Blogging for dosh

Apparently there are over 50 million blogs in the blogosphere now, ranging from occasional bloggers like me, to full-time professional bloggers, some of whom get more readers and subscribers than many national newspapers.

If you've ever wondered how people make money from blogging, take a look at the links below.

A lot of the top bloggers who blog about Internet marketing are now posting their income reports online. The reason they do this is because it establishes their credibility, which is particularly important if you want people to 'buy in' to your status as an expert on a particular subject. By posting their income report on a blog about making money by blogging, they are showing that they 'eat their own dog food' so to speak and know what they are talking about.

Two of the blogs that I subscribe to that are seen as authorities on blogging and Internet marketing are www.johnchow.com, and www.entrepreneurs-journey.com by Yaro Starak (a fellow Brisbanite).

In September, John Chow made $20,512.17 and Yaro made $10,899.83. Not bad eh. Most top tabloid journalists don't make that much.

You can read John Chow's income breakdown here , and Yaro's income breakdown here.

This is what is truly exciting about the Internet. You can literally start a business from scratch - you don't need money to make money. It doesn't cost a penny to start a blog.

I personally have decided against adding advertising on this blog. This was never meant to be a commercial enterprise - simply a means of communicating to friends and family now that I'm on the other side of the world. I have considered launching a couple of commercial blogs. I've even registered some domain names. At the moment though I don't want to commit to something when I know my website projects will be ready within weeks. If I try to do too much at once none of the projects will get the attention they deserve.

I'm starting an Internet business - Part 2: The Lifestyle 2.0 Model

A few days ago I wrote about how I'd seen the light in terms of work and lifestyle after reading 'The Four-Hour Work Week' by Tim Ferriss.

In part 2, before I go on to describe some of the ways that I can generate passive income - the first step towards achieving the dream lifestyle - I'm going to expand some more on the general concept of going from where I am now (which I'm going to call the Lifestyle 1.0 model) to where I want to be (which I'm going to call the Lifestyle 2.0 model).

I've been using what I've learnt recently to generate my own strategy for achieving my goals. I believe it's important to develop the strategy first, as this will:

• Reduce the likelihood of failing at the first attempt;


• Give me something to refer back to and provide motivation when things don't got as planned; and


• Give me clear milestones that I can use to track progress towards my goals.
  

The strategy that I've started to develop is called my Lifestyle 2.0 model. I can't profess that the model is particularly revolutionary; it is something I've developed based on inspiration from 'The Four-Hour Work Week', as well as other books I've read such as 'Rich Dad, Poor Dad' by Robert Kiosaki. My model takes the best concepts from these books, tunes them slightly to leverage the 'web 2.0' revolution that is happening right now, and also takes into account my experience and knowledge of risk management gained from my career to date in Information Security.

The purpose of my Lifestyle 2.0 model is to show how I'm going to use a few basic business and financial principles, as well as a commitment to taking advantage of the web 2.0 opportunities, to help me achieve my goals of gaining financial freedom and escaping the 9-5 so I can pursue my dreams full-time.

To understand my Lifestyle 2.0 model you first need to understand the Lifestyle 1.0 model. You will easily recognise the Lifestyle 1.0 model because it is what most of us live today. I've split the model into separate sub-models, including a 'cashflow' model and a 'living' model.

Lifestyle 1.0 Cashflow Model

This is a basic diagram that I've created of the Lifestyle 1.0 cashflow model that most of us can relate to:

The Lifestyle 1.0 Cashflow Model is a process flow that determines our financial wealth. The Lifestyle 1.0 Cashflow Model is the model that most of us follow, but also the reason why most of us will never be rich, or at the least will never achieve financial freedom.

Here's how it works:

1. Our sole income is from a salary. The salary comes from being an employee. The salary is dependant upon us providing x amount of effort and x amount of hours per week. The income we receive from our salary is paid after tax has been taken off.
   


2. Most of our income is spent on expenses. Our expenses is made up things such as living costs - bills, groceries, general expenses, etc, - but also payments to discharge our liabilities (debts such as a mortgage, credit cards, loans, etc).
   


3. If we have anything left over after expenses we may put this into a savings account. We can count a savings account as an asset because it is working for us - it is generating interest.

Knowing the difference between an asset and a liability

Here's a quick explanation of these terms, which is fundamental to understanding the model:

Asset: An asset is something that puts money into our pockets. Most of us wrongly consider our house as an asset. In most cases, an house is a liability not an asset because it takes money out of our pockets (mortgage payments, insurance, upkeep, etc). An house is only really an asset if you rent it out to provide an income, or you cash in on any equity that may be in the house, i.e. you sell the house and there's money left over after paying off the mortgage, or you re-mortgage the house to release some equity and you use the released equity to generate income that is greater than the proportion of the expenses inccured from the increase in liability payments (increase in mortgage).

Liability: Conversely, a liability is anything that takes money out of our pockets. One of the biggest liabilities that most of us buy is a car. A car loses value as soon as we get into it and continues to take money out of our pockets for as long as we keep it. A common misconception is that a car, like a house, is an asset. It's not because it's not making us any money. Also, unlike an house, a car will never become a real asset because it won't increase in value. A key principle in the 'Rich Dad, Poor Dad' book is that rich people put their money into assets, wheras the middle class put their money into liabilities which they think are assets.


Lifestyle 2.0 Cashflow Model

This is a basic diagram of the Lifestyle 2.0 Cashflow Model, which I explain in more detail below:

Here's how it works:

1. Our income is derived not a from a salaried job, but from 'income generating assets'.
   


2. As a business owner, we pay tax after we pay ourselves, and after expenses. The beauty of being a business owner, rather than an employee, is that we can claim a proportion of our expenses as a business incurred expense. As an Internet business owner, we work from home, which means we can claim a proportion of our household bills as a business expense. Because we're a business owner, we pay ourselves the minimum wage so as to only pay the minimum amount of income tax. The rest of our income from our business is derived from dividend payments. Of course, we also have to pay corporation tax, but corporation tax is at a lower rate than income tax, and corporation tax only gets paid on profit made after expenses. Although we pay both income tax and corporation tax, our overall tax burden is actually less than a salaried employee in the Lifestyle 1.0 model.
   


3. Most of our income goes back into our assets column. As our assets grow, so does our income, which in turn grows our assets. This cycle continually increases our overall wealth.
   


4. We buy assets and avoid liabilities. If we want a luxury such as an holiday, nice car, etc, we make sure it is paid for by our assets. We must not incur liabilities due to luxuries.
   


5. If we do incur liabilities, it is to buy assets. However, we use risk mitigation strategies to ensure that the income generated from assets financed by liabilities will always be greater than the expense of the liability that paid for the asset.
   


6. Although we do buy traditional assets such as property and shares, most of our money goes into creating new Internet business opportunities - we understand that we have the potential to make more money in the short-term by capitalising on this thing that is being called 'web 2.0', than on traditional assets.

A real asset makes money while I sleep

In my model, an asset is only really an asset if it makes money for me while I sleep. A day job is not an asset because it is dependant upon my contribution, both in time and effort, and once I stop contributing, so does the income. Whereas if done properly, a Lifestyle 2.0 asset will make me money, and then continue to make make me money without requiring any further effort or time on my part - it should be self-generating.

How do you measure wealth?

Am I wealthy if my net worth is $1 million. What about $2 million? In my model, the measure of my wealth is not how much I am worth in the traditional sense. In part 1 I suggested that a man earning $250,000 a year but working 80-hour weeks is actually worse off than a man only earning $50,000 but working a ¼ of the time.

In my Lifestyle 2.0 model my wealth is simply determined by the following calculation:

• If I was to stop working today, how long could I continue with the same standard of living before I would have to work again?

At the moment, because I'm living the Lifestyle 1.0 model and have only just begun the Lifestyle 2.0 model, the answer to my wealth question is only a few weeks. So the success of my Lifestyle 2.0 model will be measured by calculating my wealth in days, weeks, and years, not in dollars.

That's it for part 2, in part 3 I will describe how my Lifestyle 2.0 Cashflow Model will be used to achieve my Lifestyle 2.0 Living Model.

Britain's banks face £1bn bill from charges revolt | Special report | Guardian Unlimited Business

HSBC's half year results show that the banks are having to pay a lot more out than previously thought:

Britain's banks face £1bn bill from charges revolt | Special report | Guardian Unlimited Business

If you haven't already claimed back your unfair charges, like we did, you've probably missed the boat as the FSA have allowed the banks to suspend any further payments until the high-court ruling. You may still get your charges back, but it's not likely to be the full amount

Banks agree to charges test case

The banks must be tired of paying out to those of us (in our thousands) that have reclaimed bank charges, as they're finally accepting a test case in the courts.

Having worked for banks and knowing a little about their operations, I doubt very much that they'll be able to prove that they can justify the unauthorised overdraft charges. There's no way it costs them £30 a transaction, particularly the big banks which benefit from massive economies of sale and where everything is an automated computer transaction.

The banks will always win in the end though. They may lose their day in court and be forced to lower their penalty charges, and be forced to make refunds to customers, but they'll probably counter this by bringing an end to free banking in the UK.

Free banking is practically unheard of in Australia. There are a few accounts that don't make monthly account charges, however these tend to be dependant upon maintaining a certain balance in your account. For instance my main account is with the Bank of Queensland. If my balance remains above $2000 then I don't get charged, but if it drops below $2k at any time then I'll get charged a $4 monthly account fee.

I can imagine the likes of Barclays, HBOS and HSBC introducing something similar. Barclays have kind of already done this by stealth with their Barclays Additions account. If it's anything like the Barclays Additions account the monthly fee will be a lot more than $4 (£1.60)!

BBC NEWS | Business | Banks agree to charges test case

Banks ordered to reveal true cost of charges

Banks ordered to reveal true cost of charges - Guardian Unlimited Money

I may have got my money back, but I'd still like to know how they justify the charges.

The backlash continues

In what could be a landmark case, next week, a young barrister will take on Natwest over his £2000 unlawful bank charges. What's different about this case if the fact that Natwest have already offered him a full refund, but he is arguing that as well as the refund, he is due a claim for damages because the bank's actions damaged his credit score. If the judge rules in his favour, this could open the floodgates!!

More details including a link to an audio interview with him here.

The real Budget story unravels

It takes a few days for the 'analysts' to work it out, but it's clear now that Gordon Brown tried to pull a fast one on Wednesday. Here's some of the facts that are starting to emerge:

Gordon Brown claimed that 4 out of 5 households would be better off because of his budget, yet leading accountants say this is impossible to prove because of missing information which includes:

• The level of income at which basic-rate tax will become payable from 2008-2010
• The level of salary above which National Insurance is payable for that time
  
• Increases in personal allowances for people under the age of 65 from 2008-2010
• When higher-rate tax becomes payable in 2008-2009
• Details on who is able to claim working tax credits or child tax credits and how much
• Levels of inflation the Treasury has assumed for its figures
• No commitment to provide this information in next week's Finance Bill, which will only cover tax changes in 2008-2008

It's clear that the people who lose out most from this budget is single people with no kids on less than 18k, which, according to the Institute for Fiscal Studies, equates to 2 million people. The loss is due to the abolition of the 10p starting tax rate, and the fact that they can't claim child tax credit to claw back the difference.

The other losers in the budget is people like myself - small business owners, because the Corporation Tax rate is rising from 20 to 22p for small companies, yet coming down for large companies.

All in all it's a very strange Budget for a Labour government. So much for looking after the poorest in society and encouraging entrepreneurship.

And so much for the green measures - is £400 road tax really going to deter those who can afford a £50k Range Rover?

The Sun made itself look stupid, while other papers were taking a cautious reaction to the Budget, the Sun rejoiced with this headline:

Surely, The Sun's core readership must be those low earners who will actually be worse off?

Touch wood, none of this will affect me, as we'll be long gone by the time the changes start next April. The state of politics in this country is one of many reasons why we're fleeing down under.

Success - settlement offer from Barclays!

Like many, I've downloaded the templates off Martin Lewis' site moneysavingexpert.com to try and reclaim unlawful punitive bank charges over the last 6 years. I worked it out, and after having a bad year 4 years ago when I kept hovering around my overdraft limit, I racked up approx £1100 worth of unauthorised overdraft charges.

After sending them a letter demanding it back, with interest, I came home this weekend to find I've received a settlement offer from them which states:

May I say how sorry I am to learn that you feel the bank charges you have incurred are unfair. In you correspondence you have referred to elements which you feel support your claim. Barclays is aware of the information you have drawn to our attention. I must inform you, however, that we disagree with your view.

When an account is opened with us, our customer is provided with a copy of the Terms and Conditions relating to the use of their account; including details of our charges. This information clearly explains our obligations to our customer, as well as their obligations to us. If we make any changes to the Terms and Conditions, we provide details of these changes to our customers in line with the Banking Code. Details of our Terms and Conditions, along with our charging tariff, can be obtained at any of our branches, or via our internet site, www/woolwich.co.uk/barclays.co.uk.

Despite my comments above in relation to your views, on this occasion, and without any admissions of liability, I am willing to offer the sum of £860.00 towards the total amount you are seeking. This is with the cost and inconvenience inherent in a further dispute in mind and is intended as a gesture of goodwill, in full and final settlement of your complaint. If you would like to accept my offer please sign and return the enclosed form in the pre-paid enveloped provided. I will arrange for the payment to be credited to your account within seven working days of receipt of your acceptance at this office.

So, shall I accept or stick to my guns and hold out for the full amount?

I've had a look through the advice posted in the forums as well as the main articles on moneysavingexpert.com, and my conclusion is this:

Most of the success stories on moneysavingexpert.com state that they were either offered the full amount in the first instance, or they rejected the first offer, started small claims court proceedings, and then the banks quickly paid the full amount. However, there is an Office of Fair Trading (OFT) ruling expected within the next couple of weeks that could change the situation.

The OFT are due to make a ruling on unfair bank charges within the first few days of April, and are likely to say the banks should be charging no more than £12, even though in actual fact independent experts agree that it costs the banks no more than £4.50. My charges were initially £20 and then rose to £25. I've worked out the mean average and it's roughly £22. Which means, after the OFT ruling, the banks will likely only agree to pay the difference, in my case this would be £10 per charge. So based on my 54 charges that would work out at £540 - so at this point the £860 offer looks a good one.

Now of course the OFT ruling doesn't bind the courts. I could still take Barclays to court and it would be up to them to demonstrate to the courts that it costs them more than £4.50 per penalty charge.

Martin's summary conclusion is that after the OFT ruling you are MORE likely to get some money back without a fight, but LESS likely to get all your money back without a fight.

Taking all of that into account, and the fact that we're hoping to emigrate within weeks, and have much more pressing issues to deal with, my own conclusion is that I'm going to accept their offer. I could probably get more back if I pushed it, but I've neither the time nor the inclination given our present circumstances.

This doesn't mean I'm grateful to Barclays. They had absolutely no right charging £25 for an unauthorised overdraft fee when the law clearly states that punitive charges must be no more than the actual cost incurred by the bank. What's more, even though hundreds of thousands of us are reclaiming our bank charges it's obviously having little affect on their bottom line given the amount of profit the banks have announced this year.

Fight the bastards. Consumer power - I love it!!