In my previous post here on Escape Velocity I talked about Boostrapping. That particular article was about business, but as many people remarked, the same argument can be made for your personal life also.

Taking Control

Back in 2005 when I left my cushy job to leap into the chasm of self-employment my wife and I were in serious debt. Not crippling debt like a lot of people experience, but still enough that it caused a fair few sleepless nights when things got too real.

Much of the debt was self-inflicted through poor financial management, but the bulk was a legacy from when I had been made redundant six years earlier. Being “let go” from my job came during a particularly stressful period of upheaval, coinciding with my wife going on maternity leave. Not a time I would like to repeat. Having to call debt collectors and the tax man from a hospital pay phone isn’t ideal let me tell you.

I’m glad to say we turned things around, and we did it in a straightforward way (not easy, but simple).

Overcoming Debt

1. Stop spending money you don’t have.
2. Reduce your debts.

Easier said than done, right? Disaster does strike and we don’t always have enough savings (if at all) so having credit is a necessity for most of us. What can we do?

This is where bootstrapping comes in.

Bootstrap to Boost Your Earnings

I like this because it applies even if you don’t have debt, it is especially cool if you are doing ok but want to spike your income upwards.

My original solution was to start accepting the spare-time gigs that were coming to my via my growing profile in the programming geek world. My day job was never going to increase my income, so I added additional sources of income via books, providing training and freelancing work. It meant my spare time reduced to almost zero, in fact it cut into my sleep, but it made a huge dent in our debts.

Other people would advise a different order to these sorts of tips but I put this idea first because of the psychological value.

A lot of the stress of debt comes from a feeling of being out of your control, that the debt is a burden you don’t have much influence over, that negative spiral of futility and inevitability. Having a way that you can “fight back” is a huge morale boost.

Just make sure you use a system that does not require huge investment or risk in order to get moving, otherwise it could be counter productive.

My approach to quick spikes of income is outlined here.

If you follow that approach or something that works as well, when the debt is cleared you will have tools that allow you to create surplus income for savings and new purchases.

Manage Your Overhead

Just like in business, in our personal lives there is a lot of waste.

You can start with the big stuff, but don’t overlook the little stuff that adds up. Most of us are spending on things we don’t really need. I was buying a LOT of coffee for example. Because every day I was commuting over three hours, I was supping the wakeup juice thinking it was helping me keep productive, plus I was working so hard I felt I deserved to treat myself. That all added up to hundreds of dollars per month alone.

Some people record a spending diary, I think this is clever but I didn’t have the discipline. I did however have online bank accounts that allowed my to check my credit and debit payments. When you are looking at your outgoings, see if there are big chunks and tiny details.

Once you clear the easier stuff, then you make some tough choices. A lot of money can be saved by doing stuff you have probably had in mind anyway, like cutting out cigarettes, booze, junk food treats and snacks, and TV.

Simple Equation

When your income exceeds your outgoings then you can repay or invest.

Most debt advice focus on reducing your outgoings, which is fair enough but no fun, and really there are limits. By starting on the income side we not only added to our earning ability to recover from the debt situation but learned useful skills for growing that income for when we escaped the debt completely.

Now when we can see a big spend approaching, or when we particularly want to buy something, we have a way to make the money first.

Summary

Chris B called his affiliate banners “worry reduction buttons”, for me it is having the ability to do a quick, profitable product launch. It doesn’t matter which approach you use, just having a “way out”, or the ability to boost your income can be a huge comfort. But don’t start when you are desperate, my advice would be to start putting money away now and start funding purchases and expenses from “new money” so you never have to panic in the first place!

There are two good methods to finding out what your passion really is.

One is to get really rich. When that happens, you become open to anything, and you have no limits. A rich dude can go anywhere, be anyone, and do anything if he has the time. Easy.

But this method is not available to most of us– at least, not yet.

Instead, let’s discuss the other way: Going broke. Going really broke.

In early 2005, when I had started podcasting, there was a brief period, maybe six months, where I lived off 5 dollars a day. I remember getting a coffee at a Starbucks every day– walking there– and the luxury it was to me at the time. It was amazing. I still look fondly on that time in my life.

Why? I felt free.

It’s hard to feel this way– really free– especially if you have kids or anyone else to take care of. You must have nothing– no options, no escape– nothing at all.

It happened to me by accident, but I suspect you can create this feeling on purpose, as well. To do it, you go minimalist. You create the feeling that, whatever you’re currently doing, it is over.

The feeling is powerful, scary, and is very hard to ignore.

Have you ever felt it? You would know if you had.

The reason I ask is because I’m curioous what it takes– what circumstances– to help you feel this way. I recently had the feeling again, for a separate reason, and I took up sculpting classes and started writing furiously as a result.

You become a different person when you are desperate. You become alive.

It could be a divorce, a death, a layoff– anything.

What was it for you?

If you want to take your business to the next level (or if you don’t yet have one, but want to have one), read on…

Hi- it’s Carol, and I am offering a limited number of focused one-on-one strategy sessions, which I typically only make available to larger corporations.

If you are interested in leveraging my strengths in strategy, monetization and problem solving and receiving guidance in the following areas, this is a valuable opportunity to strategize directly with me in two-focused sessions (includes two one-hour sessions and prep time).  I usually do not offer this on a one-off basis; my clients pay me six-figures for my top-tier strategy work.

Our Strategy Session Focus Areas:

• Business plans (I’ve written more than 100 and reviewed more than 1000)
• Capital raising (I’ve raised over $1 billion in capital and have made private equity and debt investments)
• Mergers and Acquisitions (I have completed more than $750 million worth)
• Joint ventures/partnerships/licenses (I’ve done this for my clients with partners ranging from Disney to Katy Perry)
• Business strategy, including new revenue streams/monetization and business model tweaks/evaluation to ignite growth (I’ve done this for companies ranging from entrepreneurs with ideas to Fortune 100 companies)
• Enthusiast/loyalty programs (I have created 7-figure yearly programs)

Or, if you prefer, we can talk instead about South Park, the NFL or anything else your heart desires (within reason- if you saw some of the requests made to me, you would know why I have to say this…) the time is yours.

This is limited to 20 entrepreneurs/businesses only (about a dozen slots left currently), first-come, first-served.  This isn’t some lame ploy to sound exclusive, it is literally all I can commit to time-wise with my schedule, especially with shooting my television pilot.

Cost

The cost is the commitment to purchase 100 copies of my upcoming book, The Entrepreneur Equation book directly from me, $25 each with shipping and tax included; you pay now, and books are delivered to you in mid-March 2011 ($2500 total commitment).  This pricing structure and format is for the US- if you are outside of the US, send an inquiry with your location.

You can use these books as client gifts, donate them (if you want to do a direct donation, we are partnered with SCORE nationwide and can have the books sent directly to one of the 350 nationwide SCORE chapters) or even use them to adjust uneven furniture or make an abstract book sculptures, the choice is up to you.

This is an unparalleled opportunity for you to invest in yourself and your business. I want to you get a return out of the strategy we create that far exceeds what you are investing.  Plus, you get a unique ability to work with me directly and the value of books.

Format

-You choose the topics area and provide information and materials at least 3 days prior to our first session

-We have a one-hour in-depth session on that topic

-We decide on action items, you do any “homework”

-We have a second one-hour session to review progress, make any adjustments and come up with a go-forward plan

-Sessions done by phone or Skype (phone preferred)

Sessions to be booked for December 2010 and January/February 2011.

That’s it…No Ginzu knives “but wait there’s more…”, just this offer for the first 20 to contact me (and lock it in).

To take advantage of this offer, please fill out the form here, putting “one-on-one strategy opportunity” in the comments box.

FAQs

Why only 20 spots? I have a very tight schedule and that is all I could in good conscience carve the time out for to make sure everyone gets my full attention.

Can I buy just one hour/or more hours? If you want to propose something creative, you can try me, but I can’t guarantee what my answer will be.  It’s free to ask, though.

Do you really charge this much per hour? Yep- and usually more. In fact, I don’t typically take on client engagements that are not in the 5-6 figures in scope.

What are your qualifications? I have listed some above, and you can see my biography here.

It seems like a lot for me to spend right now. It’s an investment, but if you are serious about your business, it should pay dividends.

I’m interested in the book, but not this offer… I will be making more offers soon, this is just one particular opportunity. The book is also available for pre-sale currently on Amazon.com

What if I don’t get anything out of it?  I can provide references if desired and after the first session if you think you aren’t getting value, then you can bail, no further obligation.

That’s it.  I look forward to working with you!
-Carol

Everyone wants to be rich… but most will never know how.

There are so many books, blogs, ebooks, and seminars about wealth that you think there should be more rich people in the world if it were that obvious. But there aren’t, because obvious is the furthest thing from it.

I could go on forever about why this is, from the deck being stacked against you to an inflated sense of entitlement, but that would be beyond the point. I would be adding to the literature about why you’re not doing as well as you could only places me too close to the herd that is trying to take money from you in exchange for telling you how to make money (online or off). But it’s not that easy.

Getting rich requires good luck, timing, hard work, and/or a fair amount of insight. You already know this, and you might have some of those in varying amounts, but may still not be rich. Adjust the formula, and you can be.

You may think that getting rich needs to happen because it will help you get more stuff, or make you happier. But studies on happiness show that you don’t get happy beyond a certain amount per year. If you get there, you’ll realize that, then wonder what your higher purpose is, or donate billions to charity if you have them. That connection to a larger sphere of humanity is what, ironically, makes you happy, and you could have done it when you were broke. Really.

But there is a reason to become rich– why you, yes you who is reading this, should become it. It’s because being rich will allow you to become independent, and to say no to what you don’t want and free you enough to say yes to what you do.

This will allow you to be free of influence on what your behaviour is. You’ll be a more natural you if you aren’t afraid, if you’re confident. They say carrying a gun is a great way to feel strong; well, making good money helps that too.

Lots of people will disagree, and say the rich want more. For some, this is true. But more often than not, in those I’ve known, it’s made them who they want to be. It’s made them free to be who they are. Which means they can decide for themselves what is right, instead of rich people deciding for them.

And by the way, remember the opposite, which is also true. Be independent– and as you learn to be, you’ll also become rich. The two are connected, and you can get closer to one by becoming closer to the other.

Five years ago, I was working with a portfolio of websites, some of which made money and some of which did nothing. On a lark, I decided to apply for Google’s Adsense program and list up a few ads on the underperfoming sites.

It took about twenty minutes to set up, and another half-hour or so to optimize. I was traveling in Brussels that week, so I set up my experiment in the hotel one morning before taking off on a day trip to Luxembourg.

Coming back in the evening, I entered my hotel room and fired up the laptop. The Google Adsense page finally refreshed, and I saw that I had made a grand total of $1.26. That’s right, a buck and a quarter had trickled in via 10-cent and 25-cent denominations throughout the day as visitors had clicked the links. The closer I looked at the data, the more I smiled.

I Could Not be Happier

I was thrilled by the small amount of money, because I was pretty sure I could apply the same strategy in other places and effectively scale up the $1.26 to $50-100 a day in completely passive income. Over the next couple of months, I did just that, eventually reaching a $120/day average for the better part of a year. This was essentially free money, since I did nothing for it and it allowed me to focus on other projects with a steady stream of income coming in.

About a year or two later, I moved out of that business, and I don’t do anything with Adsense anymore. (I don’t think it’s a good idea for most other bloggers either.) But the feeling of empowerment stayed with me. Whenever I have a product launch, I’m more excited about the first few sales than the 500th one. The first few sales represent the promise of potential. It shows that something is working, and that’s a fantastic feeling.

***

Creating something out of nothing is what entrepreneurs do. That’s why entrepreneurship is such an important force for good, especially during a time when conventional assumptions about the economy are being questioned. Plenty of people will read about these ideas on Escape Velocity and do nothing. A few will take action, make their own $1.26 (and hopefully more), and go on with their escape plan.

Which group are you in? What’s the next step?

###

Image: Tony

We’ll talk about money plenty here at Escape Velocity, in lots of different ways. One way we’ll talk about it is as a game’s scorecard. Another way we’ll talk about it is as fuel for reaching those goals you want. Part of what we need to do, you and me and everyone, is get more comfortable talking about money. For better or worse, when we don’t talk about money, and when we try to avoid it, that ends up biting us on the butt. Wish it weren’t true, but I’ve had too many personal experiences to the contrary to tell you otherwise.

How Do You Make Money?

There are a few ways to make money. You can make money actively: exchange services and products and time for some value. That’s how most people make money. They work somewhere, for some number of hours a day, satisfy some criteria that people have agreed upon, and receive money as a payment for that service and time.

You can make money passively: you might have your money invested in the stock market, or in bonds, or other instruments that are abstracts of other people’s efforts. You might have your money in real estate equity (though if you do, I’m temporarily sorry). You might be earning some money by investing it in other companies directly, or through loans. You might be making money by earning royalties off products like books or music or pieces of art.

You can also “make” money by not spending as much. This is every bit as valid. The thing is, this one also requires you to do an audit of where you’re spending your money, and it requires a little bit of work to get everything in order.

In coming posts, we’ll talk about making money in lots of different ways, and we’ll talk about our entrepreneurial pursuits and the like. For this post, I wanted to give you some thoughts about making money by not spending.

A Personal Audit is Tricky

The other day, I realized that I was still auto-paying for a gym membership to a gym I haven’t seen in ages. That one kind of hurt. I basically had invested in this gym, because they were getting my membership money without me showing up. I also realized last week that my home phone hasn’t been used in months, because we both have cell phones, so I finally made the executive decision to cut the cord. Those two changes will save me $70 a month. Yep. That’s a dinner for two (minus wine) every month I just recovered. And I think I’ve found more.

Once you get through the really obvious ones, you have to start going after your luxuries, to see if you really need two cappuccinos and three cans of Diet Coke every day. If you’re spending on average $15 a day on consumed goods every day, then that’s $75 a week (skipping the weekends). That’s over $3000 a year you could reclaim if you eliminated that from your spending.

Heck, if you even cut back a little, can you see what you could do with that money instead? Would that $75 be better spent in buying yourself that piece of software you’ve wanted to edit your photos so you can put some up for sale?

Money that Makes You Money

At this point in my financial career, the kind of money I love best is money that makes me money. I just went out and bought an HP TouchSmart PC because I needed a Windows box to run webinars on. My goal is to pay back the expense of buying that computer with my next for-pay webinar. Why? So that I can see the results of spending money that made me money. It’s the best kind.

I look at books like that. The books I read and review are almost always books that will help me earn more money. So, if I spend $25 to get thousands and thousands of dollars, isn’t that a great investment?

Looking at things this way is really helpful to how I build projects and to how I decide where to spend my money. This kind of thinking lets me know when something is a luxury to consume or an investment that will help me grow.

Things that aren’t money to make me money?

A nice watch. I have a decent watch, but I’m not going to buy myself a $10K watch. I have a really fun car, but didn’t buy the twice-as-much car because I didn’t see where the value would ever come back to me (cars are not an investment, period – mine’s more of a perk). TV doesn’t make me money. I’ve never once learned something on a TV set that was worth money to me.

Again, your mileage may vary, but this is how one might think about these things and apply some pressure to your future growth.

What’s your take?