Coffee heat rising

Coupons for Sale or Rent…

Did you know you can sell coupons—the kind of stuff that comes in junkmail—at online sites? Saturday’s PlayNooz reported on a New York postal carrier who was arrested for the sale of coupons he’d ripped off from residents’ mailboxes and peddled on eBay. A commenter observed that some coupons, such as the ones that come from Penny’s, are worth ten or fifteen bucks. Or more…one shoe store here routinely sends out 30%-off coupons, and all its stock is in the $100-plus range.

Turns out this enterprise is not very difficult. You simply collect coupons, organize them in some intelligible way (such as by category or by likely frequency of purchase), and advertise your stashes on eBay or Craigslist. You can even consider collecting coupons that are listed online. I have found that you can go here for Amazon coupons and a ton other top retailers. Apparently you can get as much as 50% to 75% of the coupons’ savings.

There’s actually a site that will let you resell coupons from sites like Groupon, Living Social, or Tippr. How exactly you’d make a profit on coupons you have to pay for is unclear, unless you could charge a premium the ones that sell out fast.

What a hoot! Talk about your passive income…just let that junk mail roll in!

Image: Ticket for a free glass of Coca-Cola, ca. 1888; believed to be the first coupon ever. Scanned by uploader from Wired (Nov 2010), Vol. 18, No. 11, p. 104. Public Domain.

Budgeting and strategies for saving

Some time ago, a financial advisor who was helping me figure out what to do with a small inheritance remarked that I have a special talent for accruing savings by bits and pieces. Well, that does appear to be the case. As we noted the other day, by the end of this year my emergency fund will exceed $24,000—above and beyond the $21,000 squirreled away last year to pay off the Renovation Loan for the downtown house. 

So…how d’you do that?

Truth to tell, I don’t know how others would do it. But here are the basics that work for me:

1. Get out of debt and stay out of debt.

At the outset of my financial journey, I paid off a five-year car loan in 18 months by adding principal prepayments to each regular monthly payment. This freed up the $300/month payments to put into savings. Within a few years, I also paid off the $80,000 mortgage on my house, partly by renting space in my home and using the income to deal with the mortgage.

Debt consumes an enormous amount of your income. Freeing yourself of debt payments effectively “increases” your income even if you never get a raise—you end up with more money to spend or save.

2. Build savings into your budget.

“Pay yourself first” is the operative principle here. This is another way of saying “spend less than you earn.” As I was paying off car and real estate loans, I also set aside a small amount for savings each month. Bare minimum has always been $200 a month. As debts dissolve, some or all of the amount you’ve freed up by paying down debt can be added to the monthly savings.

When you create a budget, an effective way to create savings is to find a place to put every dollar of income. In other words, rather than estimating what you spend on each category (such as food, housing, utilities, transportation) and stopping when those categories are accounted for, build a set categories that will account for your entire net income. One of the categories should be “monthly savings.” This approach is sometimes called “zero-based budgeting.” 

My own approach to budgeting was to carefully track expenditures for a month or two, using Quicken or Excel. This provides a picture of where and how much you’re spending. Expense categories become evident after a month or so of observation. This exercise not only allows you to see where your money is going, it gives you some clues to where you might rein in unruly spending habits (for example, have you run amok at restaurants? did you really need all those clothes?). 

Once I understood my spending patterns, I established reasonable amounts for each category, including a category for savings. Any difference between income and expenditure was added to the “savings” category. Raises in pay resulted in raises in savings; although I might not devote the entire raise to increasing saving (you do have to get a life sometime, after all), I did pay myself better savings on the rare occasions the university gave me an increase.

3. Build side income streams.

Find ways to earn above and beyond the income from your day job. A master’s degree in anything will get you an adjunct teaching job at a community college. Night courses are a lot of fun to teach, because they’re full of adults who are there because they want to be there. Such gigs are not well paid, but every buck counts. I put all my net pay from teaching directly into savings.

You’re not forced to stop with just one side job. If you have a marketable hobby, if you enjoy collecting junk and selling it in yard sales, if you can trade a skill or a product for someone else’s skill, products, or dollars, you can create income that also can build your savings account. In addition to adjunct teaching, I also indulge in freelance editing. Every penny that comes in from that endeavor goes…yep! Right into savings.

Besides helping to build savings, secondary income streams have an enormous potential benefit: you still have them if you’re laid off your day job. Having the experience and contacts in teaching and editing will allow me to ramp up both those enterprises in my coming enforced retirement, and, as we have seen, will support me in the manner to which I intend to remain accustomed even if I never get another full-time job.

4. Take full advantage of your employer’s 401(k) or 403(b) plan.

If your employer  matches contributions to a retirement plan, for heaven’s sake, go for it! Every dollar your employer puts in means twice as much long-term savings for you. 

Allocate these investments intelligently, putting 50 or 60 percent in stocks and 40 or 50 percent in bonds and the money market. You have to assume some risk to make money in your investments; keeping it all in so-called “safe” instruments means your total savings will not keep up with inflation. Though the market does drop every now and again (sometimes with operatic drama!), over time losses and gains level out and and your investments build principal. Put your money in low-load funds to the extent possible (if your employer allows you to invest with Vanguard or Fidelity, these are good choices), because management fees eat into profits at an amazing rate.

Outside of an employment-related plan, go for Roth IRAs. Although these are after-tax instruments, they have the advantage that withdrawals after you reach age 59 1/2 are tax-free, which is huge. Also, they allow you to pass money to your heirs without the nasty tax gouges inherent to 401(k) plans and traditional IRAs. Here, too, set up your IRA with a low-load provider such as Vanguard or Fidelity.

5. Cultivate a frugal lifestyle.

Try to stay sane about this. You don’t really have to live like Our Hero, Scrooge McDuck. But on the other hand, neither do you have to live like an investment banker riding high. Get over the temptation to buy every new gadget just because it’s out there; to accrue stuff because all your friends, relatives and neighbors accrue stuff; to own bigger things and more things than you really need. Learn to distinguish between want and need, and then train yourself to appreciate the nonmaterial riches of life.

Frugality and simple living are the keys to living within your means. Spending less than you earn makes it possible to build savings and, eventually, to achieve financial freedom.

Yard sale adventures

It’s twenty after five and I’m done in…and I didn’t do much of the work.

VickyC is still trying to shovel out the mountains of clothing and other personal effects left after her mom passed last April. She’s already sold over $1,500 worth of clothing on consignment. But bags and bags of perfectly fine clothing—some of it very attractive—were rejected by the consigner. So, she decided to throw a yard sale. Another of her friends and I offered to help out and to bring some of our own yard-salable stuff to the big event.

And what a yard sale she’s got going! We convened at her central-city home right at 7:00 a.m. One of her house-mates put up the yard sale signs on his way to work, and shortly customers started to show up.

In addition to hundreds of clothing items and mountains of towels, sheets, and bedding, she offered several pieces of furniture, including a Thomasville coffee table and a handsome red upholstered love seat. I brought the security cameras M’hijito had installed to record activity in the backyard during the late great swimming pool vandalism adventures, plus some old stereo components and a few pieces of kitsch. A male friend contributed two electric guitars and an amplifier.

People will buy the darnedest things…and not buy the darnedest things. The clothing, as expected, sold well, even though there was so much of it we had no hope of hanging it up or even of spreading it out in any way to display it effectively. Buyers just pawed through stacks and bags of stuff, apparently undisturbed by the absence of merchandising flare. Someone paid $100 for one of the guitars, but no one would pay $75 for the love seat, which was clean and in nearly new condition. It took all day to unload the coffee table. Someone bought two of the stereo components, neither of which was the receiver. The cameras, hard disk, and electronic stuff to connect them to a TV set were stolen.

VickyC collected over $300 today and probably will sell more tomorrow, provided it’s not raining. Rain wasn’t predicted until Sunday, but gray clouds lowered overhead all day and it wouldn’t be surprising if we got rain by tomorrow.I collected $21 and change, and VickyC gave me a lamp that I coveted for M’hijito’s house as consolation for the theft of the electronic goods.

Staging this yard sale was an enormous amount of work, especially for the proprietor. We hangers-on didn’t do much, other than help drag a few tables around and spread out the loot, and then drag it all back into a secure area when VickyC was ready to close for the afternoon. Was it worth it?

Really: is a yard sale worth the amount of work it requires?

Only, IMHO, if you have a lot of stuff to get rid of and you can be pretty certain it’s the sort of stuff that will sell. Around here, that means clothing, children’s toys, tools, low-end cookware, and (sometimes) small household items. And by a lot, I mean a lot:a houseful of stuff left by a deceased relative, or everything you own when you decide to not to rent a truck or pay a moving company to decamp to another state.

Given the time and effort it takes to put together even a fairly small yard sale, I don’t think it’s worth the effort unless you can make at least $300. We held the sale open from 7 in the morning till around 2:00 p.m.—seven hours—and VickyC had put in many, many hours more than that. I’d estimate she put in at least 20 hours, bare minimum. That meant she earned about $15 an hour, not a bad wage.

In my case, however, if you count VickyC’s $15 asking price for the lamp as a fair trade for the $800 worth of security camera equipment that was ripped off (I hoped to get about $30 for the stuff, at yard-sale rates), then I came away with $36 for the seven hours of my time at the sale plus another hour spent gathering my junk, cleaning it up, tagging it, and hauling it downtown. That’s $4.50 an hour…a far cry from the $60 an hour my time commands on the freelance market.

So, no: in ordinary circumstances, I doubt if yard-saling is worth your time. Financially, I would have been better off to have spent today marketing The Copyeditor’s Desk or writing the proposed CE Desk book. Had I donated my junk to Goodwill, the deduction from my income taxes would have been worth more than my yard-sale proceeds. It was a choice people-watching opportunity, and I enjoyed spending the time with my friend. But beyond that, I don’t see it as a particularly efficient way to generate sidestream income.

New business enterprise gets under way

Well, the tiny newborn business my friend and I are starting has climbed to its little feet and is toddling around. Yesterday we got our first serious nibble, if you don’t count the client we already had when we began. The contract isn’t landed yet, but we were thrilled to attract a serious expression of interest.

Here’s what we did to get the business under way:

First, we wrote a business plan. We articulated a) what we wanted the business to do; b) how we would deliver on that; and c) how the business would be organized (as a partnership).

Next, we set an earnings goal. Since this is a side business and we both have day jobs, we decided we would each like to be grossing at least $1,000 a month within one year.

Then we established two marketing strategies: 1) join the Arizona Book Publishing Association (ABPA); and 2) create a blog in the enterprise’s name, The Copyeditor’s Desk. The ABPA turns out to be a gold mine: its meetings are frequented not only by publishers likely to need our copyediting, proofreading, and indexing services but also by writers who are either self-publishing or seeking publishers and very much need our services. It remains to be seen whether the blog will bring in much business, but it gets our name out there, and if it develops much readership, it can monetized to contribute a few dollars toward our earnings goal.

Finally, we obtained some business cards, free, off the Internet, and we designed a brochure that we will have printed through her brother-in-law’s Kwik-Kopy outlet.

It’s pretty rudimentary and at first blush doesn’t look very ambitious — until you consider that we both have jobs and she has a family to take care of. We think it will keep us busy, and if we’re lucky it will generate the fairly modest financial goal we’ve set for ourselves. Keeping it simple should at least keep it manageable.