2015 AMSOIL Update

If I get 7 posts in the next few days or weeks, that gets my average to a post a year for the past 7 years, which is much better than ZERO posts for 7 years :)

I got a call the other day from Sam about my AMSOIL business.  Since my last post on AMSOIL was in fact over EIGHT YEARS AGO, an update is certainly in order.

The Bad News

As many times as I have intended to, I have not become any more active with my AMSOIL business.  I read the monthly magazine to keep up on new products and potential customers.  I also keep in touch with the business accounts I have that sell AMSOIL.  I do have a couple of great ideas to grow the business both short-term and long-term but thus far they have remained only that - ideas.

I also helped a downline dealer work an AMSOIL corporate booth in Kansas City a few months ago.  Although it was certainly not as productive as previous events (where the dealers pay to have a booth), it was good experience for us both and got me thinking more about the business again.

The Good News

Despite my lack of effort in the business, my income has remained remarkably stable, mainly due to my business accounts (mechanics and service stations) and downline dealers.  Average monthly income has stayed in the $200-300 range.  If I would bother to increase my group sales 50%, my income would likely increase 100-200%, but as I mentioned in the previous post, I have so far lacked the motivation to do so.

AMSOIL remains a great company with great products, constantly innovating to improve the range of product offerings.  The fact that my income has not dropped over 8 years of neglect is a testament to the quality and "stickiness" of the AMSOIL product line.  Compare that to my NuSkin/Pharmanex business (now mostly purchases for myself, wife, and father-in-law), where 90%+ of customer sales and profits have disappeared over the same time frame, and you can see why I much prefer AMSOIL's model in network marketing / MLM for generating true passive income.  See - I don't completely hate passive income!

I'm baaaack...and a passive income hater :)

Sorry for the 7 year hiatus.  If anyone was ever following this blog, I bet they aren't after 7 years!  I can't believe it has been so long...time flies when you are having fun, I guess - and as you get older...  I don't have a good excuse (are any excuses really "good"?); I have simply been distracted by other things.

Obviously some things have changed for me over the past 7 years, but many of the most important things remain constant (church, wife, family).

I suppose the biggest reason that I stopped writing so much was a waning enthusiasm for purely passive income.  "Heresy!" you say.  Well, hear me out:

Why my enthusiasm for passive income has waned

1)  Lack of motivation for more money

First, my wife and I have a very comfortable income, and I lack the motivation to become really wealthy.  If we had more income - passive or active - it would not change our way of life significantly.  (Although we might take more unpaid vacation if our work allowed it.)  I enjoy saving & investing, so additional funds would largely go there and to the church. These are all worthy activities but not enough to cause me to lust after additional income.

2)  Active income is better than I thought

Second, active income provides more flexibility down the road. Mark Ford (aka Michael Masterson) talks about this a fair amount after his two attempts at retirement.  Passive income can be lost - interest rates dropping kill your income from the bank, you lose network marketing customers and dealers as they pursue the "next big thing," etc, etc.  Actively working for income keeps your skills sharp (and improving) in a particular field, which is useful if you want to do part-time consulting or if you need to find work to provide additional income for whatever reason.

3)  Working is better than I thought

Finally - and probably most importantly - I now believe that "work" is a significant component of a healthy life.  I think the typical American ideal of retirement - stop working and hit the golf course or simply laze about - is very unhealthy.  Work provides social interaction, purpose (if you are doing it right!), and mind & body benefits (again, if you are doing it right!).  Work can be unpaid; a lot of retirees I know do a lot of volunteering, which can provide all of the benefits mentioned above.  But I think even volunteer work should take advantage of the specifics skills and talents people have - my experience is that many organizations just use volunteers for "busy work."

I understand the urge to just be "done" with work.  I have had that urge.  Sometimes a lot.  Ideally, work is something you enjoy.  No, not every second, but you should generally feel good about the work that you do and enjoy it.  I also understand that many people work in jobs they hate just to make a living.  My question is - why do they hate that job?  If their boss is abusive or coworkers are vindictive, then try and get a new job.  But I think many people hate their jobs just because they are jobs.  If those people worked to do the best possible job they could and worked to make their workplace pleasant for coworkers, customers, etc, then I think their jobs would be much more fulfilling.

I reached this conclusion over time, so I don't expect anyone who looks forward to that day when they "stop working" to agree with me right away.  I still have one pair of grandparents living, and they used to travel a lot when they first retired (and my grandfather downhill skied into his 70s), but for the past decade or so I think most of their time was spent watching TV.  They have declined fairly quickly in this time with a lack of socializing, movement, and purpose.  I don't think they see anything wrong in what they have been doing, but it has been sad for me to watch.

If you are going to retire and simply stop working, please find something else productive to fill your time, therefore adding value to others and keeping your mind and body in shape.

More soon

That's all for now.  I will soon provide updates on AMSOIL and blog monetization - just keep in mind my waning enthusiasm noted above!

Book Review: Be Principled and Grow Rich

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!

Other Passive Income Blogs

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!

Passive Income

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

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.

Network Marketing - ewwwww!

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?

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!

Financial Freedom

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 :)