Remon Talks

We all know that saving for retirement is important, but how much should you save? How much is enough?

The problem is that you don’t know how much time you’ve got left after retirement so you can’t predict how much money you need. There’s a huge gap between living 5 years after retirement and living 30 years after retirement.

Ideally, you want to save more than you could ever spend. Unfortunately this is unreachable for most people. Another option is to save enough to live on the interest, which is also my goal. Keep in mind though that future interest rates can not be predicted but hey, we’ve got to set a goal and this is mine.

Say you have 30 years to go before you retire. You currently earn $2000 a month and you want at least $1500 a month from your savings when you’re retired. The house is paid off so it’s basically cost of living only.

Step 1 - Inflation

$1500 now is $2,561.68 in 30 years with a 1.8% yearly inflation rate. To make it easy we use $2550 in our calculations.

Step 2 - How much do we need to save

Considering a 5% interest rate we would need (($2550 * 12) / 5) * 101,8 = $623,016. The 101,8 is 100 percent plus the 1.8% inflation rate.

Step 3 - How much do we have to save monthly?

Considering a 5% interest rate for the next 30 years we would have to save around $745 a month to reach $623,016 in 30 years. If you can get more interest, or growth from mutual fund, you can save less.

If you earn 7% on your investment than you would need around $520 a month to reach that same goal. The more you save ofcourse, the more you’ll get later on.

Conclusion

Although it’s unpredictable how much time you’ve got left after retirement or how much money you will spend during retirement we can secure a monthly income by planning ahead and saving enough money to live on later in life.

The $745 or $520/month examples above are very reasonable I think. When you consider that living expenses aren’t much higher when you’re together with someone it should be very doable to save enough as a couple.

It is common for people to do what other people do. The best example is probably people getting a job because that’s what you’re supposed to do, plus, it’s secure *cough*.

Now, say you want to become wealthy, like most people, what would you do? Work for a boss? How many employees do you know that are, will be or have become wealthy? I know how many wealthy employees I know, zero!

Another great example is the discussion here in Holland about taking a 30 year mortgage, even if you can afford to pay your house in full. People think they have to take a 30 year mortgage because they can use the tax deductions on their interest rate and be better off. That’s stupid!

Say a house costs $200,000. You can choose to pay $200,000 and be done with it or you can choose to pay $200,000 + interest - deduction = $323,000 over 30 years. I’ve heard at least 4 people choosing the option to throw away $123,000 in 30 years so they could “benefit” from the tax deduction.

What they do with their own money is putting it in an account at a 4% interest rate and think they’re better off, while house prices rise 5% every year across the nation and even more (10-15%) in the big cities.

I think most people believe that if everyone does it, it must be the right thing to do. It’s easy to not think for yourself and follow the hurd. It’s admirable to think for yourself and often do better than most people.

I could give dozens of other examples but this post would become too long. They key point here is think for yourself. You can take advice from others, but dig into it to see if it would be better, especially if you’re taking advice from people selling you stuff, like mortgage brokers. If you want to be different then the hurd, don’t follow the hurd.

This blog post, and the last 4 as well, are all written 5 days ago. Some days you’re motivated and full of things you can write about and other days you have to think for a while before you can come up with something interesting.

To maximize my time’s efficiency I decided to write as much posts as I can once I feel motivated. I edit the timestamp on them so there’s 1 post per day. If I write 4 posts in one day it basically gives me another 3 days off!

I like the fact that you don’t get that “I have to write something…” feeling. I have a whole 3 days to think about another topic for the blog so there’s no time pressure at all!

In business, you could also apply this “tactic”. It’s not really a tactic but more logic thinking.  On a motivated day I can write 3 or 4 posts in maybe 1 to 1.5 hours. On a pressure day I have to think at least 20 to 30 minutes to come up with just 1 idea for a blog post and then I still have to write it! What a timewaster!

I can now use the not-so-motivated-to-write days to promote this blog or work on things to grow my income. Having a few days off from one task gives me a little more freedom in deciding what I want to do that day, great!

Who would have thought working ahead can actually save time? I sure didn’t when I was still attending college!

In order to become successful in whatever you do you must be able to motivate yourself. If you aren’t motivated you can’t give your full potential and seriously lower the possibility of reaching your goals.

Self motivation is basically moving yourself to achieve something you badly want. Self motivation is not the same as external motivation, if you are motivated by external factors like friends or things happening around you than you’re not self motivated.

Why do I need self motivation?

• If you can’t encourage yourself to reach your goals, who can?
• To find direction in life or in business
• To have the courage to go through with your plans despite negative comments

I’m not motivated, what should I do?

Motivation and positivity go hand in hand. Try to erase all negative things from your life. This can be small things like cleaning up your desk, or big things like getting rid of friends who pull you down. You have to decide for yourself what the negative aspects in your life are and start getting rid of them.

Here are some more self motivation tips.

• Surround yourself with positive people
• Review all your successes and achievements in life, leave out anything negative.
• Make a list of things you’d like to improve on and/or goals to reach, and how you plan to reach them.
• Read inspiring books or websites
• Most important: Do what you love. It’s hard to be motivated for doing something you don’t like doing.

Lack of motivation is normal

It happens to all of us, even the so called “guru’s” lack motivation every now and then. We all face the same kinds of problems in life sometime, and it’s your attitude that decides how you deal with them.

If you lack self motivation and can’t seem to motivate yourself, ask yourself why? Maybe you don’t like doing what you have to do, maybe you can’t focus because your desk or room is a mess, maybe you haven’t achieved a success in a while?

Once you know why you can’t motivate yourself, you can make a plan that works. Review your successes in life, clean your room! Also think long-term. How will life look like in 20 years from now if you don’t do what you have to do. How will you look back at yourself? And how will life look like if you did do what you had to do?

You also shouldn’t be too focussed on your goals. If you really can’t get yourself motivated for a day it is not a big deal. Do something what you love instead, like going out to photograph some wildlife, it clears your head and will get you motivated. Reaching your goals shouldn’t feel like it’s bossing you around, reaching your goals should feel like fun.

I’ve said it before and I’ll say it again; you can’t start planning your retirement too early. The younger you are the better.

Tax Deferred Accounts

Make maximum use of these accounts (IRA or SEP), it’s basically free money. You can read a bit more about this in Some tax tips for the investors.

Saving for retirement

You can save for retirment with a basic savings account. The younger you are, the more use you get out of compound growth.  You’re basically saving risk-free but you can’t expect big gains like when you’re investing. If you’re young I would consider investing for retirement.

Investing for retirement

Investing for retirement if more risky than saving, but you have the possibility of higher gains as well. You can invest in a safe way or take an aggresive approach.

If you’re young you should put most of your money in stocks and the older you get the more bonds you should buy.  Bonds are less risky thus giving you more security when you’re approaching retirement.

Say you’re 25 years old and retire at age 65. You have 40 years left to save for your retirement. You could start with 100% stocks now, 80% stocks by age 35, 70% stocks by age 45, 60% stocks by age 55 and 50% stocks by age 65.

To be more secure you could also put some money in a savings account like I do. I save on a savings account as well as in stocks and a few high yield bonds.

The younger you are the more risk you can take. Buying bonds only at a young age will not give you the most for your money. When you’re older though, you want security. You don’t have tens of years left to make up for a possible mistake you may make.

If you’re reading this you probably “suffer” from low self esteem. There are several ways to overcome low self esteem, but before we get to the tips let’s define what self esteem is. Wikipedia says:

In psychology, self-esteem or self-worth is a person’s self-image at an emotional level; circumventing reason and logic. The term differs from ego in that the ego is a more artificial aspect; one can remain highly egotistical, while underneath have very low self-esteem.

Well that’s clear. To build self esteem we have to figure out why you have low self esteem. That’s easy, I’m positive that you’re focussing on your negative aspects, instead of the postive ones!

See, since you were a kid you were told thousands of times “You can’t” or “Don’t”, making you feel incomplete. You get the feeling that you don’t know enough, that you’re not good enough, that you aren’t experienced enough etc.

To overcome this, and build self esteem, you have to focus on you’re strengths and achievements and acknowledge your weaknesses. Everyone has weaknesses, and it doesn’t matter! Accept them for what they are and focus on you’re strengths and achievements. For example; you can make people laugh. That’s great! Any idea how much joy you bring to your friends and family? Give yourself a pat on the back!

I’ll list some things you can do to build self esteem. They’re simple, everyday things but they work wonders.

• Keep your promises
  You know how it goes. “Tomorrow when I wake up, the first thing I’m gonna do is workout” and then you don’t. Keep your promises, especially to yourself. If you don’t workout tomorrow morning it will negatively affect your self esteem and you will feel less good about yourself all day. You can replace “workout” with anything else ofcourse.
• Help someone else
  Perform an act of kindness. Little things like giving the homeless guy a piece of fruit, helping a co-worker out with something or letting someone get in front of you in line. Everytime you do something like this it will make you feel good about yourself thus increasing your self esteem.
• Teach someone else how to do something
  If you teach people how to do something that you already can if will help you build self esteem. Learn a kid how to read or ride a bicycle or teach your friend how to make that nice dinner you made last week. Teaching someone to do something successfully, like cooking that dinner, is one of the greatest feelings in the world and will definitely help you build self esteem.
• Make a plan and stick to it
  When you make a plan for the day it’s probably a plan that is consistent with what you think would be the best use of your time. If you stick to your plan you are consistent with the best person you can possibly be, causing your self esteem to soar.

Just remember to accept your weaknesses and focus on your strengths. Building self esteem is not as hard as it sounds, you’re already full of self esteem, you only have to find it within yourself. By focussing on your strength and doing little things like I wrote above I’m sure you’ll find it very soon.

The Great Idea is basically an idea that will or has become a great success. All of you, the readers of this blog, probably know someone who is waiting for The Great Idea so he or she can become wealthy and/or successful. Maybe you are that someone, maybe a friend or a familymember.

Waiting for The Great Idea

The problem with The Great Idea however, is that you keep waiting for it to hit you. A friend of mine, “John”, talks about wanting to start his own business everytime I see him. He is just waiting for The Great Idea before he is gonna take any action. It has been the same conversation for at least 3 to 4 years.

John: Remon I really want to start a business
Remon: Oh really? What kind of business?
John: I don’t know man, I need a great idea.
Remon: I see, what about <insert>?
John: No that’s not original, I need something new, something that doesn’t exist yet!
Remon: Ok… well I hope it will hit ya someday!

Dreamers

To be honest, most people waiting for The Great Idea are just dreamers. They dream of coming up with a great idea someday so they become wealthy and never have to work again! Dream on, I say. The odds of coming up with a real great idea are slim to none, and slim is out of town. You have better odds winning the lottery.

I think most dreamers are just making excuses for theirselves. If they keep telling theirselves that they’re waiting for that Great Idea they have a reason to take no action. The truth however, is that taking action is the first step to realizing your dream.

No need for The Great Idea

See, you don’t need a brand new, original, nonexisting idea to make money. You don’t need the whole pie, a piece of the pie is good enough. You don’t need a Great Idea, you need to get up and start taking action NOW. There’s no better time to start then now.

Starting something puts you one step ahead of most people and one step closer to living your dream. Take a pen and a piece of paper and start brainstorming what you would like to do. It could be something online or offline, in fashing, jewelry, music, animals, anything really! Just make sure you have a passion for it. It doesn’t matter if you know nothing about it, passion is enough. The knowledge will follow.

Once you figured out what you would like to do start thinking about how to come closer to that goal. Say you want to start your own clothing line someday. Working at wal-mart isn’t gonna help you, is it? Start looking for a job with potential, one where you can network with bigtime fashion people! Or at least, a job that has the option of doing that sooner or later. Once you have the right connections, you can start your business and market it to the right people.

Reaching a goal really isn’t that hard if you think about it. Just do it step by step. Maybe you want to be a successful internet marketeer. Instead of waiting for The Great Idea, something unique, start a website with a subject you can talk a lot about. Even if it only makes $5 a day that’s $1825 a year. While it isn’t much, it’s a start. Once you know what works and what doesn’t you start scaling. Build 10 or 100 of those sites or put all your effort in growing your current site, whatever you want.

Conclusion

Overall I’d say The Great Idea is something you shouldn’t be thinking about. You keep searching for something you’ll probably never find. Instead just take action, now, if you want to do better than most people waiting for The Great Idea. The Great Idea, if it hits, will hit you someday wether you have a job or are self-employed. The only reason for not starting now, is you being afraid to take a dive in the deep. Don’t be. If you do it step-by-step you’ll enjoy the freedom and benefits self employment gives you.

Many people think before taxes. Ie. a friend is earning € 2000 a month before taxes and he is in the lowest tax bracket here which is 34%. It’s a fulltime, 40 hour week, job. Let’s call my friend Joe for the rest of this post.

The common thought

Joe wants to buy a new iPod, the price is € 400. “Hmm that’s only 4 days of work” Joe thinks and he decides to buy it. “Cash or creditcard?” the clerk says.

Do you know what went wrong here?

First, Joe’s monthly income is not equal to 4 weeks (20 days) of work. 3 Times his monthly income is 13 weeks (65 days) of work. I don’t know if it works that way in the US or Canada as well but that’s how it works here in Holland. So instead of earning € 100 per day, Joe is earning € 92.31 per day.

The second thing that went wrong is, ofcourse, that Joe is thinking before taxes! And Joe is definitely not the only person thinking this way. Many people, worldwide, make this mistake. After taxes Joe is making € 1320 a month or € 60.92 a day. That means that Joe can spend close to € 40 less then he thinks he can spend. Instead of working 4 days for his new iPod, Joe has to work 7 days (6.6) to be able to pay for his new gadget.

Moral of the story

You’re not interested in Joe’s new iPod ofcourse, but what I wanted to show the readers of this blog is how easy it is to make this same mistake. An iPod could be something one really wants or needs, but think about how much you’re paying for stuff you don’t really need. Buy lunch everyday? Buy coffee everyday? Buy a snack everyday? All those little things add up over time, and you’re paying for them with after-tax dollars.

Instead of thinking before-taxes like many people do, start thinking after-taxes. For the fun of it, you could write down everything you bought but didn’t really need for one month just to calculate how many days you had to work to pay for the unneeded stuff. I bet you’ll be amazed!

GoDaddy is having a sale on .info domains. They’re only $.99 each plus $.25 ICANN fee per domain. Still a very good price.

If you go to their How to pay page, you see they also accept payments with paypal. Great! I wanted to register 31 info domains for some niche minisites, added them to my shopping cart, chose paypal as the payment method and then the horror;

I had to add a creditcard

That’s just lame. At their how to pay page they say;

It (Paypal) lets you use funds from either your bank account or credit card;

and

All you need is a PayPal account to get started. Don’t have one yet? It’s fast and easy to set up; in fact, you can do it while you complete your GoDaddy.com purchase.

It doesn’t let me use funds from my bank account and a paypal account is not all you need. You need a creditcard as well. Creditcards are not very common here by the way, and if you’re self employed it’s even harder to obtain one.

I emailed GoDaddy support and this is what they replied;

I have to inform you of this but, in order to use paypal in purchasing domain names or whatever it may be we require that you have a credit card on file with paypal. You only have one other alternative, that is using good as gold.

Is it just me or is this really silly? I checked what good as gold was, and you need a minimum deposit of $100, that’s $70 more then I want to spend with them. Screw it, I’ll buy my domains elsewhere, somewhere where they actually want my business.

Enough rambling, time to write a post for you guys! Any requests for a subject?

If you run a business, no matter the size of it, you will at some point face bad customers.

There are several reasons why having bad customers is not good, here’s a few;

• They waste your time in several ways
• No matter what you try or do, it’s never good enough
• They love leaving negative reviews of your product or service
• They usually want free <fill in>
• They often cost more then you’re earning from them

So how do you deal with this kind of customer? Simple; you don’t.  As a business owner your goal is to make profit, the more, the better (usually). However, you shouldn’t just accept ANY customer, no matter how desperate you are for clients.

The bad customers will never increase your profit with significant proportions, even worse, if there’s one tiny little thing they don’t like they start spreading bad word of mouth in an instant in as many places as possible, thus costing you more business.

Avoiding bad customers

So how do you avoid attracting bad customers? It’s easy when we look at the profile of a bad customer:

• They want free stuff, more expensive = better
• They don’t behave normal in conversations (yelling, namecalling, disrespecting etc.)
•  They expect you to treat them like you’re most important customer
• They’re cheap

No idea how to avoid them yet? It’s simple, don’t try to attract customers by giving away (expensive) free stuff. If people like your product or service, they will buy. The free gift doesn’t matter.

If a (potential) customer is disrespecting you or an employee end the contract. You may lose a few bucks worth of business but don’t let anyone act like this. It’s not respectful and should never be accepted.

If a customer demands special treatment, ie. by emailing you every minute, calling you during off-hours etc., tell them they have to be patient because you have more things to do then being their personal assistant. If they keep doing it you may end their contract, or not if you’re okay with their behaviour.

In my webhosting biz I also noticed that I gained better customers when I raised the prices. When I used low prices I got many (cheap) clients but they were also the worst clients you can wish for. They’re also “hoppers”, once they find a competitor that’s $0.02 cheaper a year they’ll switch over. Don’t go low-budget with your prices, no matter what your product or service is.

Turning a bad customer in a good customer 

If you had some company problems, or made a mistake causing customers to turn bad or unhappy, do everything you can to make them happy again. This is only true if they were good customers but you screwed something up.

You can send them a small postcard with your excuses, or send them flowers, offer them a discount on they’re favorite product or refund some money. It all depends on your type of business. Even a simple phone conversation can work wonders.

Good customers are worth their weight in gold. If something goes wrong, they stay loyal to you. If your competitor is lowering his prices, they stay loyal to you.  They’re also not demanding, usually very quiet. They’re willing to pay a premium for a good product or service, and if they like you they will recommend you to their family and friends.  A bad customer does none of this, they’re worthless and make you feel bad. Lose them if you can.