Twenties Life

To many people the idea of starting a business seems like a complex process that takes a significant amount of time and effort to accomplish. For some multinational corporations in the Fortune 500 that hire lawyers, accountants and advisers by the hundreds then certainly a business re-organization or spin off can be a complicated process but for those of us who simply want to start our own small business it’s so easy that in fact we could do it today!

Even if you have grand ambitions for your business then there is certainly nothing wrong with starting small. After all, Microsoft was started in a garage, Facebook was started from a dorm room, and Google was started out of a Stanford research lab.

Here are some down and dirty tips that you can use as action items for starting up your very own business immediately and then get right down to work building your business and actually making some money!

#1 You are NOT Required to Incorporate

It’s always a smart thing to form some type of business entity for your business. In fact, you can incorporate or form an LLC for free or close to free at MyCorporation.com (not including any state filing fees involved). While forming a business entity is a good thing because you enjoy some form of liability protection it is in no way, shape, or form a requirement for starting your business.

If you decide to postpone incorporating/forming an LLC then that is perfectly fine because in the eyes of the law you will just be conducting business as a sole proprietor (if you are an individual) or a partnership (if there are two or more owners of the business).

Many successful businesses function as sole proprietorships or partnerships and although not the optimal business structure because of potential liability issues it should certainly serve as an example of the fact that in many cases you don’t even need to file one scrap of paperwork before you start conducting your business! (Note: Although once your business idea pans out and you start to make some money then it’s always a good idea to then start deciding on what business structure you should choose).

Money Saving Tip: Many places will charge you money to obtain an Employer Identification Number (EIN) from the IRS (essentially a Social Security Number for businesses) when in fact you can apply for an EIN at the IRS website online for free (and it only takes a few moments)!

#2 Look for Online Solutions

The beauty of starting a business with an online presence, maybe even ONLY an online presence, is that the cost of doing business online is relatively very cheap in contrast to opening a brick and mortar store.

It could take thousands to lease office space, set up and outfit a retail store, etc. but with less than $50 in your pocket you could find a domain name, choose a hosting plan, set up WordPress, create an online store, and start putting your business idea into practice!

With startup costs so low in an online venture then you A) Have the freedom to try out various strategies and various business ideas with minimal financial risk and B) You can forego looking for angel investors and bank loans and rather just plop down your credit card to make the few infrastructure purchases you need to get your website up and running.

#3 Quit Obsessing Over Details

The temptation for many when it comes to starting a business is to obsess over every little detail and to refuse to launch their business until “everything is exactly right”. Well, I hate to be the one to break it to you but every single little thing is rarely going to end up exactly right so taking the first step and simply bringing some type of product or service to market and then iteratively working to improve is often the best strategy. What are you waiting for? As any present value calculator will tell you the more you delay the more the time value of money principle starts working against you rather than for you. Get started creating your business today!

Joel is a CFP™ and the founder of 4 different businesses. Some of his most recent undertakings include websites for comparing car insurance quotes, reviewing health insurance companies, and learning about all other types of insurance.

Having debt in your 20s is not ideal.  Chances are you’ve just entered the workforce, and you’ve gotten your hands on a credit card or two, and somehow within a few months (or less for some of you), those cards are maxed out!  That’s not a great way to start your financial life.  Let’s get rid of that debt, shall we?  I’m going to share with you some great ways to eliminate your debt and stay debt free from now on.

1. Spend less than you earn.  Seems simple, yet most of us can’t even follow this one.  If you spend less than you earn, you have more money to knock down debt or build up savings.
2. Keep only 1 credit card.  This way your debt focus is simple and your amount of debt stays low.
3. Build an emergency fund.  Here’s how to start your emergency fund.
4. Stop using credit cards to “make it until my next check.” You’ll likely pay it back ten fold before the debt is gone.
5. Avoid eating out often – it’s the easiest way to save money.
6. Find cheaper entertainment – renting a movie is way cheaper than seeing one in your local cinema.  Cooking is cheaper than eating out…
7. Save for future expenses – car tires looking worn?  Wardrobe need updating?  Save a small amount each month to go towards future expenses.
8. Snowball your debt – pay the minimum on every account except the smallest, and pay as much as you can afford on that.  When you finally pay that off, add the amount you paid towards that account to the next one.  Rinse. Repeat.
9. Stop Spending – I know it’s hard, everyone likes new things.  But you have to commit to spending less or you’ll never get ahead.
10. Set goals in stone – “I’m going to pay off this card in 6 months.” Then plan out exactly how to do it, and stick to your plan.
11. Pick up side gigs – have a talent that you could make money from?  Try Craigslist or find other ways to do some small side jobs, and put that money towards your debt.
12. Make purchases with cash – Want an iPad?  Don’t reach for the plastic.  Save some cash each month for you “iPad” fund, and when you finally have enough, go out and buy it.  It will feel so much better not having to charge it.  Trust me, I just bought my first BMW, and I paid ALL CASH!
13. Don’t borrow money – owing other people is the worst kind of debt.  It can ruin all kinds of relationships.  Do your best to never owe money to a friend or family member.
14. Plan for retirement – The difference between starting in your twenties and starting in your thirties is millions when you consider the time value of money. Take a look at this chart.
15. Move into a smaller home – Americans have some addiction with bigger things that we just don’t need.   I live in a modest <700sq ft apartment, which in Texas is pretty tiny.  I save over $300 per month because of this smart decision.
16. Use an online savings account – IngDirect is my favorite.  It makes it harder to spend, and you can open multiple accounts to track different things you’re saving for.  For instance, I have an emergency account, a travel account, a new car account (even though i just bought a car last month), and a general savings account.  If you’d like to open an IngDirect savings account, contact me here, and I can get you a free $25 referral code.
17. Cancel the cable – this will save you time and money each month.  Watch the shows you really love on Hulu.com or their network websites.
18. Think about worth instead of stuff – I used to want things.  Now I want wealth.  I want security.  I want value.  And my investments and savings give me much more value than an iPhone or kindle.
19. Read Personal Finance books – Who Moved My Cheese and Rich Dad Poor Dad are two of my personal favorites.
20. 30 Day Waiting Period – If you think you really need something, print out a picture of it and put it on the fridge.  Look at it every day.  If at the end of 30 days of waiting, you still want it just as much, buy it.
21. Watch this documentary – Secret History of the credit card. If this doesn’t convince you that credit is evil, I don’t know what will.
22. Feel good about your sacrifices – there is nothing like being debt free.  If you haven’t experienced it, trust me.  It’s the most wonderful feeling of accomplishment you can have.  I recently paid off every dollar I owed (other than student loans), and I don’t want to ever borrow again.  I bought my newest car cash, after saving for over 2 years (and driving a 16 year old piece of junk).

The road to freedom of debt is difficult, and requires a lot of discipline.  All of your friends are going to keep spending the way they always have, and you’ll be tempted to fall back into the trap.  But if you can stick to your plans, sacrifice a few restaurant meals, and go on a few cheap dates, you’ll find yourself in a much better position.  Then, when you’re all debt free, every purchase will be so much more fun, because you don’t owe anyone but yourself!

What’s your best get-out-of-debt tip?

What is the biggest financial mistake a person in their twenties can make?  Many people will have their opinions, but for me it’s putting all your financial eggs in one basket.  Becoming complacent with your income can be a dangerous mistake.  Too often people in their twenties still have that immature feeling of invincibility, as if somehow we are unaffected by external forces like unemployment and the economy.  We think that our bachelors degree is somehow insurance against such tragedies.  Well I’m here to save you from making such a terrible mistake.  The fact is, no job is 100% reliable, and since not many of us are sitting on huge trust funds, we need to find other ways to ensure our own prosperity.

The solution to this problem is to begin developing multiple streams of income.  I’m sure you’ve all heard those words before.  You’re probably thinking, “But Ibrahim, I make X amount of dollars per month and I only spend Y amount of dollars per month (y<x) so I should be fine.”  Well answer me this: How long could you live the lifestyle you are living now if you were fired from your job? 2 Weeks?  1 month?  2 months?  I’m certain that most of you could not rely on your savings for more than 2 months.

So multiple streams of income… what does that even mean?  It means you have systems in play that allow you to make a little money on the side.  What type of systems are totally up to you.  Some people buy and manage vending machines, others have online businesses.  Some people mow lawns, and yet others are masters of selling their old stuff on eBay.  What your side job is doesn’t matter, what matters is that it is capable of producing a steady amount of income and that if need be it could be expanded to make more.  In other words, a small business that you could work full time if you lost your job and needed to make money fast.

Just so that you understand what I mean, I’ll share a few details of my multiple streams of income.  I have a full time job as an E-Communications Recruiter at the university I graduated from.  It pays a decent salary for a fresh graduate.  I also have TwentiesLife.com and a couple of other blogs, which currently bring a very modest amount of income (though they could probably do better if I really tried).  I’m in the process of starting a web design business with my brother, and I already have 4 web development projects lined up.  I also write ebooks and build seller websites.  I’m even learning to outsource web work such as SEO optimization and web research, to speed up these processes.  Now I’ll tell you that even with all of these streams, none is bringing in significant dough (though the web design business will soon), but the goal isn’t to get rich off of your streams.  The goal is to have ready-made systems that can become full time jobs if necessary.

I can tell you this much:  If I got fired today, I’d still be able to pay my bills this month, and I honestly believe that by next month I could have my multiple streams of income making just as much as my salary does today.  Not only is that job security, but it’s also job satisfaction.  It means that if I decide tomorrow that I don’t enjoy working where I am, I can quit, and still manage just fine.  Can you say the same?  If not, I urge you to think about the skills you possess and find a way to make them profitable.  Your financial security blanket will thank you.

Whether you’ve realized it or not, having an Emergency Fund is the difference between a life changing event and merely a depletion of funds.  Answer me this:

If you busted a tire on your car, could you afford to buy another (without a credit card)?

If you totaled your car, could you afford another (immediately)?

If a natural disaster caused damage to your home, are you financially prepared to repair it?

If you got fired today, how long would you be able to support yourself financially?

All of these questions are designed to get you thinking about your “financial pillow.”  An Emergency Fund isn’t only smart, it’s insurance for all the little things life doesn’t prepare you for.  It helps you sleep at night.  In my opinion, it’s a good idea to have at least 3 months worth of living expenses covered in your emergency fund, and 1+ year is even better.  But obviously it’s not that easy to just put all the money in their, right?  WRONG.  I’m going to give you a few simple tips designed to get that Emergency Fund growing, without taking a hit to your current lifestyle!

1. Get out of Debt – This goes without saying, but I’ll say it anyways.  It doesn’t make sense to build a huge Emergency Fund when you still have large amounts of credit card debt.  Chip away at that first, and once it’s down to a reasonable level, start throwing money at the Emergency Fund.
2. Treat it like a bill – Decide on a comfortable number, or even better percentage of your income, and stick to it. Pay your Emergency Fund every month just like you do your cellphone.
3. Start Out Small – Not everyone can afford $250+ per month, but that doesn’t mean you should put off starting your fund.  Do what you can do, and if that’s $40 per month, than next month your fund will be $40 bigger.
4. Automate your transfers.  I have mine set up to deduct from my checking and into a special savings account once per month.  I never have to think about it again.
5. Open a high-yield online savings account – I use IngDirect, it’s online, free, and easy.  And here’s a BONUS, if you open an account with $250 or more, using my referral link, they’ll give you a free $25.  If you needed an account anyway, you can’t argue with free $$$.  Contact me here for the referral link.
6. Never spend anything less than a 5 dollar bill. This is an interestingly genius idea.  If you hold on to all of your one dollar bills and coins throughout the day, and save them each night (in a coin jar or whatever), it adds up pretty quickly.  You’ll be funding a big fat Emergency Fund in no time.
7. Stash Gift Cash – Ever get cash gifts from mom, grandma, or other family or friends?  Do the responsible thing, save it for a rainy day.  You wouldn’t have missed it if you didn’t get it anyways…
8. Tax Returns/Rebates – It might be difficult to convince you to stash your entire tax return away, since so many people look forward to that check each year.  But stash a percentage.  I’d go with 15-25% as a modest goal.
9. Sell Your Junk – One man’s trash is another man’s treasure.  Go through your closet, attic, junk drawers, etc.  Ebay the junk that’s worth something and stash the rewards.
10. Work an Extra Shift - Each month, work an extra shift and dedicate those earnings to your Emergency Fund.  It’s time to be responsible, and sometimes that means sacrificing a day or two for the future.

Bonus – Freelance It – Have a skill that you could use for profit?  Create a Craigslist or other personal ad offering your talents for a small fee.  Do this once per month and save the money for a rainy day.  Your Emergency Fund will thank you.

That’s it.  It’s that easy.  And even if each of these tips only totaled $5 per month, you’d have $50 to add to your emergency fund this month.  Can’t argue with results, right?

What is your Emergency Fund building strategy?  Leave it in the comments below.

Welcome to TwentiesLife.com, your new home for lifestyle tips for adults in their twenties.  Twenties Life is a solutions based online magazine geared towards creating a lifestyle in your twenties that most people of only dream about!  How will we do this? By teaching you how to live a life that is meaningful, proactive, and overall more luxurious!

The topics that covered here at Twenties Life are vast, and the overall message will be useful to any young adult in any stage of life.  We at the Twenties Life will be helping you shape your present life along with your future.

So what will we be talking about?  Lifestyle.  This covers everything from Fashion & Dress to Sex & Love, Culture & Fine Living to Health, Business & Money to News & Politics. We’ll pretty much be talking about everything that pertains to a twenty-something’s life.

Buckle up and get ready for the ride of your life!  TwentiesLife.com launches February 1, 2010!