Flippa: Buy and Sell Digital Real Estate Like eCommerce Stores, Amazon Products

Posted on October 8, 2020 // 4 Comments

Flipping, rehabbing, or rental residential real estate is a popular entrepreneurial activity, but I’ve always been more partial to digital real estate (websites). There are similarities in that anyone can enter the business as long as they are willing to learn quickly and put in the hours. Nobody gets a degree in “landlording”, just as nobody gets a degree in “digital marketing”. Everything is about results, not letters after names. Some own $500 websites, while others own $5,000,000 websites.

You can now also buy and sell digital properties via online marketplaces. I often spend idle moments browsing the email newsletter of the biggest one, Flippa.com, and realized that a beginner could learn a lot about the industry by just reading through the listings. The best way to learn is still to jump in and get your hands dirty, but seeing the inner details of all these properties will accelerate your education. How does their website valuation tool work? What are the ranges in terms of multiples of revenue? How do you verify traffic stats? By signing up for a free account, you can see the non-public listings as well. I’ve learned a lot more about the Amazon ecosystem myself.

Some people love to start websites from nothing and quickly sell them for $1,000 to $10,000. Others like to find a starter drop-shipping site or Amazon product with potential and improve it into a six-figure property. Others are just looking to build a portfolio of properties that creates a steady cashflow with minimal maintenance. The market is a lot more mature than when I was buying domains on small internet forums. Private equity funds and publicly-listed corporations are also increasingly in the game.

You should also know that digital properties are much more volatile in price. A condo in Manhattan, NY or a 4-plex in Portland, OR might double in price in the next 10 years, but it won’t go up 2,000% or drop by 95% either. They also vary widely in the ongoing work involved. Some require hardly any maintenance, while others require ongoing marketing campaigns and a team of independent contractors.

One of the pathways to wealth is to find an asset type that you have a passion for, instead of a consumer product. Some people get $1,000 and spend it on video games, a car modification, or some nice clothes. Others get a kick out of buying another share of BRK, JNJ, or VTI stock. Same for a downpayment toward a rental property, reinvesting into their own private business, or to improve or acquire a digital asset. You also end up increasing your knowledge in that industry, which is highly valuable on its own.

Disclosure: I did sign up to be an affiliate of Flippa, and will receive a commission if someone clicks and lists a site for sale, but not if you just sign up for an account to browse listings.

Filed Under: Entrepreneurial, Inspirational //

Skin in the Game: How Much Do You Have To Lose? (Book Notes)

Posted on September 27, 2020 // Leave a Comment

The central idea behind the book Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb is simple. Never trust anyone without skin in the game. In the real world, behavior changes for the better when you have to pay a price for your mistakes. This is a very handy heuristic to apply in everyday life and applies in many areas. A good example of why we shouldn’t allow people to not have skin in the game is Bob Rubin:

The Bob Rubin trade? Robert Rubin, a former Secretary of the United States Treasury, one of those who sign their names on the banknote you just used to pay for coffee, collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn’t write any check—he invoked uncertainty as an excuse. Heads he wins, tails he shouts “Black Swan.”

If someone is giving you financial advice, don’t worry about what s/he “thinks”, ask them what they actually hold in their own portfolio. Sure, what is optimal for them may be different than what it optimal for your own situation, but at least put it out there and let the consumer decide. Predictions are cheap without real risk of loss/pain.

In case you are giving economic views: Don’t tell me what you “think,” just tell me what’s in your portfolio.

How much you truly “believe” in something can be manifested only through what you are willing to risk for it.

Conflicts of interest can be good, if it means skin in the game. Taleb argues that while many people think it is better for CNBC “experts” and/or journalists to not own the stocks or companies they talk about, it’s actually better that they do.

There are two types of “talking one’s book.” One consists of buying a stock because you like it, then commenting on it (and disclosing such ownership)—the most reliable advocate for a product is its user. Another is buying a stock so you can advertise the qualities of the company, then selling it, benefiting from the trumpeting—this is called market manipulation, and it is certainly a conflict of interest.

We removed the skin in the game of journalists in order to prevent market manipulation, thinking that it would be a net gain to society. The arguments in this book are that the former (market manipulation) and conflicts of interest are more benign than impunity for bad advice. The main reason, we will see, is that in the absence of skin in the game, journalists will imitate, to be safe, the opinion of other journalists, thus creating monoculture and collective mirages.

In general, skin in the game comes with conflict of interest. What I hope this book will do is show that the former is more important than the latter. There is no problem if people have a conflict of interest if it is congruous with downside risk for themselves.

Bureaucracy too often means NO skin in the game. We allow people elected for only a few years be allowed to bind all of us into agreements that last for decades. We should also look more closely at the former “civil servants” that conveniently land high-paying jobs soon after their terms are over.

Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.

More critically, people with good lawyers can game regulations (or, as we will see, make it known that they hire former regulators, and overpay for them, which signals a prospective bribe to those currently in office). And of course regulations, once in, stay in, and even when they are proven absurd, politicians are afraid of repealing them, under pressure from those benefiting from them. Given that regulations are additive, we soon end up tangled in complicated rules that choke enterprise. They also choke life.

Employees have skin in the game, but perhaps not in a good way.

A company man is someone who feels that he has something huge to lose if he doesn’t behave as a company man—that is, he has skin in the game.

What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing. […] The more you have to lose, the more fragile you are.

It is no secret that large corporations prefer people with families; those with downside risk are easier to own, particularly when they are choking under a large mortgage.

People whose survival depends on qualitative “job assessments” by someone of higher rank in an organization cannot be trusted for critical decisions.

How can you achieve true freedom?

Financial independence is another way to solve ethical dilemmas, but such independence is hard to ascertain: many seemingly independent people aren’t particularly so. While, in Aristotle’s days, a person of independent means was free to follow his conscience, this is no longer as common in modern days.

Intellectual and ethical freedom requires the absence of the skin of others in one’s game, which is why the free are so rare. I cannot possibly imagine the activist Ralph Nader, when he was the target of large motor companies, raising a family with 2.2 kids and a dog.

I have held for most of my (sort of) academic career no more than a quarter position. A quarter is enough to have somewhere to go, particularly when it rains in New York, without being emotionally socialized and losing intellectual independence for fear of missing a party or having to eat alone. But one (now “resigned”) department head one day came to me and emitted the warning: “Just as, when a businessman and author you are judged by other businessmen and authors, here as an academic you are judged by other academics. Life is about peer assessment.”

You can define a free person precisely as someone whose fate is not centrally or directly dependent on peer assessment.

Embrace taking some risk (those that don’t endanger your survival). Starting a business is one way.

Yes, take risk, and if you get rich (which is optional), spend your money generously on others. We need people to take (bounded) risks. The entire idea is to move the descendants of Homo sapiens away from the macro, away from abstract universal aims, away from the kind of social engineering that brings tail risks to society.

Doing business will always help (because it brings about economic activity without large-scale risky changes in the economy); institutions (like the aid industry) may help, but they are equally likely to harm (I am being optimistic; I am certain that except for a few most do end up harming). Courage (risk taking) is the highest virtue. We need entrepreneurs.

By definition, what works cannot be irrational; about every single person I know who has chronically failed in business shares that mental block, the failure to realize that if something stupid works (and makes money), it cannot be stupid.

A final summarizing quote:

Recall that skin in the game means that you do not pay attention to what people say, only to what they do, and to how much of their necks they are putting on the line. Let survival work its wonders.

Filed Under: Behavioral Economics, Book Reviews, Entrepreneurial, Investing //

The Warren Buffett Pilot Story: The Importance of Making a NOT To Do List

Posted on August 24, 2020 // 1 Comment

Even before COVID, I hated that feeling at the end of the day that comes after running around but not being able to list anything accomplished. Here’s a helpful idea of what I call the story of Warren Buffett and his pilot. I’ve read a few different versions from various sources, and I honestly don’t even know any of them are true. This one is taken from the book Grit: The Power of Passion and Perseverance by Angela Duckworth:

Warren Buffett—the self-made multibillionaire whose personal wealth, acquired entirely within his own lifetime, is roughly twice the size of Harvard University’s endowment – reportedly gave his pilot a simple three-step process for prioritizing.

The story goes like this: Buffett turns to his faithful pilot and says that he must have dreams greater than flying Buffett around to where he needs to go. The pilot confesses that, yes, he does. And then Buffett takes him through three steps.

First, you write down a list of twenty-five career goals.

Second, you do some soul-searching and circle the five highest-priority goals. Just five.

Third, you take a good hard look at the twenty goals you didn’t circle. These you avoid at all costs. They’re what distract you; they eat away time and energy, taking your eye from the goals that matter more.

(Note that this is from a book about not giving up!)

Creating this list provides a clear yardstick at the end of each day. Did you make any progress towards your top 5 goals? Even a little progress makes the day seem well spent. A common problem is that not even knowing what those top 5 goals are.

However, equally if not more important is the second list. Instead of the ever-expanding To Do List, we need a NOT To Do List. In order to be truly productive, we need to be willing to focus on the most important things and not just ignore the unimportant things, but also ignore the simply not-quite-as important things. You only have a limited amount of time and energy (focus). As someone with completionist and perfectionist tendencies, this is hard!

Doing this properly means giving up on a good and respectable goal (at least temporarily). For example, I chose to give up pursuing rental properties and residential real estate. I also spend minimal time on Facebook/Twitter/Instagram, even though it can be useful for research, networking, and marketing. These might be near the top of someone else’s list, but just not high enough on my personal list. I still don’t feel like I have enough time, but it is nice to let go of feeling guilty about not doing something that other successful people do.

This concept can apply to many different areas of life. Money is finite as well, so we have budgeting. You should have two lists: What can you cut? Yes. But also, what do you love so much that you want to spend more on? Ideally, you now have a positive reason that motivates you to make that change.

Marie Kondo has created an entire brand in applying this to getting rid of your stuff. I don’t claim to grasp her ethos completely, but my take is that you can spend more money (and space and time) on the list of things that “brings you joy” if you get rid of the other list of things that “you don’t really need but still can’t seem to give away”. (Still working on this one too.)

Filed Under: Budgeting, Entrepreneurial, Inspirational //

Financial Independence Not As a Number, But Creating a Content Lifestyle

Posted on August 17, 2020 // 5 Comments

If you’re reading this, then financial independence is probably a goal of yours. Yet, most people who accumulate a pile of money big enough to retire upon keep on working if they are able. Why? They may truly love their job and be willing to work for free, they may worry that they won’t have enough, they might decide they’d rather have nicer things, or they may simply not have fully considered a life after paid work.

The problem is that reaching your “Number” is like finally buying that big house or fancy car or 100,000th social media follower. There is never a point at which you can say “I’m here! I’ll be forever happy and satisfied from now on.” It is always tempting to keep reaching for more. As the saying goes: If all you care about is money, you’ll never have enough money. If all you care about is social prestige, you’ll never have enough social prestige. You are forever stuck on the hamster wheel.

The article Redefining Success So It Doesn’t Crush Your Soul touches on many concepts related to this puzzle.

It’s high time to redefine success. Success is not something that you reach—not something that is outside of yourself, just down the field. Success is creating a life you want to live in right now. The great tragedy, Fromm writes, is that “man misses the only satisfaction that can give him really happiness—the experience of the activity in the present moment—and chases after a phantom that leaves him disappointed as soon as he believes he has caught it—the illusory happiness called success.”

According to decades of psychological research, a successful life is one in which your basic needs for food, shelter, health care, and income are met and in which you have a sense of autonomy, mastery, and belonging. A life that is not about enduring means you can’t stand in order to reach ends you are supposed to want; but rather, about selecting pursuits based on how much you’ll enjoy the process of doing them.

Happiness is not a goal. It is a side effect of how you spend each day. Imagine a day where money is not limitless, but it also doesn’t matter to your wellbeing. You can pick to “work” on something you both enjoy and find meaningful, while also spending time with people you love. What would that look like? I completed a similar Dream Day activity in 2005, and the improved clarity definitely helped.

Starting out, I thought of financial independence as a race to a fixed goal. Track numbers, plot them on a chart. I’d work hard, save hard, reach my net worth target, and finally turn in my resignation letter and disappear.

Looking back, what worked better was a gradual transition between two versions of the same sustainable lifestyle. To build up your assets, you have to enjoy your daily process so you don’t burn out, while also maintaining a gap between your income and expenses. Invest that excess money into productive assets (building a private business, buying stock shares of public businesses, rental real estate, etc), and over time your choices expand. You can work the same job but less hours, work a different job with lower pay/lower stress, decline promotions, or simply do nothing (much rarer than you think). Part of this is the ability to be content with your non-work lifestyle and expenses. Life should just keep getting better and better, instead of you simply wanting more and more.

But it all starts with that work lifestyle, which requires something meaningful, moderately enjoyable, and pays well. Even with an aggressive savings rate, you’ll need to work for more than a decade, so invest money into yourself first! Get a job that is more interesting, more enjoyable, or just pays better. Use your money to take time off, switch to a entry-level job in a different industry, go back to school full-time, or spend nights and weekends working on new skills. Perhaps find a government-based job with a secure pension agreement if that fits you.

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I plan to advise my own kids to spend their 20s in this manner. Live cheaply and invest in yourself. An emergency fund is important, but after that – What are you willing to spend 80 hours a week doing? Take the job that opens up future opportunities. Work with a great mentor. Study hard and don’t settle until you finally get into your target professional school. Work 80 hours a week because you (and maybe your friends) are building a business from scratch. Take asymmetric risks with big upsides and minimal downsides. Find your joys, and don’t waste money on the rest.

I’m still working on improving my own daily routine. I look back onto my 20s as a special period because time felt so abundant before you have others to support (partners, kids, parents). Having dependents also makes it harder to take risks and change your life. These two factors help explain why life satisfaction is lowest in your 40s. Yet harder doesn’t mean impossible. My father went back to school in his 30s and didn’t finish his schooling until I was already 10 years old. I constantly remind myself that I will eventually think of today as “back when I was young”:

Bottom line. Financial independence is not simply a faraway number like accumulating $1,000,000 in 30 years. Most important is figuring out how to enjoy the process by creating a content lifestyle that is meaningful and aligned with your values so that saving regularly doesn’t feel like a constant struggle. You want life to keep getting even better as you go vs. simply wanting ever more.

Filed Under: Entrepreneurial, Family //

Kneading Dough Podcast: Athletes Talk Openly About Money

Posted on August 3, 2020 // Leave a Comment

Another podcast that I discovered late is Kneading Dough, where famous athletes sit down and talk openly about their finances. Created by UNINTERRUPTED (founded by Lebron James and Maverick Carter) and sponsored by Chase, guests over the three seasons range from Lebron James to Serena Williams to Simone Biles. The description sounded similar to Celebrity Money Diaries.

Despite the old saying about death and taxes, studies show that personal finance is actually the most difficult topic for most Americans to discuss. But while most Americans aren’t comfortable revealing their finances, athletes’ money mistakes are splashed across newspapers and the internet.

Chase’s Kneading Dough series connects the money challenges of average people to the hard-earned lessons of pro athletes. In exclusive, one-on-one interviews, famous athletes discuss how they learned to budget responsibly, balance the needs of career and family, and prepare for retirement.

You can view all of the shorter video interviews on this YouTube playlist, but the podcast version includes the full unedited interviews.

In the end, these are often people who were not born into wealth, so I did find them relatable and enjoyed the casual conversational style. You hear straight from Lebron how he handled the fame and responsibility of becoming the family breadwinner at age 18 (and how other athletes handled huge windfalls and learned to manage their budgets), but also how one navigates the more modest WNBA max salary of $110,000 a year (now higher but the average player earns $130k). There are amusing moments like how Serena Williams tried to deposit her first million-dollar tournament check at the local bank drive-thru window, which the teller didn’t know how to handle.

Filed Under: Entrepreneurial, Inspirational //

Country Time Bailout: Kid’s Lemonade Stand $100 Stimulus Check

Posted on July 16, 2020 // Leave a Comment

The summer lemonade stand remains the iconic entrepreneurial opportunity for kids. Well, maybe not this summer. Country Time Lemonade is starting the Littlest Bailout Relief Fund, which is a $100,000 fund to send $100 stimulus checks to 1,000 kids who had to close their lemonade stands due to COVID-19. To enter the random drawing, you must attest to being the parent or legal guardian of a child 14 years or younger that actually operated a lemonade stand. You must also attach a picture of the child’s lemonade stand, and they will review all submissions.

Sure, it’s a publicity stunt, but at least it’s a fun one. Two years ago, Country Time Lemonade offered “Legal-ade” to reimburse any permit fees or fines incurred by a child trying to operate a lemonade stand.

Here is a local news story I shared on Twitter with some real-world kid businesses: Lego kit rentals, mobile baseball lessons, and tutoring/swim lessons. Here is an older WSJ article on teens making serious money doing iPhone repairs.

Filed Under: Deals & Offers, Entrepreneurial //

Forrager Podcast: Start Your Own Home-Based Food Business

Posted on June 22, 2020 // Leave a Comment

If you enjoy listening to podcasts about entrepreneurial stories on a smaller scale (i.e. not tech unicorns), I recommend the Forrager Podcast about cottage food businesses, where people sell food made in their home kitchens (as opposed to a commercial kitchen). Depending on the cottage food laws in their state, you can learn from successful small (often solo) business owners selling their homemade bread, granola, nut mixes, cookies, pies, and other food products in both retail or wholesale environments.

The cottage food industry allows you to start small with minimal upfront investment. You keep your big potential upside, but you’ve minimized your downside. Being able to take asymmetrical risks like that is very powerful. You only need to hit it big once!

Here’s a quote from an episode with baker David Kaminer, who makes a living selling about 300 loaves of sourdough bread each week:

What’s so nice about the cottage food law is you have the opportunity to start small. Prior to cottage food laws existing, if I wanted to open up a bakery I’d be a quarter of a million dollars in before I could even produce my first loaf of bread. You can start making six loaves a week and trying to sell them on the weekends while you’re working your normal job and then see how it goes.

I feel like as long as you love making bread and you’re comfortable charging people for it and you understand the value of your time you could make a go at it pretty easily. For me it was starting like that just seeing if I could potentially ramp this up. So I feel like as long as you’re you’re ambitious and you love making bread you can pull off a cottage food business almost at any scale. It just all depends on defining how much you need and if it’s worth your time.

However, many people choose to keep it small on purpose. There is a common theme with the financial independence community of being able to work more on your own terms. Owning a cottage food business definitely won’t be for everyone, but it is more of a lifestyle choice that will be very attractive to a select few. Sound familiar? Here is a quote from an episode description with Lisa Kivirist who runs her own farm, bed & breakfast, and home bakery amongst many other things. It could very well be the bio for a personal finance author.

Lisa talks about living off the land, moving away from the corporate life-style, creatively packaging products, diversifying income streams, advocating for your laws, and everything in between.

Filed Under: Entrepreneurial, Inspirational //

Creative Business Idea: Selling Baked Goods Online via Etsy

Posted on May 26, 2020 // Leave a Comment

My family enjoys watching Kid’s Baking Championship on Food Network, and I’m always impressed how many of these 8-13 year-old contestants have a side baking business! Last weekend, the WSJ article How Etsy Became America’s Unlikeliest Breadbasket profiled home bakers selling their baked goods online through Etsy. That could be a perfect business education for a teenager, including concepts like business plans, accounting, customer service, online marketing, and basic coding.

Cottage food laws. Many states allow exemptions that don’t require you to use a commercial kitchen to sell “non-potentially hazardous” items like bread and other baked goods. I knew about “cottage food laws” in terms of church bake sales, but I wasn’t aware that some states have much more relaxed laws than others. For example, some states require you to sell in-person and you must hand-deliver it yourself to a customer within your home state. However, the following states allow you to sell bread and other baked goods via online marketplace and deliver them via mail:

  • Colorado
  • Idaho
  • Iowa
  • Maine
  • Maryland
  • Nebraska
  • Ohio
  • Oregon
  • Pennsylvania
  • Tennessee
  • Utah
  • Vermont
  • Virginia
  • West Virginia
  • Wisconsin

Source: Forrager.com, May 2020. Note that some states will require an annual home inspection and/or permits.

The WSJ article profiled the Etsy shop ChickensintheRoad by Suzanne McMinn. She lives in West Virginia, which has some of the most open cottage food laws. McMinn shares some of her Etsy history in this blog post. Both an experienced baker and soapmaker, she realized that the competition was much more intense in the soap category. She now specializes in fresh baked goods as well as various dry food and seasoning mixes.

What is a hand-crafter worth? Can you buy biscuits–or cookies or fudge or soap or bread of whatever–for less at the grocery store? YES. But you don’t get the hand-crafter. You don’t get the individual batch per order. You don’t get homemade. You don’t get that attention to detail. You don’t get that packaging that makes every order of a dozen biscuits (or whatever) look like a present under the Christmas tree. That is what you get from a hand-crafter on Etsy.

Making the most out of your valuable knowledge. Thanks to a recent profile on Good Morning America, it looks like McMinn isn’t even taking any new orders until late June. She’s booked solid! Her skills are definitely valuable, but I can’t help but notice that if she is not baking, she’s not making money. She’s still selling her time for money.

What I would love to see her do is create a series of online videos for making some of her specialties, and then charge for access. Yes, there are many videos for free on YouTube, but what about those superfan customers that want to recreate her exact biscuits? The best part is that it would only take a one-time commitment of say, 10 hours. After that, the upside is unlimited.

Actually, you know what would make the most money? A full digital course that would teach others how to start their own online home baking business. For example, her blog post also revealed the triple-wrapping method that keeps her biscuits at maximum freshness even when delivered in a USPS box. I’m sure she has make many mistakes along the way that would be valuable to know ahead of time. You could charge anywhere from $100 or far upwards depending on how much detailed, step-by-step content was included. Again, the upfront cost is fixed and the upside is unlimited. She could make $1,000, but she could also make $100,000 if she sold 1,000 copies over time. She could always keep on baking, but now she’d also be making money 24 hours a day, even when she’s sleeping.

Indeed, she’s pretty funny and I appreciate her sense of humor:

Remember that year, when I first moved to Sassafras Farm, and all the pipes froze, and I had no money, and it was like, Kids, be happy we have running water, that is your Christmas present? This year is almost like that, but with running water, and it’s like, Kids, be happy there are a couple leftover cookies after I make this batch I’m shipping, cuz other than that, you can just starve! OR PAY ME BECAUSE I CHARGE FOR FOOD.

There’s nothing like someone telling you that what you’re doing isn’t worth what you’re charging right when you’re dying of exhaustion from doing it.

Anyhow, I thought this was a cool example of how someone’s special knowledge can be turned into a living by taking advantage of new opportunities, in this case new cottage food laws and the Etsy online marketplace. I’m also always trying to show my kids ways to decouple time and money, and not forever work for an hourly wage.

Filed Under: Entrepreneurial, Inspirational, Self-Employment //

68 Bits of Unsolicited Advice by Kevin Kelly

Posted on May 7, 2020 // 1 Comment

The best thing I read this week was a “Things I’ve Learned…” list called 68 Bits of Unsolicited Advice by Kevin Kelly – a very interesting fellow (see his bio, about me pages) who must have secretly figured out how to freeze time given all the things he does! I’m most familiar with him as the editor of Cool Tools.

Certain items on the list will sound familiar and only a few are finance-related, but chances are you’ll find something new that clicks. Here’s a small selection:

– When you are young spend at least 6 months to one year living as poor as you can, owning as little as you possibly can, eating beans and rice in a tiny room or tent, to experience what your “worst” lifestyle might be. That way any time you have to risk something in the future you won’t be afraid of the worst case scenario.

– Don’t be the best. Be the only.

– Perhaps the most counter-intuitive truth of the universe is that the more you give to others, the more you’ll get. Understanding this is the beginning of wisdom.

– Separate the processes of creation from improving. You can’t write and edit, or sculpt and polish, or make and analyze at the same time. If you do, the editor stops the creator. While you invent, don’t select. While you sketch, don’t inspect. While you write the first draft, don’t reflect. At the start, the creator mind must be unleashed from judgement.

– Following your bliss is a recipe for paralysis if you don’t know what you are passionate about. A better motto for most youth is “master something, anything”. Through mastery of one thing, you can drift towards extensions of that mastery that bring you more joy, and eventually discover where your bliss is.

Definitely something to bookmark and read again.

Filed Under: Career, Entrepreneurial, Inspirational //

My Unconventional Best Work-From-Home Gear Guide (What’s Yours?)

Posted on April 9, 2020 // 10 Comments

I’m quite familiar with working from home in my tiny 78 sq. ft. “office”, but after looking at some online WFH gear guides recently, it’s all about standing desks, latest laptop models, and USB hubs. Eh? My desk is a basic folding table and my laptop is a 2015 Macbook Pro (with real scissor keyboard and real moving trackpad) that recently underwent DIY battery replacement surgery (way too complicated, Apple!).

My favorite WFH gear is different. Maybe yours is too? These are real things that I bought with my own money and I would buy them again if I had to do it all over again.

Quiet, Please! – 3M PELTOR X5A Over-the-Head Ear Muffs

I wear these every day to help me focus. They have the highest noise reduction rating (31 dB) available on the market. You even have to certify that you are using them for “professional/commercial use” (which I am while working for money, as far as I am concerned). At ~$30, they are also about $10 more expensive than other similar models, but I think the extra $10 is well spent to know you have the quietest experience possible. If you have kids running around the house, you need all the help you can get. They are “over ear”, which means they don’t put pressure on your ears and I can wear them for a relatively long time without discomfort. (I try to take regular breaks anyway.)

Budget Noise-canceling Headphones – Mpow H5 Active Noise Cancelling Headphones

After a certain member of the house (ahem) stole my trusty old pair of wired Bose QC25 headphones, I decided to try out a budget pair of $50 bluetooth noise-cancelling headphones. These over-hear headphones worked out quite well and I really don’t miss the old Bose ones. I’d say they are 80% as good while under 20% the price of new Bose QC35 headphones.

Note: I do own a pair of regular Airpods, which I got as a nice gift. I do like them and use them for phone calls around the house and outside, but I use the Mpow headphones while at my desk listening to music or editing things.

Dependable Printer – Brother Monochrome Laser Printer

This thing is the workhorse of my home office, and yet also the oldest electronic item here at over 10 years old. Which is rather crazy, given that it has moving parts and is used constantly to scan PDFs, make copies, and of course print. These Brother black-and-white laser printers are like the Toyota Corollas of the printer world – cheap yet reliable. The cost per page can be very low thanks to generic toner cartridges (that link is for two of them) if you don’t mind a slight decrease in quality.

Dry Erase Whiteboard – Magnetic Dry Erase Whiteboard

Another inexpensive but important addition for a variety of reasons. Sometimes drawing it out in real space is just better than the digital alternative. This one is lightweight and thus easy to remove from the wall and move it around. You can also put up complex equations or obscure drawings and put it behind you during those Zoom and Webex meetings and impress/confuse/scare your colleagues. I like these BIC markers as they are higher quality and have finer points.

Looking around my desk, other random things that I probably like more than I should are my TI-85 calculator, classroom-grade pencil sharpener, and an ancient Swingline stapler (sadly not the red 747). The only thing that I have been thinking about upgrading is my office chair. Any suggestions?

Filed Under: Entrepreneurial, Frugal Living //

Bank of America Paycheck Protection Program (PPP) List of Required Documentation

Posted on April 8, 2020 // 3 Comments

As a follow-up to my initial post on the Paycheck Protection Program (PPP), there has been a some speculation as to the specific documentation required to prove your eligibility and payroll numbers. Each lender may have some discretion as to exactly what they require, but here is what Bank of America has listed as required documentation to submit:

Organizations with employees who file Tax Form 940:

  • Tax Form 940 from 2019
  • Bank of America Paycheck Protection Program Loan Amount Template
  • Bank of America Paycheck Protection Program Application Addendum
  • Tax form 941 or Payroll processor records for the period including Feb 15, 2020

Documents for Sole Proprietors or Self Employed, who do not file Tax Form 940:

  • 1040 Schedule C, if filed for 2019 OR
  • Draft 1040 Schedule C for 2019 if not filed
  • Bank of America Paycheck Protection Program Application Addendum

Documents for All Other Small Businesses:

  • Form 1099-MISC for 2019, for services rendered as an independent contractor
  • Bank of America Paycheck Protection Program Application Addendum

As far as I can tell, the BofA Application Addendum contains the same certifications and questions as the paper PPP application.

Hopefully, this will help you get your documents in order ahead of time so that you can get your applications approved more quickly.

Filed Under: Banking, Deals & Offers, Entrepreneurial, Self-Employment //

Paycheck Protection Program (PPP): Forgivable SBA Loans For 2.5x Monthly Payroll

Posted on April 5, 2020 // 15 Comments

If you are a small business impacted by COVID-19, including self-employed and independent contractors, you have hopefully been following the developments of the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Emergency Advance (EIDL) being rolled out by the Small Business Administration (SBA) and U.S. Treasury. Details are still being ironed out, but PPP could cover up to 2.5 months of your payroll costs. Here are some general highlights from the Treasury PPP overview PDF along with some details from the Bank of America PPP application:

Loan Amount = 2.5 times Average Monthly Payroll. “The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.” In the Bank of America PPP application, two possible options given were to use 2019 payroll or 2019 1099-MISC totals, and then multiple the average monthly payroll by 2.5. So if you averaged $6,000 per month, you can ask for a loan for $15,000. Income over $100,000 annually per employee isn’t covered. Here are some details:

For purposes of calculating “Average Monthly Payroll”, most Applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee. For seasonal businesses, the Applicant may elect to instead use average monthly payroll for the time period between February 15, 2019 and June 30, 2019, excluding costs over $100,000 on an annualized basis for each employee. For new businesses, average monthly payroll may be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000 on an annualized basis for each employee.

Fully Forgiven. “Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.”

In my Bank of America, the details are given that it is a 2-year loan at fixed 1% interest. As noted, payments are deferred for the first 6 months. If you use the money in an eligible manner (see below), it is fully forgiven and not treated as taxable income.

Must Keep Employees on the Payroll—or Rehire Quickly. “Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.” In other words, this is supposed to encourage companies to keep employees and is separate from unemployment insurance.

All Small Businesses Eligible. “Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries.”

Businesses are limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number at the Small Business Administration (SBA) to prevent multiple loans to the same entity. Owners with more than one business may apply for a separate loan for each entity.

Application Dates and Details. “Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap. […] You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.”

While technically you can apply at any SBA 7(a) lender, as of 4/5 many of them don’t even have any formal application process at all! Bank of America started accepting applications early, but first required both an existing BofA business checking relationship AND a BofA loan relationship as of 2/15/20. They later relaxed the rules to require at least an existing BofA business checking relationship as of 2/15/20. Most banks are limiting the applications to existing clients, but I’ve tried to list a few that don’t have such a restriction.

In addition, the US Treasury now has a paper application that you can submit to any eligible lender. I have no idea what will be the best. Small local bank? Mega bank? I would assume that if you have an existing relationship with a bank, they would be able to just deposit the money into your primary business account. But I’ve learned to stop making assumptions in 2020!

The funds are supposed to go out first come, first served, although they may expand the amount available. I’m sure that is not helping the chaos. No documentation was required upfront for BofA, but I would get your payroll documentation ready to submit as soon as they ask for it.

Filed Under: Banking, Deals & Offers, Entrepreneurial, Self-Employment //
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