Fall 2008

Another year and another update in the life and times of what we’ve been up to:

Hi! I’m Cat, and this is going to be the busiest year of my life. I keep saying that every year, but as I look forward to the coming year, I can’t imagine it being any less busy. This year Scott and I are  introducing twins into our family to come hang out with our son who will be just 18 months old when they arrive! What do you think the new ones will be…boys, girls, one of each?

Last year I had some time when our son was small to get my tutoring business off to a good start. Quantum Tutoring is a tutoring business specializing in teaching science and math to high school and college students in Champaign and Urbana, Illinois. Keeping our overhead costs to a minimum, we became profitable in just a few weeks. It was also our first experience with actually marketing a business, doing business taxes and running a business while raising kids.

Everyone else is still in school. My husband Scott and my sister Sara are in graduate school studying Electrical Engineering and Music Education, respectively. Sara’s husband Jonathan is an undergrad double major in Religion and Psychology. Will they ever be done with school so they can help me start another business? Someday.

In the meantime, what do two engineers, a psychology guy and a singer know about business? We all have practical experience now and have tested out some theories in the real world. Quantum Tutoring is ready for a new school year; Sara decided to put Quincy Massachusetts Voice Lessons on hold after a very successful year of business, while she raises her twins and finishes school; we’re continuing to develop new business ideas that we’d like to try someday; and we’re still learning and sharing that new knowledge with you.

See how far we’ve come:
About Us Summer 2006
About Us Summer 2007

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Personal Finance Favorites

A friend recently loaned me the book Financial Peace Revisited by Dave Ramsey. It has a lot of good advice, though I find the writing to be somewhat wordy, and there’s a contradictory part about Roth IRAs versus regular IRAs that I think must have happened in the revision to the original book. However, my friend had loaned me the book to advocate responsible saving, investing and avoiding debt. She wanted to help make sure I don’t make the financial mistakes that can be easily avoided. I felt inspired by her desire to help me. Therefore, I want to help others also know how to avoid financial mistakes.

It is my belief that everyone should:

  • Spend less money than they earn.
  • Have absolutely no consumer debt. This means not going into debt for anything except school or a house.
  • Have an emergency fund in a savings account to cover 3-6 months of income.
  • Save as much money as possible every month in a high-interest savings account and in a retirement account.
  • Everyone should START NOW!

First, there are a lot of great resources on the internet, but it’s sometimes hard to know if a website has good information. So, here are some of my favorite sites:

  • Bankrate.com: This site has great calculators for renting vs. buying a home, saving money, paying off your debt, etc. Here’s a fun one to motivate you to save money NOW . Just type in your age, some amount that you would like to save monthly, and an interest rate. Use a rate around 10%, which is a good estimate of the interest rate you could get in an investment. I used a lower interest rate as a sign of mourning that the economy has slowed down recently.
  • FreeMoneyFinance.com: This blog has a ton of information. Start with the “Best of FMF” links in the leftmost column. I read a post on this blog about how to make an extra $10,000 per year by selling your used items, starting a business based on a hobby, or talking your way into a raise. Looking at all the textbooks and other items we’ve sold and the income from my tutoring business, we won’t quite make an extra $10,000, but we’ve made more than you’d expect.
  • IWillTeachYouToBeRich.com: This blog has bit more on being an entrepreneur than Free Money Finance, and the author is not much older than I am, so it’s motivating to see how we can manage money while we’re young.

Some of my favorite books (and a pamphlet) on personal finance I’ve read are:

So anyway friends… I just felt like trying to motivate you to save money now, or get out of debt, or stop spending more than you earn.

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Start Saving Now

This example has been given many, many times, but it makes such a great point.  Investor A contributes $2,000 from age 26 to age 65 (40 years, $80,000 contributed); Investor B contributes $2,000 per year from age 19 to age 25 (7 years, $14,000 contributed).

Compound Interest

Who ends up with more money at age 65? By contributing early, Investor B ends up with $36,937 more than investor A, even though he contributed $66,000 less of his own money. So start saving now!

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SNL Skit – Don’t Buy Stuff You Cannot Afford

Here is a hilarious Saturday Night Live skit with Steve Martin (as the host) about consumer debt.

“If you don’t have any money, you should not buy anything.” Classic.

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Textbooks for Sale

Scott and I have decided to liquidate one of our assets, namely our inventory of college textbooks. Amazon.com has revolutionized the way textbooks are bought. No longer are the students at the mercy of the university to buy their textbooks (new or used) at the university bookstore for a premium price. Student always had the option of selling their books back to said bookstore at the end of the semester, but the price paid to them was way below the books value, and the university turned around to sell those books to next semester’s students for three times what they paid last semester’s students to buy their book back. My university always touted how much money they had saved students with their buyback policy. What a boldfaced lie!…or is it baldfaced?

Enter Amazon, which connects you, last semester’s student, directly to next semester’s student. Since there’s no university ripping you off, you sell your books for a higher price than the university would give you and they buy them for lower than what the university offers. Ah, how I love Amazon!

Additionally, you can buy old editions on Amazon. They are usually less than five dollars plus shipping, and ye olde university bookstore would never ever even offer the old editions for sale. You’d never be able to find them. Scott and I decided to buy our textbooks back when and if we need them once they have become an outdated edition.

All in all, we’re still losing money by buying textbooks for our courses and later selling them for less than we bought them. However, by not letting them sit in our closet until they are outdated, we have minimized our losses. To us it seems like extra income, since we never planned to turn a profit on textbooks anyway. In just two months we’ve sold over $700 in textbooks. How cool is that?!

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I Finally Figured It Out

There have been many times in my life when I have thought, “if I could just go back and redo that with the knowledge and skills I have now, it would have been a lot easier.” I look at it as progress that I am making in my life, but usually I figure out how to do something really well right when it’s time to stop doing that thing.

In high school I refused to do an English assignment during my freshman year. It was to compare and contrast the written and movie versions of the story “A Man Called Horse.” I didn’t like the story, so I refused to do the assignment. Our teacher even gave us a chance at the end of the semester to make up any work we missed, and I still refused. Therefore, my first semester in high school I got a B+ in English. After that I never got less than an A-. I learned my lesson not to be stubborn, but it cost me the rank of valedictorian and the scholarship that went with that! Oh what I wouldn’t give to go back and write a compare and contrast essay of that dumb story.

As a missionary for my church I helped others to learn about the gospel of Jesus Christ and helped them improve their lives in other ways. The people of Argentina were so kind to us, and even when they weren’t interested in learning about our church they often would continue to invite us into their homes. In the last two months of my mission I finally figured out how to teach those who wanted to know about Christ and how to recognize when others were just being nice to us. I was able to create great relationships with those who were content with their current religion or lack thereof and still move on to find those that really wanted us to help them find spirituality in their lives. Before I came home to the United States I would have loved to have the extra six months that the guys get (girls have 18-month missions in my church and guys have 24-month missions, I’m not sure why, but that’s the system) to put into practice everything that I had learned. Scott was coming home from his mission at that same time though and wanted to get married ASAP, so I knew I couldn’t torture him by staying out of the country for six more months!

After Scott and I got married I started to watch how he studied, because he always got nearly the best grades in his classes. As an undergrad, I had done well in school, but it was not without quite a few late night study sessions. Scott, on the other hand, was always able to go to sleep by 11pm at the latest. The two key things he did were: 1. He read the textbook before the lecture was given on the material, even in subjects like math (in high school I never had to read a math text, and in college I never figured out that it was useful), and 2. he started the homework the day it was assigned and finished it long before it was due (I had always planned around the due dates and struggled to finish the work). These two things allowed him to take advantage of the professors’ and TAs’ help during lecture and office hours. I started doing this as a grad student, and I blew everyone in my class away. I had the best grades in almost all my classes and always had the work done weeks before anyone else. Again, if only I could back and do that as an undergrad.

Now I find myself raising a son and running a business. I wonder what there is to know that I have not yet learned. I know I will look back on this time and think, “if I had only known this one thing, life would have been so much easier.” It just goes to show that life is meant to be an uphill battle. If I can just get over the next challenge I will be even more ready for future challenges.

“That which we persist in doing becomes easier to do; not that the nature of the thing is changed, but our power to do is increased.” –Heber J. Grant

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Ace is Not Tide…In Argentina

I have been getting a ton of hits lately from people searching to find out if Ace laundry detergent is the same as Tide. As I have discussed at length, while I lived in Argentina, I was fooled into thinking that Ace and Tide were identical. This ended with me with a rash twice.

In all fairness, I repeat that I was living in Argentina at the time. They had Ace there and not Tide. Due to the increase in searches for Ace versus Tide, I must conclude that there is a version of Ace released in the US. I have no idea if Ace in the US is the same as Tide. I would be interested in finding out though. Leave a comment if you have any evidence that Ace is or is not Tide.

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Too Many Books

I recently read an article about going on an “information diet.” The fact that I can’t remember who wrote it, where I read it or many of the main points proves that I need to go one. The jist of it is that often we spend far too much time online and off reading, watching , consuming information and then doing what?…nothing. How many articles about financial advice do you need to read, before you put yourself on a budget, cut your credit card debt or make some wise investments? For most people, they never get beyond the information-consuming stage.

Recently I realized that I was in the middle of at least nine books. I was reading Despereaux in Spanish to my son, listening to Les Miserable on mp3, listening to Shadow of the Hegemon on CD with my husband, and reading Drawing on the Powers of Heaven, The Book of Mormon (in Spanish), The Engine of America, The Essential Online Solution, Babywise, and Solve Your Child’s Sleep Problems. I think there were actually more than that, but I can’t even remember them.

I think overwhelming myself with reading material was a result of not being in school. During the entire school year, I always had to focus on the reading material for my classes and could barely find time to read one book per quarter that was not school related. Now that has suddenly disappeared and I have all the time I want to read and go back to the library for more and more books.

Additionally, it seemed to take forever to finish any one book…this past weekend I finally finished three of them! I often feel obligated to finish a book I’m not enjoying, so I can post the review on this site and so that not all my reviews are super positive. However, I think that will end. Maybe I’ll just keep a list of books I started that weren’t worth finishing. Hehe.

So by putting myself on an information diet I am going to schedule a maximum amount of reading time per day or per week. Also, I am going to do more with the information I do gain. The ROI from the books I have been reading has been nill. I need to change that.

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The Essential Online Solution: The 5-Step Formula for Small Business Success – Rick Segel & Barbara Callan-Bogia

The Essential Online Solution: The 5-Step Formula for Small Business Success
Rick Segel and Barbara Callan-Bogia

This book has not been one of my favorites, but I cannot really figure out why. All of the advice about building a professional, effective website and spreading the buzz about your business seems good to me. There’s info on SEO, word of mouth marketing, banner ads and adwords and adsense. Maybe it’s just not that applicable to my situation at the moment.

The five steps to small business success according to Segel and Callan-Bogia are:

  1. Uncovering Possibilities – Which looks at online buying and selling as a while and how you can fit into that picture.
  2. Building Practical, Powerful, Professional Web Sites that WORK – How to initially build your site, make it more effective, and avoid common errors that detract from your site.
  3. Positioning You as the Source: Creating Expert Status – Using blogs and podcasting.
  4. Creating the Buzz with Clicks and Clends – Discusses how to position yourself online and how to use pay per click and viral advertising.
  5. Sell, Sell, Sell – Covers how to use eBay and other programs to get your business going.

The section critiquing different websites for positive and negative qualities is very helpful for someone who is not familiar with the internet. Even if you have done a moderate amount of online shopping however, you already should have a pretty good feel for what makes up a good website. Advice given is that your site needs to be user friendly, personalized, simple and straightforward. Many good examples of sites that have these characteristics are given. It would be nice to have some bad examples to look at, but out of courtesy to the owners of those sites, they are only described in the The Essential Online Solution, not named.
All in all, if you’re not pressed for time, there are some interesting things to learn from this book. However, it is not a quick read, at least for me it wasn’t, and you probably know a lot of the information in it already. To be fair, part of the reason it took me a while to read was that I kept reading things I probably should do to promote myself and things to apply to my websites. I would stop reading, thinking when I got the chance I would make sure to redo the CSS code on my quantum tutoring site to enhance my SEO or other things like that, but I was never motivated enough to actually do them and eventually I’d go back to just reading.

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The Engine of America – Hector V. Barreto

The Engine of America: The Secrets to Small Business Success from Entrepreneurs Who Have Made It!
Hector V. Barreto

The Engine of America: The Secrets to Small Business Success from Entrepreneurs Who Have Made It! was written by former Administrator of the US Small Business Administration, Hector V. Barreto. I found Barreto’s book inspiring and full of useful information. With the stories of some of the most successful small-business entrepreneurs, he teaches the keys to successfully start up a company or grow an existing one.

The Engine of America gives a lot of the same advice that you hear all the time about running and starting a business. Therefore, it is a great book for someone just starting out. Additionally, the advice, although repetitive for those entrepreneurs who have been in business a while, is given in a way that keeps you entertained. Stories of successful entrepreneurs remind us that anything can be done, and help us keep an optimistic point of view.

Barreto gives sound advice about studying to learn what you need to know and planning your business venture to increase likelihood of success. Then he addresses the need to take risks, but to take calculated risks rather than just a shot in the dark. One aspect of business I don’t think of a lot is employees. I am far from that point, but Barreto addresses how to share your vision with your employees and how the people around you are a critical key to your success.

A large portion of The Engine of America is dedicated to specific tools for success that every entrepreneur can benefit from. From how to contact SCORE for free advice from successful businesspeople to how the Small Business Administration (SBA) can help you obtain financing to what government programs are available to small businesses. From his insider’s point of view, Barreto helps unlock the mysterious process of dealing with government organizations and programs.

Overall, I really enjoyed this book. It’s an easy read, but it contains a wealth of useful information. I especially enjoyed the quoted advice from successful entrepreneurs such as Earl Graves, founder and publisher of Black Enterprise magazine, and Tom Stemberg, founder of Staples.

You can read an excerpt of Chapter 4 Challenge the Conventional Wisdom or go to www.theengineofamerica.com for more information.

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