Goodbye Alameda, Hello Kochi!

On our quest for financial independence we relocated to Kochi in Kerala, India. Kochi is the industrial city in the tiny state of Kerala bordered by the Arabian Sea along the southwestern coast of India. We considered several locations for relocation before settling on this unlikely place. These factors contributed to our decision:

1. Cost of Living: As we expect a lull before generating income from our vocation (few years possibly), it was critical that we stretch our money as far as possible. To this end, Kochi won hands down - as we had a place to live (which needed remodeling) the day-to-day expenses should be low on an ongoing basis. Kochi along with most other second-tier cities in India does very well in this regard, for many of the recurring costs such as property taxes, utility rates, labor charges, etc. are low compared to global standards.
2. Education: Kerala has a well-developed school system (literacy close to 100%) with numerous choices. Costs vary depending on the type of school (public vs private) and on the value-added services offered. Though public schools are free they were not an option for us given their limited facilities. Private schools usually conduct an entrance examination even for lower grades - sometimes having connections can help get an admission. We chose a newer private school around ten miles away from our residence mostly because they offered admission without an entrance test and partly because from friends we learnt that the school catered to expatriates like us. Despite being one of the more expensive private schools in the state, costs are only about one-tenth of the average cost of sending kids to private schools in the US.
3. Language: When considering relocation to a foreign country, language skills (or its lack of) can be a major impediment. Many schools offer alternate language options but it can be hard if the medium of instruction is in a new language altogether. Kerala was a good choice for us in that regard as our kids were in the beginning stages of becoming literate in Malayalam.
4. Logistics: Proximity to family is priceless.

We relocated towards the end of May 2010 and our things arrived a month later none the worse for the move. Of this relocation experience, we have to say that while there were many surprises, overall it has been a net positive. Kids are happy at their new school, house remodeling is progressing albeit slowly, and this blog is falling into gear with the frequency catching up to the time when we were in Alameda. Working on our vocation had been in the back burner for some time now, although we should be able to reverse that trend in the coming months.

Above all, it is a great feeling to be freelancers – no one to report to, no stress of deadlines, taking the time to ensure that kids are doing well at school while also trying to do well at our commitments. We will update this series on a regular basis from now on focusing on our experience being expatriates.

Last Updated: 07/2010. 

Best sites of Edinburgh - Trip Report:

We did a short sightseeing trip of Edinburgh (07/2008) during our trip to England and used Ryan Air. Our flight was from London Stanstead to Glasgow Prestwick airport and relied on the rail to get to Edinburgh. The Prestwick airport houses the train station too. The rail route involved a changeover after alighting at Glasgow Central - Glasgow Queen Street station to Edinburgh. It is a 10-minute walk from Glasgow Central to the Queen Street Station. Free shuttle bus service is available for those so inclined. Edinburgh’s main railway station (Waverly) is in the city center. Allow about 2.5 hours for the whole journey. Tickets can be purchased aboard the train and a through ticket to Edinburgh is available. Passengers holding Prestwick airline tickets were eligible for a 50% discount on ScotRail and round-trip ticket prices for the two of us came to £22. Trains operate every 30 minutes (60 minutes on Sundays) to Glasgow Central Train Station between the hours of 06:00 - 23:08. Trains to Edinburgh from Glasgow Queen Street Station run regularly up to four times per hour.

Reserving accommodation in Edinburgh was a challenge in itself as most places available online (3 stars or above) were well above our price range. We lodged at the Holyrood Festival Studio Apartments at £67 per night. Booking.com had the best rate at the time of our reservation (early June for the end of July stay) – price comparison among sites provides returns as Hotels.com was seen to offer better pricing at times. The location is unbeatable, just off the Royal Mile in close proximity to Holyrood Palace. It is student accommodation and lacks hotel staff. The building is very new and the amenities are ample, complete with a small kitchen. The administrative services are provided at 6 Queen Street (a 15-minute walk from the Royal Mile - 3 PM check-in) and the hotel is located at 32 Calton Road. Given our penchant for walking, this arrangement worked well but for some it could be painful.

The major attractions in Edinburgh are the Edinburgh Castle, Holyrood palace, and the attractions dotted along the Royal Mile. Edinburgh Castle is iconic to the city and lives up to expectations gracefully– allow at least 3 hours – Admission was £12 for adults and £6 for children. The Scottish Crown, the palace of Mary, Queen of Scots, Batteries, the Great Hall (meeting place of Scottish parliament until 1639), and the St. Margaret’s Chapel are overwhelming. All - tourists and locals alike, appreciates the commanding history of the place. A hike through Holyrood Park and a stroll around the lochs and Arthur’s seat familiarizes one with the local flora. The humble thistle, the Scottish emblem, makes you smile. The lochs although small are representative of the unique Scottish landscape. Lochs come in various shapes, sizes, and elevation and are tranquil at best - their appeal leaves you yearning for more. Dedicated loch tours are available and advance booking is recommended. Scottish cuisine is best described through Haggis, made of sheep’s innards eaten with turnips (“neeps”) and potatoes. The Scots enthusiasm for golf is renowned and many hotels offer inclusive deals.

Related Posts:

1. European Vacation – Gotchas to avoid and frugal options for cost conscious American Visitors.
2. Best sites of London & Cambridge - Trip Report.
3. Best sites of Edinburgh - Trip Report.
4. Best sites of Ireland - Trip Report.

Last Updated: 02/2011.

Employee Stock Purchase Plan (ESPP) and 401K Retirement Plan Annual Enrollment and Contribution for 2009 Review

The current economy has contributed much to an especially volatile stock market. Adding fuel to the fire is the advice from market gurus which are poles apart. On the one hand you have the Oracle of Omaha, Waffen Buffet insisting US stocks are cheap and is a steal at current prices while at the other end experts such as Diane Garnick warns US stock market is far from a bottom and advices staying away from it until a clear “up-cycle” is established. Even a novice investor can evaluate that on a relative basis US stocks are fairly expensive compared to European and other Emerging Market counterparts leaving one to wonder whether Buffet’s call is prompted primarily because Berkshire Hathaway’s (Warren Buffet’s company) holdings are heavily tilted towards US equities. The latter call has a couple of different problems:

• It discounts the possibility of a V-shaped stock market recovery – being on the side-lines will result in missing most of the rally, and
• In a protracted stock market recovery, opting out results in underperformance as even with a slight increase, investors staying in the market usually beat lower-risk investment options such as treasuries when dividends are included.

Circumstances being such, it is not easy for average Americans to decide on their contribution, if any to their employer sponsored plans, primarily ESPP and 401K. ESPP is straightforward (participating at the maximum level is the best option) as the following characteristics and associated strategies make it almost impossible to lose money in that venture:

1. The ESPP stock is purchased at a discount to the market price. Some plans even have an option that guarantees same-day-sale profit, even if the stock price slips on the day of the purchase, a
2. The discount is based on the lower of the market price at the beginning of the offer period and the purchase date. The “lower of” provision allows for more profit if the stock price has risen during the offer period. Thus, it is in effect stock ownership that is exempt from downside risk during the offer period.
3. The immediate selling strategy allows for high returns with low risk, the Holy Grail in investing.
4. The long-term capital gains realization strategy allows for high tax-optimized returns with somewhat higher risk.

As for strategy, one option is to adjust the percentages upwards or downwards depending on whether the company is undervalued or overvalued respectively at the beginning of the offer period. A corresponding adjustment in the other direction will have to be made during the next offer period in the same calendar year so as to realize the benefit of participating at the maximum level.

401K enrollment, on the other hand is a different ballgame altogether. The chief concern with 401K is that the onus is on the employee to choose investment selections and contribute. This is a far cry compared to pension plans, where the employer shouldered the responsibility completely. Expecting average Americans to be financially savvy and being able to choose investment options is a tall order. The pension protection act of 2006 is aimed at alleviating some of this responsibility, and provides the following related provisions:

1. Removes barriers that prevent companies from automatically enrolling their employees in defined contribution plans: The provision recognized the fact that one-third of eligible employees did not participate in these plans. Over time, this provision should allow dropping this number well below 10%. Companies generally implement this provision by making 401K contributions an “opt-out” benefit. In other words, if employees do not want to enroll, they have to “opt-out” of it explicitly, – should they choose to do nothing, they are automatically enrolled.
2. Ensures that employees and retired personnel have more information about the performance of their accounts: Companies support this provision by providing an investment advice benefit, usually for a nominal fee.
3. Gives workers greater control over how their accounts are invested: This has relevance with respect to the Qualified Default Investment Alternative (QDIA), which automatically takes effect in the absence of investment direction from the participant – the provisions make sure that workers are kept informed on their selections such as if they had selected them on their own. Further, it also provides for the ability to transfer out of QDIA investments without undue penalty. Making available life-cycle funds or target-retirement funds is one popular way companies have chosen to implement this provision.

These provisions are aimed to make it comparatively easy for a worker to adopt a passive investment strategy. Life-cycle funds or target-retirement funds is an especially attractive alternative in this regard. The only adjustment one could consider for next year in the face of a large market correction is to opt for a more aggressive life-cycle fund choice – a fund that aims for retirement 5-10 years before your perceived retirement date. As for the amount of contributions, it is simple – try to max-out on these contributions, given the tax benefits – if unable to do so, the next best option is to contribute the percentage that allows for complete employer matching if applicable.

As indicated in our 401K updates, we have been choosing investment choices on our own with a 40-40-20 asset allocation between domestic, international, and bond investment choices. While using an asset allocation plan (AAP) such as this is a good option, one cannot afford to be asleep at the switch – need to monitor your choices and make adjustments periodically. We are seriously considering switching to life cycle fund choices next year as that would allow for a much more passive strategy.

Related Posts:

1. Flexible Spending Accounts (FSA) – Great Benefit with a few caveats!.
2. Writing Covered Calls against Employer Stock Plan Shares (ESPP, Restricted Stock, and Stock Options) – A Primer.
3. Employee Stock Purchase Plan (ESPP) and 401K Retirement Plan Annual Enrollment and Contribution Review.
4. Employee Stock Purchase Plan (ESPP) - Immediate Selling Strategy.
5. Realizing Long-Term Capital Gains With Stock Based Compensation.
6. Stock Based Compensation Tax Optimization Strategies.

Last Updated: 01/2009. 

Frugal Living – Ten Great Gift Ideas for Frugal Families

Families who live frugally find that their perception of needs is minimal. This makes frugal families naturally inclined to be philanthropic. Furthermore, it is also second nature for them to consume far less and have a heightened awareness of the damage done to the environment by our collective mindless consumption. The list of gift ideas for frugal families below focuses on charity/causes related, environment, family, health, and money:

1. Gift Cards to Charity: If there is no desire for further material things, in addition to having made the frugal living choice, one way to redirect the generosity of others in the direction of your choosing is to publish the fact that an ideal gift to you is gifts/gift cards made to your favorite charity.
2. Environment: If you have a strong stance on unnecessary consumption as a major problem, by all means be bold to gift the DVD “An Inconvenient Truth” to people whom you think are especially unaware of the damage we are causing.
3. Health: Family health is generally high in the list for all families and a gym membership is a good choice. The downside though is that it is a subscription style expense and goes against the frugal definition. However, choosing exercise equipment such as treadmill, home gyms, exercise bike, and/or elliptical is a great choice over the long-term. Alternative health remedies is an area that was vastly overlooked as the medical insurance provided by the employer covered basic needs leaving not much incentive to look into the benefits of such. With healthcare costs rising and support from employers diminishing, such options are worth more than a passing glance – Yoga and Tai Chi for general wellness, Acupuncture (pain), Resperate (blood pressure reduction without medicine), Massage Therapy to mention a few have proven benefits and surely there will be someone that you know of that will gain from such a gift.
4. Money: Any gift that would increase the value of the item over time would qualify. One idea is to give stock certificates – our previous post details on why it is a great frugal gift. If the recipient has a keen hobby interest (stamps, coins) they would be eligible too. For folks in your family, savings bonds and other fixed income certificates will also work.
5. Consumables (Candles, Confectionery, Wine, Flowers etc.): In social situations where it is not appropriate to choose any of the ideas above, gifting something that is consumable is always a safe bet.
6. Prepaid Cell phone and VOIP: Prepaid cell phones are a good option when pitted against subscription style services like public telephone service and 2-3 year cell phone subscription plans. The one caveat to look out for is term-limits to cell phone pay cards – typically, if you buy a higher-amount card, you get a higher term limit up to a year. Another option to consider is replacing your landline with VOIP from manufacturers such as Ooma that lets you have unlimited calling in the US for free with no contracts.
7. Event Tickets: These are decidedly an environment friendly option especially if you have a clear idea of what the recipient likes and if you can join them it is the icing of the cake.
8. Media: DVDs, CDs, etc. are good options for one’s family. The frugal approach however will be to have an expiration date – six months is a good ballpark figure as the odds of enjoying it is inversely proportional with time. There are frugal ways to save money at both ends of the ownership time line –
1. Make a choice to purchase media a year after its initial release – on the average, more than 85% of the value of media products is lost in its first year and so you get a big discount upfront, and
2. Make it a point to get rid of it by either selling it on Amazon.com or Ebay, or by donating it to a charity or the local library. Doing so, helps the environment and provides an opportunity to realize a little bit of income, and above all helps with limiting the accumulation of useless stuff that is the bane of average American families.
9. Technology: Should you decide to make one extravagant gift to your own family this year, buying the buzz in the technology area provides a high. For frugal families who tend to wait out new stuff until they have acclimatized, once a year or so, gay abandon is a necessity to avoid the feeling of always lagging new technology. Buying a Computer, GPS, Video Game Consoles, PDA's, Digital Cameras are all options to consider in this regard.

Related Posts:

1. Frugal Living – Ten Great Gift Ideas for Frugal Families (Christmas Holiday Shopping Tips).
2. Frugal Living – Skiing Story.
3. Frugal Choice On Gifts - Giving Stock Certificates.
4. Frugal vs Cheap – A definition to go by.
5. Frugal Living - Top ten frugal living tips for families.
6. Reducing Expenses.

Last Updated: 01/2015. 

More Asset Allocation Adjustments to Retirement Portfolio

The market capitulated another 15% in the last four trading days and that has forced us to reallocate our 401K portfolio again to keep our target allocation roughly at 40-40-20. Below is our portfolio after the adjustments to move about 3% out of bonds back into stocks:

Symbol	% of Portfolio	Fund Fees	Fund Return 2008 (After Fees)	Comments
Dodge & Cox Stock Fund (DODGX)	6.45	0.52	(44.45)	A Large cap value fund with a history of outperforming the S&P500 index. Has very low turnover ratio. The fund is very big (~70B) and so outperformance may be harder to come by going forward.
Fidelity Diversified International Fund (FDIVX)	19.01	0.97	(45.79)	Diversified large-cap international growth fund. This fund is very big at over 58B. Turnover is at 58%. Has a history of outperforming its related index, the MSCI EAFE.
American Beacon Small Cap Value (AVPAX)	4.95	1.06	(30.72)	A Small-cap value fund with about 1.2B of total assets under management. Turnover at 48%.
Hotchkis & Wiley Mid-cap Value (HWMIX)	2.38	1.02	(43.58)	A mid-cap value fund with about 2.4B of total assets under management. Turnover at 45%.Top 10 holdings account for 38% of assets.
Vanguard Institutional Index Fund (VINIX)	2.75	0.05	(37.70)	Attempts to replicate S&P500 index performance.
PIMCO Total Return Fund (PTTRX)	13.55	0.45	(1.74)	None.
Artisan Mid-cap Value (ARTMX)	2.64	1.22	(40.14)	None.
Fidelity Small Cap Stock Fund (FSLCX)	4.70	1.08	(40.42)	None.
Fidelity Low Priced Stock Fund (FLPSX)	3.18	1.08	(37.62)	None.
Calomos Growth A (CVGRX)	1.44	1.44	(46.89)	A 12B large cap growth fund. The top 10 holdings represent about 27% of assets.
Schwab S&P500 Index (SWPIX)	1.41	0.36	(37.60)	An index fund that tracks the performance of the S&P500 index benchmark.
William Blair International Growth (WBIGX)	1.36	1.67	(50.96)	A 5B large cap international fund with between 10 and 25% exposure to emerging markets.
Vanguard Index Trust 500 Index (VFINX)	6.81	0.18	(37.73)	An index fund that tracks the performance of the S&P500 index benchmark.
Vanguard Pacific Stock Index (VPACX)	6.50	0.27	(41.90)	An index fund that tracks the performance of the MSCI Pacific index benchmark.
Vanguard Inflation Protected Securities (VIPSX)	2.47	0.20	(2.79)	Invests in inflation indexed bonds (primarily US) with maturities between 7 and 20 years.
Vanguard Long-Term Bond Index (VBLTX)	0.74	0.18	(6.39)	An index fund that tracks the performance of a market-weighted bond index with a long-term dollar-weighted average maturity.
Vanguard Emerging Market ETF (VWO)	6.44	0.25	(52.44)	None.
Fidelity International Real Estate Stock Fund (FIREX)	1.00	0.96	(50.37)	None.
Fidelity Small Cap Growth Fund (FCPGX)	3.80	1.09	(43.16)	None.
Fidelity Select Technology (FSPTX)	1.63	0.88	(46.25)	A sector specific fund focused on large cap technology stocks with about 2B in assets under management. Top 10 holdings account for 45% of total assets.
Fidelity Select Health Care (FSPHX)	2.31	0.87	(35.14)	A sector specific fund focused on large cap healthcare stocks with about 2B in assets under management. Top 10 holdings account for 38% of total assets.
Pension Plan	4.38	0	3.70	Company Fully Vested Cash Balance Pension Plan.
Cash and Money Market	0.10	0	0	None.

The total returns YTD as of 07/31/2008 were –33.5%. The performance compare well with the returns of popular domestic indices as many of the indices are down around 40%. We reduced risk by opting for a 40-40-20 allocations among Domestic, International, and Bonds/Alternatives in the beginning of the year as compared to a 100% domestic stock portfolio and that accounts for the better performance in the down market.

Related Posts:

1. 401K/IRA Account 2007 Performance Summary - 01/08.
2. 401K/IRA Account – Asset Allocation for 2008 – Part 1.
3. 401K/IRA Account – Asset Allocation for 2008 – Part 2.
4. Retirement Portfolio – Mid Year 2008 Update.
5. Asset Allocation Adjustments to Retirement Portfolio in the face of market correction – 10/08.
6. 401K/IRA/Retirement Account 2008 Performance Summary - 01/09.
7. 401K/IRA/Retirement Account 2009 Reallocations - 01/09.

Asset Allocation Adjustments to Retirement Portfolio In The Face Of Market Correction

Due to the market correction, our target asset allocation plan of splitting 40-40-20 between Domestic Stocks, International Stocks, and Bonds got shifted to a 37-38-25 split over the course of the year as the stock funds under performed the bond funds by a wide margin YTD. We readjusted the portfolio to reach the targeted split of 40-40-20 by moving 20% from our bond funds to the domestic and international stock funds. Also, our company 401K administrators automatically reallocated the funds in the Fidelity Intermediate Term Bond Fund (FTHRX) to the PIMCO Total Returns Fund (PTTRX). Further, when choosing the funds to move from, we avoided moving funds from Vanguard Inflation Protected Securities (VIPSX) as the chances of rising inflation have increased. Below is a consolidated spreadsheet of our holding and performance details of the mutual funds held in our 401K and Individual Retirement Accounts (IRA) as of YTD 10/06/2008:

Symbol	% of Portfolio	Fund Fees	Fund Return 2008 (After Fees)	Comments
Dodge & Cox Stock Fund (DODGX)	6.65	0.52	(30.22)	A Large cap value fund with a history of outperforming the S&P500 index. Has very low turnover ratio. The fund is very big (~70B) and so outperformance may be harder to come by going forward.
Fidelity Diversified International Fund (FDIVX)	19.59	0.97	(32.66)	Diversified large-cap international growth fund. This fund is very big at over 58B. Turnover is at 58%. Has a history of outperforming its related index, the MSCI EAFE.
American Beacon Small Cap Value (AVPAX)	5.19	1.06	(16.30)	A Small-cap value fund with about 1.2B of total assets under management. Turnover at 48%.
Hotchkis & Wiley Mid-cap Value (HWMIX)	2.58	1.02	(27.56)	A mid-cap value fund with about 2.4B of total assets under management. Turnover at 45%.Top 10 holdings account for 38% of assets.
Vanguard Institutional Index Fund (VINIX)	2.90	0.05	(23.89)	Attempts to replicate S&P500 index performance.
PIMCO Total Return Fund (PTTRX)	13.23	0.45	0.68	None.
Artisan Mid-cap Value (ARTMX)	2.69	1.22	(29.67)	None.
Fidelity Small Cap Stock Fund (FSLCX)	3.9	1.08	(9.87)	None.
Fidelity Low Priced Stock Fund (FLPSX)	2.3	1.08	(24.83)	None.
Calomos Growth A (CVGRX)	1.46	1.44	(39.88)	A 12B large cap growth fund. The top 10 holdings represent about 27% of assets.
Schwab S&P500 Index (SWPIX)	1.47	0.36	(26.73)	An index fund that tracks the performance of the S&P500 index benchmark.
William Blair International Growth (WBIGX)	1.37	1.67	(44.02)	A 5B large cap international fund with between 10 and 25% exposure to emerging markets.
Vanguard Index Trust 500 Index (VFINX)	6.96	0.18	(26.87)	An index fund that tracks the performance of the S&P500 index benchmark.
Vanguard Pacific Stock Index (VPACX)	6.65	0.27	(31.60)	An index fund that tracks the performance of the MSCI Pacific index benchmark.
Vanguard Inflation Protected Securities (VIPSX)	2.34	0.20	2.26	Invests in inflation indexed bonds (primarily US) with maturities between 7 and 20 years.
Vanguard Long-Term Bond Index (VBLTX)	1.11	0.18	(1.74)	An index fund that tracks the performance of a market-weighted bond index with a long-term dollar-weighted average maturity.
Vanguard Emerging Market ETF (VWO)	6.50	0.25	(45.27)	None.
Fidelity International Real Estate Stock Fund (FIREX)	1.04	0.96	(42.24)	None.
Fidelity Small Cap Growth Fund (FCPGX)	3.92	1.09	(34.85)	None.
Fidelity Select Technology (FSPTX)	1.66	0.88	(41.38)	A sector specific fund focused on large cap technology stocks with about 2B in assets under management. Top 10 holdings account for 45% of total assets.
Fidelity Select Health Care (FSPHX)	2.45	0.87	(24.87)	A sector specific fund focused on large cap healthcare stocks with about 2B in assets under management. Top 10 holdings account for 38% of total assets.
Pension Plan	3.95	0	3.70	Company Fully Vested Cash Balance Pension Plan.
Cash and Money Market	0.09	0	0	None.

The total returns YTD as of 07/31/2008 were –26.5%. The performance compare well with the returns of popular domestic indices as many of the indices are down well above 30%. We reduced risk by opting for a 40-40-20 allocations among Domestic, International, and Bonds/Alternatives in the beginning of the year as compared to a 100% domestic stock portfolio and that accounts for the better performance in the down market.

Related Posts:

1. 401K/IRA Account 2007 Performance Summary.
2. 401K/IRA Account – Asset Allocation for 2008 – Part 1.
3. 401K/IRA Account – Asset Allocation for 2008 – Part 2.
4. Retirement Portfolio – 2008 Mid Year Update.
5. Asset Allocation Adjustments to Retirement Portfolio in the face of market correction – 10/08.
6. More Asset Allocation Adjustments to Retirement Portfolio -10/08.

Frugal Choice On Gifts - Giving Stock Certificates

We discussed in a previous article, that when it comes to gifts our preference is to develop a culture of no gifts in the household. Yet, there are situations when giving a gift is the appropriate choice. As a frugal consumer, it is a challenge choosing gifts, as there is an inevitable loss in value when buying something material (including a gift certificate). Add to it confusion in choosing for other people and you end up with a double-whammy.


One strategy that compensates for some of the downsides with gift giving is to find items that have the potential to increase in value over time. An obvious choice is gifting a certain amount as a certificate of deposit (CD) or savings bonds. While such options are fairly popular especially among grandparents, they rarely beat inflation. A gift idea that sits well with us is giving actual stock certificates. As the holiday season approaches, this should qualify as one of the unique Christmas gift ideas for frugal consumers. Below are the benefits of opting for actual stock certificates:

• Since you own the stock represented by the stock certificate, you are eligible for the underlying appreciation in the share price over the years. Further, as stocks overall beat inflation by a wide margin, chances are good for your stock value to also beat inflation over the long-term, assuming some research is done on the company concerned before investing in any particular stock certificate.
• Stock certificates (bearer stock certificate, to be exact) are a dying breed in corporate America as the securities industry is slowly shifting completely to digital securities. This can serve as an opportunity for it is likely that some of these company stock certificates will eventually become sought after collector items and thus end up have additional antique value associated with them.
• Scripophily, the hobby of collecting stocks and bonds is fast-growing because of certain unique features associated with them:
• Historical Context – Stocks associated with the Dot Com mania is a recent example that is fast becoming popular among collectors,
• Value as an art piece – many are produced on hand-etched printing plates by artisans and provide excellent examples of engraving - as such, that paper has value as an art piece,
• One-of-a-kind value – each certificate is individually numbered and has the shareholder’s name etched in them, and
• Scripophilists also are on the lookout for signed certificates from famous personalities. Share certificates usually have signatures of three to four company executives including the Chief Executive Officer (CEO). If any of those personalities become famous or infamous, the certificate will enjoy additional value.

Giving stock certificates also comes with a certain amount of flexibility with respect to the amount and scope. As one of your unique Christmas gift ideas, you can choose to give any number of shares of a stock in a single certificate and you also can personalize it to an extent by opting for a business that has some personal connection to the receiver – for example, if your kid, grand-kid, or parent is a big Disney fan, giving Disney stock certificate helps personalize the gift to a certain extent.


Related Posts:

1. Frugal Living – Ten Great Gift Ideas for Frugal Families (Christmas Holiday Shopping Tips).
2. Frugal Living – Skiing Story.
3. Frugal Choice On Gifts - Giving Stock Certificates.
4. Frugal vs Cheap – A definition to go by.
5. Frugal Living - Top ten frugal living tips for families.
6. Reducing Expenses.

Last Updated: 10/2009. 

Frugal Living - Top ten frugal living tips for families

For the uninitiated, many frugal approaches can be misconstrued as being cheap. Any act with a potential for savings in time and funds merits a pondering. Below is our compilation of frugal tips. Analyzing against our definition makes their frugality apparent.

1. Self-haircuts – Contrary to the popular belief nurtured by smart marketing folks that portray self-haircuts as being contemptible and comical at best, it is an easily acquired skill that can save both time and money perpetually.
2. Saying no to cable TV – This is a deviation from the condescending attitude epitomized by talking heads on TV ‘poor people that cannot afford cable TV’ as though economical classification hinges on cable TV. The subscription style expense coupled with its potential to squander time makes this high in the frugal list.
3. Lifeline service for telephone, and switching to a pay as you use cell phone service –These options allow switching from a subscription style expense to one directly linked to usage.
4. No-gift parties, re-giving gifts, and developing a culture of no gifts (including Santa Claus stuff) in the household – Gifts by nature are not efficient as someone else is using their valuable time and resource to decide your needs. This measure applies to both gift giving and receiving. A gift card at a retail place is a great alternative in situations were one cannot avoid it.
5. Saving reusable plates, forks etc. from take out vendors – Reusing these items as opposed to throwing them away helps the environment while being frugal.
6. Shopping selectively at dollar stores, craigslist, garage sales, etc – These options have the possibility to limit spending yet maintain the standard of living. Exercising a little patience while browsing for your needs goes a long way.
7. Buying only from the bargain aisles at department stores –Bargain aisles hold surprises up their sleeve.
8. Comparison shopping at online stores and waiting on the wish-listed items – Prices do fluctuate up and down and that too again and again.
9. Going for homemade coffee, minimizing eat-outs, take outs, etc. – This is the oft-touted homerun of a frugal tip by pundits. If your family appreciates the ambience of a dine-out, it is perfectly fine to switch from the norm to mark achievements and such.
10. Local library – The biggest underused resource are the public libraries. They offer a myriad of services. Donate useful books to the library and the time you can spare to give back to the community.

Some options such as maxing out on all insurance deductibles help save significant money by taking a little bit of additional risk.

Related Posts:

1. Frugal Living – Ten Great Gift Ideas for Frugal Families (Christmas Holiday Shopping Tips).
2. Frugal Living – Skiing Story.
3. Frugal Choice On Gifts - Giving Stock Certificates.
4. Frugal vs Cheap – A definition to go by.
5. Frugal Living - Top ten frugal living tips for families.
6. Reducing Expenses.

Last Updated: 06/2011. 

Frugal Living - Frugal vs Cheap – A definition to go by

Frugal and cheap are two words considered by many as synonyms while they differ greatly in the meaning they render. Cheap is when one values the money saved more than an associated loss while frugal points to the contrary. Here are everyday encounters of cheap and frugal actions to nail the definition:

1. Paring down a bill among friends at a restaurant to justify the difference in spending. The loss associated with this action can range from a decline in goodwill among one’s own friends to even losing a friend. This loss is not worth the few dollars saved. Volunteering to split-up the bill in this situation would be a corresponding frugal action and would be considered a no-brainer at best.
2. Bargaining on an item listed at a throwaway price at a garage sale. Here again, at the expense of goodwill, you could fail to purchase the item because the seller would rather not deal with you. Happily purchasing the item and/or adding a small tip would be a related frugal action in this situation.
3. Spending 2 hours to save $2 (coupon clipping, driving long distance, etc.). Failing to recognize the time value of money. Science has a long way to go before we can turn back time. A matching frugal action would be to plan shopping around bargains.

Related Posts on Frugal Living:

1. Frugal Living – Ten Great Gift Ideas for Frugal Families (Christmas Holiday Shopping Tips).
   
2. Frugal Living – Skiing Story.
3. Frugal Choice On Gifts - Giving Stock Certificates.
4. Frugal vs Cheap – A definition to go by.
5. Frugal Living - Top ten frugal living tips for families.
6. Reducing Expenses.

Related Posts on Exiting the Rat Race:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 06/2011.

Reducing Expenses

Controlling expenses to maintain the standard of living is the chief challenge faced by those trying to exit the rate race. A few life choices aimed at reducing monthly expenses can make the overall task of attaining financial independence less onerous:

a) Choosing To Own As Opposed To Rent:

Any item used on a daily basis is a candidate for owning as opposed to renting. Examples include the house one occupies and automobiles. Normally regarded as the major outlays of money one might ever make, home ownership is a special case that merits special attention. We have explored the issues associated with home ownership through a series of articles (click to read them).

A variation on the same theme is to reduce/eliminate subscription style expenses. Cable TV, DSL, Movie Rentals, Cellular Phones, Club Memberships, etc fall in this category. Your best bet is to always choose life time membership without monthly charges, if such a choice exists.

b) Frugal Living:

Frugal living is a life choice that allows people to spend less money for the same standard of living that they are used to. In exchange of spending less money, the practitioner spends a little bit of extra time and energy looking for “better deals”. We have looked at our experience practicing frugal living through a series of articles (click to read).


Related Posts:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 06/2011.

Strategies to Beat Inflation

Beating inflation is critical to make savings last longer. The spreadsheet below tabulates how much money can be withdrawn (inflation adjusted) annually from a representative investment of $1,000,000 at different levels of after-tax returns assuming a withdrawal period of 60 years starting from the current year- 60-years withdrawal period defines a family in the 40’s yearning for financial independence as early as possible:

After-tax Return Percentage on Your Investments (Projected/Assumed)	0	3	4	6	8	10	12
Safe Withdrawal Amounts at 3% inflation for 60-year time horizon	$6,000	$17,000	$22,000	$34,000	$49,000	$65,000	$81,000
Safe Withdrawal Amounts at 5% inflation for 60-year time horizon	$3,000	$9,000	$12,000	$22,000	$34,000	$48,000	$64,000
Safe Withdrawal Amounts at 11% inflation for 60-year time horizon	$0	$1,000	$1,000	$3,000	$7,000	$13,000	$21,000

The highlighted figures indicate that even at higher levels of inflation, 2% is a good withdrawal rate, provided the investment beats inflation on an after-tax basis by at-least one percentage point - the highlighted amounts in Red (all above 2% of investment) are what can be withdrawn safely, if your investments beat inflation by exactly 1%. If your after-tax returns are below the inflation rate, the amount that can be withdrawn goes down progressively (amounts to the left of the highlighted figures).

US Stocks have historically outpaced inflation by a much-wider margin over prolonged time frames. This out-performance is correlated to the actual GDP growth rate over the years and should continue moving forward conditional to US being able to grow its GDP. An alternative strategy is investing in a global basket of securities from a representative list of countries that are projected to grow their GDP in the upcoming years. Minor asset allocation adjustments every 5-10 years based on the countries expected to grow GDP highest is a simple house keeping task. It is to be stressed that the consistent return associated with stock investments hold true only over extended periods of time.

A more cautious strategy that GUARANTEES moderate levels of inflation out-performance is the inflation-protected securities. In the US, the Treasury Inflation Protected Securities (TIPS) and series-I savings bonds are examples of such instruments. The caveats that need to be analyzed with such securities are:

• The inflation index such securities are pegged against. ie, if the index doesn’t accurately reflect the overall inflation rate, the guarantee of beating inflation may not provide the expected real return, and
• Tax implications – The tax effects for TIPS in the US makes it less desirable under certain situations. Specifically, the income from TIPS and the inflation adjustment are both taxable. The series-I savings bonds fare a little better in this regard as taxes are due only upon cashing them.

Related Posts:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 06/2011.

Passive Income Opportunities – Part 6 –Employer Plans

Employee Stock Purchase Plans (ESPP), Employer Profit Sharing Plans, and Employer 401K contributions are the easiest ways to generate passive income, provided one is employed. Amongst these, profit sharing plan is automatic since virtually no action is required on the employee’s part to avail this benefit. ESPP and Employer 401K contributions on the other hand require opting in. The process of opting in can vary by plan.

Profit sharing plans puts in a percentage of the salary to an employee account – the percentage is derived from a formula that is tied to the company’s profit. Most common downside with profit sharing plans is that the contribution makes its way to the employee’s retirement account, usually the 401K account. Generally this is in the guise of shares in the company’s common stock. A vesting period for these shares is more of the norm. A critical aspect of this is that employees tend to overlook the need to diversify out of company stock.

In a typical ESPP plan, opting in requires signing up and assigning a percentage of salary (limited to $25K/annum fed mandated maximum) as the amount to be used to purchase the stock. During the offer period (usually 6 months) the money will be accumulated in a company account and it can be equated to receiving a portion of your salary at the end of the 6-month offer period as opposed to every 2 weeks. The benefit is that the stock is purchased at a discount (typically designed so as to be over 5%) at the end of the offer period. By selling the stock at the end of the offer period, passive income is realized. The downside with ESPP is that one has to forgo part of the salary during the offer period.

For Employer contributions to a 401K plan, opting in requires signing up and assigning a percentage of salary (limited to $15.5K/annum fed mandated maximum plus $5K/annum catch-up contributions for those over 50) as the amount the employee contributes to the account. Employer contributions to such plans are designed such that the percentage contributed is dependent on the employee contribution. A common plan is employer contributing 50% of up to 5% of the employee contribution. In this scenario, passive income of 2.5% of the salary is realized by opting to contribute 5% to the 401K plan.

The downside with all of these passive income strategies is that once the rat race is successfully exited, the income steam also ceases. Hence, the strategy should be to use these income streams as building blocks for other forms of passive income while still in the rat race.



Related Posts:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 01/2015.

Passive Income Opportunities – Part 5 - Pension Plans

There are two general types of pension plans:

• Defined Benefit, and
• Defined Contribution.

Defined Benefit Pension plans are fast disappearing from corporate America and are being replaced with defined contribution plans such as cash balance plans, 401Ks, and profit sharing plans. These deposit a certain percentage of the salary directly to the employee’s 401K-plan account. The primary difference between these plans is that a defined contribution plan has individual accounts while a defined benefit plan does not.

Pension plans provide passive income during retirement. With defined benefit plans, the actual payment received monthly during retirement is predefined as it is based on a plan dependent formula. Social Security is an example of such a plan. With defined contribution plans, the monthly income realization at retirement is not automatic, but is an option – essentially what you are left with is a cash balance against which an annuity can be purchased to realize passive income.

The one big downside with pension plans is that in general one can start realizing this income to its full potential only after reaching retirement age.


Related Posts:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 01/2015.

Passive Income Opportunities – Part 4 – Investments In Top Dividend Paying Stocks

Stock and mutual fund dividends rank high as passive income sources. Passive income comes into play automatically as soon as you stake claim to securities that pay dividends. Adding another feather is that the dividends have appreciation potential that ensures inflation is kept in check. This link shows the list of dividend aristocrats (25 consecutive years of increased cash payments) from the S&P 500 index. Below is a list that shows the historical compounded annual growth rate (CAGR) of dividends of the companies in the S&P 500-dividend aristocrat index over the 10 years through EOY 2011:

Symbol	Company	Dividend CAGR
MMM	3M Co	6.1
ABT	Abbott Laboratories	9.18
MO	Altria Group	6.49
BUD	Anheuser-Busch Cos	9.76
ADM	Archer-Daniels-Midland	10.84
ADP	Automatic Data Proc	13.25
AVY	Avery Dennison Corp	6.66
BAC	Bank of America	12.91
BCR	Bard (C.R.)	5.24
BBT	BB&T Corp	10.15
BDX	Becton Dickinson	12.95
CTL	CenturyTel Inc	4.69
CB	Chubb Corp	7.18
CINF	Cincinnati Financial	11.09
CLX	Clorox Co	9.6
KO	Coca-Cola Co	9.28
CMA	Comerica Inc	8.36
ED	Consolidated Edison	1.00
DOV	Dover Corp	7.73
EMR	Emerson Electric	5.93
FDO	Family Dollar Stores	11.14
FITB	Fifth Third Bancorp	15.69
FHN	First Horizon Natl	10.55
GCI	Gannett Co	7.73
GE	Genl Electric	10.84
GWW	Grainger (W.W.)	10
JNJ	Johnson & Johnson	14.2
JCI	Johnson Controls	11.12
KEY	KeyCorp	5.68
KMB	Kimberly-Clark	8.24
LEG	Leggett & Platt	9.9
LLY	Lilly (Eli)	7.83
LOW	Lowe's Cos	27.77
MTB	M&T Bank	24.22
MCD	McDonald's Corp	19.74
MHP	McGraw-Hill Companies	8.58
NUE	Nucor Corp	37.64
PEP	PepsiCo Inc	11.61
PFE	Pfizer Inc	16.44
PPG	PPG Indus	4.34
PG	Procter & Gamble	10.73
PGR	Progressive Corp	5.82
STR	Questar Corp	4.51
RF	Regions Financial	8.31
ROH	Rohm & Haas	8.3
SHW	Sherwin-Williams	12.16
SIAL	Sigma-Aldrich	13.11
SLM	SLM Corp	18.27
SWK	Stanley Works	4.48
STT	State Street Corp	13.87
SVU	Supervalu Inc	2.72
SNV	Synovus Financial	13.07
TGT	Target Corp	12.02
USB	U.S. Bancorp	12.56
VFC	VF Corp	10.65
WMT	Wal-Mart Stores	22
WAG	Walgreen Co	11.74
WWY	Wrigley (Wm) Jr	5.33

• Inflation rate over the 10 years through 2011 is under 3%. The list shows dividend growth outperforming inflation by a wide margin for most companies.

Related Posts:

1. Exiting the Rat Race - Definition.
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3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 01/2015.

Passive Income Opportunities – Part 3 – Rental Income

Rental incomes have the advantage that the value of the associated asset and the incomes realized from them correlate well with inflation over the long term. This also explains why many consider it the safe haven in investment. A residential rental property, a strip of land, or an office space that is leased are eligible for this form of passive income opportunity. However, there are a few caveats -

Rental incomes can be considered truly passive only if the management of the asset is setup to be handled by a property management company.

• Delegating the entire associated maintenance tasks to a property management company attains the hands off approach in managing the rental property. Utilizing such a service has the obvious down side that the rental income is reduced by a sizable percentage as the property management company gets a considerable cut directly from the top line. There are several other expenses that get deducted from the rental income before passive income can be realized including -
• Expenses for the up-keep of the asset,
• Property taxes,
• Utilities.

It is not surprising therefore that in most cases the lion’s share is not what is left standing.

Leverage is mostly the norm and the associated risk needs to be weighed.

• Leverage is associated with a higher risk factor and has the potential to make you lose more than you invested on the asset. This is best understood with an example. You purchase a rental property for $100K with a down payment of 10%. Assuming you funded all the closing expenses which added up to 2.5%, your total investment in the property is $12.5K. To fund the purchase, the remaining $90K is realized by taking a mortgage on the property. At this point, you have an asset worth $100K for a net investment of $12.5K and your leverage is 90% (100 minus percentage you own). Assuming the property was later sold for $120K and the selling expenses added up to $5K, the return on your investment is $12.5K (115K – 90K – 12.5K = 12.5K or 100%). This sounds upbeat but the downside risk also needs to be evaluated. If the property was instead sold for $80K and the selling expenses added up to $5K, here is what ensues– you owe $90K to the mortgage company for which you have to come up with $15K. Or, you lost 15K more than what you invested – a loss of a whopping 217%. One way to mitigate this big risk is by planning to hold on to the asset for a very long time. Over the long-term, real estate prices, though cyclical, have always gone up. Thus the assurances for a positive return over the long-term are a shoo-in.

An often-overlooked item in the category for passive income is the house one lives in. As the single largest investment for most households, it is an important asset and so careful consideration need to be given as to how it is funded. In an abstract way, passive income can be realized if you own your home outright. Rhetorically, it has the effect of reducing your monthly expenses by a certain amount thus qualifying as another form of passive income. Property taxes and utility expenses are a damper to this income.



Related Posts:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 01/2015.

Passive Income Opportunities - Part 2 - Royalties

Royalties of all forms are always appealing in that the income is purely passive and so there is potential for huge rewards once one gets it going. There are only a few specific areas where such opportunities exist – writers, singers, and inventors to name a few. Broadly speaking, one has to create something unique. Bear in mind also that not all writers, singers, and inventors earn royalties. Whether one earns royalties is dependent on mainly two factors:

• How desirable your creation is to others? and
• whether you had established some sort of an agreement with another entity which could decrease your income potential?

On the assumption that a creation is in place, its desirability is dependent on how well it is marketed and on the level of competition. Singers and writers face steep odds to realize substantial royalties largely because of the expenses associated with getting their creation appreciated by the marketplace. For upcoming singers, the contracts are heavily skewed in favor of the record label company. One should not overlook the role of shrewd marketing, which can get certain songs to command more airtime at radio stations thereby, helping it get popular and on the road to be a hit. The effectiveness of such promotions is also dependent on how intense the competition is from promoters of other similar songs.

Similar odds exist for inventors employed in the field of their expertise. As part of their hiring process, employees are required to sign away rights to patents related to the line of work, making the employer the owner of the invention. To their credit, employers do take the initiative to go through the patent process by using patent lawyers and the inventor is offered a fixed monetary/stock reward. This effectively takes away any chance that employees can realize passive income from royalties.

As is evident from both the above scenarios, middlemen benefit from the creations of individuals. These arrangements are heavily tilted in favor of the associated corporations. Adding further insult is the heavy lobbying by corporations at the political level. Needless to say, it is extremely hard for individuals who have regular day jobs to realize passive income through royalties with the existing system.

One can envision customers buying songs directly from singers who publish their work thereby eliminating the middleman entirely. This will allow the artist to realize the “true” value of their product. Similar scenarios apply for writers and inventors as well.

Corporations can play a positive role in this by promoting an open marketplace for the associated inventions, songs, book material, etc that came about by an individual’s association with them. The current situation of corporations hoarding songs, books and inventions as IP and media assets will give way to an open marketplace where nobody is shutout completely from a creation. Furthermore, by allowing the income realized through such strategies to filter down to the talented individual, it is bound to be a win-win situation for all involved.

The optimist in us sees its time in the horizon…


Related Posts:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 01/2015.

Passive Income Opportunities - Part 1 - Network Marketing

The idea of passive income is intriguing because of its promise of creating something out of nothing. But, in reality, for all sorts of passive income, there are risks associated with them that need to be carefully assessed.

Our first attempt for passive income was a short-lived experience in the form of signing up for the one of the biggest network marketing companies in the US. We were hooked in by the promise of checks coming in as we sit back and relax after setting up a broad network under us. The risky part seemed to be setting up the network for which the company offered help in the form of weekly and sometimes impromptu “client” meetings. We immediately signed up for roughly $100 for the materials. The materials came about a week later in the form of everyday household goods that we were expected to find a market for. At this time, we panicked a little trying to figure out how to hook in people to sell the goods to. Not to worry, our friend who signed us up offered all kinds of help and invited us to her place for a presentation. The presentation went well – the talk was focused on how good & competitive the products are, interspersed with information about the presenter’s lavish lifestyle made possible by the passive incomes realized through this. Another week was spent trying to figure out how to hook up people into the system. Another presentation followed - this time by someone higher in the network. The presentation was a complete disappointment. It was pretty much the same content as the first one with the only difference being the stylistic aspects. What put us down more than the boring content was the fact that the rest of the people listening to it were behaving as though what they were hearing was the biggest thing since sliced bread (classic cult behavior), even though more than half of the audience was in attendance for the first presentation we attended as well. To summarize, with some discomfort with our friend, we were able to wiggle out of the deal. What did we learn from this experience? – First, these types of deals are not for everyone, especially people with minimal experience in marketing & selling. Second, the benefits are fairly back ended in the sense that a lot of time & effort needs to be spent initially to start enjoying benefits – time working families may not have!


Related Posts:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 01/2015.

Rat Race Exit Strategies

There are 3 main practices to use when aiming to exit the rat race as quickly as possible:

Develop avenues of passive income – these include such income streams as dividends from stock or mutual fund investments, royalties, rental income, pension plans & variants, etc. The central idea here is that you do not have to spent energy to realize the income.

Develop strategies to protect asset-base against inflation – the main idea here is to invest in areas were the returns are proven to beat inflation over time.

Minimize expenses – these include planning to own assets that you use on a daily basis (as opposed to renting them), minimizing subscription style expenses (taxes?) of all kinds, etc.

The next series of articles go into details of each of these areas.

Related Posts:

1. Exiting the Rat Race - Definition.
2. Rat Race Exit Strategies. 
3. Passive Income - Part 1 - Network Marketing.
4. Passive Income - Part 2 - Royalties. 
5. Passive Income - Part 3 - Rental Income. 
6. Passive Income - Part 4 - Dividends.
7. Passive Income - Part 5 - Pension Plans. 
8. Passive Income - Part 6 - Employer Plans. 
9. Strategies to Beat Inflation.
10. Strategies to Reduce Expenses.
11. Frugal Living - A Definition to go by. 

Last Updated: 01/2015.