I used to read a lot of personal finance blogs but I’ve stopped because they mostly just make me feel like shit about myself. However, I think what Mrs. Micah is doing is really cool, so I stop by there every now and again. (She does a good job of differentiating herself from many PF bloggers by not being a psycho. Mrs. Micah and I can be friends.)

Anyway, she wrote a post called When Generics Bite Back — Razor of Death, the title of which is good enough that I wish I’d written it. In the post, she basically discusses how a generic razor ate her husband’s face and they’ve struck men’s razors off the list of things that are cool to buy generic.

Before I started my home business, I was a full time mama. I had dreams of being uber-frugal, but I always had an excuse. I was pregnant. It is Canada and therefore too cold to traipse halfway across the country to save a nickel on a can of peas. I am tired. Whatever.

But then I would read these PF blogs and read about people who seem to spend 20 hours a day saving money. It’s all they think about. When they shower, they’re thinking about ways to save money. When they eat, when they sleep, when they have sex, everything. (It’s entirely possible they have more sex than the rest of us because it saves them money on a gym membership. At the same time, they might need to do more laundry. OH THE CONFLICT!!!)

Eventually, I begrudgingly allowed that I was not the kind of person who could organize a grocery list around which brand of rice was on sale that week and I resolved to do my best and let the chips fall where they may. I’d still like to be the type of person who can feed a family of nine on $27 a week, but such is life. Sometimes you suck.

When I started working from home, though, then the PF stuff really came out. We’re not going to have a steady paycheck. Jack’s older and requires things like food. He has the tendency to grow, at inconveniently frequent intervals. I made new resolutions. We will eat nothing but brown rice and water. Not a drop of alcohol would pass our lips — that three dollars I would spend on a gin and tonic could be saved towards my retirement! We would be the frugal kings of the world.

The factor I’d failed to consider was that working from home actually tends to take more time than not working from home, at least in the beginning. When you’re at home, your computer is right there, and you hear the little bing that says you have new email. The idea of rinsing beans to make a nice hearty soup for three cents a serving just doesn’t cut it when you’re hysterical and overworked. Add pregnant with a toddler who has given up on sleep, well, it’s ugly in our house.

Basically, I liked what Mrs. Micah was saying. I like that somebody else out there realizes that not every generic brand is the same and that the You’re-Just-Succumbing-To-The-Marketing crowd are delusional. (Um, I work in marketing, so I kind of get it.) Micah’s face proves it. Jack’s wet bed when we buy generic diapers proves it. The horrible itchy rash every member of our household gets when we decide to cheap out on laundry soap proves it.

Cheap can be great, but it can also be a false economy. Perhaps the most frugal thing to do is actually put some thought into your purchases and consider the cost benefit ratio of cheap vs. chic. If your children will only eat Campbell’s soup (and frankly, having tasted the No Name brands, I can’t exactly blame them) you’re not saving money by buying El Cheapo Soupo. “But it’s five bucks a case!” the PFers screech. That may be. Congratulations, you just spent five bucks for your kids to pitch a fit and your soup to end up in the garbage.

I remember when Jack was about 6 months old and I was debilitated by postpartum depression. Jamie had just gone back to work after parental leave and I was too depressed to even do laundry — I would pull it together to do a week’s worth of work clothes for him and the rest of us got by on Febreze and the sniff test. I was terrified we wouldn’t have enough money — we actually made more on maternity and parental than we did on his salary — and I turned to PF blogs and message boards for some solace.

Don’t ever do that.

I came onto one board where the ladies were talking about a woman one of them knew from church. Apparently, the woman who wrote the post “caught” the other woman in the grocery store buying generic premade oatmeal. The vitriol these women had towards this other woman –who they had never met in their lives — was simply astounding. “I can’t believe she bought store-bought oatmeal!” was said in a tone that one would normally reserve for “I can’t believe she fellated the priest in front of the entire congregation while he was baptizing a newborn baby!”

Just do the best you can. Working from home can be really scary. When you don’t have gigs, you’re worried you’ll starve. When you do have gigs, you worry about what’ll happen when you don’t. It’s normal. Don’t let the psychos get you down.

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By Naomi Dunford - Feb 17, 2008 in Home Business Money - 53 Comments
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Let me guess. You can’t afford it.

You’d really love to [start a home business/spend time with your kids/give money to charity/adopt a child from China], you really would, but you just can’t afford it. If I hear that phrase one more time, I’m going to do something drastic.

I hate to be the bearer of bad news, but you’re lying. You can afford it. You’re just choosing not to. In your case, that could be a wise choice or it could be a stupid choice, but it’s yours and you’re making it.

I could tell you about Christine who spent time hanging out in the upper echelons of homelessness. I could tell you about Harri in Finland, busting his ass and saving like crazy to work from home with his two little boys.

I could tell you about the time I spent six months in a homeless shelter. I could tell you about rolling pennies to buy a half-pound bag of generic rotini.

I could tell you what it feels like to have no money for baby formula. To fill the empty can with flour and return it to the store, claiming it tastes funny. To lie and steal to get free milk for your kid. To be 20 and single and totally unprepared for motherhood and dirt ass poor.

You don’t care and I don’t blame you. But don’t tell me you can’t afford it.

When I had Jack, Jamie took parental leave. In Canada, we get 55% of our salary for 50 weeks, up to 35 of which can be taken by the father. People looked at him like he was crazy. People came right out and said he was crazy. “How can you afford it?” “You’ll never be able to afford it!” “I wish we could do that but we can’t afford it.”

Here’s my open reply. We did not have a car. We did not have a house. We did not have cable TV, or a Best Buy account, or a shoe habit. We did not take vacations. We did not have a gym membership. We did not drink non-negotiable morning cappuccinos.

We sacrificed a damn lot and we got six blissful months of doing nothing but getting to know our new baby son.

Is this for everyone? Absolutely not. Are there things I will not give up? Hell, yes. But if I don’t do something or buy something or go somewhere, it’s not because I can’t afford it.

It’s because other things are more important.

When you say you can’t afford something, you are giving away your power. There might be damn good reasons for you to keep your day job. You want to save up some money first. You like the security. The health benefits come in handy. You can’t stand the sight of your wife. Hell, maybe you actually enjoy it.

Those are all choices, and they may be good ones, but they’re yours and you’re the one making them. Stop wimping out and start telling the truth.

This is the end of my ranting about money week. Next week, I rant about marketing your home business. Subscribe to the feed, you just might get to watch me explode live on the Internet.

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By Naomi Dunford - Oct 26, 2007 in Home Business Money - 23 Comments
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Let’s talk about money, shall we? I mean, we’ve been doing that all week, but let’s get dirty about it. Money is not hard to understand. Earn more, spend less, you’re golden. It’s not exactly rocket science. The problem most people have, though, is that they spend all their time trying to do one of those things, while summarily ignoring the other. Half the world busts their ass to make more money and then promptly spends it all on crap. The other half drives halfway across town to save a nickel on a can of peas, but charges fifteen bucks an hour for their SEO services.

That’s really dumb.

I’ve compiled a little Best of the Web on money, broken down into Making and Saving. Some of this stuff is directly related to freelancing and home business ownership. The rest should be required reading before you’re allowed to own a baseball card, let alone a credit card.

How To Make More Money

The lovely Cyan (who linked to me yesterday, by the way, and sent me a boatload of traffic - thanks, Cyan!) offers the super-in-depth Freelance Switch Rate Calculator. It incorporates a whole bunch of things that’ll make you smack yourself in the forehead wondering why you didn’t think of it before.

They also have a great article, Nine Factors To Consider When Determining Your Price, for those who don’t like filling out forms or actually doing the calculations. If you’re just starting out and don’t have all of the information to put in the calculator yet, this is a great article to read.

Since you’re here, you probably think blogs are cool. You either already have a blog of your own, you’re planning to start one, or you’re related to me or my husband. Along the lines of the whole diversify your income thing we’ve been talking about, Maki from DoshDosh has a great post about making money blogging. Problogger has a lot of good stuff about this, too, but you’ve probably already read it.

How To Spend Less Money

The ever-awesome Trent takes on Money Magazine’s 25 Rules To Grow Rich By, Simple Dollar style. Each of the 25 tips is linked up to a more in-depth post, so you can take what you want and leave the rest.

Also from Trent, check out his 31 Days To Fix Your Finances. This one is long. LONG. It’s also one of the most valuable resources available on the Internet. If you don’t feel like clicking around, you can send Trent two bucks and he’ll send you the whole 60-page insanity in PDF.

The very nice people at Free Money Finance gave this crazy round-up of financial goodness, My Best Piece of Financial Advice? Spend Less Than You Earn. Don’t be put off by the title - each letter in each word links to a post with yummy money advice. In other news, FMF also gives all their income to charity. Why? Cause they’re cool like that.

My contribution?

Double your rates. I don’t know who you are and I don’t know what you’re selling, but I’ll tell you right now, your rates are too low. They always are. Every time I talk to entrepreneurs and freelancers, when I’m doing seminars or coaching or just hanging out at the coffee shop, I am shocked and appalled by how cheap they’re selling themselves. Want hard data? Go here and check out the numbers.

UPDATE: The handsome and knightly Dave Navarro of Freelance Folder and Your 30 Hour Day fame gave me a heads-up about his awesome article, Selling Yourself On The Value Of Your Time. He calls it tasty. It is tasty, and that’s not a compliment I go handing around, all willy-nilly. Read it, learn from it, then spend a few minutes hanging your head in shame about all the time you’ve been wasting.

* One thing I’ll mention - watch out for the comment streams on The Simple Dollar. Some of the readers are totally psychotic. The Frugaler-Than-Thou crowd is a bitch.

Liked the round-up? Why not subscribe to the IttyBiz feed? There’s still more than 2 weeks left of home business and freelance advice to come.

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By Naomi Dunford - Oct 25, 2007 in Home Business Money - 15 Comments
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I like risk. Risk and I have spent a lot of time together, and we’ve become close friends. Risk has spent a lot of nights sleeping in my bed, nestled cozily between Jamie and me.

Jamie does not like my relationship with Risk. He thinks we’re too close. He thinks I don’t see Its flaws, the problems It could cause, the havoc It could wreak on our home business. The perfect entrepreneur would be halfway between Jamie and me - someone with a healthy balance. (Maybe we could just have Jack take care of it.)

Knowing where you exist on the risk spectrum is vitally important to entrepreneurs. If you are well aware of the strengths and weaknesses of your position, you can better determine who to ask for help, who to choose as mentors, and who to avoid like the plague. You’ll be able to intelligently decide when to spend your money and what to spend it on. Most importantly, you’ll know your business’ financial potential and how to optimize your position for the best possible gains.

The Riskophile

Riskophiles get off on danger, unknown outcomes, and fear. They find it a healthy motivator. I, for example, am quite comfortable when my bank account is in overdraft. It gets me off my ass. I think there’s nothing like not having any money to make you want more money. Jamie, not so much. Jamie is a Riskophobe.

The Riskophobe

Riskophobes are safer people. They get uncomfortable spending money they don’t have to, or taking actions that might cause them financial hardship. He wants to know, beyond a shadow of a doubt, that we will be able to pay our rent on time. The fact that we have paid our rent on time for the entire four years we’ve been together is irrelevant. He wants to know it again. Now.

Finding Your Balance

If you’re anything at all like every other person on this planet, your balance is off. You exist too far on one side of the spectrum. You either take too many stupid chances, or you miss opportunities because of fear.

In order to be successful as an entrepreneur or a freelancer, you need to get out of your risk comfort zone and come closer to the middle. To make money, you have to take some risks. If you want to keep money, you have to stay a little safer.

Where’s your spot on the Risk-to-Anti-Risk continuum? Do you like where you are?

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By Naomi Dunford - Oct 24, 2007 in Home Business Money - No Comments
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One of the best ways to avoid the whole living in the gutter thing we talked about yesterday is to create multiple streams of income for your home business. This is a very trendy topic right now and I figured I’d clear a few things up.

In order to succeed using this model, there are two main steps involved.

Step One: Diversify your income streams.

When you are starting out, your diversification involves getting lots of clients. If you run a small business or you are a freelancer and the vast majority of your income comes from one company or individual, you do not have a client. You have a boss.

Lots of clients means lots of checks. If one client flakes out, you’re okay because you have other clients. You make your mortgage payment on time, your wife doesn’t leave you, and everybody’s happy. For now.

The reason this is only the first step towards income stream utopia is because this is not a sustainable business model for a company with only one or two employees. You work your ass off and you get paid. You keep working your ass off and you keep getting paid. At some point, you’re going to want to stop working your ass off. This is where step two comes in.

Step Two: Diversify your TYPES of income streams.

There are three main types of income streams. You want lots of income streams coming from as many of these as possible.

Active and Direct

This is the most common type of income. You do something for which you get paid. You take a freelancing gig for $1000. You perform the service and you are given $1000. Your income is directly related to your activity level. You don’t do it, you don’t get paid.

Active and Indirect

This is becoming a more and more common type of income. You write on your blog and get thousands of readers. Advertisers come beating down your door and offer you money to shill their stuff on your site. Your level of activity does not directly impact the amount of money you get - if you don’t blog today or tomorrow or the day after, there will probably be a negligible net impact on your income. It is still active, however, because eventually, a lack of activity on your part will impact your income.

The vast majority of unconventional income streams fall into this category.

Passive or Residual

Everybody loves the idea of passive or residual income. We all seem to have this image of laying on a beach in Bali, sipping a Mai Tai and having hula-clad groupies lovingly applying our sunscreen. The problem with this fantasy is that in the vast majority of cases, it’s crap.

There are very, very, VERY few income streams that are completely passive.

Patents provide residual income. Certain blue-chip stocks that pay dividends provide residual income. Books that are already wildly successful provide residual income. That’s about it.

Figuring out your income streams

To know what kind of income stream you have, figure out this little equation. It’s easy. Look at your activity (A) and your income (B).

If you take away A, what happens to B?

If you eliminate A and B disappears, your income stream is active and direct.

Example: You are working at a job. You quit. Your income goes away.

If you eliminate A and B diminishes over time, your income stream is active and indirect.

Example: You stop blogging. Gradually, readers start to leave and so do advertisers. Your income decreases gradually.

If you eliminate A and B keeps trucking along happily, your income stream is passive.

Example: You are Stephen King. You decide never to write again, and do not engage in any promotional activities. You have invested your money wisely. People keep buying your books and your stocks keep paying out. You never have to worry about money again.

That’s great. Why do you care?

When you know how much of your activity is directly impacting your income, you can decide where to assign your efforts. Like doing the job that’s closest to a bill, if you don’t have enough time or energy to get everything done, work on the activities that provide direct income. As you successfully create more indirect income streams, your level of activity can decrease without impacting your level of income, bringing you one step closer to Bali.

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By Naomi Dunford - Oct 23, 2007 in Home Business Money - 10 Comments
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“Do you want to be homeless and live in the gutter?” Apparently, this is the biggest fear among would-be home business owners. It also seems to be the biggest fear of people who know and love would-be entrepreneurs. When I was about a week away from launching Itty Bitty Marketing, somebody very close to me (thankfully, not Jamie) asked me that exact question. Verbatim. What do you say to that? “Yes, actually, that’s exactly what I’d like. In fact, why don’t you just take my house and my car and I’ll do it right now?”

Many advice types suggest having something like seven gazillion months worth of savings before you make the leap, thus mitigating your risk of poverty and ridicule. While I’m sure that is a nice, safe plan for many people, in our case we would have shot ourselves had we waited that long. Instead, we decided to go with the Back-Up Plan method of small business management.

How To Make a Back-Up Plan

There are two key elements to a successful back-up plan. One, it has to be tolerable. Two, it has to be doable.

First, let’s look at tolerable.

Back when I was still attempting to be employable, I used to temp as an administrative assistant. I was pretty good at it, but I hated it. I mean, I really hated it. I hated getting dressed up. I hated acting like I gave a crap about their mediocre, random company. I hated having to pretend like I wanted, more than anything else in the world, to stay with said random company for the rest of my working life. Not cool.

Therefore, temping isn’t a good back-up plan for me. The key here is for me to analyze what sucks about temping (working in an office) and what isn’t too bad about temping (typing, administrative work). Once I’ve figured that out what works for me, I can identify a tolerable alternative to whipping on the pantyhose and kissing ass all day.

In Jamie’s case, he’s a pretty wicked photographer. While I doubt we’re going to retire off the income from his photography, it’s a viable back-up plan in case we’re ever on the verge of the poorhouse. I have no doubt there are plenty of lovely babies out there just dying to have him make them laugh on film. For my mother, she types about 95 words per minute. She can always get freelance work as a voice transcriber, which I gather pays pretty well for sitting at your computer all day in your underwear. Not that she would do that or anything.

Some other options you can consider are:

* freelance writing
* graphic design
* web design
* computer programming
* tutoring
* resume writing
* editing (essays, copy)
* babysitting
* seasonal work
* part-time jobs
* dog walking
* pet sitting
* house cleaning
* note-taking

This is not a comprehensive or exhaustive list. I just hear from so many entrepreneurs that they can’t think of any other ways of making money. If you have any level of skill whatsoever, there is something you can do that people will pay you for that does not necessitate going back to work full time. Nothing this list is supposed to make you millions. It’s supposed to get you through your rough patches.

Now what about doable?

The second requirement of a successful back-up plan is that it needs to easily and quickly executable. The whole point of this plan is to be able to implement it immediately if you need money. Starting a mail-order cheese business, while admirable and potentially very fulfilling, does not fit the bill.

If you want to be a freelance writer, you can start making money this week. The same is true for many other marketable skills. Through services like Elance, Guru, and GetAFreelancer, you can find work almost instantly. The key is to have an infrastructure already in place before your situation becomes urgent. When you’re ready to start working from home on a full time basis, spend a little bit of money to get a membership for your site of choice. If your plan is to take in kids for babysitting or do some tutoring on the side, have flyers printed and ready so there’s nothing stopping you from starting right away.

When you realize that there’s a very good chance you won’t make this month’s mortgage payment, that’s not the time to start thinking about writing your flyer copy. Get everything ready beforehand, and the stress of not knowing what to do next virtually disappears.

What about you guys? Do you have a back-up plan? Do you end up using it? How’s it working out? Talk to me!

Related: Aaron over at the Shane and Peter Blog has a great post about making the leap to freelancing today. It was nice to read someone actually talking about the good sides of freelancing for once.

In other yummy acts of linky love, Genesis over at At Home Mom did an interview with me that’s live on her blog today. It’s fun for the whole family. Except the members of the family who don’t like the word “sex”. Them, it’s not so fun for.

If you want to catch the remaining three weeks of our as-requested-by-you tutorial, subscribe to the feed. To quote everyone’s favorite purple dinosaur, it’s super-dee-duper.

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By Naomi Dunford - Oct 22, 2007 in Home Business Money - 17 Comments
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Leo says you need an emergency fund. Trent says you need an emergency fund. Your mother probably says you need an emergency fund. But do you have one?

The last few months have been good ones for me. Jamie’s student loans came in, and I got a pretty substantial bonus from one of my freelance clients. I was able to increase my rates for some of my writing jobs. All in all, it’s been pretty good.

I wanted to buy a big screen TV. Jamie wanted to set up an emergency fund. Knowing that he was right, as usual, we filled up our emergency fund to a level we felt comfortable with. (Then the bonus came and I secretly bought him the TV for his birthday anyway, but that’s neither here nor there.)

I got to feeling pretty smug. I bought the TV, everything went as planned, our emergency fund is fine, and I was about ready to start telling him it hadn’t been that important to begin with. Then today happened. Today, we took a little family trip to the pediatric ophthalmologist.

Today I found out my 13-month old needs glasses.

I didn’t even know they made glasses for toddlers. Sure enough, they do, and we’re going to buy a pair or four. One month after our health benefits expired.

Now here are a few things you might not know about outfitting your one-year-old in spectacles. Apparently, toddlers have been known to break things. This means it’s not impossible that we’ll have to buy four pairs of these things in the next 12 months. Also, their prescriptions tend to change every 6-12 months, so even if he’s the first baby in the history of baby glasses to NOT break or scratch them, we’ll have to replace them anyway. Also, babies are often allergic to certain metals, so they make these ones in titanium.

It would be cheaper for him to take up smoking.

Anyway, the point of all of this is that one year ago, this would have thrown me into a frenzy (and not just because Jack would have only been four weeks old at the time.) I wouldn’t have had the four hundred bucks to buy the glasses. I would have felt like a bad mother and a bad person. I would have been all around hysterical. Now, though, we have a comfortable emergency fund and I’m not scared.

Don’t get me wrong, though. I am annoyed. I am inconvenienced. (Keep in mind this is the child who categorically refuses to wear pants so I’m not sure how we’re going to convince him to wear glasses.) But I’m not scared.

When you’re first deciding to start your home business, people always tell you to expect the unexpected. And you try to do that, but it’s hard. What kind of unexpected was I thinking about? I was thinking major car repairs, which don’t exactly affect me since I don’t have a car. I was thinking the roof caving in, which also doesn’t affect me since I don’t actually own my roof. I was thinking major orthodontia which doesn’t affect me since my child only has four teeth.

I sure as hell wasn’t thinking my kid would need to wear glasses before he needed to wear shoes. My point? Expect the unexpected, the really unexpected, and create a sizable emergency fund.

Leo does a better job of explaining how and why you should create an emergency fund than I ever could. You should probably go read it.

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By Naomi Dunford - Oct 4, 2007 in Home Business Money - 3 Comments
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