Beating Broke

Personal Finance from the Broke Perspective

3 Ways To Be An Entrepreneur Boss With No Startup Cash

By Leave a Comment

Most people think that the only way to be a businessperson or entrepreneur is by first having money – and lots of it. This is simply not true.

Now, to be fair and honest, having money in the form of startup capital definitely helps. In fact, it’s pretty important. Your chances of growing a successful business are related to your ability to raise funds and attract investors.

However, it’s possible to get into the game without significant startup cash and there are plenty of incredible stories of business moguls and brand tycoons who have done so.

But how? Cash is king, especially in business. How can one possibly become a player in the game of entrepreneurial thrones without a starting nestegg of investment money?

The answer, as in most things, is to start small, think strategically, and take it step by step. As they say, Rome wasn’t built in a day.

The following is a list of ideas and tips for how to think past your financial limitations and pursue the entrepreneurial business mindset hidden inside you.

Building up and selling small, lucrative operations

Ever since Amazon launched its Fulfillment By Amazon (FBA) program, the logistics landscape for small business owners has changed. And by small businesses, we also mean one-person online operations, such as craftspeople and sellers who have ecommerce shops on Etsy and other platforms. Such online shops are popular because the startup costs are very low.

If you or a friend/partner have a lucrative craft or trade that you’re very good at and which is relatively popular, you can tap the warehousing and third-party logistics of the biggest ecommerce company in the world, Amazon, to dramatically upscale your operation.

And that’s not even the best part for entrepreneurs. If your goals go beyond just running one selling operation online, you may want to sell your business itself. There are partner-investor platforms that buy Amazon FBA business assets and can close the deal in 45 days or less.

If you can make this sale, suddenly you will have startup capital to dump into a new endeavor. Granted that you’re safe and strategic, this is a way to start small with virtually no startup funds and grow into a serious investment package.

Jump on the cryptocurrency train

You’ve probably heard a lot about cryptocurrency in recent years. The blockchain-based, decentralized digital currencies like Bitcoin and Ethereum have grown exponentially. In fact, early investors – those who scooped up significant amounts of Bitcoin when it was only worth pennies – are millionaires many times over now.

The train’s already out of the station on these bigger coins, but the truth is that cryptocurrency is finally being accepted by mainstream financial institutions, who are integrating it into various operations. Blockchain technology is here to stay, which means that new blockchain projects that are attached to crypto coins are also here to stay.

Eventually, it’s inevitable that these smaller crypto projects are going to explode the same way Bitcoin did. So if you invest early in the right coin, you could find yourself with new funds in only a few short years.

This path is only recommended for those who already have a knack for stock market investing and have the discipline to study and research the cryptocurrency industry. Crypto is a very volatile investment, but the payout can be huge.

Reselling

Have you always had an eye for high-value clothes at thrift shops? Maybe you can walk into a used book store and find a gem that only costs a dollar. Thanks to platforms like Etsy and others, reselling has turned into a major industry and the best part is that it’s accessible to everyone.

You might be able to spend 10 bucks and walk out of a Goodwill store with hundreds of dollars worth of resellable inventory. If you know how to set up a digital shop and market your wares, you can become a reselling powerhouse in no time.

The best part about reselling is that it’s not limited to any particular type of product or craft. There are resellers for vinyl records, paintings, books, clothes, shoes, video games, etc. Pretty much anything that has ever excited humans has a ready-made niche market in the reselling industry. If you have a passion for something and naturally know how to find valuable models of it, you could have a promising reselling career ahead of you.

Are Insurance Companies Just Big Ponzi Schemes?

By 14 Comments

It struck me the other night, as I was reading a book and came upon a section on Ponzi schemes, that insurance companies are borderline Ponzi’s themselves.

Ponzi Schemes

What Is a Ponzi Scheme?

The definition of a Ponzi scheme is when the broker/banker/agent takes money and promises an unusually high return and then pays said return from the incoming money from other investors.  Eventually, when the incoming investors dry up, the agent can no longer pay the returns and the scheme comes crashing down.

Ponzi schemes are named after Charles Ponzi, an Italian immigrant who was the original Ponzi schemer.  In recent years, the most famous (and longest lasting) Ponzi scheme is attributed to Bernie Madoff.  Madoff’s Ponzi scheme is thought to have begun in the late 1980s or early 1990s and didn’t end until 2008 when he was arrested.  This Ponzi scheme cheated nearly 5,000 customers out of $60+ billion dollars.

Insurance Companies Are Set Up Like Ponzi Schemes

Now, let’s look at insurance companies.  We, as the insured, pay the insurance company our premiums in return for insurance against some sort of event.

With health insurance it’s against some sort of health event.  With car insurance, it’s against some sort of accident.

In any case, it’s a payment.  Or a return on the premium.  Very seldom will you actually come out with your entire investment.  And, unfortunately, you often have to fight for the payment.  Health care coverage may be denied if the health insurance company doesn’t find the treatment worthy of the expense or if they deem it experimental.  Likewise, if you file a home insurance claim too many times, the insurance company can choose to drop you as a customer.

Ponzi schemes
Photo by Daniel Tausis on Unsplash

For the most part, insurance companies are in charge and decide when to cut customers.  But what would happen if the premium payers dried up?  It would certainly get more difficult for the insurance companies to pay any claims.

How Insurance Companies Are Different from Ponzi Schemes

Where the key difference lies is that if you stop paying your premiums, the insurance company stops paying any claims for you.  Also, as a premium payer, you never really expect your money back unless you have a claim.  You’re paying for the “in case”–if it were to happen.

In a Ponzi, you’re investing your money specifically for the return.  You’re not going to stop investing as long as the returns are stable.  And a Ponzi only really dies when the new investors stop coming.  If new insured stopped coming to the insurance company, they would still have their current insured to collect premiums from.  However, as the years go on with no new insured clients and the current clients age, the insurance company could have difficulty paying claims.

Final Thoughts

Even though insurance companies seem to fit many of the criteria for a Ponzi scheme, no.  insurance companies are not Ponzi Schemes.  But, it sure feels that way sometimes.

Read More

Do Politics Have Any Place in Personal Finance?

How Much Car Insurance Coverage Do You Need?

When Do You Need Umbrella Insurance?

Covering the Costs of a Car Accident When You’re Broke

By Leave a Comment

As life would have it, you’ve just been involved in a serious accident. To top it all off, you’ve sustained injuries that will certainly keep you out of work for some time. You’re already strapped for cash, so you’re probably freaking out about how you’re going to survive the next couple of months (or years). Before you add tension to an already stressful situation (and prolonging your healing process), you should know that there are ways to manage – even if you’re broke.

Costs of a Car Accident

Not many people consider the true cost of a car accident. Outside of possibly paying an insurance deductible, you could also be responsible for repairs, medical bills, and medical-related expenses (i.e. co-pays or medical supplies). There’s also the added fact that you’re not able to work until you get clearance from your doctor. This leaves you hemorrhaging money that could result in you not being able to pay your regular bills. Ultimately, knowing where to turn in times of a financial crisis such as this is key to your survival.

Hire an Attorney

If you believe the accident wasn’t your fault, you should consult an accident attorney immediately to discuss your case. If there is sufficient evidence that you were not the at-fault party, a trained attorney may be able to use this information to help you get a considerable settlement from the insurance company or by filing a personal injury lawsuit and pleading your case in court. You could get money to cover your medical bills (past and present), medical-related expenses, and the time that you’re out of work if you win your case. This, of course, would take a load off your shoulders (and your pockets).

Dip Into Emergency Savings

An emergency savings account is an account where you set money aside for a rainy day or unforeseen circumstance. Getting into an accident is certainly an ideal time to use those funds. If you have several months’ worth of income saved in the account, you could find peace of mind in knowing that your bills are covered for a little while until you come up with other financial solutions.

File for Disability

If the injuries you’ve sustained are serious enough, you may be able to qualify for temporary or long-term disability coverage. This would provide you with a monthly income that can be used to cover the bills. It can take several weeks to get approved, so be sure to apply as soon as possible. You’ll likely need your medical reports or notes from your doctor to explain your injuries and ideal time in which you can return to work.

Look Into Assistance Programs

There are plenty of programs available for those going through hard times or living on a limited income. They are free to apply for and could provide you with peace of mind. There are programs to help with healthcare, car insurance, food, housing, childcare, and even transportation costs. Check with your local board of social services to find out how to apply for such programs.

Cut Costs

If you’re really struggling financially you’re going to have to get serious about your spending. Cutting back on your costs could help you save several hundred bucks each month. Cut your cable subscription, cancel monthly subscriptions for products and services you don’t need, or cook at home instead of eating out. You should also use methods like waiting 72 hours before making a purchase to ensure it’s something you really need.

Downsize

You may not like this next bit of advice, but if your injuries are long-term or permanent, downsizing may be the only way to survive financially. If you’re already broke or living on a shoestring budget, eventually, you’ll find yourself accumulating more and more debt and causing a plethora of financial trouble for yourself. If necessary, move to a smaller house or more affordable apartment, or consider living with family to give yourself a financial break.

You never thought you’d find yourself dealing with the aftermath of a serious accident, but here you are. Though overcoming this situation requires more than finances, when you’ve got bills piling up and can’t afford the bare necessities, the stress really adds up. As increased stress only intensifies pain and prolongs physical and psychological healing, it is ideal to have solutions to help you cover the costs of the car accident. With such a big stressor lifted, you can focus your energy on your physical and emotional well being.