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Money

If You Want to Make Money in a Capitalist Economy be a Capitalist

‘If you want to make money be a capitalist’. It is that simple. My father told me that and he will be 92 this year and remembers The Great Depression and his parents fled communist and feudalism. He has some wisdom. I am getting a PhD in economics. I will give you specific examples of what I see.

Capitalism by definition is involves being an owner of a creation process.

If you are in another economic system you need to be something else, for example under socialism perhaps a better strategy would be working for a government agency and move up the ranks through longevity with the organization and merit and politics. If you were in a feudal system better would be to rub elbows with the feudal lords and aristocracy.

However, as long as we have the system of capitalism, good or bad, you need to sit on top of a process. You need to take ownership in something. If you are a worker the capitalist will always pay your market value based on perceived value for the process. With issues like mass migration of people and the AI revolution this becomes challenging. In fact I would say working in corporate America is not an optimal situation. However, the entrepreneur takes risks and brings ideas into action. This results in profit.

This is not a debate of Adam Smith versus Karl Marx. We can leave the gloves at the door. While we are all saving the world by creating a utopia society we envision, lets also having some spending money in our pocket. Here is how in a market based economy.

After School program that makes 40k a month

A friend of mine was unemployed. He got fired from his last job. He started an ‘after school program’ for the elementary school system in my county. It took him two years to have 400 students. He charges $90 a month. He has some additional income so he earns 40k a month in gross revenue. His expenses are about 10k a month. For teaching in after-school 1 hour a night and employing a few extra teachers he nets 30k a month. That is, $360,000 a year. In the summer he does summer camps. After all taxes and expenses it is over 1/4 a million a year. I know this because I work for him. I just got back from working for him moments ago.

CEOs and Presidents of small companies do not make that. He does it by teaching elementary kids an hour in the evening Monday through Friday. Do you know how hard you have to work to do that? How many years in the corporate world would equal what he makes in one year.

He said he could expand but he has a house on the beach and everything he wants. It is all about fun.

Other ideas to make money

Most of the people I know that are making millions started something because they were fired from their job and living in the parent’s basement.

  • I know a lawn care guy that makes 200k
  • I know an HVAC guy that makes 200k
  • I know a website owner that makes 3. I know this for a fact, as I use to work with him. He makes 3 million Euro a year with his site.
  • I know another broke person that nine months latter makes 20k a month on his website. His friend makes 250k a month.
  • I know a YouTube person that makes 1.2 million a year.
  • I know a DJ that clears a few hundred thousand.
  • A friend of mine creates custom guestbook and makes a very respectable amount, more than her husband at a corporate job.
  • A few backyard farmers I know make 100k in their backyard.
  • I know a person who was so poor all they could eat is popcorn and cheese so they started a popcorn and potato chip company worth a few hundred million dollars.
  • I think my brother is worth about 100 million. He did it overnight with his own company.

I know these people personally or as acquaintances and have verification that they make this.

What about being a professional?

I do not know? What do you mean, like what, being a lawyer? That is so boring. The AI revolution creates the contracts, and the proliferation of law schools make lawyers and many other professions just another cube job.

Do you know see my point? Own a process. Think of something because by definition our system is based on property rights and ownership.

What kinds of Capital are there?

Capital is a tool or something used in the production or creation process. It is not money. You do not need money to make money. What you need is imagination. I tell my students better than memorizing is play and day dream. Forget test scores. Play and spend your day in your imagination.

  • Physical capital – Nice if you have it, but not needed.
  • Financial capital – great if you have it, but not required.
  • Intellectual capital – The highest level, this is brains, imagination, handwork intellectually. This will pay you the most. Think Apple, Google, Facebook, Microsoft, Harry Potter, How to train your Dragon, Taylor Swift (is she still relevant?) These mostly involves pen and paper or some idea. But you can shot lower and fly beneath the radar. It will give you a better life, like the examples I listed above.

Thinking is the hardest work there is, that is why so few people do it.

Why do I not do it? I do. I am working on programs. I have this website, I am getting a PhD in Economics as it would be easier to market a book with a degree, if I so desired. But you have to own something. The best capital is your grey matter is worth more than all the money in the world. You just need to brainstorms ideas and not give up.

I play chess and 40% of my wins are when I think I will lose, but do not give up. I do not want to pump you up and then leave you frustrated, as I am not a life coach or a motivational huckster I mean speaker. I just want you to make the connection between, play and capitalism. Play is not recreation, strictly speaking. Imagination and capitalism.

OK what about t-shirts and affiliates? I do not recommend selling affiliates etc. These are not your creations. You are only working for others. They are not imaginative.

Create something yourself. Be patient with yourself. Try to ask yourself what you like to image or play when you were a child. That is a good start. If it takes years, let it take years. I mean it, it often takes years and many ideas before something clicks. Focus on what you really love. Do not watch how to make money videos on ‘how to make money online’ as those people are not using their brains, just recycling ideas. Trust me I have had websites for fifteen years.

Make Adam Smith and Karl Marx both be proud as they were both classical economists who had a labor theory of value. That is real value is created in work. In this case, the work under capitalism is creativity.

If you want to know more about the economic theory that supports this read a book by Robert P. Murphy, PhD School economist. It Choice. That will inspire you more than any make money online books.

I am getting a PhD in economics and writing myself so I think I have some credibility and do not need to flex. If you have questions or ideas you want to bounce off me you can write me. I can give you some hints on how to bring this to fruition. I will not take your ideas as I have my own ideas I am trying to bring to completion and I am more an intellect than a cigar and port style capitalist.

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Money

The Economics of Growing your own Food

‘I wish I could grow money’. You can. Growing your own food works. If you are trying to save money or improve your diet from a culinary perspective nothing beats growing your groceries. In this post, I will give you a plan that I personally implement. It saves me substantial after-tax disposable income. This is a summary of knowledge that are hard-learned lessons from experience.

To toot my own horn, it would be hard to find this advice so compact and useful than in this post, so read on. I developed this system myself. It works. Therefore, if you want to save money, and good advice from a frugal economist, here is how.

Perhaps you care about your own money or the planet?

Further, if you care about sustainability and saving the planet then perhaps you can start doing things on a small scale like this and be a test case for sustainable agriculture. You can read Small Is Beautiful: A Study of Economics As If People Mattered by E. F. Schumacher and take inspiration. Or perhaps your motivated by self interest. Adam Smith would be proud either way.

As a bonus, this is especially written for those of use who are lazy and cheap.

Money savings can be beautiful
  • If you can save 500 dollars a month, it is easier than asking your boss for a raise.

In the old days people use to market garden produce like tomatoes and call these ‘mortgage lifters’. Today the system or the matrix has made people soft.

I encourage people to stop worrying about their day jobs and start thinking in terms of entrepreneurship and rugged individualism.

This is from an Austrian school of thought economist (Mises, Schumpeter, Hayek, Robert Murphy) coupled with the American spirit.

How much do you spend on food?†

According to the USDA a family spends about $902 a month in 2005 on a moderate food plan. I would say in this year, it is over $1,000 a month.

You can find the data here:

Cost of food per month

What I find strange is that this is grossly understated. If you work in a professional job and eat out, buy ready meals, coffee and snacks some estimates are north of $2,500 a month.

Perhaps there is a large substitution effect in play, people sacrifice what everyone ate in my parents time, that is organic, local produce with imported heavily sprayed low nutrient produce and package food. This substitution effect is to save cost but the quality has gone down.

That is one of the main reasons for obesity. When I moved back from Europe I put on 20lbs in no time eating the same food. I realized quality matters. Obesity has a cost also.

I cannot imagine what kind of food people are buying and feeding on. I often look at the shopping carts in front of me at the check out line and I can see. I observe, large bags of chips, and inorganic white rice and cheap low-fat milk.

When I do shop, I only shop at organic, local markets and my monthly family budget is less than $500 a month. Before I grew my own food it used to be up to $2000 a month but more realistically $1,200 dollars a month in my personal gilded age. Further, my diet has improved. My daughter is the tallest in her class.

Some people are like a modern day Henry David Thoreau – one of them: Rob Greenfield.

Look how happy he is. He takes it to the next level, you do not have to but common sense tells us that you can learn some food independence.

What I buy is dairy, flour and chicken or meat that is on sale for example, a few basics. However, the savings is substantial and you can take pride in providing for your family beyond just pushing paper behind a desk, which we all do.

If you do not have space, make a plan and find space. Innovate instead of telling me why not.

Excuses not to grow money

If you do not have space, grow vertical gardens and some inside. If you are in an apartment look for in a community garden. I did all those these so yes, it is possible.

These sweet potatoes grow up the side of my house and I harvest them when needed.
  • When American settlers came over on wooden ships to this country it seemed as those people were made of iron. They hacked their way out of the wilderness and buried their dead along the way. They survived in harsh and primitive conditions building their lives from scratch. You too can survive.

So no excuses, you can do it with little to no money – all you need is some sweat equity.

Thanks to the garden my family has gourmet, healthy meals every night of the week.

How I rotate my crops to bring prosperity to my fiefdom

Three Crop rotation System

I do the three crop rotation based on the idea that in the Middle Ages brought prosperity to Europe. An abundance of food allowed people to produce other things that were not connected to survival.

In economic terms, it was an outward shift in the PPC curve.

Here is the plan to grow food with no fertilizers, pesticides, herbicides or any amendments you buy at the store. Forget buying things. You need brain power rather than throwing money at the field.

My yard was pure sand. Nothing but weeds.

I had only Florida sand and not the garden is hard to stop. I use brainpower not muscle (these came after working in the garden) or money.

I live in growing zone 9A so I can grow all year around. If you can not you can modify this.

Tools you need – the capital

For an initial investment of fewer than 150 dollars, you will be set for life. I started only with a shovel so really you do not need more than that.

  • A shovel 15 dollars
  • Cover crop seed purchased from a professional seed store that sells to farmers. I can give you a company. Total cost with inoculat might be 35 dollars. You can save the seeds after the first season. If you are really cheap you can gather clover seeds from the wild.
  • A tarp of some sort or you can use cardboard for free, 20 dollars.
  • A couple of light plastic buckets 11 dollars
  • A cart with inflatable wheels 60 dollars – much better than a wheelbarrow.

I keep my front yard my front yard, grass and flowers and OK a few herbs and OK a few fruit trees. But from the front people have no idea what I do in the back.

In the backyard, I divide my yard into three sections for growing. I also leave a section for green grass so we can play. My whole property is 1/3 an acre. But perhaps I use less than a 1/4 of it for growing for my family. I have to measure this. In any given season it might be .1 acres because I use the three field rotation system.

calculate each soil amendment and look for the most cost/effective method. You can grow a tomato but who cares if it cost you $10. You want it to be free except for the opportunity cost of your time (which beats the gym).

Do not spend money, rather grow soil

In two of my fields, I grow cover crops to sequester nitrogen from the atmosphere. For pennies I plant in fallow fields cow peas in the summer and Austrian peas in the winter. I also grow clovers and alfalfa, and Crotalaria juncea (if I want to get exotic). These cover crops in fallow field with two seasons of rest, will supply all the nitrogen you need for your growing season.

I have inoculated all three garden plots additionally with Azospirillum Brasilense bacteria which does not need a symbiotic relationship with legumes.

The cover crops should crowding out the weeds. If you want to prep the field before you can remove the grass by hand or tarp it for a month and then remove it. I have done both. Tarpping can be replaced with covering it with hay, but that has a cost. Many times after fall pumpkin sales people will give you bales of hay if you ask. Rotting hay is even better.

That is your fertilizer. Those are your herbicides. Some people flame the weeds I do not. I tarp and plant.

I inoculate the field with mycorrhizal fungi, by planting a sock full of rice under a tree and then cultivating the fungi in a bucket. You want to build this up.

So far, not a lot of work, just brains. The good news is I do not need to mow most of my lawn, I just let it grow.

Once you have your plots under production, the first year might not be a high yield, I recommend adding free amendments.

I use homemade compost

  • My compost is made with:
  • Food compost
  • If you want to add more you can add the following
  • Leaves the neighbors bag up for the county to take away.
  • Seaweed I collect
  • Grass cuttings
  • If I am outside I pee there. It is basically the same as expensive fertilizer.
  • Horse manure which you can get free in any town.
  • Basically, everything goes there. Compost everything.

I do not turn it, I do not work it or use any bins, just a pile by the forest. Nature will decompose everything.

Other considerations

If I see bugs I squash them and leave them on the plants as a deterrent. I rotate the crops and mix them so they do not develop infestations. This will throw off mixed signals to the insects. It is called a chaos garden. If you need to you can spray plants with neem oil solution.

Chaos garden – each plant symbiotically helps the other.

Seeds – I buy wholesale or ebay, or from the food I purchase. Eventually I save the seeds or let things permaculture over.

Any fruit tree from your neighbor or deserted land you can propagate with a cutting.

What if you are super lazy?

If you want a white glove approach to garden, just tarp the grass, a month later throw alfalfa pellets from the feed store down and do nothing else. Then plant seeds. This is the cheapest all purpose fertilizer. A 50lbs bag will cost $14 and provide everything you need for a small food plot. It has triacontanol a grow hormone and will also act as a mulch.

You do not have to do anything else. No composting, no cover cropping, no work. Your ROI will still be green.

Row spacing

Whatever you feel good about. Some people cram it in and others space.

When I am motivated I build a hugelkulture mound. It takes no additional soil and gives you nice drainage and organic matter.

I also use free woodchip from tree companies. You can check out the Back to Eden method. These are optional.

What to grow to save money


I recommend starting with herbs as this is the high-value point. Find out what people grow professionally in your area as they have an economic interest in growing. Herbs are your vitamins, even if your other consumption is starches, herbs help your diet.

This is a yam that grows over 50 lbs and tastes like an Idaho potato. You could drop in the woods and it will grow.

Next, choose things that are almost invasive in your area that are food. For example, in Florida people grow everglade tomatoes, Seminole pumpkins, sweet potatoes, dioscorea alata and mulberry. You can not help to have these grow. If living in a post apocalyptic world they would still be growing on their own. You almost can not stop them from growing here. They are made for this soil and climate. Find the equivalents in your area. Write to me if you need hints.

Florida native tomatoes that grow like a weed. Everyday there are new tomatoes. Hard to believe since I could not get a decent tomato to ever grow.

If you have mycorrhizal fungi in your field and grow cover crops and add compost your garden will blow you away with the food that grows. You will make the desert bloom.

Some people go for calories and in a prepper paradigm it makes sense, I grow what is easiest to grow and taste good.

Write me if you have questions how to save money by growing food

You can give your food to your friends and enemies and build up social credit or karma depending on your perspective.

Even if you only save 500 dollars a month, think of what you can do with 500 dollars every month. Enroll your kids in chess camp or buy books or go to Europe. I am pretty lazy mind you, and if I can do it so can you. You will have fresh food every day.

Write me if you have questions or comment below. I want you to be on the road to prosperity.

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Money

Cryptocurrencies – the next evolution of money

Cryptocurrency investing is like choosing Democracy over a King. That is, you are investing in an idea. You believe in decentralized currency and the freedom of economics and money. 

  • Even with the collapse of the Crypto bubble, the idea will resurface in another form as the market determination of the supply and demand for a medium of exchange central control by the ECB the Fed and other central banks.

That being said, the market is hyperinflated. I personally do not invest in this. This post is wild speculation on my part and I have not tied it to any microeconomic foundations or macro theory.

I get into enough trouble with investing in things I know something about, why should take a long or short position on something I do not know anything about.

– Warren Buffett on Cyrpocurrency investing

However, from a theoretical perspective, my question to skeptics is, if you were to bet on a political system that would be the convention in the next 100 years would it be monarchy or democracy? Analogously so it is with money, once people get understand the idea, I believe the monetary convention in the future will be decentralized currency. It is a paradigm shift. I can not image in 100 years people will be walking into Walmart and pulling out crumpled up dollar bills, or at least to buy things online. I am not saying that Altcoins will go up forever in value, but once the idea catches fire, it will be a revolution in monetary economics. Science fiction movies describes this reality with electronic credit. The central banks will see their power decline and fade.  I do not know if that will be in ten years or one hundred years, but it probably will happen as the evolution of money continues.

You can burn books but you can not stop and idea, once it catches fire. – Mark Biernat

I teach economics and want to clarify the emergence of Bitcoin and other private currencies from a historical perspective.

Historically people have used various commodities as a medium of exchange

Money has evolved. What is money? It is anything that functions as a medium of exchange. In order to function as a medium of exchange it needs to be generally accepted and people have to trust it. Initially this medium of exchange was something that had intrinsic value. For example, beaver pelts, to salt (that is where we derive the word ‘salary’ from Latin) to species (e.g. gold and silver).  Latter governments issued coin and fiat paper money. However, banks, insurance companies railroads and private individuals also issued money, for example in The US, Canada Scotland in our Gilded age. The government monopoly of money for most of us started in 1914 with the Federal Reserve system. In fact, if you consider the evolution of money in civilization, the government monopoly of money is an anomaly.  Money is evolving. Money continues to evolve as economies and our economic understanding evolves.

Salt was used as a medium of exchange

Is one system of money better than the other?

Each monetary system serves a purpose and functions to serve the people who live in that time. At this point in man’s economic evolution, the currency that works best is, fast, something that can not be forged and circumvents the government’s misuse of monetary policies, something that is durable and can be transmitted electronically and lastly since fiat money does not have any intrinsic value and has worked, it does not have to be tied to anything tangible either. The logical conclusion at this juncture is private money.

Why the fiat currency system is archaic?

For example, the chairman of the Federal Reserve is similar to a despot. At anytime without any real checks and balances could over stimulate the economy and exacerbate the boom and bust cycle.  There is an argument that, the Federal Reserve caused WWII.  When the world needed economic help most, both the Central Bank in the US and Germany made mistakes that exacerbated the global depression and contributed to people looking for extreme political ideas to either fix their economic woes or look for blame.

Since 1914, how many business cycles have we seen?  The Great Depression, the Great Recession, the Dot com boom, it seems that the existence of the Federal Reserve system and government control over money does not liberate people, but tries to manage them and fails. Its primary objective is to stabilizes prices and lessen the trade cycle but it does not necessarily do a better job than an alternative system.

Therefore, believing in a centralized government issued currency can be equated to believing in a king or a queen should be your ruler. Theoretically it can work, however, like all top down approaches it is prone to oversight. If you really meditate on this truth you understand why the world is gravitating towards cryptocurrency/ Altcoins are metaphorically like the Alibaba, Amazon or Ebay of the money market. That is, buyers and sellers come together in a market and determine value. That is capitalism and that is freedom.

The world will flat and it will always be

If you think the world will stay the same just like it is today especially in the financial markets think again. The world is always changing and reinventing itself. Economic paradigms are investing the way we interact.  Although I do not have a crystal ball and I cannot see the future, I think this cryptocurrency is just the beginning of the S curve a wave that will eventually hit maturity in the long-term. If that is true, the current valuations of any of these cryptocurrencies, Bitcoin, Ripple, Ethereum or Litecoin  are undervalued based on a social economic trend. I am not giving investment advice, but I personally am dollar cost averaging small quantities systematically.  The idea of free money in the digital age is an advance over the  altcoins in the 1800s in the US, Canada and Scotland when private citizens insurance companies, railroads and banks issued currencies. It was arguable our Gilded age.

Once an idea is out, it is hard to suppress. For the world to jettison the idea of private money would be like people abandoning fiat money and going back to commodity money. Economics is an evolutionary science.

How I invest

I do not invest. I put a few dollars in for fun into cryptocurrencies. If you do you can not invest based on technicals or traditional value because none of that makes sense. Buying altcoins is really is a bet that currency will be decentralized.  If free banking and money continue to gain acceptance it will appreciate. I would dollar cost average in and diversity with money I can afford to lose. Those are time tested investment techniques. If it all fizzles out and we go back to gold coins or something then so be it. However, in the context of the evolution of money I think there is a greater chance fiat money will be the dinosaur. However, we do not know if that will be ten years or one-hundred years.

Investing in decentralization in contrast to speculating on government money

The reason buying cryptocurrency is investing, rather than rather than a gambit with FX zero sum game trading.  Tune out the hype and yield to the logic of this argument. The idea behind Bitcoin, Ethereum, Litecoin and Ripple is you believe in the revolution of money. It is the idea that decentralized currency will rule over government controlled currency.  In contrast, believing in the monopoly of money by a central bank is very little difference than believing that kings and queens should  rule over you and determine your economic fate.

Analogously surrounding the inner circle of Kings and Queens are the aristocracy, that is, the investment banks and those looking for bailouts or favor.  Under that are the little people, the serfs or workers, that means you and me.  With free money you break the monopoly, circumvent the matrix and participate in the evolution of money. Money becomes a true medium of exchange, minus the politics and social engineering of governments.

The idea of decentralized currency in essence is a belief in freedom and free money. Money being the most important commodity, the lubrication for free transactions it would make sense it would be free rather than controlled, since economic experiments with control result in deadweight loss. When things are controlled they do not reach social or economic optimum.

The future of Crypocurrency

Is Altcoins or Cryptocurrency in a boom or a bust? There is no way, anyone can tell. I am an Economics Professor and former Stock broker and investment guru but I do not know and do not recommend putting more than lottery ticket money. 

Yet, from a long-term theoretical perspective, and you look at macro-social-economics trends, Cryptocurrencies are the next logical step in the evolution of money.

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Money

Currency competition – Stop the government monopoly of money

Competing currencies is the idea that anyone can create and trade with any form of money.  Sounds great does it not? You can mint your own coins in your basement. You can print your own money in your workspace on your new HP printer and digital editing software and spend it, and make your own dough in your kitchen (pun intended). You can back it with anything you want, or nothing. If this sounds crazy read on.

  • The Federal Reserve Bank of the USA is the primary cause  of economic business cycles in the USA. Their gross misjudgments regarding the supply, demand and elasticity of money, creates the boom and bust cycles. This is not conspiracy theory, mind you,  but solid monetary theory supported by data and research; and the elimination of the central bank was advocated by Hayek and other noted economist from the Austrian school, the Swedish school and free market economists. The central bank unintentionally causes poverty and inequality.

No State shall … coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;  – Article 1 Section 10 of the US constitution.

Kings and Czars started the idea of a government monopoly on money, for reasons of control over the people’s economics, like its twin – taxation. This is why many of the founding fathers strongly opposed the idea of a central US currency, as Washington was not to be a replicata of the King’s economics.

This seems pretty clear to me. There is no mention to a central bank, but  says that States do have a right to have their own non fiat currency backed by gold and silver. Then why is there a monopoly on currency that has harmed our economic stability from the Great Depression to the Great recession (speculative boom and bust cycles cause by the Fed’s excessive expansion and loose monetary policy). To me that is clear.

Romans paid soldiers in salt, hence the word salary, anything can be a medium of exchange as long as it is accepted trusted. Today community currencies are working, how open-minded are you about this debate?

The primary cause of cyclical fluctuations are…the ‘elasticity’ of the volume of money at the disposal of the economic system. – F. A. Hayek – Monetary Theory and the Trade Cycle

Why competing currencies are good

  • Slows government expansion – Imagine if the government monopoly on money were broken. If there is no Federal Reserve and no government monopoly on money than the government can not recklessly create money out of thin air to fund  government expansion as easily. The government empire controls the money supply.
  • No business cycle – The real benefit of free money or competing currencies is stable prices and the end of the boom and bust business cycle. Not all business cycles are monetary but I believe after studying Knut Wicksell from the Stockholm school of economics and economists from the Austrian school, and simply observing the boom and bust cycles created by the Federal reserve from its creation in 1913 we can safely say, the Federal reserve is why we have rescissions and speculative booms. The supply and demand for money should be controlled by market forces not centralized government.
  • Increase freedom – Ideologically why should the government have that much control over you?
  • The Federal reserves routinely bails out pigs – Greedy bankers who take exorbitant risk and do not pay the price. We need to legally eliminate the US Federal Reserve.
  • Secret and undemocratic – No conspiracy theory here the US central bank is run by unelected officials and their operations are largely kept in secret.
  • Mainstream and alternative – Great economics and free thinking politicians  from Hayek on alternative currency to Ron Paul’s currency competition,  free money ideas. Many alternative currencies in Michigan or community currencies in Philadelphia are arising and working to help the poor. Competing currencies are not counterfeit, but rather just another thing people accept for trade in the market, from a gold coin to voucher worth something to paper money printed and in the seller’s and buyer’s hand worth something in a transaction.

Historical examples of competing currencies

  • Community currencies in the USA – This list of community currencies is a little dated, and more are in use, but it gives you an idea that money alternatives work, it has a nice map.
  • Scottish Free Banking. This period from 1716 to 1845 was a complete success. The result was a cooperative equilibrium with banks accepting other banks money. Professor Lawrence White from George Madison University wrote a book – Free Banking in Britain: Theory, Experience and Debate 1800-1845.
  • Free Banking era in the United States from 1837 to 1864 – This was not true free money, but state chartered banks issuing currency backed by specie. Free market economist have argue this was a tremendous period of growth for the USA as well as monetary stability. If you research American economic history you will find that this was a great time for America. The American civil war brought a stop to this and the start of the National banking era. liquidity panics in 2007 cause the USA to move to the creation of the central bank. The cause of the 2007 panic was speculation by large banks that caused depositors to withdraw and create a liquidity crisis. Could this type of financial crisis have been averted without the subsequent introduction of the Federal Reserve? Yes.  With competing currencies which would allow for the elastic expansion and contraction of money supply that without wild speculation caused by the money center of New York city banks.
  • No competing currencies – Lets be honest the great depression and great recession were both caused by the central bank as well as all the other business cycles in between. Disequilibrium in the monetary markets have on the real sector, and talk of ‘the US being the lender of last resort’ or calming the markets with bailouts is a road to long-term economic malaise as well as an economic injustice that rewards the reckless and penalizes the prudent.
  • The Euro – Did this really prevent anything or make things worse for Europe, again let’s be honest. If I was England I would not want to join this scheme.
  • Zimbabwe – had hyperinflation until they allowed other currencies to be accepted, then inflation stopped.
  • Tourist areas – I travel a lot and in tourist shops they basically take any currency that is respected, what do they care.
  • Local currencies or alternative currencies People in various states have tried to use their own currencies and it worked until the Feds shut them down. However, states and people are making gold and silver depository notes as well as gold coins and using them more and more. Community currencies work.

Why must legal tender only be controlled by bureaucrats, and have they done a good job?

What is money? Money is anything that can be used as a medium of exchange. Keep your mind open.

Arguments against free competing currencies

  • Endless complexities that would arise from exchange rate calculations and multi currencies. – My rebuttal is it would be no difference than  different credit card from various banks being accepted, as long as there is a base value of measure like an ounce of gold, then there is not a problem. And this standard measure of value would evolve quickly as gold, used since the beginning of the market at the dawn of civilization. Legal tender has value because the market says so not the government, we know where this leads. Foreign exchange or FX markets worked with this for hundreds of years and with competing currencies as gold as the value of measure it would be easier.
  • If it is not broken do not fix it argument. – It is actually a question I saw on an IQ test. That is, if something is not broken,it is good to try to fix it, as you can improve something. I do not think the economy is not broken. The US currency like the Japanese Yen, Ruble,  or the Euro is just a currency because the law makes it so, but it is not necessarily the optimal solution and has nothing to do with being American. If you think the USA economy is not broken, let me know.

Modern rebuttal to critics of free money

  • Poor suffer with the government monopoly on money – The US Currency has lost 97% of its value since 1913 and the establishment of the Federal Reserve and there has been no lack of business cycles. This is a major reason the poor get poorer. With less disposable income they are less equip to coup with economic instability, including price movements and business cycles. The poor are hurt by this monopoly, and the rich are not to the same extend as they have financial hedges and diversification.
  • Technology is moving us to free money to some extent. Sweden is basically a cashless society, if you have ever been there you know what I mean, everything is electronic. As soon as you step off the plane, the Kiosk sells tram tickets via debit cards.  You use different bank Visa and Master cards. They are universally accepted. I personally, rarely use ‘cash’ or pay for anything. We are moving to a cashless society. I was walking arround with literally one dollar in my wallet for weeks. When would I use cash? Hence giving up the US dollar as money is not a much a real event but rather, an abstract idea that would not affect your day-to-day life. You could still pay with your visa debit card but just the unit of value might be set against an ounce of gold. Come on, we evolved away from barter and we can evolve away from the government monopoly on money. Numismatics has been one of my  personal interest as a subset of the history of economic thought.

My mantra for freedom and prosperity for the poor as well as the rich is let the markets work. This crucial ubiquitous commodity of money is governed by a monopoly, a Federal unelected bureaucracy, not free market forces.

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Money

My expanding economic lifestyle – Car – TV

Lifestyle upgrade

I recently upgraded my lifestyle.  I went for many years without a car, TV and still do not have a cell phone. It is not that I am a Luddite, rather, I tend to be a minimalist. I like to read books from the library, play chess and do outdoorsy things like shoot baskets with my wife and bike everywhere, and recently a little surfing. But I am not Amish.

I think it has something to do with the fact that I am sitting on the computer working all day, I write language learning software and various other online projects and trade stocks (not much money generated here recently as I moved across the world and have not had my focus in stock trading like I should).

If I am sitting using technology all day long and I really do not want to sit (I just started using the Kola hug for my back pain – another purchase)  and drive or channel surf on my flat screen TV.  Nothing wrong with it, just I think I would gain weight (more).  So I am not anti-technology, but I love to be frugal and like a little bit of an alternative lifestyle guy, as much as an unrepentant capitalist can be.

At the playground this morning with my car - something that has expanding my lifestyle exponentially.

I really have to confess I love having a car and a TV after so long without one. I question what will I get next, a boat? I think for now this is enough expansion of my home economy on the consumption side. I was at the park today and I was mentioning causally to various people little things about my car and parking and what was on TV last night. I felt normal for the first time in a long time.

We also got a bike trailer for my daughter, an upgrade from a bike seat. A couple of my two alternative reality fantasy lives when I was a kid, used to be owning a bike shop or a bookstore.

Ironically my bike trailer order arrive the same day I got a car.

Of course I could not get cable, but rather I use a digital antenna which gets about 20 stations. For me this is enough TV and I have no cable bill.

I am Lucky I live near a major metropolitan area, that is Jacksonville. I have to qualify this that about three of the stations are religious stations (Jax is a Baptist mecca) and one Latino station (I really have to improve or learn Spanish). However, the other dozen stations I could watch. I think there is still one analogue station.

Movies I use Netflix streaming and the library (I have advanced to position number 82 in the queue for the last Harry Potter movie).

Daytime TV, now I feel like my lifestyle has improved.

On the car I intend to use only now and then and with Liberty Mutual I pay 65 dollars a month insurance. Therefore, as long as I do not drive it too much my monthly fixed cost is under 1000 dollars.  Car insurance + rent + utilities+ medical insurance (We are Polish citizens and bought a cheap plan from there that we can use here)  + Netflix +  YMCA (I am typing this post from there, it is more about getting my daughter to use the discovery center).  To be honest, I think it might be a little more if I add it all up all my expenses and I think my 30 dollar electric bills will not last in the summer. Although my brother made a point that for 400 years in Florida they did not have A/C.

Food is our biggest variable costs, but my wife being from Poland cooks everything from scratch so it helps. I hope she does not become too American (both my sisters do not cook and but both my brothers do).

Anyway, I have no debt or credit and the last things we need to get is a house.  The issue here is we would like to pay mostly cash for a house (It is a European thing not a credit thing), but unless I turn up the dials on my income making machine or start trading more aggressively (with risk) this might be a pipe dream.

Most of my money now is through passive income from my websites. I need to start releasing products.

OK, So I got a TV and a car, I am guilty.  I can get off my high horse (a little) about  minimalism and try to be like many rich hippies say,’ living in the world but not attached to it’. I still do think you do not need a car, and the fact that I did not have one a good part of my life is a testament to this, but it will be nice for my wife and daughter as we are not living in a major city (St. Augustine beach).

This next year I do not intend to make too many major purchases. I have a wish list of course that includes a telescope, taking my daughter to the Space center and Disney, but now I really need to finish I have had on the back burner because of life issues came up. Then hopefully buy a house.

In the United States of America there is a Puritan ethic and a mythology of success. He who is successful is good. In Latin countries, in Catholic countries, a successful person is a sinner. – Umberto Eco

I have always said economic life is not want you earn or save but your lifestyle on a day-to-day basis. If you are in an hour and ten minute commute each way and with a stressful job, worrying you will lose your job or house, and you have stress at home, because you are always working, who needs it.  Life is what you do on a day-to-day basis. I know I could make more, and could afford more anyway, but I want to be a capitalist and entrepreneur, yet not base my lifestyle on too many material things. Kind of a Puritan work ethic type of idea, although I am Catholic.

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Money

Mob Rules – Louis Ferrante – book review

I do not like reading about the mafia,  I only saw one Godfather and I  never saw the Sopranos. However, when I can across Louis Ferrante’s business book about ‘legitimate business lessons learned from working in the mafia’ it intrigued me.

Who do not like Horatio Alger rag to riches and prodigal son stories? Ferrante learned that the pen is sharper than the sword, and took up a new passion. I admire people who succeed with street smarts rather than via Harvard MBAs. I am also reading books on the reasons the Amish succeed in business and one by a Rabbi explains why his people are good businessmen. I try to keep my mind open.

For me Ferrante’s book comes under the category that you can achieve anything you put your mind to and change your life from bad to good.

Ferrante is a story-teller with motivational wisdom and business common sense sprinkled in. He has 88 lessons for business people who can be applied to legal business. Granted he is no expert on life, nor do I agree with all the things in his book, but I liked reading it and there are some take aways I will have to process and consider when making my own business plans going foward.

Perhaps my favorite part his is versed in the classics and balances his wise guy tales with reference with the classics and an impressive vocabulary to boot. If anyone who has ever read the Count of Monte Cristo, you will know what I mean. The hero is transformed and perhaps his soul is saved.

Anyone that was clever enough to succeed the underworld business environment at an early age and then change his life around is worth noting and that is why I am giving it a positive book review.

  •  “Don’t build Yankee Stadium, just supply the concrete: Spotting new rackets.”
  • ‘A wrong decision is better than not making a decision’

But you need to read the book to see how he illustrates these points to make them come alive.

A good writer has you nodding your head yes, as you read,. In some remote way, not matter how crazy their circumstances are they have you nodding yes, I relate to that.

For example, here is a except from his book and this will show you what I mean. The rest for you to read.

Coming home from prison, I needed a car and an apartment. Time and again, I was ‘bull…’  by car salesmen with the old bait and switch… I rented an apartment. During the winter, my landlord would not turn up the heat, but the cheap bastard wanted his rent on time….When I left he claimed he did not have (my security deposit).

I am not the first to notice that prison is a lot like ordinary society.

In the words of George Costanza ‘I feel like the whole world is trying to screw me’.

Street Smart business

I do not want to say it, but countless times I too have felt this. That is, I have dealt with people fairly and honestly and usually for greed and ego or because they just could, they have taken advantage of my good nature.  But it makes me feel better when I read a tough guy like Ferrante has felt the same and had the same experiences, it makes me feel less of a sucker and ask the question, what can I do about it.

My philosophy has always been people who use people are small bottom feeders, that will not get far in life, or only for a short time, and that life is fair and there is Karma at work. Like Plato said, ‘nothing bad can happen to a just man in this life or the next’. I also focus on creative and intellectual entrepreneurship, and you can be a total geek and wimp and get rich this way.

Why the rich have money – I go more into this philosophy here.

But on the other hand, maybe to learn a little street smart is not that bad. If you are someone who needs some rounding out of their business education, consider Lousi Ferrante’s book Mob Rules.

Louis Ferrante from middle management capitan to writer, not exactly St. Ignatius (if you know his story) but none the less business motivational

The take away from this business book could be said to be don’t join the mafia, just learn from the their experiences.

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Money

Small business idea for the US market

If you want to try to be an entrepreneur, but do not know where to start consider the websites like alibaba.com.  It is like a Chinese eBay for small business designed for people who want to access suppliers, manufacturers and wholesaler.  You can sort by country, and type of product you are searching for. The economies of scale here are small so even for under a thousand dollars you can start a business.  Can this type of website work for you? Yes.

I now live in the artistic town of St. Augustine, Florida. It amazes me how many people make their living, own homes, drive big cars just by being artists or importers here. If you walk the downtown or at any open market you see scores of people who are making a living with stands and shops and things they import or create. There are also a number of online stores.

I have talked to a number of the small business owners and amazed at how laid-back they are. They just set up a shingle and people come in. It is like they have no business sense whatsoever beyond, buy cheap sell high.

Granted it is a tourist town, but you can do the same online or in your town in a different way. People satisfy their basic needs at your towns super stores but in anytown, USA there are people who love to browse and shop for more than a three-pound drum of mayonnaise at Wal-Mart. There will always be people who desire uniqueness. That is where you come in.

This is a typical shop in St. Augustine packed with artistic little trinkets. I estimated the net profit in the owner's pocket, to be about 65k a year based.

I believe a well marketed supply creates its own demand. Primary goods like food and oil will always be in demand and depending on barriers to entry will enjoy normal economic profits. However, intellectual good and artistic goods in particular have a loose connection to intrinsic value and prices is subjectively determined. This means no matter what you create, import or sell it can yield a nice profit if you market it correctly.

Travel the universe on the wings of your imagination

The idea for your business will be based on what you love to think or dream about.

Look at a websites like alibaba.com and search for ideas. eBay is too competitive nowadays, but the international market is wide open. The international market with some good old fashion Yankee ingenuity will make a profit.

I want to keep this post simple. It is the idea that selling tangible goods or intangible intellectual good (I would but artistic works in this category) are two ways to make money in the USA market work, are time-tested and do not take a lot of capital, mostly intellectual capital. You could create something on your laptop in any open source design software program and send the specifications to China, they send it to the USA and you market it. It is a simple formula.

You do not need to hire a staff, you can do it all yourself. I had hired a small cottage group of people in Krakow, Poland where I live but it is better do most yourself or hire a consultant to get you set up.

  • I wrote a post on how people make money that is worth exploring if you want to understand on an abstract level how people make money with small and large business.

 

Categories
Money

Ways to save money on a tight budget

How to live on little money

My family lives in a paradise, with a good standard and on a tight budget. Four years ago we came to the USA with two suitcases and no car. Now we are doing well, not because of the income but because of our savings.

A wealthy person is one whose expenses are less than their income. – Ben Franklin

I lived abroad in Krakow, Poland for a decade and moved to St. Augustine, Florida.  My brain is still processing the differences in economic wealth, however, one thing is apparent, economic hardship in the USA is not as bad as the media would like you to believe. I have written on these subjects before ad nauseam but I now see it with my own eyes. So here is yet another post on how to save money but also consider my posts on how to get rich .  Feel free to ask any questions.

The following details my methods of savings. Do you think my methods are for the extreme poor?  I am a consultant for investment banks, and I make close to 200k a year at times and I write my own software.  Nothing is beneath me or above me. You can think like that. You just have to do it. If I can do it so can you. I would and have worked at Walmart if I had to.

This is what we specifically do to save and earn money. I am walking the walk. This is not some hypothetical list.

    • We growth most of our own food with backyard gardens   – These our some of are gardens, we creatively use a lot of our yard. We beautify it with roses from Walmart in the front and stones and shells.  You can have all the greens you need from your garden each day. Think how much you spend on food a month. It is your biggest disposable income expense. I think $1,200 dollars for a family is normal.  We grow our on food. For one hour of gardening a day, we have organic good from the garden. We compose and garden and the food taste better than even Wholefoods Market.

Either grow food in your back yard or a community gardens

 

  • We fish for food   –  If you use the right bait you can catch twenty fish in a few hours. Write me for my method. I have it down to a science.  Even if you do not live by the Ocean, there is a river or lake you can drive to.  People lived on Fish as protein and you might be healthy because of it. We fry it in coconut oil and home-made bread crumbs. We by the cheapest fishing poles at Walmart for 10 bucks. The little ones, so they fit in the car easy. People make fun of us until they see us pull one fish after another. Write me for my secrete.

Fishing can give you a lifetime of free food. We also compose what we do not use.

Make things at home – We make yoghurt and bread. You do not need equipment, just an oven.

We even thought of a mini cow (yes they have them) – but making yoghurt saves a lot if you skip the Ice cream

 

 

I use herbs instead of drugs – Make your own choices but I do not spend money on drugs.

Natural medicine many times trumps expensive drugs.

Use Linux – I have not used Windows OS in years. I have a three thousand dollar Mac for my business, but use Linux Mint as I like it better. I pulled a seven year old computer out of my closet and put Puppy Linux on it and runs better than the other computers. Basically, if you can not afford a phone or computer, get a donation one and install Linux. It will be faster than a new Windows computer in most cases.

Dump your phone and cable – I have neither. I use Google Voice and Skype for free and Netflix.

Medical – I opted our of Universal health care for ethical reasons and do Medi Share. Look into it.

If you must shop – do not use coupons – I buy basic things of quality from Wholefoods or make things myself from HomeDepot.  For example, do not buy a plastic composted dig a whole instead and add worms.

What do you do for fun – Beach,  hiking,Chess ( we all play chess competitively), read books from the library, travel (camping). Our lives are non-stop fun.

The above are just a few ideas.

Budget –  Kind of boring if you as me to make a budget but I did one in LibreOffice and have it on my desktop. I have three sceneries, 1) when I have a job 2) when I do not work but have extra, 3) survival

You can start by trying out a personal budget software I recommend, it is free and in the cloud, but I try not to get too much into the details of penny saving, I am more a big picture guy, like not having a car or sending kids abroad for college. However, I like this software as it gives comparisons of how you stack up against the guy next door and might motivate you to save more money towards investing.

Government help – No thanks

I was sitting in WalMart the other day waiting for my wife and chatting with the lady next to me, I had mentioned I was from Europe and she said at least there the government will provide and help families. I did not want to engage her on this. But the bottom line is what about providing for your own family with a little frugality? Examine what you have and what you need and what life is about.

What is poverty?

The word “poverty” is a political buzzword use by politicians. I am not heartless, mind you (read my post on how to help the poor), I have just lived in places in the world that are really poor and under spartan conditions so I can compare. To some extend Americans are spoiled economically , myself included a good part of my life. The purpose of this post is to convey some lessons I learned living abroad about living frugally and how I apply it to the my new American lifestyle. In a nutshell, how to save money on a budget and live well.

My wife holding one of our energy-saving bulbs-plan to save – plan to win, do not plan to fail.

I think it was in Joseph Murphy’s book ‘Power of the subconscious Mind’ he wrote ‘poverty is a mental disease’. I thought that was a pretty bold statement and found it a little brash. However, what he ment by that is, you can achieve anything you want if you have the right attitude and set your expectations. It was not to be taken (too) literally.

The ways to save are nothing I do not do myself, although you do not have to follow them. If you want more money in the bank, you need to tighten your belt a notch and see your assets rise despite the economy. You can save money on by eliminating things that you think you need, but really do not. It is a little bit testing the limits of frugality in a Henry David Thoreau, Walden Pond sort of way and not for everyone.

Mark’s fix cost
Rent (luxury condo on the beach 2 bed 2 bath) $850.00
High speed > 15mb/s – Internet $29.00
Water/Trash (partly included in the rent) $43.00
Electric (I am in Florida so no heating and I will rarely use A/C as I am on the ocean) $70.00
Netflix $8.00
$1,000.00

Note: This does not include expenses associated with my business I run at home, but these are a separate method of accounting.

Therefore, for $12,000 dollars a year fixed cost you can have a pretty nice life.  That is a life in a tourist town on the beach with a nice standard. If you want to cut costs you could cut the rent in half if you go 20 miles west of here out towards Palatka, and cut out the high-speed Internet and Netflix or really cheap on electric. But I think for $12,000 dollars fix expenses you can have a nice life for your family if you choose the right place. If you live in the pricey North East or California, I would move.

  • Step one to saving money: You need to start thinking in terms of lifestyle and real tangible assets not in terms of earnings and cost. Think about what things cost in your area and is it worth it? This means you could rent a small apartment in Boston or San Francisco or live in a nice place house with a yard in North Carolina or Kansas if you will, I prefer Florida right now. The income side is obviously important but it is beyond the scope of this post as there are too many factors to weigh, but it would suffice as to say I see a lot of upper middle management types in Connecticut busting their hump for the same life style people working in lower middle management  in the south for example. Forget the nominal income and expense numbers and think in terms of real assets, stress, people’s friendliness in the area and weather.

One of our bikes, cars are great, but if you are on a budget, consider the alternatives

Variable costs are what often blows a families budget.  If you a keep your food bill modest and shop at the Dollar store, Wal-Mart or learn to sew, you can live for 500 dollar a month variable cost. We keep ours pretty modest, as our entertainment is Netflix, walking, framers market,  biking, fishing, beach activities, library, artistic events. St. Augustine is a big art town and there is always something to do.

What is wrong with shopping for toys and gifts at discount stores like dollar general? I loved it when my grandfather when I was a child would go to the five and dime store and buy toys.

That means for anything over 500 dollars a month variable cost goes into savings and investing accounts. If you make 5,000 dollars a month cash flow that is a lot of money. If you invest that money wisely you will be rich eventually. But even if you make 18,000 dollars a year, life is not that bad and certainly nothing that I would call poverty.

The Wal-mart or Publix or WholeFoods or wherever you shop for food has good quality control over their store brand food. It makes shopping easier in many cases. We buy only organic either way.

You do not want to deprive yourself. You do not want to live like ‘they call this stuff hamburger helper but it does all right just by itself”. You want to explore life on a different level.

A few more things I do to save money on my home budget which might be viewed as heretical to some

  1. Move south or to a cheaper area look at things like cost of living comparison on a budget and see where you can live cheaper.
  2. As a general savings rule live like it is the 1970s. Look at all the gadgets and expense that have incrementally become ingrained as a necessity, that lets me honest really is not.
  3. Stop wasting money on soft consumable items, like magazines, pay for downloads, to XBox programs. You would be surprised how this eats your cashflow.
  4. No cell phones – and question why these companies are rich? –  iPhone or blackberry, nor do I have a landline, rather I use Skype in. I was a mobile phone junky and when I gave it up I was so stressed and nervous for a few weeks, now I do not even know why I had one.
  5. Cars are nothing more than an expense and a deprecating asset and they do not help your level of fitness – No car. This is sacrilege. Did not have one as a Stock Broker on Wall Street nor as a director in Boston nor as an entrepreneur in Krakow, just wanted to see if we as a family need one in Florida and to date not an issue. Saves about 400 dollars a month depending on your use and repairs and how you amortize the cost of your vehicle, insurance and gas. However, if you need to commute to work or live in suburbia it makes it harder. My friends use public transport or bike. I know it is harder in some places that others, but consider what I wrote about lifestyle. Also for 500 dollars you can get a scooter that goes 49 miles an hour and in most states that does not require a driver’s license until you hit 50 mph. I know of people who commute this way. However, my friend Peter and my Christine both do not have a car and are professionals and do fine also, so there is something to be said for this. I think this is the bitterest pill to swallow for Americans. I do a weekend rent a car when I want to travel or do extra shopping. It is eons cheaper than owning and in my opinion more fun as I get to test different models.
  6. Drink filtered water – Best beverage there is.
  7. No brainer for saving money – No TV or Cable bill
  8. Energy Saving light bulbs – good for the world as well as you.
  9. Be green to save money – I use the lights rarely and natural light works fine. In fact when I lived in dark cold Europe we did this, so in sunny USA you can to. It is better to be in harmony with the natural light cycles of early to bed and early to rise.
  10. Heating water during none peak load use times is a waste of money – Hot water heater circuit breaker switch is off unless we are taking a shower
  11. Look at the labor-saving devices you use – for example, Dishes by hand – I do not use our dish washing machine as it is a good break from the computer to go wash some dishes and good for my hands to do something besides surf the web.
  12. The Amish way to save money – Do not use a clothe dryer. Use the spin cycle in your washer and hang the clothes, even in an apartment we have a small hanging rack. Many other things from push vacuums and lawn mowers but I am not there yet.
  13. Buying processed food increase your food bill 500% – Food is my biggest variable cost. When I was buying expensive food I got fat. Really, I had extra money and bought tasty easy to make snacks and juices and got fat.   Food  in bags and cans are about marketing and ill-health, just make things like chicken soup at home. What can I say, I married a country girl and she likes to cook for the family and with rice or noodles and chicken makes great soup.
  14. Have a garden for health and cost savings–  even inside grow herbs, we always have something growing by the windows.
  15. If you like fishing do it and cut expenditures on your biggest variable cost. Of course I live in a fisherman’s paradise and it is a hobby of mine, but it really reduces you budget to have fish and chips a couple of nights a week. I am not a hunter, do not have the heart for it, but I can fish perhaps because I grew up on a lake doing this.
  16. Natural air is cheaper than conditioned air – Central heat and air is over rated. Keep the windows open and run a small fan in your bedroom for the summer and a small energy heater in the room you hand out in the winter. Its 90 degrees and it feels good. I think over 90 I would turn on the air. It’s a matter of what you are used to.
  17. Netflix for cheap pleasures – I do spend on this, as well as high-speed internet but only streaming, the DVD program is too pricy. Hulu and library DVD can fill the gap.
  18. Buy high quality basic items than lower end exotic or rare cheap. That is it is better to buy potatoes of reasonable or high quality than shrimp of poor quality.
  19. Water savings – Lower the water level in your toilet tank, if you do not know how to do it place something in the water tank behind it to displace the level.
  20. Heat savers under the doors – in the areas of your home you choose to heat and cool I use these things that prevent drafts under the door.
  21. Plants and trees in the home to increase air quality and make it feel cooler during hot days. We have lemon, line and orange trees as well as plants.
  22. Heat pumps are expensive but save money in the long run. You can read up on how your cooling and heating can be cut to a fraction with good insulation and a heat pump.
  23. Buy and sell things on Craigslist – I bought a new washer from Sears, furniture from Ikea, but a used couch from Craigslist. If you need something as long as it does not look junky, used is fine.
  24. Need a new computer? – First consider something like puppy Linux or Macpup. It looks like an Apple but runs faster and is free and will get less viruses and is more secure as it loads into RAM.
  25. Maximizes your deductions from your paycheck. Take out as much as you can before it hits your bank account. I was saving like 18% on my 401k for a while.
  26. Do not over insurance
  27. Do not buy or rent too much house – this is a huge mistake, consider the standard you live in and compare it to the way the rent of the world lives and are happy, maybe you do not need too much space? Most Eastern Europeans grow up in a family apartment 500 square feet, you do not need to do that but if your cashflow is pinched consider alternatives.
  28. Shop at Indian stores if you have one in the area, they are usually cheaper for things like beauty care products, herbs, and good.
  29. Make your own pizza and bread. My wife does and so can you.
  30. I often make my own – wine as it is healthier and cheaper, I make it from wild rose, pomegranate and apples for example.
  31. Gifts are an industry – and people spend a lot on these, while home-made cards and spending time with people is more values.
  32. Coupons are usually on premium groceries items – I have rarely found these too cost effective especially regarding the opportunity cost.
  33. Consider education abroad – You can get an education that is richer and more full of experience for your kids if you send them abroad for University, you would be surprise how many Americans go to medical school in Poland for a fraction of the price.
  34. I use LibreOffice and mint.com as my budget software and planning tools – but you can use anything you like.
  35. Retirement is more a 1950s idea. Work or purse your passions as long as you can. Or consider retiring abroad if you are hurting for cash.
  36. Donate money – It does not hurt if you can afford it and I believe in Karma.

To make money, try Fiverr, User testing online, Elance, sell things on ebay, retail arbitrage, Uber etc.  This is more about savings but making money is also easy if you try,

The main thing is to achieve a high level of lifestyle without feeling poor, but with saving money. This is what saving money on a tight budget is about.  A lot of this will be based on your world view. If you feel poor examine the way you see money and income and what it means.

Categories
Money

What is a good income for a family

The question of can a family survive on 50,000 dollars a year is something I hear only in the USA. I can answer with a strong yes. Fifty thousand is a lot of money, people need to put things into perspective. What is a good income for a family in the USA less than you think.

I not only studied Economics but has lived in Eastern Europe a good part of my life and people with almost the same price structure as the USA, people survive with their families on 800 dollars a month.

Me - walking (no car) to the library to get some books with my daughter an her cousin - in basic clothes (my wife cuts our hair), no cell phone etc, in Eastern Europe. I am a stock trading entrepreneurial capitalist, but does not mean I have to buy and consume the whole world.

I am not saying this to be uppity or for any other reason than to convey what I see. 800 dollars a month is actually not bad money. I am writing this only to say if you are an American and worried about money, do not. I want to give you confidence that you will survive. Forget the huge stigma in the USA about being poor. Who cares what other people think of you. I have been rich and poor and each has its pluses and minuses.

A prime example why Americans parents need not worry about money

For example my friend grew up with nothing, in a 160 square foot apartment with her parents and no running water and she is today a famous research PhD and MD and helps people with cancer in Poland. She is a happy lady with a family and her lack of material goods did not affect her in any adverse way. In contrast a friend of mind in the USA grew up in rich Connecticut gold coast and his father was Wall street guy. The kid is on drugs today. Money does not means anything for raising a happy family, in fact there might be a slight negative correlation. I am not a tree hugging hippie at all, I believe the best things in life are free and people who have an inordinate focus on hyper consumption will not be happy.

Example 2 why money does not matter for a family

Another friend of mine grew up with 10 people (two families in 2 small rooms. She is just as happy as kids in the USA. She started her own travel company and always talks fondly of her childhood. My point is you do not have to do that but put money and income in perspective.

My wife’s family and money

My wife grew up on a farm and when communism fell she remembers going to the store and looking at a candy bar (Mars) and she had no idea what it was. She tried to figure it out, but could not, because had never seen anything like that before. No one had anything.

She has a Masters and a few years of medical school, speaks a handful of languages (self-taught) and a grew up happier than a lot of the kids in the USA. She says her life is a fairy-tale.

If the doors of perception were cleansed everything would appear to man as it is, infinite. – William Blake

Fear of lack of money hurts people more than the actual lack.

American girl attitude about money – I never want to be poor

In contrast some American girl told me the other day she wants to marry a man with a good job so her kids can get language tutors and go to a good school. What a lame reason to fall in love. You want your kids to be fluent in French, go camping for the summer in Quebec and encourage them to study or like my wife did to learn French translate songs. I studied French for seven years to a University level and I think my wife speaks it better than I because she love translating French music lyrics. That lame American girl would be better off taking a trip to Italy and falling in love with some poor Italian guy, there and then her future children would be 100% bilingual and two passports and learn more about the world than any meal ticket in the USA she wants to spin her web around.

You want your kids to be smart? Do not spend all your time at the office to save for their education. Rather, spend time with them, teaching them when they are between 0 and 15 and the rest will take care of itself.

Gheez Louise, I will not give up love or family for money. I understand paying the bill but put expectations in perspective, and drop irrational exuberance like a bad habit. Being poor is no shame. Jesus said “blessed are the poor”. How is that unclear?

Poor Europeans are educated and happy

My point is very nice kids here growing up in poor countries with much less than a poor or impoverished family in the USA and making a lot with their lives.

My point is you can raise a family on less than you think and have a wonderful life. Since I have lived in Eastern Europe for so long, I can not imagine anyone having a hard time with a family on 20k a year in the USA. For Twenty thousand dollars you a year in the USA you and your family can have a nice life.

Looking at a frugal American Budget

Lets say you spend:

  • 500 on rent (could be less)
  • 300 utilities
  • 300 medical (Blue cross premium plus plan)
  • 400 on home cooked chicken soup type meals everyday etc.
  • Ah Mark what about entertainment? – It is called a book. But even books cost money have you seen the price of an e-reader these days? |They are called the library books. Did you know at your local library they will order you any book you want from the whole state?
  • Reading is what people do in other countries that do not have the latest iPod. In Russia on park benches everywhere you see someone reading some 30-year-old library book with aged pages. Its fun, I do it myself. I also spend the weekend on picnics in the forest with my family. Is that bad? Is that wrong? No shopping malls or gassing up the car and spinning wheels. Want another example, look at the Amish. Again I am an unrepentant capitalist, but I am just saying money is just energy and can be use for good and bad or conserved and you do not need that much to live a good life.
  • At 20,000 dollars a year you are cutting it close but even the above budget could be modified. However, at 25,000 dollars a year you are in a positive cash flow and 30,000 dollars a year you are saving.
If anyone does not see it this way leave a comment and challenge my number.

What has changed in the USA – the economy or expectations in terms of supporting a family and earning a good income?

I think the main thing that has changed since I left the USA is people’s expectations about life. Even in the 1990s people had different expectations. When I left the USA at the start of the 2000s the world looked different. Now when I return the middle class all has nice clothes from shopping malls and nice cars and high expectations. Really, being abroad has allowed me to see the change other people living in it everyday do not.

The wonder years – look at old photos and see how the economy has changed but smiles have not

Taking it a step further, look at old movies and photos of your childhood. I remember growing up in the 1960s in the USA and I think we were not that bad off economically as my father was not only a hard-working man but a clever investor. With five kids and living in Connecticut we did well. Yet time were different, we had no PlayStation or Plasma TV and I read used books and used my imagination.

Einstein was right, this universe is relative and we can not go back in time. But that does not mean we can not remember where we as Americans came from.

What if you can not support your family?

  • Move to West Virgina or Kentucky to a mobile home or Palatka, Florida or where it is cheaper. Or a place where there is great job growth like North Dakota. The USA has infinite possibilities.
  • Upgrade your skills, go to massage school or learn on your own a skill like IT that is universal and can be done anywhere.
  • Make a budget like people living in the 1930s depression did, very basic.
  • But I have been to many countries around the world and you would have a hard time convincing me that in crisis America things are that bad economically for you and your family. Try me.

I do not want to criticizes, rather give you confidence that you can do it and do not worry. If the job opportunity if good and you want to move do not worry about money. Money goes and comes but time, well it only flies. Most families if you look at the “statistical mode” (highest frequency of occurrence) not some average that skews results for the super rich live on 30 something thousand dollars a year. For 50,000 dollars a year you are rich.

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Money

Free stores and the Freecycle network

Did you know that anywhere in the world you can get things for free?  The other day I was walking though my town of Kraków, Poland and I saw a sign that said “free shop”.  I was like what is this? It was filled with nice items that are totally without price. You just take what you need or want or donate what you want no questions asked. They are give-away shops. Not exactly charity shops for he needy but open economic exchanges. Books, furniture, clothes and household items are founding these free markets. Some have a swap (one in one out policy) but most are purely free.

As an unrepentant capitalist and someone who is libertarian leaning, I have no problem whatsoever on the exchange of goods and services outside the traditional market economy.  That is economic activity outside of the world of money and prices as a yardstick of value. It is the ultimate in free market economics.

Marketing psychologist know how to press your buttons to induce an unnatural patterns of consumption

Its origins are the Freeganism or anti-consumer movement of direct action. Some anarchist (I am not this)  are into it, but the reality is practical and everyday people use these open markets. I mean lets be honest how much different are they from these flee markets and tag sales where things are for a nominal price, except the ideal.

  • Human life is not only about economics, it has many dimensions – Many forms of human exchange take place outside the economical price system and everything in life does not have to be quid pro quo.
  • As an alternative to capitalism I would the freeccyle network as my personal favorite. Why? Under socialism or communism the state or armed power allocates resources and determines value. In contrast under this anti-capitalist model of ‘free’ people exercises their own personal liberties.
  • Social evolution – It is an ideal, and perhaps the world will never become like this, that is so evolved socially. However, it does not hurt to have an example by people who are more socially developed. They are usually peace and love type people who in my experience have never hurt anyone or at least in contrast to the other side of the spectrum, that is reptilian brain dominated humans are much more socially responsible and aware.
  • Open source is a free model – Is this high in the pie hippie stuff?  What browser do you use? Firefox or Chrome or if you are remotely connected to the IT would you know the best software is open source or based on the idea of free exchange and donations. Just because it is free does not mean anything, sometimes free open exchanges are the best or one way give and take actions work better than arms length transactions.
  • Must we consume the world? – I mean what if I go into the Free Shop and take everything to my apartment? Will I be any happier than if I temper my desires and live a more Epicurean life? Sometimes I think people would consume the world if they could. Do not be mislead, if you drink life in large gulps, you will still not have enough of it when it is time to leave this world for the next.

What is the Freecyle network

You can search for a free shop in your area or connect with a group here -> FreeCycle network is an organization of people who share this Political economic ideology outlined above. It also has environmental motives as the less junk that goes into landfills and can be humanly recycled the better. Started in Tucson, Arizona, and although grass-roots it has almost 8 million members.

What do you think about this economic philosophy?