My new business is (almost) up and running!

This is a very exciting post for me because I have been talking about setting up a business for a very very long time.  In fact I decided to share the process with the readers of this blog by tracking it with my 'Real Time Small Business Experiment'...and the results were definitely mixed.

Actually it was just over 2 years ago when I first wrote about my plans to start a business.  I have gotten close several times but reality and life often got in the way of what I hoped would be successful businesses.

Focusing on my strengths and where I added value was the best decision I made

It may sound strange but when I first started looking at business opportunities I was doing it all wrong.  I was looking at gaps in the market and what businesses would work instead of what I was good at and where I had experiences.

This resulted in me going down a whole lot of rabbit holes and looking at businesses where other people could obviously do it better than me.  It was a frustrating journey as great ideas eventually turned out to be non starters due to my own lack of experience and expertise.  However once I decided to focus on my strengths the whole process became a lot easier.  I (almost instinctively) knew where I could add value and where I was weak and this helped me structure my new business much more clearly.

The end result was a new blog that I'm very proud of

Avoid these traps when looking for a new mechanic

Are you getting ripped off when you take your car in for servicing?  How do you know?  How do you find a good mechanic when you move into a new area?  These are all questions that most of us ask and very few people have the right answers to.

Finding a mechanic is hard because we don't generally know if we are being lied to or being overcharged

The fact is that most people (including myself) have no idea how cars actually work.  Generally a mechanic will call you before doing a series of repairs and will list all the problems with the car.  If most of us are going to be honest we'd have to admit that:

1. We don't know whether the problems they are telling us about are actual problems
2. Most of the time we don't really understand what parts they are actually talking about; and
3. We have no idea whether they are quoting us an acceptable price or whether we are being ripped off

We also have no idea if our car is being 'over serviced'

I think most people are able to tell when their car is running 'better' but the biggest 'rip offs' come from over servicing.  That is when unnecessary repairs are done in order to inflate your servicing bill.  It is not that they don't do the work at all or do a shoddy job...it is just doing too much work and then charging you for it.

'Fixed quote servicing' doesn't fix the problem either

Too Small to be a member of Costco? Here are 3 ways you can make it work

Recently I posted 5 reasons you may want to reconsider joining Costco.  Most of the reasons actually involved you not getting value for your $60 membership because you were too small or did not have enough space to buy the bulk items.  This post suggests 3 ways that you can 'get around' these limitations and make shopping at Costco worth your while.

1. Tag along with someone who is a member at Costco

This is the most efficient way because it costs you nothing.  Members at Costco are allowed to take along one guest on their membership card.  The only limitation is that the Costco member has to be the one that pays for the items.  This is not much of a limitation at all if you think about it.  Work out roughly how much your spend is and give the person you go with the cash or transfer them funds after the event.

The benefits of this method is that it involves minimal co-ordination and costs you absolutely nothing.  The downside is that you are still having to buy in bulk...which is really not practical if you live on your own or in a small household.

2. Join with a group of friends and get one Costco membership card

This is much like the tagging along method but you are less likely to feel guilty about mooching off your Costco friend and more likely to be able to use the Costco card whenever you would like to.  So how does it work?  Simply join with a group of friends (who you trust) and pitch in for one membership card.   Splitting the cost among 3 or 4 friends reduces the benefits that you need in order to make the Costco membership more valuable.

The benefits of this method is

Why do companies get away with acting badly? Here is my way to effect change!

Corporate governance is important and can really affect share valuations.  The problem is that as individuals we can make very little difference (even if we do vote at shareholder meetings).  Retail shareholders typically do not have sufficient influence to change the way in which a company acts - as we are dwarfed by institutions.

Why don't most institutions hold companies account for their actions?

Large institutions can definitely make a difference.  However they often don't pull companies up for their bad actions or behaviours for various reasons:

1. The want access to the companies
• Institutional investors are researching these companies day in and day out and one of the ways they do this is by access to the company's board and management teams
• There is always the risk that you lose this access by 'rocking the boat' too often and voting against what the board and management teams want to do
2. They make money when some of these companies do badly
• The performance of a fund manager is often measured on a relative basis versus an index
• Even if a fund manager holds shares in a company which has bad corporate governance practices and can therefore make a difference through their voting, if they are underweight the stock they get rewarded (in performance terms) if that stock does badly
3. They get no positive benefit from holding companies to account
• If you invest in managed funds, ask yourself "when was the last time I made a decision about which fund manager to invest in based on how activist they were in terms of looking after my investments?"
• The fact is that the clients of fund managers do not care enough about corporate governance to make the fund managers care.  As a result fund managers just focus on making more money 
• If the return of a stock is likely to be impacted by corporate governance issues then they will be underweight the stock which creates the issue outlined above

The case for index funds to be corporate governance hawks

Index funds are the one actor in the whole share market who has the best incentives to

Want to earn a 20%+ return? Pay down that credit card debt!

Wanting to take control of your finances and start to invest your hard earned money is an admirable goal.  Congratulations if you have just started out on this journey and keep going if you have been on it for a while. The first step on any journey to financial freedom, whatever your goals are, should be to pay off your high cost debt.  Nothing is more efficient than this and I'll explain why in this post.

Pay off your high cost credit card debt before you start to invest

I know your goal is to start investing, to start making millions in the share market and to put your financial worries behind you...but the first step on this process is paying off your high cost debt.  Pay day loans and credit card debt will kill you over the long term if you don't deal with it first.  All your financial efforts should go to paying this down first.

The 'problem' with this is that it is not fun...it doesn't feel like your getting ahead financially.  But trust me when I say it is the best investment you can make.

Investment returns are rarely going to equal the effective return you get from paying off your credit card debt

Credit card debt is incredibly expensive.  At rates starting at 19% p.a. it is almost daylight robbery.  The fact is that there are very very few share market investments that will make you this kind of return consistently.  If you get a consistent 10 - 15% from the share market or other investments you are doing very well.  

Getting a 20%+ return on your money is unheard of...but this is

Review: You Can Be A Stock Market Genius by Joel Greenblatt

With a title like "You Can Be A Stock Market Genius" I was expecting this book to be full of marketing hype and not much actual substance.  I thought it would be full of tips on investor psychology (which is actually very important) but very little on how to invest (which is what we all want to know).

For the second time in a row (the last time was The 4-Hour Workweek - see my full review) I was pleasantly surprised.  This is the first book written by Joel Greenblatt, the founder of Gotham Capital and although he later admitted that it was probably to advanced for the beginner investor.  This book is brilliant if you have been investing for a while, understand how stock investments work and how you generally look at companies to value and have been wondering how successful investors actually spot opportunities in the market.

What sort of investments does the book cover?

This book is probably best described as a special situations investment book.  It covers a variety of special situations which consistently deliver stronger than average returns and it goes through how these situations work, why they deliver the returns, what you need to consider and most importantly also backs up every situation with relevant examples and evidence.

The special situations the book covers include:

• Investing in spin-offs and rights issues
• Risk arbitrage and merger securities (although advises not to try this at home)
• Bankruptcy and restructuring investments
• Recapitalisations, LEAPS, Options and Warrants

One of the best thing about reading this book is that Greenblatt goes to the effort of explaining to you what you, as an individual investor, should look at and what you should avoid.  This is invaluable.  Most investment books provide explanations but not actually what you as an individual investor should do.

Does the invest advice actually work?

Everyone provides

Thinking of joining Costco? Here are 5 reasons you may NOT want to

There are many benefits to becoming a Costco member however before you go in and sign up here are 5 reasons that Costco may not be the right option for you:

1. You live on your own or in a small household

The real benefits from Costco come from the ability to save money by buying goods in bulk.  If you live in a small household the number of things which you benefit from buying in bulk is significantly limited.  Can you really get through 5kg of hot dogs on your own?  What about that 3L bottle of sauce?  Sure you can find ways around this by freezing, pouring into smaller bottles or a variety of solutions but is it really worth it for a 10% saving?...Maybe not.

If you are considering joining Costco and are comparing the prices to what you currently pay it is probably worth looking at the prices of bigger bulk packs in your supermarket before you join.  You may find that you can save money that way...without having to pay the $60 membership fee per year.

2. You don't have a lot of storage space

I made this particular error and learned from my mistake very quickly.  I went with my Dad to Costco, on his card and thought I could stock some non perishable things up in bulk for when I needed them.  I live in a smaller two bedroom apartment and even with the second room free, finding place to store 72 rolls of toilet paper (the smallest package there) was a real challenge.

If storage space is an issue for you, it doesn't matter how many people are you are shopping for, Costco's bulk goods are going to create more headaches for you than you have possibly though of.  Take one trip to Costco on a friend's card and see whether you can actually store some of the things that you can save money on.

3. You don't really know or check the price of goods when you shop

Do not make the

Want to get more done in each hour? How to work smarter not longer

In a recent post I talked about how I managed to increase my productivity at work 300% by getting rid of time wasters and distractions that take away from the core tasks at hand.  I didn't tell the full story in that post though.  I was getting 4 times as much done...but I wasn't using all those hours that I freed up during the day for work.

In fact I managed to get four times as much work done in almost every single work day (excluding days which are just out of your control...we all have them) while freeing up two of those hours to work on personal projects (including this blog and spending more time on personal investments).

You can achieve huge productivity gains by knowing when you are effective

Most of us do not work in jobs where we can work when we are at our peak efficiency and then watch TV or relax or do something else that we would like to do when we are not.  This is especially true if you work in a typical office job which has a set expectation of the hours you will work.

All of us know when we are the most effective...although you may not have stopped to think about it

So much of being able to get these productivity gains is knowing when you are effective.  One of the easiest ways to think about this is to think about when you get a lot done during the day.  For me I get the most done before lunchtime and then in the last hour before I leave work.  Everyone is different but I don't know a lot of people who really hit their straps right after they have eaten lunch.

When are you at your most efficient?  Does it take a while for your brain to 'wake up' at work or do you just get right into it?  Working this out can help you become much more efficient.

Save your most important tasks for the times you are most efficient

In my last post on becoming more efficient I talked about identifying what you actually needed to do each day and what was not as important or just filler.  If you combine this with

April 2014 Expenditure Tracker

As outlined in my April 2014 Net Worth post yesterday, this month (like March 2014) was not great for me in terms of keeping control of my budget and expenses.  I had several large expenses combined with having to pay off a large credit card bill from the previous month which left me very cash poor.  My detailed expenditure tracker is below.

April 2014 Expenditure Tracker

Item	Apr 2014	Monthly Target	Perf. vs Target
Accommodation / Living expenses	$2,071	$2,246	-$175
Car expenses	$1,782	$692	+$1,090
Health / Well being expenses	$804	$566	+$238
Entertainment / Personal expenses	$1,114	$1,230	-$117
Travel expenses	$0	$675	-$675
Other 'big' expenses	$2,500	$3,508	-$1,008
Savings / Investments	$-968	$1,051	-$2,019

If we look at the major line items in my tracker above

• Accommodation and living expenses
• Although it looked like I outperformed my target for this month it was actually quite an expensive month.  I have started entertaining more at my apartment so my groceries bill was quite high and I also spent a fair bit extra on clothes
• The only reason this category came in within budget was because I did not have to pay my apartment bond nor did I have any expenditure on things for my apartment
•  Car expenses
• This  was the category that absolutely blew everything out of the water this month
• I budgeted that I would have $1,500 in maintenance costs for the year however I ended up having to spend more than that on just one service
• Health / well being expenses
• This category was also worse than expected.  My increased health insurance premium really bit into my budget and I continued to spend more on some of my hobbies
• My charitable donations (which fall into this category) were also up above budget...though I'm not upset or concerned about this!
• Entertainment / personal expenses
• I actually spent far

April 2014 Net Worth: $489,000 (+0.3%)

This month I had originally hoped to display both my expenditure tracker and net worth post in the same post, however I realised that the level of detail I included in both posts made them suitable for two separate entries.  I am looking for ways to streamline these series and combine them.  If you would rather see them as two separate posts with all the detail let me know.  Tomorrow I will be posting my April 2014 Expenditure Tracker post as usual.

April 2014 Net Worth: 489,000 (+0.3%)

	Value	% Change
Assets	$847,000	+0.1%
Liabilities	$358,000	-0.1%
Net worth	$489,000	+0.3%

What drove my net worth performance this month?

Although the result for this month looks rather benign, there was actually quite a lot happening behind the scenes.  I was not able to reduce my debt balance as aggressively as I would have liked because of several rather large expenditures which happen infrequently, but which really bite when they do happen.  My asset performance was also subdued with good savings from my wage but a terrible result in the share market.

Before I have outlined in a little bit more detail the positive and negative factors which affected my net worth performance this month

• Positive factors
• I managed to reduce my credit card debt balance slightly this month which I was pretty happy about.  Note that all of this expenditure is still within the interest free period which is why it is not paid off completely.  It is a high balance but I had significant cash flow constraints this month which is explained in my expenditure tracker
• My superannuation fund actually saw a rather nice increase for the month which was in contrast to my personal share portfolio. I do tend to hold a much more conservative portfolio within superannuation so this tends to perform better in softer markets
• I continued to save into my Employee Share Plan.  I've said it before but I'll say it again...enforced savings plans are one of the best things you can do
• Negative factors
• I had to draw down on some of my savings which I haven't done for a very long time - this is because I had to fund significant expenditures (including an unexpectedly large car maintenance bill) which you can see further details on below
• My share portfolio was down 1.5% for the month driven by a higher A$ (versus the US$).  I have quite a few investments in US$ investments which have been benefiting from the falling A$ but this month the increase in the currency really hurt me. In addition several of my cyclical stocks were down for the month which doesn't worry me in the short term but which affected my returns

What is my outlook for next month?

In last month's net worth post I wrote that I had hoped to hit $490,000 for the month.  This has now been my target for the last 2 months and I have failed to hit it both times.  The coming month should be slightly better (assuming markets don't ruin my return) and I am hoping to increase my net worth to $492,000.  Only 2 months away from my year end I am still hoping that I can somehow get to the magic half million dollar mark.

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March 2014 Net Worth: $487,000 (+0.5%)
Net Worth: All Posts
Expenditure Tracker: All Posts
Superannuation: All Posts