On Vacation

No post this week or next, as I'm off on vacation in Europe.

Happy holidays! See you in 2017!

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This Christmas, Ask For Higher Credit Limits

Your credit score is an important number. We all know that is the number companies look at when you want to get a loan or open a new credit card. But did you also know it can affect how much you pay for home and auto insurance? Did you know someone with a poor credit score can pay twice as much as someone with a high credit score for the exact same insurance coverage? Check out this post from FinancialLibre for more info. For that reason, even when I am not looking to open any new lines of credit, I still work to keep my credit score high.

As part of my mission of retaining a high credit score, once a year, I contact my credit card issuers and ask for a credit line increase. How does this help my credit score?

Credit Utilization Ratio

One of the variables that goes into the calculation of your credit score is something called your credit utilization ratio. This can be calculated on a per-card basis (that is, the credit utilization for each card by itself) and overall (based on all your credit cards). Most credit scores use a combination of both ratios to determine your score. The lower this ratio is, the higher your credit score.

How It Is Calculated

As with all things credit cards, math is involved. But it's easy math, so don't fret.

Your credit utilization ratio is simply the amount you have outstanding on a credit card divided by the total amount of credit available on that card. Let's look at a single card first. Suppose you have a credit limit of $1,000 and you have a $250 outstanding balance on that card. Your credit utilization ratio for that card is 250 / 1000, or 25%.

Easy peasy.

Now let's look at your overall credit utilization. Suppose you have three credit cards with the following credit limits and balances:

Card	Outstanding Balance	Credit Limit
Card 1	$250	$1,000
Card 2	$700	$1,000
Card 3	$1,400	$2,000

First, let's look at the individual credit utilization ratios for each card. This is done just like we did previously for the single card. Here's the table updated to include that:

Card	Outstanding Balance	Credit Limit	C.U.R.
Card 1	$250	$1,000	25%
Card 2	$700	$1,000	70%
Card 3	$1,400	$2,000	70%

To find our overall credit utilization ratio, we add up all our outstanding balances and divide by the sum of our credit limits:

Card	Outstanding Balance	Credit Limit	C.U.R.
Card 1	$250	$1,000	25%
Card 2	$700	$1,000	70%
Card 3	$1,400	$2,000	70%
Overall	$2,350	$4,000	58.75%

So looking at this, we can see you are using more than half of the total credit extended to you.

How Does A Credit Limit Increase Help?

So how does increasing your credit limit help your credit score? By increasing your credit limit, your credit utilization ratio will decrease - even if your outstanding balances do not change! Why? MATHS!

By increasing your credit limit, you are increasing the denominator of the ratio. This means you are dividing by a larger number, which results in a smaller number. Let's say we called up all our credit card issuers and got a $500 credit limit increase from each of them. Here's how the table looks now:

Card	Outstanding Balance	Credit Limit	C.U.R.
Card 1	$250	$1,500	16.67%
Card 2	$700	$1,500	46.67%
Card 3	$1,400	$2,500	56%
Overall	$2,350	$5,500	42.73%

Look at that. Even though your outstanding balances did not change, your credit utilization ratio for each card dropped, as did your overall credit utilization ratio! Because all of these figures are used to calculate your credit score, decreasing any or all of them, will increase your credit score.

In Practice, It's Not That Simple

There is one other thing to watch out for. Another part of your credit score is based on how many recent "hard" credit inquiries you have. A slew of credit inquires in a short amount of time will drop your score because it could indicate you are opening a bunch of new credit accounts. How many is "a slew" and how long is "a short amount of time?" That's a secret. The credit reporting agencies don't share that information. The Illuminati forbid it.

So what should you do?

First off, some credit cards don't run a hard credit inquiry when you ask for a credit increase. You can tell if they are going to because they have to ask your permission before doing so. Go online to your credit card's website. You should be able to find an option to request a credit increase. (Note, not all credit cards allow you to do this online. One of mine required that I call the number on my card.) You can go through the process of requesting an increase and, if they ask for your permission to pull your credit, you can simply abandon the process at that point.

Or, go ahead and let them. If you feel your credit is good - or at least, hasn't gotten worse since you opened the card - or if you are not planning on applying for any new credit soon, go ahead and let them pull your credit. If you aren't looking to get a new loan or credit card in the near future, any small hit your score might get from the additional credit inquiries should be gone after a few months pass.

No matter which method is used, you should get an answer to your result immediately.

When you go through the process, you'll need to provide your current income and your current rent or mortgage payment amount. Some cards will ask what you want your new limit to be and some won't.

My Results

My wife and I have our own credit cards - no joint cards. There is no real reason for this. It's just how things started out because we lived together for a while before we got married and combined our finances.

Bank Of America Travel Rewards Card - This is a new card I got about 6 months ago because I'm going to be going to Germany soon and this card has no foreign transaction fees. I was able to request an increase online. I asked for a $1,000 increase and was given a $3,000 increase. Because this is still a fairly new account, I was surprised I got anything at all.

Chase Freedom - I was not able to do this online and when I called the number on my card, they said they had to do a hard inquiry on my credit, which I consented to. I did not ask for a specific amount of increase. They ended up increasing my limit by $4,600 - exactly 20% of my old credit limit.

Citi Black Diamond Visa - This is my wife's card. I was able to request the increase online, but they asked to do a hard inquiry on my wife's credit report. I consented. I asked for a $1,200 increase and they said I would get a response in a few days. Less than 24 hours later, I got an email saying I was approved for the amount I requested (which was about a 20% increase).

My Discover card - I asked for an increase online, no specific amount. They did not check my credit and I got a $500 increase. This was the smallest increase I got and I wonder if it was because I rarely use this card.

My wife's Discover card - Jackpot! I was able to request this online and they did not ask for a credit report. I did not ask for a certain amount and she end up with a $5,000 increase! That represents a 33% increase from her old credit limit!

Your Mileage May Vary

I should also note that both my credit score and my wife's are currently 800 or higher, so we're in the "Excellent" credit rating range. We also never carry a balance on our credit cards, so this process will likely have minimal impact on our scores. So why do I bother?

I look at this as preventative maintenance. The future is uncertain and you never know what may happen. It's easier to get credit when you don't need it than when you do, so I have a reminder in my calendar to do this every year in November.

If you are trying to increase your credit score, this is one method you may want to look into.

Does anyone else do this on a regular basis?

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Goal Update: End of November 2016

At the end of each month, I post an update of my goals, including a brief discussion of any notable events that might have occurred during the month. The latest month's figures can always be found under the Featured menu in the menu bar at the top of the blog.

Last updated: End of November, 2016
Current value: $25,757
Change from last month: +$157
Percent of Goal:  23.68%

Note that the funds in this account are invested in stock, so there will be fluctuations in value that are outside my control. I never withdraw money from this account, so any dips are purely due to stock price changes.

Events Of Note Last Month:

Net income this month from my online courses was $113.65. My hard money loan generated $133.33 in income. My Amazon Mechanical Turk side hustle earned me $67.15 - significantly lower than the last two months because I was in the process of changing jobs for a couple weeks, so I had little spare time. I took in $20 in misc blog income and $15 from another class action lawsuit settlement. The stock performance of Realty Income continues to suppress my savings. Once again, my monthly gain is less than the amount of cash I deposited to the account.

Looking at the above graph, you can see very little progress made over the past 3 months. Because I invest in the stock market, this can happen. As soon as Realty Income turns around, I'll likely see a nice pop. In the meantime, I'll just collect the 4% dividend each month.

Net Worth Update

For November, our net worth is back to moving in the right direction - up. Gains are mostly due to Mr. Market playing nicer than last month.We saw a $10,636 gain over last month, more than making up for the $4,300 loss in October. I think this a new high.

October 2016

November 2016

Note: Mint.com categorizes our HELOC as a credit card debt, not a loan, hence the apparently high credit card balance.

If you have any questions or suggestions for topics, please drop me a line in the comments section!

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Playing The Long Game

Many people blog to express themselves. Many others blog to make money. Truthfully, most bloggers do it for some combination of both reasons. Those that are trying to make a living by blogging usually go all out learning about branding and content and market share. They treat blogging as a job and they need to learn ways to find their voice and to distinguish themselves in their area of interest to be successful. They know that attracting readers doesn’t just happen magically. They need to work to deliver good, regularly published content, have a consistent brand or theme, and strive to make their blog the best they can.

Everyone Should Have Some Marketing Knowledge

But even those that blog for fun can benefit from such marketing tactics. Sure, your goal may not be to retire and live off your blog income, but if you do any advertising on your site, anything you do to increase readership can increase your income and I’ve never met anyone who complained about increased income. If you aren’t looking to live off revenue from your blog, you probably don’t need to immerse yourself neck deep in branding studies or Google Analytics reports. But you should still focus on one thing: content.

Write about what you know. Write with passion. Write to share your knowledge. Writing good content is playing the long game. You won't wake up the day after publishing a great post and see that your hit count has skyrocketed. That's OK. That's the short game, the live-in-the-moment-and-only-for-tomorrow game. It’s buying advertising on Monday and seeing an increase in hits on Tuesday.

That’s not what you want. Anyone can do that. Sure, people will respond to ads and visit your site, but it is your content that keeps them coming back. You want to make long term readers out of people. You want them to look forward to your latest post. Buying ads is paying people to visit your site. If the content isn’t good, then you need to keep buying ads to keep people coming back. Paying for readers is not the game you want to be in. Building for the long term is.

Play The Long Game

Building a stable, long term readership takes time. It takes effort. It takes working hard at creating content that people will find useful, funny, engaging, or educational. It doesn’t happen overnight. There are no shortcuts to get there. It’s called the long game for a reason. It takes a long time to build and set in motion.

Even better, the long game can pay off in unexpected ways.

A Surprise Benefit

Two days ago, I started a new job that comes with a whole bunch of improvements over my old job – better pay, shorter commute, better benefits, etc. I really wanted this job and even though the total time from my first interview to getting the job offer was only 2 weeks, it felt like months.

Do you remember being a kid two days before Christmas? Remember how you couldn’t stand waiting to open up all those presents and how it seemed time stood still and Santa was never, ever going to visit your house to deliver those amazing toys you were sure you were going to get?

Yeah. I felt like that for two weeks.

Then, the day before I got the offer, I was told I was one of two final candidates being considered for the position. The other finalist and I were fairly evenly matched and the employer was having a tough time making a decision. Those two days felt like years. When I finally found out I was the one to get the job, I was ecstatic. As I talked to the recruiter who placed me, I found out some more information.

The other candidate had more experience in one area than I did. What put me over the top was my professional blog. Although I was a little short in experience in one area, my new manager looked at my blog and saw that I could dig deep into the inner workings of SQL Server. I wasn’t afraid of learning new things. In fact, I welcomed it. I think my enthusiasm for the product showed. That was what put me over the top. They knew whatever I didn’t know, I would find out quickly and eagerly.

I have been writing that blog for six and a half years. Content is somewhat irregular, but (I think) is of high quality – I only post when I have something I feel is worth sharing. I have ads on the site, but I only earn a few pennies a month from them. I just blog there to put more information into the world, to share a little bit of my hard-earned knowledge in the hopes that I can help someone else. I’m playing the long game.

And it just paid off.

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Two Reasons Why I Love Living With A Budget

In the past two weeks, I've had to have new spark plugs installed in my car and my wife decided we needed to get a couple oriental rugs cleaned before the holidays roll around. In short, two major expenses hit us within two weeks of each other.

Spark Plugs Ain't Easy To Find Anymore

I thought about changing the spark plugs myself. Remember when you could open the hood of your car and see something like this:

They don't make them like this anymore

Those spark plugs would sit right on top of the engine block, easily accessible at the end of those blue cables. Boy, things sure have changed! While investigating how to change the spark plugs on my car, I found this video and saw exactly how much of the engine compartment I'd have to take apart to do it today. That's waaaaaay outside my comfort zone. Additionally, I don't even have all the tools needed to do the job. So off to the dealer I went for this work. Total cost - about $300. (Reason #2,343,241 to get a Tesla - no spark plugs!)

Rugs Aren't Cheap Either

Getting the rugs cleaned was actually even pricier. I have a home warranty and the policy covers carpet cleaning. Unfortunately, it only covers wall to wall carpeting, not area rugs. However, they gave me the name of the contractor they use and I called them for a quote.

One rug measures 8 feet by 11 feet and the other is 6 feet by 9 feet. The difference in prices between the two were substantial: $240 for the big one ($2.72/square foot) and $162 for the smaller ($3.00/square foot).

(At this point, I briefly considered just renting a carpet cleaning unit and cleaning them myself, but given that one of the rugs cost over $2,000, I opted to stick with professionals for cleaning.)

When talking to the contractor, he told me that his company actually does the area rug cleaning for most of the other rug cleaners in the vicinity. I just chalked this up to a sales pitch, but I called another company for a quote and was given exactly the same prices, so maybe he was telling me the truth. The second company also charged extra to come to my house to pick up the rugs. The first company included that in their price.

Because I don't like to leave money on the table, I called the first contractor back and asked if, because I was referred to them from my home warranty company, they could give me some sort of discount. I figured it was a long shot, but it never hurts to ask. To my surprise, the guy said yes and gave me a quote of $350 for both rugs, a $52 discount. He said he'd like to give me a bigger discount, but since the plant where they clean the rugs is in Tucson, about a 1.5 hour drive south of me, he couldn't really go any lower. I agreed to the price and they were able to get a truck out that day to pick them up.

Budgets Save The Day And My Piece Of Mind

So in a span of two weeks, I had to lay out $650 for expenses - and right before the big holiday shopping season starts. In the pre-budget days, that would have thrown my finances into a tailspin for at least two months, probably longer.

In these days of budgeted living, I didn't blink an eye. Two line items in my budget are Car Maintenance and Home Maintenance. I had money in both of those accounts to cover these bills. No stress. No pain. I charged both items to my credit card to earn the cash back reward (effectively giving myself another 1% discount) and transferred the money from my bank account to the credit card to pay for them before I accrued any interest charges. Easy peasy.

This, more than anything else, proves to me the value of budgeting! Have any of you had a similar experience?

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Financial Knowledge Survey Results

Four weeks ago, I asked readers to take a financial quiz that I had to take on Amazon's Mechanical Turk. I was curious to see how other people scored.

The Results

The average Road To A Tesla reader taking the quiz got about 12 of 13 questions correct. For comparison, when I first took the quiz, I scored 13 of 13 correct. The person giving the original quiz on mTurk said the average score was 7 of 13 correct. Clearly, readers here have a better financial education than the typical person. That being said, there is still some room for improvement.

Correct answers are shown below in bold. Percentages after the answer show the percentage of responders who choose that option.

The Questions

Q: Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, you would be able to buy:

• More than today with the money in this account
• Exactly the same as today with the money in this account
• Less than today with the money in this account (100%)
  
• Don't Know

Inflation measures how prices increases over time. Because prices are rising at the rate of 2% per year and you are only getting 1% per year, your purchasing power is decreasing by 1% per year. This means you will be able to buy less after 1 year than you could today.

Q: Do you think that the following statement is true of false?: "Bonds are normally riskier than stocks."

• True (10%)
• False (90%)
  
• Don't Know

Bonds are promissory notes issued by companies. They are basically an IOU from the company to the bond purchaser that the company will pay you back the face value of the bond plus interest over a specified period of time. They are considered safer than stocks because they represent loans the company made and must pay back, whereas stocks are just shares of the company. Stock prices fluctuate based on how much other investors are willing to pay for the company at any given moment. Bonds, on the other hand, represent a well-defined, specific return.

Q: Considering a long time period (for example, 10 or 20 years), which asset described below normally gives the highest return?

• Savings accounts
• Stocks (90%)
  
• Bonds
• Don't Know (10%)

 The stock market has historically had the greatest return over a long time period.

Q: Normally, which asset described below displays the highest fluctuations over time?

• Savings accounts
• Stocks (75%)
  
• Bonds
• Don't know (25%)

As mentioned earlier, stock prices change based on how much investors think a company is worth at any given time. Because investors' sentiments can change both often and dramatically, stocks are the most volatile investment on a short term basis.

Q: When an investor spreads his money among different assets, does the risk of losing a lot of money:

• Increase
• Decrease (100%)
  
• Stay the same
• Don't know

Spreading money among different assets is called diversification and the purpose is to decrease the risk of losing money. The theory is that different assets won't move in the same directions at the same time. For example, if the stock market falls, the price of gold may rise. If an investor had put money into both stocks and gold, the loss in one area may be wholly or partially offset by gains in the other. You can also diversify within one asset class - splitting your money between transportation stocks and medical stocks, for instance.

Q: Do you think that the following statement is true or false?: "If you were to invest $1,000 in a stock mutual fund, it would be possible to have less than $1,000 when you withdraw your money."

• True (80%)
  
• False (20%)
• Don't know

This is, once again, due to the volatility of the stock market. Although a mutual find invests in more than one stock, the whole fund is still made up of individual stocks that can change value by the minute or second. As a result, the overall value of the mutual fund can also change that often. However, given the large number of stocks held in a typical mutual fund, the average price of the fund is typically less volatile then any one individual stock, as winners and loses within the fund will tend to moderate each other. Nevertheless, it is possible for the share price of a mutual fund to decrease, leaving you with less money than you originally invested.

Q: Do you think the following statement is true or false?: "A stock mutual fund combines the money of many investors to buy a variety of stocks."

• True (90%)
  
• False
• Don't know (10%)

The definition of a mutual fund is a pool of money from multiple investors used to buy stocks of various companies. Sometimes the stocks the fund buys are limited to specific industries, such as healthcare, or to stocks making up certain indexes, such as the S&P 500. Others times there is no such restriction.

Q: Do you think that the following statement is true or false: "After age 70 1/2, you have to withdraw at least some money from your 401(k) plan or IRA."

• True (75%)
  
• False (12.5%)
• Don't know (12.5%)

The government has rules that require you to start withdrawing money from tax deferred accounts such as 401(k)s and IRAs. In same cases you can start withdrawing money earlier, but as a rule, you must start withdrawing some money when you reach 70 1/2 years old.

Q: Do you think the following statement is true or false?: "A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less."

• True (100%)
  
• False
• Don't know

A shorter term loan will result in less overall interest paid because you are borrowing money for a shorter amount of time. However, due to the shorter payback period, the amount of your payment that has to go towards repaying your principal (the amount you borrowed) will be higher. This results in higher total monthly payment, even though you are paying less interest. An amortization table for the loan tells you how much of each payment goes to interest and how much goes towards principal reduction.

Q: Suppose you have $100 in a savings account and the interest rate is 20% per year and you never withdraw money or interest payments. After 5 years, how much would you have in the account in total?

• More than $200 (100%)
  
• Exactly $200
• Less than $200
• Don't know

Because you never withdraw any money, your interest is compounded. That is, you get paid interest on interest you have already earned. In this example, after one year, you would earn $20 in interest on $100 of principal. In the second year, you would earn $24 on $120 of principal. Next next year, you would earn interest on $142 of principal, etc. As a result of this compound interest, after 5 years, you will earn more than just five times 20% of your initial savings.

Q: Which of the following statements is correct?

• Once one invests in a mutual fund, one cannot withdraw the money in the first year
• Mutual funds can invest in several assets, for example invest in both stocks and bonds (50%)
  
• Mutual funds pay a guaranteed rate of return which depends on their past performance
• None of the above (37.5%)
• Don't know (12.5%)

The second statement is the only one that is correct. Some funds may charge a penalty fee if you withdraw money within a certain time period after the initial purchase, but you are always free to withdraw your money at any time. No mutual funds pay a guaranteed rate of return - if that is what you are looking for, you want a savings account or certificate of deposit (CD). And, as you always hear about the stock market, past performance is no guaranty of future results.

Q: Which of the following statements is correct? If somebody buys a bond of firm B:

• He owns a part of firm B
• He has lent money to firm B (100%)
  
• He is liable for firm B's debts
• None of the above
• Don't know

Bonds are promissory notes to companies. The bond buyer is making a loan to the company. If you want to own part of the company, buy the company's stock.

Q: Suppose you owe $3,000 on your credit card. You pay a minimum payment of $30 each month. At an annual percentage rate of 12% (or 1% per month), how many years would it take to eliminate your credit card debt if you made no additional new charges?

• Less than 5 years
• Between 5 and 10 years (12.5%)
• Between 10 and 15 years (12.5%)
• Never (50%)
  
• Don't know (12.5%)

Payments to credit cards are always first applied to accrued interest, then to any outstanding principal. Paying $30 per month on a $3,000 balance is paying 1% per month. Because that is the same amount of interest you are being charged each month, your entire payment goes towards paying the interest and nothing goes towards reducing your outstanding balance. As a result, you will never pay off your credit card. Typically, most credit cards set the minimum payment amount so that it includes at least 1% principal reduction, so the situation is usually never as bad as this scenario. However, it's not a whole lot better either.


How did you do on these questions?

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Preparing For Death Requires A Lot of Paperwork!

Last week, I wrote about how my wife and I created an estate plan and living trust and the reasons behind that decision. Once the living trust has been created, you get a big folder with a lot of paperwork in it. The trust itself is still empty.

To receive the benefits and protections of a living trust, you have to actually move accounts into it. This is done by retitling your accounts out of your (and / or your spouse's) name into the name of the trust.

Moving accounts into the trust can be a simple or complex process, depending on the institution. My credit union, Charles Schwab, and USAA and have incredibly simple processes. They basically consisted of filling out a couple forms, providing copies of key pages from our trust documents, and that was it! My account numbers did not change.

Other institutions were not so easy. Scottrade, for example, could not simply convert an existing individual account to a trust account. We had to open a new trust account, then transfer funds and securities from the individual account to the trust account. This also meant we ended up with new account numbers.

Tips

If you decide to go through this process, here are some suggestions, based on my experiences:

• Make sure your institution supports trust accounts. I found some do not.

• If you want to open a brokerage account with margin privileges in the name of your trust, some companies (such as Schwab) require that your trust documents specify that the trustees are allowed to open margin accounts. If this is something you require, be sure you have this documented in your trust paperwork.

• Identify the features you absolutely have to have. Do you have to have electronic statements? How about electronic transfers to / from outside accounts (ACH transfers)?  Some companies do not allow these with trust accounts.

Some Companies Have Trust Issues

Here are some of the major institutions I have contacted and their policies for trust accounts, as of the time of my writing:

Charles Schwab – Individual accounts can be converted to a trust account easily. Paperless statements are available for trust accounts. ACH transfers are available for trust accounts. They offer brokerage, checking, and savings accounts for trusts (the latter two being offered through Schwab Bank). A brokerage account comes with a free checking account. Both the checking and savings accounts have no monthly fees, no minimum balance, and don’t even have to be funded at all. So you can open a checking or savings account and not put any money in it until you need to. I ended up moving accounts from several other institutions to Schwab just because they offered all of the features I wanted.

Scottrade  - You cannot convert an existing individual account into a trust account. You need to open a new account and transfer assets to it, which means you get a new account number. Additionally, you cannot electronically transfer money into the account like a normal brokerage account. The rep I spoke with said the workaround is to use their mobile app, write yourself a check, and take a picture of it with the app to deposit it. Technically, I suppose that is an electronic deposit, but I move money into accounts on a weekly basis for my budget, so this is not a viable solution for me. I did not ask about paperless statements for trust accounts because the previous restriction ruled Scottrade out for me.

Capital One Investing (formerly ShareBuilder) – They are no longer opening new trust accounts. Furthermore, they take a ridiculously long 30 days to transfer your account to a new brokerage:

Did you catch that second sentence? "...our transfer process is a manual one..." Ranked by asset size, Capital One Investing is the ninth largest brokerage house in the U.S. with over $241 million in assets, but they still have to manually process account transfers. Something is wrong there. (For comparison, Scottrade transferred my account to a new brokerage electronically in about 1.5 weeks.) I also wasn't a fan because their electronic statements are not available in PDF format. I'm glad to be leaving them.

Capital One 360 – They do not offer trust accounts. (Not surprising, since they have the same parent company as Capital One Investing.)

Ally Bank – They offer trust accounts, but they cannot enroll in paperless statements. They do allow ACH transfers.

Synchrony Bank – They do offer trust accounts and ACH transfers within trust accounts, however, they do not offer paperless statements for trusts.  Additionally, only the primary Trustee (first person listed in the trust) has the ability to make ACH transfers using their online login. (Out of curiosity, I asked the rep I was speaking with if there was a reason why paperless statements were not permitted, given that other companies allow them. She told me it was just a bank policy. There is no federal regulation prohibiting it. She said other people had mentioned this, so perhaps the policy will change in the future.) Update: After being told trust accounts cannot get paperless statements, once I actually opened my accounts, I discovered this was not true. I have received electronic statements for my trust accounts.

Where I Ended Up

Given all these facts, I ended up moving several of my accounts to Schwab and I moved two of them to Synchrony. I was initially going to skip Synchrony altogether because they don’t provide paperless statements, but I changed my mind because of their high interest rates.

A savings account at Schwab Bank currently pays 0.1% interest. At Synchrony, it pays 1.05%. That’s ten times higher!

The accounts I am dealing with I use for saving for big ticket items, so they have a balance of around $4,000 right now. The difference in interest rates means the difference between getting $4 a year at Schwab Bank versus $40 a year at Synchrony. Even so, my impulse was to still go with Schwab because I had quite a few other accounts with them. However, by rephrasing the problem, I came to a different conclusion:

By going with Schwab, I would be earning $36 less a year. Was I willing to, in effect, pay $3 per month for paperless statements? My answer is no. Winner: Synchrony Bank.

(Update: It turns out, I can get estatements at Synchrony after all, so it all worked out for the best)

Moving assets into a trust is time consuming and paperwork-intensive. However, it is something that only needs to be done once and you end up with some nice legal protections for your heirs. You’ve already gone through the effort of creating the trust. It’s worth the extra effort to actually move assets into it.

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Goal Update: End Of October 2016

At the end of each month, I post an update of my goals, including a brief discussion of any notable events that might have occurred during the month. The latest month's figures can always be found under the Featured menu in the menu bar at the top of the blog.

Last updated: End of October, 2016
Current value: $25,600
Change from last month: +$73
Percent of Goal:  23.54%

Note that the funds in this account are invested in stock, so there will be fluctuations in value that are outside my control. I never withdraw money from this account, so any dips are purely due to stock price changes.

Events Of Note Last Month:

Net income this month from my online courses was $92.25. My hard money loan generated $133.33 in income. My Amazon Mechanical Turk side hustle earned me $193.78 after I withheld 15% for taxes. My mTurk earnings from September finally made it to my Tesla account, so this month's numbers got a double jolt from mTurk income (although you wouldn't know it from the anemic increase in value).

I had income from several miscellaneous sources this month. I received $2 from a class action settlement and $5.89 from sales of my ebook. I also received a $119 quarterly bonus from my work.

Overall though, the value of my account saw just a tiny increase for the month. This was due to a decline in the share price of Realty Income stock, which was trading at $65 at the beginning of October but ended October at $59. It's somewhat sad to realize I deposited just over $540 this month and my account value only increased by $73 over September. Such are the joys of stock market investing *sigh*

Net Worth Update

For the first time since I've been tracking it on this blog (7 months), our net worth dropped, decreasing by $4,304 from last month to a new total of $712,392. This was mainly due to a drop in the stock market, which caused our IRA and 401(k) accounts to decline in value. Our overall debt total dropped, so we're still moving in the right direction on that front. It just that this month, Mr. Market wasn't so good to us.

September 2016

October 2016

Note: Mint.com categorizes our HELOC as a credit card debt, not a loan, hence the apparently high credit card balance.

We are also starting a small project in our backyard that will run about $2,200, so those charges will add some downward pressure to our net worth number. Due to the timing of the charges, half of that appears in this month's figures and the rest will appear in next month's.

If you have any questions or suggestions for topics, please drop me a line in the comments section!

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Planning For Death

(Note: laws vary by state. All details here refer to laws in Arizona. Check laws in your state for applicability of this information. I am not an attorney. Due your own due diligence. Some assembly required. Your parents have to put it together. By Meco.)

No one likes to think about dying or making plans for what happens when you die, but as part of a sound financial life (see what I did there?), it is something that has to be done. After years of putting it off, my wife and I finally went to a lawyer and got an estate plan put together. If one or both of us dies, we’ve now got a solid legal plan for how our assets will be distributed, who will look after our daughter, etc.

There are many decisions to make when setting up an estate plan, not the least of which are what documents you need and who should create those documents.

Who To See

In Arizona, wills and living trusts (more on the difference between those later) can be created by two types of professionals: lawyers and Certified Legal Document Preparers (CLDPs). In general, lawyers are the more expensive of the two.

By law, CLDPs cannot give legal advice, only general legal information. They also cannot help you if you are already represented by an attorney. Basically, CLDPs make sure you fill out all the forms correctly and that’s about it.

Given the complexities of estate law, we opted to spend a bit more and go with a lawyer. The price was still reasonable. We got a living trust package that includes a will, financial and medical powers of attorney, and an advanced heath care directive for both me and my wife for about $1,500.

(I recommend shopping around. I found prices for lawyers providing the same package ran anywhere from $1,500 to $4,500. In fact, our lawyer's price was the same as some of the CLDPs we found.)

You can also find forms for wills online and you can create one yourself. I wouldn’t advise doing this. First off, laws vary by state, so you might use a form that is not legal in your state. Second, do you really want to risk your entire estate just to save a couple dollars? A simple mistake on your part could end up costing your spouse or heirs a lot of money and / or headaches.

Option 1 - A Will

Most people assume a will is all they need to distribute their assets after they die. This is true, but it’s not the whole story. A will does not go into effect until you die. If you end up in a coma, persistent vegetative state, or otherwise incapacitated but not dead, none of the provisions in the will are in effect.

People you specified to take care of your children when you die cannot legally do so. Medical and financial decisions cannot be made by others on your behalf unless they have received prior authorization from you.

What if both you and your spouse end up in a coma? Who takes care of your kids? Whatever you specified in your will has no legal standing because you are not dead.

Probate - A Place To Avoid

If you don't have a will or only have a will, upon your death, your estate will go into probate. Probate is the process of “proving” a will in court and getting it accepted as a valid legal document. The probate process also assigns an executor of your estate – someone who will dispose of your assets. (If your will doesn’t specify someone to be an executor, the court will pick someone.) Probate also makes your will public and allows anyone a chance to contest it.

As you might expect, probate can be a pain. It can also be expensive. All those court appearances cost money. If someone contests your will, that’s more court visits and more expenses. By some estimates, probate costs can eat up 3% to 7% of your estate’s value.

Many state have laws that allow “small” estates to skip probate, but the definition of “small” varies by state. If you own a home in a state with high property valuations, your estate stands a good chance of exceeding the definition of a “small” estate.

In Arizona, as of this writing, probate can be skipped if the value of all personal property in the estate is $75,000 or less or the value of real estate in the estate is $100,000 or less. That excludes most homeowners, at least in the Phoenix metro area.

Beside the expense, another problem with probate is time. It takes a long time for an estate to go through probate. It can take months for your estate to be disbursed. If you have a loved one that will depend on your assets to live on, they might have to go a long time before getting access to them. In Arizona, even if your estate qualifies as “small”, there is still either a 30 day or 6 month waiting period (depending on which of two methods you choose) before assets can be distributed.

In general, you want to avoid probate if possible. Enter trusts.

Option 2 - A Trust

There are many types of trusts – revocable living trusts, irrevocable trusts, and testamentary trusts. I’m going to only talk about revocable (changeable) living trusts. You may think only rich people need trusts, but this is not the case. They offer benefits to people with any size estates.

A living trust avoids probate altogether, so that’s a good enough reason to go this route. But a living trust does more. It specifies a disability management team - a person or group of people who can make decisions for you in case you become incapacitated.

The living trust is mainly concerned with financial situations, so you’ll still need a heath care power of attorney, which is why most living will packages include these in their cost. Remember Terri Schiavo? That's a (somewhat) extreme example of what can happen without a heath care power of attorney.

Living trusts can also be used for tax management or to protect property from creditors. Trusts are private, so your final wishes will not be made public, as they would with a will alone.

With a trust, you can not only specify who you want to raise your children when you die, you can also specify when they get access to your estate. I wouldn’t want an 18 year old to get access to a million dollar estate, even though at that age, the law considers them to be an adult. That’s a virtual guarantee that that money will be wasted. Instead, you can specify the child gets all of the money at a certain age, or when they graduate college, or a percentage of your estate every 5 years starting at a certain age. Whatever plan you come up with, you can implement.

A Trust Is Just A Box

Think of the trust as a box. Anything you put in the box is in the trust. If a part of your estate is not in the trust, that part will need to go through probate. For that reason, you’ll want to put all of your valuable assets, such as real estate, in the box.

When a trust is set up, you will sign a form that basically says any property that is not titled is part of the trust. Non-titled property includes things like your furniture, clothing, jewelry, etc. Basically everything inside your house.

Titled objects are property where ownership requires a publicly recorded title, such as vehicles, real estate, etc. These have to be specifically put into the trust via a change in title, which requires some paperwork on your part. It’s important to remember to do this or those items, which are usually high in value, will not be in the trust and will have to go through probate upon your death.

Learn More And Make A Plan

This just provides an overview and is not a full discussion of trusts and how to use them. The choices you make, specifically in situations such as how you designate beneficiaries for life insurance, retirements accounts, etc., can have legal and tax implications, both for you now and your heirs after you die. If you think a trust might be right for you, I highly recommend that you speak to a qualified attorney to discuss your particular situation.

Setting up a will or trust can cost some money, but the good news is that it usually isn't something that has to be done immediately. You can take some time to save up the money first. Just don't forget to get it done!

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What Is Your Financial Knowledge?

As I wrote about during Side Hustle Week, I’ve started doing a lot more work on Amazon’s Mechanical Turk. One of the surveys I took was regarding financial knowledge. I was presented with a couple different stock portfolios with an initial value of $10,000 and asked what I thought the value would be after one year. After that, they asked some questions to gauge my financial knowledge.

I thought it would be interesting to see how readers of this blog do on the same questions.  I re-created the quiz on SurveyMonkey, but they limit free accounts to ten questions, so I split the quiz into two parts.  There are a total of 13 questions and it should take about 5 to 10 minutes to complete. Your responses are anonymous and you don’t need to provide your email or anything to answer.

Part 1: https://www.surveymonkey.com/r/YZTPYX8


Part 2: https://www.surveymonkey.com/r/YZPKJYL

Be sure to check back here! In a few weeks, I’ll post the results, along with my results from when I took the quiz for the first time and the correct answers. I would love it if you would take a minute or two and take the quizzes.

Thanks for helping me out!

Update: The surveys are now closed. See the results here.

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Your Money Is About to Get Faster

I've always been bothered by the fact that it takes days to move money between banks electronically and that money doesn't move on weekends or holidays. It's all computerized! Why shouldn't transfers get processed on weekends? It makes no sense and I find it very frustrating.

Two years ago, I wrote about this after hearing a Planet Money podcast on this very issue. The problem is that the Automated Clearing House (ACH) system that banks use was designed 40 years ago. See my previous post for my full rant on this.

Today, I have good news! Finally, the ACH system is getting an upgrade! It is going to take 2 years to fully roll out, but soon, transfers made using the ACH will be completed the same day they were made. Banks which use the ACH will be required to update ACH transactions three times a day, up from the once a day that was previously required. (That updating was usually done during overnight processing, so essentially, the ACH was a "next-day" system.)

Effective now, banks are required to credit an account for money received via the ACH system the same day. A year from now, they will be required to debit money from an account the day the transfer is requested. And finally, in March 2018, all ACH transferred money must be available for withdrawal by the end of the business day. (Currently, there is a limit of $25,000 per day.)

It's still not perfect. It's same day, but not real time. That Planet Money podcast I talked about previously featured a man in London sending money to his daughter overseas. They initiated the transfer on the phone while speaking to the reporter and the daughter verified she got her money within seconds. The new ACH rules don't go so far as to require instantaneous transfers, so we're still lagging the rest of the world, but at least it's a step in the right direction.

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Goal Update: End of September 2016

At the end of each month, I post an update of my goals, including a brief discussion of any notable events that might have occurred during the month. The latest month's figures can always be found under the Featured menu in the menu bar at the top of the blog.

Last updated: End of September, 2016
Current value: $25,527
Change from last month: +$526
Percent of Goal:  23.47%

Note that the funds in this account are invested in stock, so there will be fluctuations in value that are outside my control. I never withdraw money from this account, so any dips are purely due to stock price changes.

Events Of Note Last Month:

I saw a pretty nice increase of $526 in September. Net income this month from my online courses was $152.65. My hard money loan generated $133.33 in income. I received $4 from a class action lawsuit settlement.

As I mentioned during Side Hustle Week, I've started doing work at Amazon's Mechanical Turk. September was my first month really working this hustle and I'm happy to report that I earned $248.03 for the month! This surpasses my goal of $200 per month. It's even more impressive when you realize I didn't even start until around the second week of the month.

Unfortunately, I'm still going through the process of linking bank accounts and transferring those funds out of mTurk, so this figure did not make it into my savings account in time to be included in my gains this month. October's number should be nice though!

LifeHacker's September Money Challenge

LifeHacker's Two Cents blog posted their money challenge for September: Find a Cheaper Cell Phone Plan. I took the challenge. Well, I took the challenge in a half-assed sort of way. The challenge was to find a cheaper cell phone plan that offered the same level of service. I found a cheaper one that offered a lower lever of service, but that is still suitable for our needs. Yeah, I kinda cheated. Don't tell the teacher.

My family has three cell phones and we have a Verizon plan that gives us shared minutes and data. I suspected that I was paying for way more data than I needed. Our current plan gives us 10 GB of data each month. I keep one year's worth of bills, so I checked my statements for the past twelve months to see what our actual data usage was. For two of the last 12 months, we used 4.4 GB and 4.0 GB. All the other months were under 4 GB of usage. The Verizon plan type we have offers data tiers with 4 GB, 6 GB, 8 GB, or 10 GB of data. I opted to drop down to the 6 GB tier, saving us $8.30 per month, or almost $100 a year. (Surprisingly, the 8 GB tier was actually more than our current price for 10 GB.)

I could probably drop to the 4 GB plan, which would save us more than twice that - $240 a year - but we've got a trip to Germany coming up in a couple of months. I'm going to have to look at my international options for that, so I'll revisit this as that gets closer. I'm leery about using public WiFi spots in general, even more so in Europe. We'll be staying at two different Air BnB places which offer WiFi, but again, I'm not sure I want to use the provided WiFi. No telling what kind of packet sniffing software they might have on their networks. Yeah, I'm a bit paranoid - that comes from working in IT. I may use a VPN client to protect our data communications over WiFi, but I haven't looked into that yet. But the bottom line is, while we are in Germany, we'll likely be using more cellular data than normal.

Net Worth Update

Our net worth continues to grow, increasing by $13,371 from last month to a new total of $716,695.

August 2016

September 2016

Note: Mint.com categorizes our HELOC as a credit card debt, not a loan, hence the apparently high credit card balance.

Almost $12,000 of this month's increase was due to my adding a pension account to my asset list (which Mint allocates into the Property category). In the personal finance world, including pensions in a net worth calculation is something that there seems to be a fair amount of controversy about.

A pension plan provides for an income stream in the future, while your net worth is a snapshot of what you are worth at this moment. Therefore, as you might imagine, an argument could be made either for or against including it in a net worth calculation.

However, I am now fully vested in my pension plan and, if I leave the company before retiring, I am eligible for a lump sum payout, the value of which is calculated at the beginning of each year. In accordance with these guidelines given at Investopedia.com, that lump sum amount is the figure I am including in my net worth calculation. Specifically, my lump sum payout, as of Jan 2016, is $11,980.

If you have any questions or suggestions for topics, please drop me a line!

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Side Hustle Week Day 5: Udemy

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Welcome to Side Hustle Week here at Road To A Tesla! Most personal finance bloggers love to talk about side hustles - ways you can make some extra money on the side to help you achieve your financial goals more quickly. These are usually jobs you can do as a hobby or while you are still employed full time somewhere and, with luck, you may be able to parlay them into big-time income producing projects.

I tried out my hand at some side hustles and each day this week, I will be posting my results and thoughts on some of the more popular ones.

Day 1 - Studypool
Day 2 - Wrapify
Day 3 - Loanables / Craigslist
Day 4 - Amazon Mechanical Turk
Day 5 - Udemy

Udemy

I’ve saved my most profitable side hustle for last - Udemy! Udemy is a marketplace for online learning. There, any subject matter expert can create their own course and offer it for sale to the public. This is where you can really put your experience in a particular field to work. Create an online course, set the price, and get paid as students sign up! Over 12 million student use their site. That’s a lot of potential buyers!

The Process

Once you sign up, spend some time getting familiar with Udemy’s Course Quality Checklist. Your course is reviewed before it is published to make sure it meets Udemy’s requirements for technical quality, so you want to make sure you build it to their specifications from the get-go. Udemy places a big emphasis on video content, so the majority of your course should be video (and be sure to use a widescreen aspect ratio). They also like to see a variety of presentation methods. For example: video of you talking, PowerPoint presentations, video demonstrations or screen captures of what you are explaining, etc. They also like for courses to have downloadable content that students can download and review on their own systems. Their system provides the ability for you to create tests for students, so that’s another option you can incorporate into your course.

Your course should be broken up into “lectures” that a student can easily digest. I try to keep my lectures to 5 to 20 minutes each. (This also makes creating them easier.) Once you have created your course files, Udemy has a step by step process that guides you through uploading your files and creating your course in their system. You then submit the course for quality review. If there are any issues, Udemy will tell you what they would like fixed and provide suggestions on how to fix it. This is where is pays to really understand their quality checklist. If you can meet most or all of their requirements the first time you submit for publication, the approval process goes much quicker.

Note – not all of their suggestions for improvements have to be followed. For example, I named my first course Microsoft SQL Server 101 and they wanted me to change the name. They said they wanted to avoid the overly-formal 101-type college course naming convention. I replied that I really preferred that name and they let me keep it. I also did not want to appear in any of my videos, so my courses are 100% PowerPoint slides or program demonstrations. Their guidelines suggest you appear in your videos, but they still will approve a course without any person appearing in it. (Although I did include a still image of myself in an “about the instructor” slide.)

They provide a free one hour lesson on how to create your own course.

Udemy provides assistance in creating the images for your course listings for free. I have zero graphical design experience, so I let Udemy design the images for my courses.

When it comes to pricing, Udemy does impose some limits. There is a minimum and maximum price for courses, currently $20 and $200. The minimum price for a course after a discount is applied $10. You also have the ability to create free courses, although you will receive no payment for students that join those.

Udemy offers several marketing programs you can opt in to. If you do not join their marketing programs, you get to keep 50% of all income your course generates. The downside is that you alone are responsible for promoting your course and getting students to purchase it. (You do have the ability to create coupon codes and discounts to help with promotion.)

If you do join their marketing program, there are three options to choose from and you can join one, two, or all three. All programs will promote your course using a fixed amount discount or a percentage discount, but there is a minimum price they will charge (usually $10). The first program is just Udemy itself promoting your course. The second program is Udemy affiliates promoting your course. The third is Udemy For Business selling your courses as part of a bundle of courses offered to their corporate customers. How much money you make depends on which promotion program you are in. The first program gives you up to 50% of the sales price. The second pays you up to 25% of the sales price. The third divvies up 50% of the sales price and divides it equally among all the courses in the bundle, based on the minutes in each course. All programs may discount your course by up to 75% (for the percentage discount option) or offer it for a sales price as low as $10 (for the fixed amount discount option).

I highly recommend joining all the marketing programs. Even though they greatly discount your courses, the number of students they get to join your courses probably beats anything you could achieve on your own. Joining one of their marketing programs does not prevent you from recruiting students on your own however, and you still get the higher payment amount for students you bring in on your own (via a coupon code).

Students have a 30 day money back guarantee on all course purchases, so Udemy pays you about 5 weeks in arrears. For example, you will be paid the first week of August for sales made during the month of June. Payment is made via Paypal.

Each course has its own discussion area where students can ask questions and instructors can answer. Instructors also can send messages to all their students or students of just a particular course. (They request that you limit marketing messages to once a month.)

How It Turned Out

This is how it’s turned out for me so far:

I posted my first course in August 2013. That works out to around $225 a month for three years. And the best part is this is truly passive income. Let me explain.

The Best Side Hustle Is One That Requires No Ongoing Hustle

Truly passive income is income that keeps coming in whether you work or not. I spent some initial time creating the courses, but once I published them, they’ve been generating income day in and day out, even while on vacation. I made my first course 3 years ago and haven’t touched it since, but I’m still getting money from it today!

My total monetary investment was $149 for this Yeti microphone (and the price has dropped since I first bought it years ago). I used CamStudio, a free screen recording program to record my videos. I used the free program Convert AVI To MP4 to convert the output from CamStudio to a format Udemy supports. I used PowerPoint to make my slides, but my employer paid for that software. My courses are about Microsoft SQL Server, and again, my employer paid for that.

My biggest investment was time. I spent several hours developing each of my courses. I started by creating an outline of what I wanted to teach, then wrote a script for the recordings. I also decided what I wanted to demonstrate and developed examples. Once all that was completed, I had to record everything.

After the course was published, I created my own YouTube channel and posted two of the lessons from each course as demos.  I also added coupon codes for the courses there.

The first course took me the longest to create. (It was also the longest of my courses, at over 4 hours long.) It took me a while to get used to the recording equipment, running the slideshow while reading my script, and running the demonstrations. I had to re-record my lessons several times because I made vocal blunders or I messed up the demonstration. But by the time I made my fourth course, I had the process down and I could usually finish a lesson in the first take. I have a total of 10 hours of course material and I estimate I spent about 80 hours creating all of that. At my current income figure of $8,288, that works out to $103.60 an hour. And as more sales happen over time, that number will only go up.

Udemy provides statistics so you can see how far into the course each student gets and I’ve discovered most students who buy a course never finish it! In fact, I would estimate that more than half of the people who buy my courses never view ANY portion of them! Here’s a list of some of my very first students who joined my class three years ago. Look at the Progress column:

Only one viewed more than 35% of the course and most viewed none of it. But they all paid me for it! Over the three years I’ve been offering courses, I think I only had 3 or 4 people request refunds. Udemy handles the refunds, so there is no work on my part.

For those interested, my courses are here. Use coupon code 15OFFBLOG on any of the courses for a 15% discount.

Teach What You Love

You may not think you have anything to teach, but visit Udemy and take a look at some of the courses people have created. You may see something and think “I can do that!”



This concludes Side Hustle Week. I hope you enjoyed it and learned a thing or two. I love hearing about what other people have done as side hustles, so please leave comments about any experiences you have!

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Side Hustle Week Day 4: Amazon Mechanical Turk

Source

Welcome to Side Hustle Week here at Road To A Tesla! Most personal finance bloggers love to talk about side hustles - ways you can make some extra money on the side to help you achieve your financial goals more quickly. These are usually jobs you can do as a hobby or while you are still employed full time somewhere and, with luck, you may be able to parlay them into big-time income producing projects.

I tried out my hand at some side hustles and each day this week, I will be posting my results and thoughts on some of the more popular ones.

Day 1 - Studypool
Day 2 - Wrapify
Day 3 - Loanables / Craigslist
Day 4 - Amazon Mechanical Turk
Day 5 - Udemy

Amazon Mechanical Turk

Just about everyone knows Amazon is an online store that sells more or less everything. However, they have numerous other businesses, one of which is Amazon Web Services. It is this part of the Amazon empire that runs the Mechanical Turk website. What is a Mechcanical Turk? The name comes from The Turk, which was a fake chess-playing machine built in the late 18th century. It was fake because the machine actually contained a hidden person that was moving the chess pieces.

Image credit

Amazon has created a crowd-sourced platform where people can submit work for others to do. Typically, the tasks are relatively simple, yet too complex for a computer. For example, common tasks are to transcribe an audio or video file, evaluate a website, or answer a survey. For the person submitting the project, the site behaves very much like a mechanical turk – they submit a question to a computer, yet humans actually perform the task and create the result. The humans performing the tasks are paid varying amounts, depending on the task. Prices range from pennies to over a hundred dollars.

The Process

I signed up for Amazon Mechanical Turk back when I first heard about it, sometime in 2012. To sign up, you use your Amazon account and answer some qualifying and demographic questions. The tasks you can perform are called HITs, or Human Intelligence Tasks. If you qualify, you can pick a HIT, which will likely direct you to another website. Open that website in a different window or tab and complete whatever task you have to do. At the end of that process, you will usually be given a code you need to paste back into the original HIT window or tab to get credit for your work.

When you accept a HIT, that HIT is not available for others, so it is expected that you complete it. If you start it and decide for whatever reason not to finish it, you should be sure to return the HIT, so that it is available to someone else. The system tracks how many HITs you accept and complete and you will be disqualified from accepting any more HITs if your failure rate gets too high.

Most of the HITs I’ve done are surveys or questionnaires, simply because I tend to do this at work during my lunch hour. These HITs typically only pay $1 to $2 and take 5 to 15 minutes to complete. There are usually many HITs available involving transcribing audio or video, which pay more, but aren’t conducive to being performed in an office environment. The higher paying HITs typically require additional qualification. You qualify for these by taking one or more additional tests. For example, here is a HIT that pays $113.21, but requires some additional qualifications. The task is to transcribe a 2.5 hour audio file.

A high paying HIT with several qualification requirements

If you can type as fast as the person talking in the recording, that works out to just over $45 an hour. Not too shabby!

I also often see HITs for transcribing foreign language items into English or vice-versa. If you are bilingual, this might be a good way to pick up some extra money.

How It Turned Out

After you submit a HIT, if your work is approved by the employer, you usually see the money credited to your account in a day or two. You can withdraw your earnings either via an Amazon Payment account (which you can link to your bank account), or get it transferred to an Amazon Gift Card, which you can use to buy things on their site.

As this image shows, I’ve earned $56.03 since I signed up back in 2012.

The Old Way I Did It

Nothing spectacular, but, as I said, I typically just did this during my lunch hour at work. I would log in to the site and manually look for HITs that were available to me. I’ve discovered that the types of HITs I usually do come around more or less weekly, so I only checked about once a week. Most the time, I forgot or I got busy reading the news or something else distracted me, so in reality, I logged in once a month or so, possibly even less.

The Way I Do It Now

A couple of months ago, I saw a report of someone making $150 to $300 per week. Based on my experience at the time, I found this hard to believe. After re-reading the post at that link, I bought the author’s ebook (Side Hustle From Home: How To Make Money Online With Amazon Mechanical Turk) to see just how this was possible. I have to say, this was a game changer.


The biggest tip I got from the book was to use scripts and browser plugins when working on mTurk. There is a whole community that has grown up around this side hustle and they have created all kinds of scripts to optimize your income. In the two days after I installed some of the scripts the author recommends, I completed about 25 HITs, boosting my total completed count to over 100, which is an important threshold at which more and better paying HITs become available. Prior to this, I could not see how it was possible for people to make any sort of real money doing this. Now, my eyes have been opened.

My daily target is to earn $11.77 a day, 5 days a week. After withholding 15% for taxes, that works out to $10 a day or an extra $200 a month. I think this is easily achievable. I'm not going to retire on this, but it will provide a nice boost to my Tesla savings!

Remember my screenshot above showing I made a whopping $56.03 after four years? Look at what has happened after just four days of using the scripts recommended in the ebook:

I made almost $70 with very little effort. And I'm still waiting for 12 more of my completed HITs to get paid, so I'm due another $6 to $12 for those days.

Amazon Mechanical Turk is definitely worth checking out, especially if you have a job working on a computer all day and can leave a browser window open in the background to alert you as HITs become available.

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