The Industry

The recent press on the subject has stimulated demand (from people with bad credit) as well as supply (of people with good credit). I am worried that there are a number of questionable companies out there taking advantage of the situation - possibly outright fraud, but more likely charging large amount for questionable results.

The industry does not have storefronts - most companies are a handful or less of employees (probably located all over the U.S.) and then additional independent contractors acting as remote agents. Everything can be handled over the phone or electronically, so it is very important to make sure you are working with a company that is not going to disappear into the night.

The Criteria

In order to be able to sell authorized user spots, you have to have credit scores of 700 or better. You also have to have "qualifying" cards: preferably at least 2 years old, at least $5,000 credit line, perfect payment history, and keep balances below 20% of the credit line.

And only certain cards report the authorized users. As examples Citibank, Bank of America, and American Express are best, Washington Mutual also works, but Chase does not work.

Any decent company will have to pull your credit before being able to quote you rates they will pay for authorized user spots. Rates typically range from $50-$150 per spot (I most often see $80-100), and number of authorized users per card ranges from 2 to 10.

I believe most companies pay after the cards report (the only way they can verify you added an authorized user) at 30-45 days after adding the person, then remove the person at 90 days (after having enough time to positively impact their credit). If anyplace promises a better time frame than that, then are probably doing the person trying to improve their credit a disservice.

Citibank and Bank of America cards allow 9-10 authorized users, so if you have several of these cards, you can rake in a decent amount - $2,000-$5,000 every 3 month is not unreasonable.

Is it Safe?

One of the main questions people ask is can these authorized users actually make charges on the account? The answer is no. When you add authorized users to your account (typically online), the company sends a card to you (they don't even have an address for the authorized user). Because you have the card, they never have enough information to be able to use a

In addition, they cannot call up the credit card company to make changes because the card company has security measures (often your mother's maiden name and your social security number) to prevent others from accessing your account.

In the 3 years that Seasoned Tradelines has been doing this with thousands and thousands of authorized users, they have never had an incident with any of the primary users' cards.

The Company I Chose

When I was looking back in April, I chose to work with Seasoned Tradelines because they have been around longer than the others I saw (since 2004), they responded promptly, had a referral program (to make extra money), paid the same as other companies, and I now know that they are also working on other ways to use your credit to make money without much work.

I also saw some contracts from other companies that had a non-compete agreement for years after working with them, and I knew I did not want that.

Once this concept started getting a lot of press and Seasoned Tradelines started getting overwhelmed with calls, I was offered what I considered to be a great opportunity. They said if I would call people back and answer questions, I would get the referral fees for anyone who decided to come on board.

Upcoming Changes?

Now FICO is threatening to change how authorized users get reported (presumably removing the benefit that authorized users can now get). My understanding is that they are going to start with one credit reporting agency in September and then do the same thing with the other two agencies over the next year.

I am still not convinced that this will happen in September (there are a lot of people - in this industry and outside it - that are very opposed to these changes). Even if it does, it will happen slowly, and I like the fact that Seasoned Tradelines has other ways to help people improve their credit and let people with good credit use it to make money.

How to Participate

If you are interested in participating yourself and believe you meet the criteria discussed above, you can give me a call (cell - 816-896-6566) or email (sfweller@yahoo.com). As I said, I work as a remote agent for the company, and my job is getting people's information so that we can provide a proposal based upon the specific cards you have.

It usually takes a day (or two) to get a proposal, then you just fax back the paperwork if you are interested. From there, you slowly get requests to add people to your cards and ultimately make money!

Like I said, they also have several other ways of making money with good credit that they are working on, so even if you don't have many (or any) qualifying cards right now, it is good to get your name on their list for future opportunities.

PS - If you want to improve your credit, I just need your name and phone number to have someone from the company who is knowledgeable about that side of things get in touch with you.

My first network marketing adventure - Part 2

2007-07-26T05:30:00.000-07:00

So we needed to figure out how to get more customers or bigger customers.

We looked at what our sponsor did - a number of shows every year. You know, tradeshows, where vendors pay to have a booth and people pay (generally) to get in, and the only people guaranteed to make money are the ones putting on the show.

Well after a few tries (OK, probably 5 or 6), we got fairly good at converting shows into customers, but those customers would not always make that first order. We found that once customers made the first order, they generally stayed around for quite awhile because most people really like the products

We also got a few accounts (places that did oil changes or sold oil products) both through the shows and by just calling on local businesses. These accounts made a difference to the bottom line faster just because AMSOIL pays better (initially) for these type of accounts.

So we plugged away, doing 5-10 shows per year, spending some very long hours at some of those shows. (I especially remember the 10 straight days of 12-13 hour days at the Kansas State Fair.) We eventually determined that our effort was perhaps not yielding the rewards we were looking for, and we began to look for other opportunities (especially my business partner).

At the end of the day, we also realized that an LLC was not the greatest structure for a network marketing business, we split up the customer base (which was already largely done anyway), and we went our separate ways.

I still love AMSOIL products but I really don't market them aggressively. My wife's car is still covered in AMSOIL propaganda, but only because I am too lazy to try and take everything off.

Our checks now run $100-$350/month on an average of an hour or so of work. Nothing to set the world on fire, but the money on top of a great learning experience has been very nice.

Let me summarize some of the key points of my first network marketing business:

What I love about AMSOIL
1) Fantastic products
2) Reasonably priced (much more benefit than other synthetic oils for just a little bit more)
3) Once customers start using AMSOIL, they keep using AMSOIL (goes back to #1 & 2)
4) Ability to earn money a lot of different ways (different account types, etc)

What I don't like as much about AMSOIL
1) The compensation is not competitive with other network marketing companies. Most of this stems from prices being too low - seriously, prices per quart of oil are only slightly higher than they were in the 1970s. People generally don't buy AMSOIL because of the low price, but AMSOIL (corporate) thinks they do. This does not leave enough compensation for dealers to make it competitive with other network marketing compensation plans.
2) AMSOIL is somewhat embarrassed to be a network marketing company. I don't know why this is, but they push direct sales to accounts rather than sponsoring other dealers into the bsuiness. I understand there is some stigma associated with network marketing, but you ought to embrace it if that is your distribution method.
3) Oil is complicated! Unlike other products (like nutritional juices, for example) where there are only one or two options, for synthetic oil and filters you have to look up the vehicle type in order to select from several different grades of oil and many different filter types. This is not convenient for either the dealer or the customers. The dealer has to be an expert, which hurts the duplicatability (is that a word?) of the business - and duplication is the foundation of network marketing (of course, see #2 above).

Lessons from my first Network Marketing Experience

1) Have products that you love! It is no fun learning about products and talking to people about their applications if you have no interest in the product itself. People also buy based upon emotion and justify with logic, so the emotions you convey are supremely important.
2) Have products that people buy more than once a year! There are a number of reasons for this. It is good to have relatively frequent contact with your customers. It is
3) Have higher-end products available for your best customers. Most businesses have more expensive, more profitable products for those customers who want the best or just more. With AMSOIL, that is very limited - there is better oil that costs $2/quart more retail or there is transmission fluid, grease, etc, but these generally last even longer than the synthetic motor oil.
4) Have distribution that matches your products. When AMSOIL was the first synthetic oil for cars and cost $5/quart in 1972, network marketing was the correct distribution method. In 2007 when it is selling for less than $6/quart and other synthetic oils are selling for more than $5/quart, I am not sure network marketing is the best method.

(By products, I of course mean products or services, depending on your particular business.)

Hopefully someone got some value out of that long story. It certainly helped me to verbalize some of my frustrations with AMSOIL's business model over the past few years as well as review all of the things I still like (which is why I still sell the products).

I do not recommend AMSOIL as a business for those looking to earn a "rockstar" passive income. The top earners in AMSOIL make in the $300,000-$400,000/year range, where top earners in other network marketing companies make 10x that.

On the other hand, $300-400k/year ain't too shabby, and this could be a great business for someone passionate about cars and interested in becoming an expert on the products.

Stay tuned for "My second network marketing adventure...", coming in a future installment.

PS - If you want to go check out the AMSOIL products, use this link to go to my store. Unless you're analytical and love trying to figure things out for yourself, though, it is easier to call (816-896-6566 cell) or email (sfweller@yahoo.com) me for the best solution for your particular situation, even if it does not involve AMSOIL! After having been very active in the business for 2 years, I know more than anyone should know about motor oil and filters :)

My first network marketing adventure - Part 1

2007-07-25T19:43:00.001-07:00

Just so it is clear during my discussions about network marketing - I am a proponent of it, I currently have a couple of network marketing businesses that produce small incomes, but I am not actively growing either business.

With that out of the way, let's talk about my first adventure with network marketing!

The year was 2003. A co-worker of mine had recently returned from a field assignment that had lasted about a year. When he got back, he was ready to start a side business.

I was just as excited as him, so we formed an LLC together. Only one problem - we had NO idea what we were going to do!

So we had a business, we had a bank account, and we even had business cards. We just didn't have a business plan or a way to make a profit. Small hitch, that.

So we first looked into rental real estate. We listened to some Carlton Sheets materials that we borrowed from someone else and read a few other books. We went to a few foreclosure auctions at the courthouse steps, but (thankfully) decided that real estate was not our first choice based upon what we knew then.

About the time we were deciding real estate was not for us, my business partner "stumbled" across a company called AMSOIL. The rest, as they say, is history.

He was looking for a bypass filter system filter system for his almost new Toyota Tacoma pickup (the same kind of filter system they use on steam turbines in power plants where they don't change oil - can you imagine a 15,000 gallon oil change?). The advantages of such a system would be extended engine life and not having to change the oil nearly as often, which he hated doing.

He found this company called "AMSOIL" that had these bypass filter systems as well as just a 25,000-mile, 1-year oil change. He called the local dealer to get a quote.

Well, the bypass system cost about $200 at the time, but you could pay $30 to become a dealer, which would drop the price of the system to about $150. That seems like a no-brainer.

So we decided to go out on a limb and pay $30 so that we could get the products (synthetic oil and filters) at better prices. (I should also mention that my wife and I were driving about 50,000 miles per year combined, so changing oil twice a year instead of 16 times a year REALLY appealed to me.)

As mechanical engineers, these products made A LOT of sense to us:

1) Generally cost less than regular oil changes over the course of a year (fewer oil changes),
2) Saved gas on top of that (1-4% better efficiency/performance),
3) Protected your engine better (so it lasts longer),
4) Are guaranteed for the longer service (yeah - if something breaks and it's the oil's fault, they pay for the engine repairs or replacement).
5) Reduced oil waste and gas consumption (I thank John Wachholz for my environmental awareness).

We figured if we thought this was cool, all of the other engineers we worked with would think it was cool as well.

As with many network marketing products, your friends and family don't always immediately join your excitement for the products that you are now marketing, and AMSOIL was no exception.

We got a few customers from work and family that started using it. And let's face it, a customer that switches to AMSOIL generates very little commission initially because they only need to buy product once a year! For me even now a customer that is only changing oil on two cars is worth about $8. Especially considering the time it took to get a sale, that is not a great wage.

So we needed to figure out how to get more customers or get larger customers (or both), and that is where I will pick up in Part 2...

The book that started it all...

2007-07-24T13:00:00.000-07:00

While I had started looking for other opportunities in general before this, the book really took all of my endeavours to another level. I'm talking of course about:

T. Harv Eker's "Secrets of the Millionaire Mind"

I first read the book...OK, confession time - I bought the book but never read it, but I have listened to the unabridged audio version read by Harv himself about 6 times...back in about March of last year. There were a lot of great ideas, but I never really did much with them.

The cool thing about the book, though, is that you get 2 FREE tickets to a 3-day seminar about really changing your mindset about money. The retail price for two tickets is $2590, but you get them free. (Full disclosure - now it costs $97 per person when you register because you get a lot of materials with it - they found that the learning was more effective when people had materials to take home.)

Now, I'm notoriously cheap, as I have previously mentioned, but knowing what I now know about the seminar, I would have happily paid full price for it. It was absolutely worth $1295 per person.

Why would he give away so much value? The most effective marketing being employed right now involves giving away a lot of value in order to establish a relationship and generate revenue from customers down the road. In this case, many people will sign up for more seminars offered by Harv's company (I sure have!). The people that are willing to go to a free seminar are also likely to pay to go to more seminars if they get a lot of value out of it. If they won't go to seminars in general, most won't go to one, even if it is free.

Back to my story: I went with some good friends - Chris, Kelly, and Nate - to a 3-day seminar in December 2006, and I can safely say it changed my life. Not only with respect to money but also improving my attitude toward life in general and relationships with others.

Ever since then, the opportunities have abounded, and things have really taken off. I can safely say that I never would have started this blog had it not been for "Secrets of the Millionaire Mind" and the 3-day "Millionaire Mind Intensive" seminar.

I loved the seminar so much that I went back in February 2007 with my wife (Rebecca). Apparently I "dragged" her to the seminar (this is what she told 800 people at the end of the 3 days). She also told those 800 people that it was one of the best weekends of her life, and she was so glad I brought her.

We are going to volunteer for the seminar in Dallas in November 2007 and "drag" as much of our family with us as we can.

I've actually bought 110 of these books to sell and give to family, friends, and business associates. Now I did get some cool bonuses for buying this many books, but at the same time I strongly believe that everyone should read the book at some point.

Not everyone is ready for the book - you have to be open, which means you have to realize that you don't know everything already. That may come as a bit of a shock to some of you (it did for me :) ), but it is true.

Please - check out the book. Not because I want to make $0.46 or whatever it is from you buying the book off Amazon, but because everyone has great potential to achieve locked up inside them, and this book just might help you release that. If you know me personally, I can get you an even better deal on the book than you can get through Amazon - just let me know that you want one.

This is my strongest recommendation so far - if you can't spring for $14 for a book that will change your life (even if only in small ways), then what else are you going to do to break out of your rut? Think about it.

PS - If you do happen to buy the book and decide to go to the 3-day Millionaire Mind Intensive seminar (did I mention that I highly recommend it?), please use the following referral code: 403014. This does two things: 1) I get paid for turning you onto the seminar (kinda like network marketing!), and 2) it allows Harv's company to determine where the seminar attendees are coming from (whether word of mouth or just picked up in a bookstore). I think it is fair for them to know where their people are coming from.

Again, use referral 403014 when registering for the seminar - thanks!

Network Marketing - ewwwww!

2007-07-24T08:17:00.000-07:00

I don't feel this way about network marketing, but a lot of people do, so I want to address some of the common issues around network marketing businesses.

First of all, network marketing is just one way of distributing product and services - getting it from the producer to the consumer.

Obviously traditional retailers (producer to wholesaler to retailer to consumer) is the most common method here in America, but direct order (catalog, TV, or now Internet) is another common method that is somewhat similar to network marketing. There are many others, but suffice it to say that network marketing is just one of many distribution methods.

I think most of our negative connotations with network marketing stem from 2 things:

1) Bad experiences with network marketing in the past. Most people that get into network marketing are very excited but have not received good training on how to introduce the products or business to others. Unfortunately, this can lead to "amateurs" approaching friends and family (the favorite first prospects) and really straining some relationships :)
and
2) Our general distate for promotion. This is one of the most dangerous mindset issues that keep people from achieving true wealth. Most people resent when people are "promoting" a product or service. Yet, how else do we expect to find out about it? We may not be interested in that product or service, but that doesn't mean we should be opposed to hearing about it - we may know someone who could really use that particular item.

But network marketing is really an effective way for distributing certain products that require more education or explanation. A couple of examples:

Let's say you had a synthetic oil that is guaranted to last 25,000 miles or 1 year without having to be changed, yet it cost 10-20% more than other synthetic oils (more about this later :) ). If you saw this brand that you had never heard of (which also costs more) next to the other synthetic oils on the shelf at Wal-Mart, would you even spend enough time looking at it to see this special guarantee?

Similarly, when you go to the drugstore to look at vitamins and you see a $20/month vitamin with what looks to be about the same ingredients of the $75/month vitamin, which one are you going to pick?

In both cases, education as to the specific benefits of the products is required to fully explain the value. It does NOT mean that everyone will be interested even after the explanation (some network marketers don't seem to understand that the majority of people will not be interested in your product even after you explain it). Some people will be interested based upon the educational process (which conveys the product value), whereas almost noone would have been interested without that education.

So network marketing can be a great distribution method for products that require more education or explanation to really explain their value/differentiation.

As an aside - there are a number of network marketing companies (I would say the minority) that created a product just to make money. There is little or no real value to the product, the company just needed to create something for their marketing engine to promote. This also happens in all other forms of distibution as well, but network marketing is more prone to it in my opinion.

Network marketing also allows quick promotion of products with very little money upfront from the producer of the product or service. Some very large corporations have launched products this way because of their ability to spread quickly without a lot of money upfront (money is only made by network marketers by sales of product - commission only). No money is paid out to your network marketing sales force until actual sales are made.

The potential rewards (especially passive income) attracts a lot of talent to network marketing. I mean incomes of $100,000-$1,000,000 per year are achievable. There are a lot of people in network marketing making that kind of money and more, but there are also a lot more people that tried it for a little while, didn't experience any success, quit, and now say "network marketing doesn't work." Of course, like many other things, it does work but not for everyone.

This discussion is prologue to my own experiences with network marketing that I will share shortly. Stay tuned...

HELP! - How to make money with your blog?

2007-07-22T07:39:00.000-07:00

Or to use the proper "lingo" - how do you efffectively monetize your blog?

I wish I had all of the answers on this one :)

As stated in the purpose of this blog, my primary intent for this blog is to journal my journey to financial freedom and share my successes (and not-quite-as-successfuls) with others. At the same time, I have put in some Google advertising (Adsense) blocks in an attempt to not only generate some revenue from the site but also provide more relevant content.

Adsense makes great sense (no pun intended) to me because many readers will stumble across my blog looking for information on a certain topic. You may or may not get value from the information I provide (hopefully you will!), but the ads provide information on similar topics that you (the reader) may find useful. If you do - it's a win-win - you get information you were looking for, and I get some advertising revenue.

My attempts to monetize this blog effectively (note also the link to Amazon.com for the 5-day book) are part of a larger goal of mine:

I hope to start a road trip blog where the revenues from the blog are what I have to live on each day. So no revenue would mean no gas, no place to stay, and no food.

Of course it would be critical to get some revenue generation before starting out because the blog about me sitting in my car in my driveway waiting for some revenue would be pretty boring (potentially very amusing, but still boring).

So that's where I need your help. How do I effectively make money from a blog? Adsense is easy to drop onto the sites, but any tips on generating click-throughs? Targetted advertising? eBooks? A "recommended reading" list linked to Amazon? I would welcome all ideas here - please make a comment to this post if you have an idea.

I plan to experiment on this site with revenue generation, so be aware of that. If you see things on here that you think are good ideas, please let me know. Likewise, make me aware of things that really "turn you off". I want this to be a positive learning experience for all of us.

Many people have great knowledge and experiences that they can share with the world. I think blogs are a great way to do that. If we can figure out the best ways to make some money at the same time, I think that would certainly provide more incentive for people to share via a blog.

Thanks in advance for the help!

Home sweet 4-plex

2007-07-20T14:01:00.000-07:00

The financial freedom discussion was important background for this topic, which falls under the reducing expenses side of achieving financial freedom.

For those of you that don't know me personally (and how "frugal" I can be), you may find this interesting. My wife and I were recently looking for new digs in our new hometown of McPherson, KS.

Now McPherson is very interesting. Although it is a small town in Kansas (population of about 14,000, not including livestock), it has a great, stable industrial base which keeps the average wages among the highest in Kansas. As a result, home prices are almost as high as those in Kansas City (for those of you on a coast, that may seem low, but for those of you from rural Kansas, you know that seems high).

So we looked for houses on some acreage (like the one we currently have outside of Kansas City) and found we would have to pay just as much for houses that were about 80 years older.

Instead of buying what we considered to be an overpriced house on acreage, we instead decided to buy a 1920s house that had been converted into four 1-bedroom/1-bath units. And further reinforcing that this was God's plan for us was the fact that two of the four units were occupied, leaving the two larger bottom units open for us!

The way it worked out, we got a 100% loan on the property from a local bank. We ended up getting cash back at closing (we got the renter's deposits, pro-rated taxes, etc - I need to go back and look how we pulled that off - I didn't expect it), and the two renters will ending up paying about as much as the mortgage payment (we have some repairs to do, and we are going to roll that into the mortgage, so I don't know the final amount yet).

Now we do have to pay some common utilities and all of the taxes and insurance for the property, but overall, we will be living in 1400-1500 square feet of space - 2 bedrooms, 2 baths, for very little money.

It is also in the middle of McPherson, so we can walk or ride our bikes most places in town that we need to go (except in bad weather). Very importantly these days that will minimize our gasoline usage.

Just one more step towards financial freedom!

Financial Freedom

2007-07-20T08:43:00.000-07:00

I did not really define this well up front, so I want to make sure and define what financial freedom means to me. I think one of Harv Eker's (or T. Harv Eker when he's an author - more on that later) declarations sums it up well:

"I have more than enough passive income to pay for my desired lifestyle."

In other words, you have more than enough income coming in without you having to work for it (from investments, passive businesses, hands-off rental income, etc) to more than cover your expenses.

There are several ways to achieve this financial freedom: 1) increase your passive income until it more than covers your desired lifestyle, 2) simplify your desired lifestyle until your expenses are less than the passive income you have, or 3) some combination of the two.

You can have financial freedom and still be generating an active income from work - you just have the freedom to stop working if you want and still have enough income to live off of. (Yes, I use dangling prepositions because the "correct" grammar just sounds wrong.)

The freedom to work or not as you desire and still have your desired lifestyle - this is financial freedom. I want us to have this common definition for future discussions :)

Health Savings Account (HSA)

2007-07-19T10:52:00.000-07:00

One of the joys of joining the ranks of the self-employed here in America is finding all of those benefits that we take for granted as employees. I have been calling and comparing plans today and thought I would share what I had learned.

For those of you that don't know (don't feel bad, I was in this boat just a few hours ago), health savings accounts act just like a savings account and are coupled with high-deductible health insurance policies. Let's take a look at each piece separately:

Health Savings Account

The health savings account itself acts much like a regular savings account, except that contributions are before tax (an above-the-line deduction - it reduces your federal adjusted gross income - the bottom line on the front page of the 1040 Form). Distributions can be used tax-free and penalty-free for the folowing:

Qualified medical expenses defined by Section 213 of the IRS Code
COBRA insurance
Qualified long-term care insurance and expenses
Health insurance premiums for individuals receiving unemployment compensation
Medicare and retiree health insurance premiums, but not Medicare Supplement premiums

After age 65, distributions can be taken for anything penalty-free, but you have to pay tax if you do not use the money for one of the above categories.

The maximum HSA contribution for 2007 is $2850 for an individual or $5650 for a family.

The other nice benfit is most HSA plans pay interest on your savings. I have seen 4-6.15%. http://www.ushealthgroup.com/ claims to pay the highest rate at 6.15%, and I have not found any higher. My understanding is that this interest is tax-free if used for medical expenses as well.

High-Deductible Heath Insurance

The high-deductible health insurance is intended to cover larger expenses that you cannot cover with your HSA money. Key things to look for in the insurance coverage:

Make sure providers you plan to use are in network. You get the contract rates (discounts of up to 90% off "list price") and some plans only pay 100% of expenses above the deductible if you use providers in the network. Otherwise you may have to pay 10-20% of the additional cost.

100% coverage above the deductible. Some plans offer lower monthly rates for 80/20 coverage up to a cap. That means you still have to pay 20% of expenses above the deductible up to some cap ($24,000 on the one I saw). If you choose to go 80/20, make sure you can afford the base deductible plus the 20% up to the cap if something bad happens. It's not worth it to me...

Look at the lifetime maximum benefit. $3 million is typical, but I found Celtic Insurance Co. (1-800-477-7990) that has a $7 million maximum.

Confirm all expenses (including office visit and prescriptions) count towards the deductible. There are lower rate plans that exclude certain items.

"Bonus" coverages - as an example, Humana offers $300 of routine wellness coverage per year. This can be a good deal if a) you know that you are going to use it, and b) it costs less than $300 more than comparable coverage from someone else.

Maternity coverage - not an issue for us, but this is something that you typically have to add separately. Make sure you get it if you expect to be expecting :)

Well, that is all I know right now. I hope that information helps other people that might be looking at the HSA option. I certainly welcome any comments you might have on the subject so that we can all learn more.

Renters

2007-07-19T10:31:00.000-07:00

It seems as though when I talk to people about rentals, the first words out of 80-90% their mouths are something along the lines of: "oh, I will never have rentals because I don't want to be fixing toilets at 2 in the morning."

It really saddens me that people first reaction is potential negatives instead of the potential positives (like "mailbox income" and great cash flow). I used to be this way, so I understand how devastating this mindset can be.

As with any potential downside, you can always do things to avoid it. The cleanest way (if you have enough cash flow) is to hire a property management company. They typically charge about 10% of gross rents, but some markets are lower (around 7%). They deal with all of the typical headaches - collecting rent, coordinating maintenance, paying utilities (if some utilities are paid by owner), running ads for new renters, taking applications, and getting new renters in. They typically pass through the additional charges (for maintenance work and sometimes advertising), and they typically charge a fee for each new lease they get signed.

This is all background to a story:

Late last week, we got our monthly check from our property management company for our investment property (5-unit house). Along with it was a long description of the various incidents that had recently happened with the tenants in one of the units.

Apparently, there were several incidents where the father in this unit pulled a gun on other people. This apparently was not the first time as he had pleaded no contest to a similar charge within the past year (before we bought the property). The offended parties refused to press charges, though one police report was filed.

I suppose such incidents would discourage some people from owning rentals. Not me - that just makes me more determined to be successful.

I am VERY thankful that I have a property management company in place for that property so that I don't have to deal with such issues myself. I am also really looking forward to the property manager screening the tenants - the background checks they do should avoid most such issues in the future.

The moral of the story is that anything you don't want to deal with in business (rental real estate or otherwise) can be outsourced to others. Even as a very "frugal" person (my friends have less nice words they would use), I see a lot of value in paying other people to do the things I don't want to do and am not very good at.

Where there is a will, there is a way.

5-day Sale Results

2007-07-16T08:31:00.001-07:00

Well, the 5-day sale results were somewhat disappointing. I sure am glad that the whole thing is non-binding!

To talk generic numbers, let's say we hoped/expected to get $100 out of the sale. According to the 5-day formula, the number we put in the add is 50% of that, rounded down to the next "magic number" in the book. In our case that was about $44. We would have been OK with anything above $89.

The written bids (before the round-robin auction started) got up to $59. The highest bidder after the round robin was $71 - less than the liens (1st and 2nd) on the property and less than we paid 6 years ago for the house.

I can think of a few things I would do differently next time:

1) Ads - I would use the words "Will be sold Sunday night to HIGHEST BIDDER" instead of "House will be sold to HIGHEST BIDDER" so people know when it will be sold. There were two versions in the book, and I did not see the other one until later.
2) Neighbors - We never got around to talking to our neighbors about our sale, and I wish we would have. I would have encouraged them to tell people they know about the sale. It would be good for the neighbors (they get to help pick their future neighbor), and gets people out that likely already know the neighborhood.
3) Bidders - I think we could have done a better job with visitors to the house, especially sitting down with them after they had looked at the house, explaining the process again, and encouraging them to bid (even if only a penny).

While I would do it again, I hoped the method was a little more foolproof. We had a lot of calls and emails (probably 50-60), but we only had about 26 famlies/couples come tour, and 14 bids.

We will probably end up listing with a realtor so that we can focus on our "new" house - getting it fixed up and in good shape to live in.

I'm afraid that this is going to discourage a lot of people we know that are very interested in this method from trying it.

We definitely want to try this method on some other things the author recommends: cars and rental properties (for rental, not for sale).

5-day Home Sale

2007-07-08T13:50:00.000-07:00

This week we will be selling our home using the 5-day sale method. I ran across the book that describes it on Amazon.com just completely out of the blue. (Though I truly believe that everything happens for a reason.)

We decided to use this method because we know exactly when the house will be sold, and the price from these sales is usually just as good as you get with a Realtor.

The summary is this: you advertise thoroughly Wednesday through Sunday, have the house open for inspections on Saturday and Sunday, and people leave a bid if they are interested (even if it is only $0.01). Sunday night, you call through those who left a bid, from highest to lowest - you tell them the current bid and ask if they want to advance the bid or drop out. you keep going until there is only one bidder left. The bidding is non-binding on both parties, but the idea is that both parties will go through with it (and if the winning bidder drops out, the second bidder is probably only $500 lower).

You do have to put in a lot of work to get the house ready, assemble information on the house, take calls, and man the house for inspections (like an open house) on Saturday and Sunday. Definitely more work than would be involved with a Realtor, but for us it is worth it to get our house sold on our timetable.

I will let you know how it turns out, and I have attached a link to the book in case anyone is interested in this method. As he says in the book - might as well try this method first, then fall back on the Realtor sale if you are unhappy with the results.

Costa Rica

2007-07-07T10:20:00.000-07:00

We've got a lot going on right now that I will eventually get in the blog, but the thing I am most excited about is...Costa Rica!

My success coach told me about this program, so I had to check it out myself. Ed Mercer is the largest (I think) land developer in Costa Rica. He is currently developing 3,000 lots around his private home.

The basics are this:
- Lots start at $60K USD (1/4 acre and up)
- 2 bedroom / 2 bath custom-built luxury home, fully furnished costs $190K USD
- The development will rent your home out for you when you aren't there for only 10% of the gross rent
- If you put 20% down ($50K) and get a 30-year mortgage for the rest, you can cash flow about $10K per year, after ALL expenses (including mortgage)
- Appreciation in this area has been averaging 30-35% per year for the past 5 years
- In March, Costa Rica announced a new international airport with the longest runway in Costa Rica will ge going in about 20 minutes from this development
- You have a place to stay if you ever want to vacation in Costa Rica (who wouldn't?)

We (Rebecca and I) are excited about going down to Costa Rica later this fall and checking everything out. We will go either in later September or November (October is the worst part of the rainy season).

We had a once-in-a-lifetime opportunity to get a 3-year price freeze on lot/house combinations in this development - no limit on the number! With current appreciation rates (and I don't expect them to slow anytime soon because the airport opens in 2010), this could be worth a LOT of money.

Ed Mercer said that anyone who comes down with us when we look at property will have the opportunity to get that same price freeze as well if they purchase property. The employees that we with him could not believe he agreed to that (they couldn't believe he did any price freeze in the first place).

If you are interested in learning more, check out http://www.best-costa-rica-real-estate.com. If you are interested in going down with us (we already have several people that are coming) in order to potentially get a 3-year price freeze, let us know ASAP. We will let you know dates as soon as we do (probably by first week of August).

There's lots of other cool things like very healthy environment, very healthy food, no taxes on capital gains & income (some additional work required here), and just a beautiful spot to vacation (from what I hear), but I expect to know much more about those things after venturing down there.

A Beginning

2007-07-04T13:41:00.000-07:00

Well, this is my first post on my first blog. Somehow I thought it would be more exciting than this...

This site is dedicated to documenting my quest for financial freedom. I am 30 right now, and my promise ("promise" is more committal than a "goal") is to have enough passive income by the time I am 35 that my wife and I never have to work again.

My purpose for this blog is to share my journey and especially some of the passive income opportunities I run across - many people don't even know such opportunities exist.

My eventual goal is to start a newsletter and forum to develop a community of like-minded people to share their ideas and success stories.

To the future!