Starting your own business is a real nail biter by itself, to say nothing of doing so in this “economic slowdown” (as characterized by the Prez).  But a looming recession should be no deterrent to pursuing your entrepreneurial dreams.  According to Inc. magazine’s May 2008 edition, iconic companies like Coors Brewing, Herman Miller, General Motors, and Microsoft, to name a few, were started during past recessions.  But how do you figure out whether you are even cut out for the self-employed world?  Moreover, how do you maximize your chances of business success (or minimize headaches)?  Remember those tests you had to take in high school to assess what you should be when you grow up (nurse, doctor, firefighter, professional wrestler)?  Well, the Small Business Administration has something similar for business wannabes; it’s called the “Small Business Assessment Readiness Tool.”  Styled like those high school career questionnaires, the SBA “Readiness Tool” asks both general questions about your aptitude and willingness to be self-employed as well as specific questions like whether you know the tax requirements for your business.   Starting a business presents all sorts of huge challenges and requires massive amounts of homework and dedication.  But this SBA tool is a nice place to start, if just to give you a general framework for many of the issues that you should consider before taking the entrepreneurial plunge.

Have you ever dreamed about working from home?  Wouldn’t it be nice to sit out on endless meetings that drone on and on.  You don’t have to get up at the crack of dawn just to make your three-hour train ride into the city.  You even get to sit in your home office in your Charlie Brown pajamas, with your stylish bedhead hair.  Well, I hate to admit it, but the reality is much different than the fantasy.  Being on maternity leave for the past two months, I actually miss the 9 to 5 (or 6) routine and the social interaction with my co-workers.  Being able to bounce ideas off of others at work is an oft-overlooked benefit of going to the office.  It’s also sad to say, but going to work and wanting to leave work on time motivated me to accomplish more while I was at work.  At home, there are simply too many distracting nonwork-related tasks.  Nonetheless, the situation is only temporary - I return to work in about a month.  But what if you are a one woman startup who can’t afford fancy office digs or any office for that matter?  Ahh, one solution might be coworking.

What is coworking?  Dan Fost of the New York Times defines it as a community workplace for solo entrepreneurs.  Fost’s recent article on coworking discusses the recent increase in coworking sites, where someone sets up an office and rents out desks and conference rooms to other people.  The setup can be very casual or quite formal, depending on the place.  You could drop in and take a place at a large table or have your very own temporary desk/cubicle space reserved just for you.  What are the benefits?  For one, it’s cheaper than setting up your own office, particularly when you are just starting out and cash is tight.  But, as Fost points out, the ability to connect socially and share ideas with others is the key benefit for those who hate toiling away at home alone.

Fost also profiled Ingoodcompany, a business consulting and community workplace specifically targeted towards female entrepreneurs.  Recently opened in the Flatiron district of Manhattan, Ingoodcompany combines workplace, community, and learning.  Members who signup and pay an annual fee can rent a conference room to meet clients or a lease a desk for their daily work routine.  Ingoodcompany also holds workshop seminars and networking events and offers opportunities for members to consult with the company’s founders, Amy Abrams and Adelaide Fives.  Because it’s more than a mere office space to park yourself during the day, Ingoodcompany sounds like a business incubator of sorts, where you can testdrive ideas with other “coworkers” as well as business experts like Abrams and Fives.  Fost’s article, however, smartly recommends out that you should only sign up if you are truly interested in growing your business, not just if you merely want a place to hang out or people to chit chat with during the workday.  I agree - it’s probably cheaper just to go to Starbucks. 

I visited my sister in car-obsessed Los Angeles over the weekend.  Cars are a daily fact of life in L.A.   Los Angelenos practically live in their cars because it takes so long, both in distance and traffic jams, just to get somewhere.  It took us 40 minutes to get to the nearest Target from my sister’s house!

My sister is a dentist and over the weekend, we went to meet her dental assistant at her office.  We pulled up to the parking garage so that my sister could let the dental assistant, “Monique,” into the garage.  Monique was driving a Ford Expedition.  I marveled at how large her car was.  My sister remarked that usually Monique takes the bus to work because she can’t afford to fill up her tank, but that because it was a Saturday, she chose to drive to work.  My jaw dropped - what is the point of having a car if you can’t afford to fill it with gas?  I take public transportation to work, but that’s because I don’t want to deal with parking or the horrendous traffic jams.  If it came down to “I can’t afford a tank of gas,”  I can’t drive the car; therefore I wouldn’t have the car.  My sister told me that Monique actually wanted an even bigger car, i.e., the Ford Excursion, but her mother said she shouldn’t.  What’s the lesson?  You should always listen to your mother. 

It’s been a busy week - my son had his two month doctor’s appointment yesterday (complete with painful shots) and I’ve been juggling quite a few chores to get ready for our first cross-country plane trip with our new son.  As a result, the blog entries have slowed and my “to do” list is getting longer and longer.  I feel that I could be a lot more organized, but I also think it might be a slight tendency to procrastinate on some of the more unpleasant tasks.  However, I am actively trying to turn this ship around.  In my quest to manage my time more productively, I stumbled across a website that provides some simple tips on how to manage your time.  Getmoredone.comhas advice on topics such as how to plan your day and how to use email more effectively.  The tips that I found most useful?  How to stop procrastinating.  It’s difficult to prioritize when you have a mountain of chores, goals, and tasks to accomplish, and often it’s just easier to put things off.  So, how do you get more done?  Getmoredone wisely says that:

                        “…procrastination stems from habit.  New habits will be needed and those take time and commitment to develop.”

Clearly, it’s a process, not an instant makeover.  Here are some tips that Getmoredone.com offers to change the procrastination habit, with my take on them:

• Finish the unpleasant tasks early in the day:  You know what they are: calling the bill collector to dispute a bill, finishing up that office memo; or even squeezing in your exercise routine.  I find that if I don’t complete a dreaded task early in the day, I build it up more and more in my mind until I really don’t want to do it at all.  So, swallow the bitter pill and finish it up.  It won’t taste as bad early in the morning.
• Break up complex tasks:  Lengthy projects are often difficult for a procrastinator to finish.  Frankly, it’s easier to tackle small projects verses big ones that will take hours, days or even longer, such as my plans to build a backyard patio or clean out the cluttered garage.  Both of these tasks (unfortunately) have been on my “to do” list for months.  Complex tasks can even include big goals like starting a business or saving six months worth of expenses in an emergency fund.  What I started doing was to say to myself: I’ll complete at least one small task each day to move myself closer to my goal.  If I think about everything that I need to do to get to my ultimate goal, it simply becomes too overwhelming.  For example, to get to my goal of starting my Internet business, I have done at least one hour of market research per day.  No matter what, I will sit in my chair for that scheduled one hour to do the work.  Sometimes, I don’t look forward to it, but once I get started, I become immersed in my work, and feel a lot better about what I accomplished at the end of that hour.
• Fear of failure:  It’s easy to delay a project when you’re scared about the possibility of failure.  As a lawyer by trade, I find that the most nerve-racking assignments are usually drafting legal briefs.  Some attorneys will put off writing the brief until the last minute often because of the anticipation that their supervisor will rip it to shreds.  Howeve, delaying the pain does not lessen the pain; often it exacerbates it.  So, what I’ve done is to forget about failure and try to “front-load” the work - drafting the brief well before the deadline so that I have time to go through the brief, reedit and correct factual errors.  That has worked well for me in the office because it takes the last-minute pressure off of me to finish the work and often results in a better work product.  What I need to do is to apply this mindset to my business ventures. 
• Perfectionism:  I’ve seen others delay projects indefinitely because they want to get the end result perfect.  This tendency to “perfect” a task can be quite debilitating.  People are paralyzed by this; often, they don’t even start a task.  What to do?  First, understand that perfection is an elusive fantasy in our heads.  Unless you are the philosopher Plato, who’s to judge whether something is perfect?  Second, just dive into the task.  Forget about all of the “what ifs,”  “this isn’t good enough,” “is this perfect?” voices in your head.  Block them out.  You don’t want to be stuck at the start line indefinitely because you are trying to figure out the “perfect” running form.

Wow, I feel better now that I have finished this post.  Hey, the procrastination tips are already working!  Now, it’s on to that backyard patio…..

This week’s Carnival of Personal Finance is being hosted by Gather Little by Little.  There are lots of informative and entertaining posts by personal finance bloggers all across the web.  You’ll find some new blogs worth reading.

The summer wedding season is upon us again and the checkbooks are crying for mercy.  I recently caught a couple of episodes of WE TV’s “Rich Bride, Poor Bride,” a show that profiles engaged couples attempting to stay within their respective budgets.  They handed the wedding planner their anticipated budgets.  By the end of the show, when the actual total was revealed, each couple inevitably went WAY over budget, with, not surprisingly, some ridiculous requests.  One couple was looking to rent live peacocks for the reception while another wanted a helicopter to whisk them to a grand entrance at the church.  My wedding requests were a bit more mundane.  I didn’t ask for zoo animals, but I did want the wedding at a nice hotel and I didn’t want to subject the guests to rubbery chicken and watered down drinks.  In the end, we didn’t pinch too many pennies on the food and drink, but surprisingly we did manage to spend several thousand dollars less than our initial wedding budget of $30,000 by doing some of the following things.

• Comparison-shop for flowers:  Do not settle for the first florist you visit, no matter how nice their shop looks or how highly recommended they are.  Flowers are definitely an area where you can shave off dollars in cost without anyone noticing.  The first florist we visited, who came highly recommended, wanted to charge for everything under the sun, including a rental fee for the vases holding the flowers.  I thought that was part of the price for the flowers!  She also wanted a steep $75 fee just to come back and pick up the vases.  I was resigned to paying several thousand dollars for flowers until I visited the third florist on my list.  Although this flower shop was located in a tiny store with barely enough room to move, first impressions can be deceiving.  The florist, also recommended by friends, charged a very reasonable $35.00 for each table centerpiece, including the vase.  The floral arrangements were gorgeous.  Overall, I only paid $1100 for the flowers, which included the table centerpieces, flowers for the ceremony, and bouquets and boutonnieres.
• Save on the invitations by printing them yourself:  Some brides may balk, but it can save you hundreds of dollars.  We decided to forgo the expensive crane paper invitations with foil inlay, ribbons, and scented tissue paper, opting instead for a box of blank invitation stationary at Office Depot.  The card stock was very nice, and it only cost us about $25.00.  We formatted the invitation layout on our laptop, typed in the text, and printed the invitations at home.  Another plus: you don’t have to worry about an outside printer misspelling the names of your parents or future in-laws.  Everything can be instantly proofread and corrected before you print out 200 invites.
• Check out national chains for better deals on tuxedos:  Unless you are a regularly attend black-tie events, chances are you are only going to need a tuxedo for those very special occasions, like your own wedding.  So, instead of buying, rent one instead.  My husband and his groomsmen rented their tuxs at Men’s Warehouse.  The store had a great deal: rent four, get the fifth tux rent-free.  They even threw in the socks and shoes.  You get to keep the socks.
• Suppress the urge to go all out on the wedding dress:  This is potentially a huge budget buster.  Do you want Vera Wang couture or are you willing to settle for the $99 deal at David’s Bridal?  I ended up spending about $900 on a beautiful silk wedding dress.  I loved the fabric and the price was good because the dress was a sample style from the previous season.  However, I regretted the fact that I didn’t shop around more; I probably could have spent even less money buying a dress that I only wore for a total of six hours.  I came to this realization after attending a couple of weddings soon after I got married.  At the first wedding, I knew for a fact that the bride spent $3,500 on her dress; she wasn’t secretive about its cost.  Despite its high price, the dress was nothing special; it was a plain strapless sheath wedding dress.  At the second wedding, the bride wore a dress that was absolutely gorgeous. It was also a strapless sheath, but had beautiful flower embrodiery all over.  I was stunned when the bride told me that she had only spent $200 for the dress at David’s Bridal. 
• Have the wedding at a nice hotel rather than a venue that doesn’t include catering:  I was just chatting with a friend about this point.  She is having her wedding at a local historic mansion and told me that with the rental fee for the venue, the tables and chairs, plus the fee for the wedding planner, she was spending more money than she would have had she chosen to have the wedding at a luxury hotel.  For our wedding, we checked out places like botanical gardens, old mansions, and vineyards for our wedding, but ultimately decided to go with a nice hotel because of all the extra fees associated with renting those places.  Not only would we have to fork over $4000 to $6000 for the rental fee, we would have had to rent the tables, chairs, and linens as well as hire a “house manager” for the evening.  In a hotel, all that stuff is included.  However, there are some trade-offs.  Having the wedding at a hotel may not feel as special to you.  There might be several other couples in the hotel getting married, and you might miss out on having gardens and other areas for the cocktail hour and photos.  However, what you miss out on in charm, you make up for in convenience and price.

One final note: definitely bargain with all of your vendors and get everything in WRITING.  If you’ve agreed to additional terms that are not listed in the vendor’s standard contract, write it in the contract and have all parties initial the change.  Also, unless you have a signed contract, don’t be afraid to walk away from a vendor if you feel that they are not being straight with you or they have jacked up the price to unreasonable levels.  I had originally asked my regular hairdresser to come to the hotel to do my hair and my bridesmaids’ hair.  However, I was shocked when she wanted $500.00 to do my hair and my three bridesmaids’ hair.  So, I wound up telling her that I was hiring someone else.  I wasn’t happy about having to do that, but I was more annoyed that she was trying to scalp me (pun intended) on the price.

If you like social networking and you are a Wall Street junkie like me, check out www.updown.com.  This website, whose byline is “the social network for virtual investing,” is like a Facebook or Linkedin for stock investors.  However, instead of merely swapping details of your life with your friends and professional colleagues, you can actually make money off of sharing stock information or managing a hypothetical stock portfolio.  I saw the CEO, Michael Reich, being interviewed on CNBC a few days ago.  Apparently, it works like this:  anybody can join for free.  When they register, they will have a hypothetical cash fund to invest in stocks.  Along the way, they provide comments, stock tips, or analysis about the stock market.  People who make the most money with their investing ideas are eligible to win real money from Updown. 

After seeing Reich’s pitch, I went to the website.  Apparently, there are three ways to make money on Updown.com:

• Manage a hypothetical stock portfolio of $1 million.  If you beat the S&P 500 index in any given month, Updown says that it will pay you real cash.  The website doesn’t say how much, or if it does, it wasn’t obvious to me.
• Write your own analysis of why a stock is a “buy” or a “sell.”  Other members of Updown will rate your analysis and provide feedback.  You’ll earn actual cash if your analysis is highly rated by the Updown investor community.
• Refer other people to the Updown website.  When I read this, I thought, “this will be easy.  I’ll just put down a bunch of email addresses of friends and see who bites.”  But, upon further reading, I discovered that it is not as easy as waiting to see who signs up.  Not only do your referrals have to sign up, they have to make money doing the investing You will then make 10% of your referrals’ earnings on Updown.  Sounds a little like Amway, eh? 

The million dollar question posed by CNBC anchor Bill Griffith to Reich: ”[H]ow does updown.com make money?”  I found this part fascinating.  Reich explained that Updown is also starting a hedge fund.  The most compelling stock tips and analysis submitted by members will be used to invest money in the hedge fund.  Very interesting concept.  I just joined as “Financialgal.”  Will let you know how I do.

What is willpower?  According to Wikipedia, it is the ability to exert one’s will over one’s actions.  Willpower is something I wish I had more of, especially when I am around my favorite junk foods, like a large bag of Cheetos or Krispy Kreme donuts.  For most of my life, I associated willpower with routine and mundane activities like eating and shopping (Eat more kale!  You don’t need those Manolo Blanik shoes!)  I never made the connection between willpower and more purposeful activities, like starting a business.  However, a recent article by New York Times op-ed contributors Sandra Aamodt and Sam Wang shed some light on this often elusive thing we call willpower and how people who train themselves to increase their willpower capacity can reach long-term success in many areas of their lives. 

Aamodt and Wang say that we can increase our overall willpower capacity by flexing and strengthening our so-called willpower muscle.  In certain studies, people who stuck to an exercise regiment for two months reported increased willpower in other aspects of their lives, such as shopping less impulsively, watching less TV, and eating more healthily.  Learning money-management skills is another way to flex willpower muscle.  The key to growing willpower abilities, according to Aamodt and Wang, is to resist the desire for instant gratification and focus on long-term success when doing activities that require self-control. 

It’s easy to see how willpower is the foundation of building personal wealth.  Whether you are starting a small business or trying to make a million dollars, being able to exert your willpower to take action and to resist certain impulses is one step closer to success.  Instead of spending your entire salary on a house that’s too big or a car that guzzles too much gas, you hoard your cash in anticipation of the Subway franchise that you’re going to start or the investment real estate that you’re going to buy. 

But, just like losing weight, taking action on certain goals that are not related to an immediate consequence is admittedly difficult.  When the doctor tells you that you need to drop a few pounds because you might get heart disease years into the future, all you might hear is “wah wah wah.”  Similarly, you might have certain financial goals that you may want to achieve, but you make little headway because you’re comfortable, you have a stable job, and there is no immediate pressure to move forward.  That’s why strengthening your willpower muscles is critical to success.  As I am writing this post right now (at 10:30 p.m. on a Monday night), I wouldn’t be lying to you if I said that I had to propel myself up off the couch to come over to the computer and start typing.  But once I got over the biggest hurdle - getting started - the rest of the work was downhill from there.  It’s all about exerting willpower to force myself into action.  I think that I’m going to have to put myself on a goal-oriented work regiment.  Everyday, same time, same place.  I’m going to buff up those muscles!

For a humorous and insightful take on how lack of discipline sabotages our chances for success, check out the following post at Bripbrap’s blog: 31Causes of Failure #5 Lack of Self-Discipline.

Now that I’ve written about some of the habits of people who have accumulated and maintained their wealth, here are some of my observations on how people destroy wealth.  When I say “destroy wealth,” I am including not just the habit of taking a lighter to the dollar bill in your pocket, but also those habits that prevent the creation of wealth in the first place.

• Buying homes, cars, and other things just to “keep up with the Joneses.”  I knew a lawyer who decided to purchase a much larger home with six bedrooms in a swanky neighborhood even though her old house was more than large enough for herself and her mother.  She was bothered by the fact that several families, including her own brother, had recently purchased larger homes and she felt that she had to keep up as well.  At the same time, she decided to upgrade her Lexus 300 SUV to the larger Lexus SUV, even though she is a single person and has no reason to acquire extra car space.
• Engaging in instant gratification payoffs while shunning long-term investments:  A friend of mine invested $2000 in an S&P 500 index fund.  However, when the fund value dropped to $1,600 a couple of months later, he became very nervous and decided to sell the fund rather than wait out the volatility.  Of course the S&P 500 index rebounded and surpassed the price at which my friend made his original investment.  Meanwhile, he has no qualms about traveling to Vegas or other gambling hotspots (Niagara Falls, anyone?) to drop several hundred dollars at the craps table.
• Failing to acquire the necessary education to move up in your profession:  If you are an entrepreneur, this point may not necessarily apply.  But for those of us working in a profession, the surest way to increase your paycheck and therefore your bank account is to move to a higher position in your work organization.  However, some people don’t see that further training and education is often the key to moving up, particularly those positions in professional fields, like engineering or accounting.  My husband, an engineer, has seen several lower level technical employees in his company complain about their inability to move into engineering positions.  These employees, however, lack a four-year college degree, which is a basic educational requirement for an engineering position.
• Failing to take advantage of new opportunities because of fear:  I see this problem a lot, even with my own actions.  It’s a lot easier to stay put in a dead-end job or not take the plunge into becoming self-employed, because the “known” is more acceptable to us, even if it’s crappy, than the “unknown.”  Because of this fear of risk, we miss out on all kinds of new opportunities.  I am actively working on getting myself to move forward and not spend so much time dwelling on why a particular business idea might be a bad one.  I find when I do take a baby step in a certain direction (like starting this blog), it usually turns out to be a much more positive experience than I anticipated.
• Letting someone else control your financial destiny.  This is a rather extensive topic and probably will address it again in a separate post.  But I’m writing about it here because I just had a conversation with a friend about her finances.  My friend, sick with pneumonia, was concerned about job security because of all the days that she had taken off this past year to deal with her divorce and health issues.  Unfortunately, during her marriage, her husband controlled all of the finances, including much of the “spending.”  He bought a fancy car and squirreled away money in separate stock investment accounts.  When he demanded the divorce, my friend only had $30k in a 401(k) account and an old car that was ready to break down at any moment.   

Probably the one common thread throughout these habits is the failure to focus on the ”long-term” picture.  But even if you do have that long-term plan firmly seared into your brain, it still isn’t a cakewalk.  Chances are it’s going to be two steps forward, one step back.  Hey, I just splurged on a new outfit last week, even though I had vowed to spend no money on clothes for the next two months.  We’re all only human! 

The Frugal Duchess, another blog that I enjoy reading, recently posted CNN’s profile of a middle-class mother with two kids.  In the CNN piece, Patricia Guerrero describes how she was forced to go to a local food bank for groceries after she lost her $70k a year job.  A commenter on the Frugal Duchess blog noted that the video accompanying the CNN article showed Guerrero describing how she took off her Tiffany bracelet and ditched her Coach handbag in her car before entering the food bank.  The CNN footage of Guerrero’s house showed luxury fixtures and appliances, including black granite counter tops, a flat plasma screen tv, a stainless steel refrigerator and hardwood floors.  Guerrero also talked about how, at the food bank, the lady helping her offered to pay her utility bill.  The commenter naturally wondered why Guerrero didn’t try to sell her luxury possessions before having someone at the food bank, who might be even poorer, pay her utility bill.  The Frugal Duchess posted a follow-up on this comment and listed some items she would sell if in the same situation and things that she has already cut back on.

I had read the same article on CNN.com and marveled at how quickly Guerrero’s life unraveled.  Were her finances that bad that she would have to go a food bank one month after being laid off?  After reading the Frugal Duchess blog, I went back to CNN.com and watched the video of the woman’s interview.  Guerrero said that she had used her tax refund to pay bills for the last month and that with her unemployment check and rental income from her mother’s house, she can only afford to cover her $2,500/month mortgage.  There is no other money to pay for food or utilities.  Guerrero also complained that she applied for but was turned down for food stamps because she owned her house.  However, what struck me about the interview was Guerrero’s obliviousness as to why she is in this situation.

     1.  She said that she didn’t take her Coach bag into the food bank.  “[The handbag] isn’t worth anything because [I] don’t have a dime.” 

     2.  Describing how she applied for but was rejected for food stamps:  “I never used the system…I needed it now and it let me down.” 

     3.  In response to the food bank employee’s offer to pay her utility bill: “This is really where I’m at?”

I’m channeling a little Suze Orman here, but Guerrero needs to shake off the deer in the headlights attitude and take control of the situation.  Guerrero may or may not have learned her lesson about lacking a rainy day fund or spending beyond her means, but what about what she can do now to feed her kids? 

• Sell the Coach bag or Tiffany bracelet on Ebay or at the consignment store - they’ll certainly fetch more than a few bucks.  Guerrero probably has many other nice outfits, handbags, and jewelry in her closet that she could sell.
• Get a job, any job, whether at the fast food joint, Home Depot, or the department store to make money to buy food.  With the mortgage covered and her mother at home to take care of the kids, Guerrero should be able to make enough for groceries and utilities, even making minimum wage.
• Demand that her estranged husband contribute to the household expenses, including paying child support.  If he refuses, go to the local government agency that handles child support cases and file a complaint against him.  If the husband is working, his wages can be garnished.

These are just some ideas off the top of my head; I’m sure there are others.  It’s easy to fall into the trap of feeling sorry for oneself when bad luck strikes, but the bottom line is that Guerrero, just like the millions of homeowners who bought or borrowed too much house, need to do what they can to help themselves first before turning to the government.  Going to the food bank should be a measure of “last resort,” reserved for those people who have already exhausted every other avenue and are hanging on by a thread.