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Hey I'm brand new to this site.

So I got caught in the debt trap too.

It's ironic how I used to be a super frugal saavy person until it came to travel hacking with Credit cards then wanting to build online businesses. It's a lot harder than I anticipated. But everyone's got to learn some way or another right?

So yeah I got some free economy/business/first class flights without paying any monetary cash but realized after being in debt that this is exactly the trap banks wanted us to fall into while continuously digging that hole. No way they can afford to put awesome exquisite fountains in each branch.

How did this debt happen?

Long story short. After I started traveling while saving thousands on air flight costs, I wanted more than just being frugal on plane tickets. I wanted to create something full time online to sustain my primary income source while living like a king in beautiful countries where the currency is much lower than the US currency. Pretty smart idea right?

Let's just say after tons of online business courses, failed online marketing businesses, massively expensive ad spends, and worse of all, bad financial planning (no financial planning actually) I dug too deep in the debt hole.

I do regret many of the big purchases I made but I was 100% in on creating successful online businesses and till this today I am still going that route.

I manage to get myself and mom into $60K debt on Credit cards.

But there's a part of me that doesn't regret the purchases I made because it was a learning experience. I know possess a mindset that will exceed my potentials and get me out of this hole and make millions for sure. I have a personal mentor too who's helping me out, but it never hurts to learn more from other people who may have been in the same hole with me.

Currently I work a crappy office job paying $15/hr in NYC. Fortunately I've been living in an apartment for almost my whole life so rent is $1000/month (That's really CHEAP in NYC!) and yes I'm living with parents so there's no privacy but it's a genius idea to stick around until I fix the problem I made in the first place.

I'm personally tired of living where I am. My closest friends suck, they're not like me in terms of wanting to achieve the financial goal life and creating online businesses or any business in general.

I want to be able to get my own place, temporarily work a better job, and live where the prices are a lot less than NYC, especially on food cost. (Most of income goes to food even though I do my best to eat on a budget)

What I am doing about it?

Well firstly I'm with my mentor discussing ways to tackle my situation at the same time invest with him.

Secondly, I'm hawking my spending and business expenses in order to beat my expenses with my currently income through a spreadsheet.

Thirdly, I want to see if there's a way to work elsewhere, anywhere in the world where I can live a lot cheaper than I would be in NYC, increase income by getting a temporary job that pays more. What this will do is increase my productivity by 20X more and this should affect my monthly income/expenses in a good path.

What do you guys think?

What would you do in my position?
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No. of Recommendations: 6
Sorry to hear about your difficulties.


Just out of curiosity, what is the nature of your on line businesses?

You are obviously a person with a huge amount of drive and determination, but I tremble at the thought of that being coupled with inexperience and lack of judgement based on experience. Driving down the wrong road isn't likely to get you where you want to go!

<<Well firstly I'm with my mentor discussing ways to tackle my situation at the same time invest with him.>>


I worry when I see this. Your mentor seems to be financing his own ambitions while offering you advice. This conflict does not sound good.


I'm sort of the opposite of you ---- excessively cautious. Despite that, I operated my own one horse furnace repair business as a self employed tradesman and have done well with stock market and rental property investments. Still, excessive caution isn't a great strategy either.



Seattle Pioneer
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Hey I try to be as specific with my life story as much as possible. There's going to be a lot of detailed I may have missed out.

My online businesses involve ecommerce mainly. Before ecommerce I tried getting to online consultation, marketing business for B2B. But ultimately ecommerce is something I work best with. It still comes with its headaches of course but that's how business works. It beats trying to start up a store with a huge up cost investment.

My mentor is someone that I do know.
In the past, I've been in situations where I had mentors who didn't give a crap about me other than the fact that I paid for their services. But with my mentor now, he never markets himself to help others in financial needs or any of that crap. So I know when I see a bad quality mentor who only wants my payment versus someone who generally cares. I personally came to him for help. He owns multiple businesses from hotels to restaurants and I have verified everything. I've been through so much that I can separate the crap from the gold people.

So far we've had 2-3 hour weekly calls to discuss a plan of action, ways to tackle my current debt, and focus on ways to increase streams of income as well as financial tracking like my daily living, daily expenses, etc.

That's where I am right now.
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No. of Recommendations: 2
You are working at $15/hour. For a 2000 hour work year, that's $30,000 pre tax.
You are living with your parents, rent free?
You have $60,000 CC debt, part on your Mom's CC.

Is that a decent summary?
Any other debt?

What is your plan for paying off the debt?
$30k / year gross... About $24k take home? If $12k of that goes to service the CC debt, then 5-6 years to get the CC debt to zero? Are you willing to wait 5 years?

You might try International Living for ideas for inexpensive places to live around the world. (I've no financial connection to them)
https://internationalliving.com
They are biased to the Conservative/Republican side.

What options are you considering for paying the CCs off and getting a business started?

Would you consider something like truck driving? Short training period for the CDL, high demand, relatively good pay? YMMV? LOL

Personally, I'm not in favor of playing the "bank/house" game with CCs. The "house" always wins. As you've noted, they want people in the CC debt trap. They are not your friend.

SP's already mentioned the "mentor". Be careful... "Swimming with sharks" and all that.

Like SP, I too, am on the perhaps too cautious side?

🤔
ralph
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Yes. That's the overall summary of my situation.

If my income to expense is a positive cashflow because of my current work and income, then at least that would bring in an extra $200+ a month (Hypothetically speaking) which means more money in my pocket to pay off the debt (this is considering after business expenses).

If one depended solely on a 9-5 to pay off CC debt then it would take centuries to pay it all off. As long as my business is in positive cashflow regardless of how much and is being tracked on a spreadsheet, I don't see the problem with it. If business lead me to any negatives, then I'll either cut off or fix something. Any type of cashflow is key right now.

Another way is consolidating my debt, it would make more sense to pay a flat rate fee and eliminate several cards and never use them again versus racking up on CC's high interest rates. Agreed?

My mindset has changed over these years. And my mentor is helping the way I think about money. It's a learning experience and guidance. I'd rather take these risks than to work a 9-5 for the rest of my life. So that's why I am where I am now.
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No. of Recommendations: 5
I manage to get myself and mom into $60K debt on Credit cards.

How much is yours, and how much is your Mom's? What interest rates are each at? Even if your debt is the smaller debt, and it's at higher interest rates, I would strongly suggest that you target paying off your Mom's debt first.

What would you do in my position?

Since you said My closest friends suck, they're not like me in terms of wanting to achieve the financial goal life and creating online businesses or any business in general. one of the first things I would suggest you do would be to find friends who will be supportive of what you want. They can be friends online or in person. You've made a start by asking the question here at TMF, but you need to continue to follow through.

Currently I work a crappy office job paying $15/hr in NYC. Fortunately I've been living in an apartment for almost my whole life so rent is $1000/month (That's really CHEAP in NYC!) and yes I'm living with parents so there's no privacy but it's a genius idea to stick around until I fix the problem I made in the first place.
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.
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I want to be able to get my own place, temporarily work a better job, and live where the prices are a lot less than NYC, especially on food cost. (Most of income goes to food even though I do my best to eat on a budget)

What I am doing about it?

Well firstly I'm with my mentor discussing ways to tackle my situation at the same time invest with him.

Secondly, I'm hawking my spending and business expenses in order to beat my expenses with my currently income through a spreadsheet.

Thirdly, I want to see if there's a way to work elsewhere, anywhere in the world where I can live a lot cheaper than I would be in NYC, increase income by getting a temporary job that pays more. What this will do is increase my productivity by 20X more and this should affect my monthly income/expenses in a good path.


Getting a better paying job, where ever it is, is the key to getting the debt paid off. What concrete steps have you taken to find a better paying job, anywhere? Talking to a mentor may give you some ideas, but unless the mentor has a job to offer, that's not a concrete step. Have you researched positions to see what type of jobs you may be qualified for? Have you applied for any jobs? Have you posted your resume anywhere?

It seems to me you're stuck in a 'dreaming about it' phase, rather than actually taking concrete steps toward getting a better paying job. Instead of posting your story here, your time might have been better spent actually applying for some jobs, for instance.

AJ
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If my income to expense is a positive cashflow because of my current work and income, then at least that would bring in an extra $200+ a month (Hypothetically speaking) which means more money in my pocket to pay off the debt (this is considering after business expenses).

An extra $200/month? Sorry, you need a lot more than that.....

And considering that from your original post, you said It's ironic how I used to be a super frugal saavy person until it came to travel hacking with Credit cards then wanting to build online businesses. your 'business' should be netting you a lot more. If it can't, it would probably be better if you spent the time looking for a better paying job.

As to how much you would need:

According to BankRate https://www.bankrate.com/finance/credit-cards/current-intere... The average rate on credit card debt is at 17.36%, and that's before the extra 0.25% rate that is likely to occur due to the Fed's rate action yesterday. At a 17.5% rate, your $60k in debt will be racking up $875/month in interest. An extra $200/month won't even pay for a quarter of that - much less any principal. At 1% of the principal balance ($600), plus interest ($875), typical minimum payments on $60k in debt at 17.5% would be $1475. At $15/hour, your gross is about $30k/year, which is a monthly gross is $2500. Add $200/month to that, and you get to $2700. Minimum payments of $1475 are almost 55% of that.

You are apparently living rent-free with your parents, but that only leaves 45% of your gross for EVERYTHING ELSE, including OASDI taxes (7.65%), self-employment taxes (an additional 7.65% on the self employment income - you are declaring the self-employment income on your taxes, aren't you?), Federal, state and city income taxes (another 10% - 15%?), food (which you say takes 'most' of your income so 30%?), insurance, transportation, entertainment and savings. You look to be really in the hole, IMO.

Another way is consolidating my debt, it would make more sense to pay a flat rate fee and eliminate several cards and never use them again versus racking up on CC's high interest rates. Agreed?

I highly doubt that with $30k in income, you will be able to find any traditional lender that will provide you a $60k fixed rate unsecured loan. You might be able to get a loan through a lender like Prosper, but their loan limit is $40k (and eligibility for that amount has to be approved). If you were allowed to borrow that much, even with an A rating (unlikely if you have maxed out your cards), and a 5 year term, you would have to probably pay at least 10% to get the loan funded. Further, Prosper charges a 5% origination fee for 5 year loans, so you would net $38k to pay off credit cards and have monthly payments of $850, with $22k in credit card debt remaining. Assuming the same terms as above (1% of principal and 17.5% in interest) would still result in a $540 minimum payment. That's only about an $85/month decrease - even assuming an A level rating. If you have a worse rating, your interest rate would be higher, and you would end up with a higher monthly payment. I don't see how you can pay off this debt with your current income.

Bottom line - if you want to pay off this debt, your first priority should be getting a job with more income.

AJ
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<<My online businesses involve ecommerce mainly. Before ecommerce I tried getting to online consultation, marketing business for B2B. But ultimately ecommerce is something I work best with. It still comes with its headaches of course but that's how business works. It beats trying to start up a store with a huge up cost investment.>>


What I see a need for are methods to allow people to liquidate the junk they accumulate in life. Garages and houses tend to become warehouses of stuff that often has value if you can find the right buyer.

E-bay can do that, but it's burdensome to manage.


Recently I've seen businesses that buy large amounts of surplus electronics parts, and then market them to people who need them, still at pretty cheap prices. Of course, you run the risk of accumulating substantial inventory costs and developing your own illiquid inventory of stuff.


Seattle Pioneer
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<<Another way is consolidating my debt, it would make more sense to pay a flat rate fee and eliminate several cards and never use them again versus racking up on CC's high interest rates. Agreed?>>


Not really. The burden of managing numbers of accounts provides an incentive to PAY OFF THE DEBT.


Debt consolidation typically makes it easier and less burdensome to carry the debt, often leading to yet more debt.

I would suppose you are tempted to start new businesses about three times per week. The easy way to do that is more debt.


Seattle Pioneer
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<<I manage to get myself and mom into $60K debt on Credit cards.

How much is yours, and how much is your Mom's? >>



Generally I'm negative on "debt consolidation" loans.


But I think there an excellent argument for refinancing loans you owe on your mom's credit cards, paying them off and NEVER taking loans from her again. Especially speculative business loans.

That was a REALLY bad idea, in my opinion.



Seattle Pioneer
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No. of Recommendations: 2
timmyturner: "Hey I'm brand new to this site."

Welcome.

"So I got caught in the debt trap too.

It's ironic how I used to be a super frugal savvy person until it came to travel hacking with Credit cards then wanting to build online businesses. It's a lot harder than I anticipated."


What is travel hacking?

And curious as to why you believe you can build multiple businesses concurrently. Most people have a difficult time building one business at a time and more or less all consuming,

"So yeah I got some free economy/business/first class flights without paying any monetary cash but realized after being in debt that this is exactly the trap banks wanted us to fall into while continuously digging that hole."

Buying stuff you do not need or cannot afford in order to get "free" flights is not really getting "without paying any monetary cash".

"How did this debt happen?

Long story short. After I started traveling while saving thousands on air flight costs, I wanted more than just being frugal on plane tickets."


Did you really save on flight costs or did you pay with CC debt?

"I wanted to create something full time online to sustain my primary income source while living like a king in beautiful countries where the currency is much lower than the US currency."

Who doesn't?

"Let's just say after tons of online business courses, failed online marketing businesses, massively expensive ad spends, and worse of all, bad financial planning (no financial planning actually) I dug too deep in the debt hole.

I do regret many of the big purchases I made but I was 100% in on creating successful online businesses and till this today I am still going that route."


So you are still over spending/ out spending your income?

"I manage to get myself and mom into $60K debt on Credit cards."

I cannot imagine dragging my mother into debt.

"I know possess a mindset that will exceed my potentials"

What does that mean?

"I have a personal mentor too who's helping me out, but it never hurts to learn more from other people who may have been in the same hole with me.

Currently I work a crappy office job paying $15/hr in NYC. Fortunately I've been living in an apartment for almost my whole life so rent is $1000/month (That's really CHEAP in NYC!) and yes I'm living with parents so there's no privacy but it's a genius idea to stick around until I fix the problem I made in the first place.

I'm personally tired of living where I am. My closest friends suck, they're not like me in terms of wanting to achieve the financial goal life and creating online businesses or any business in general.

I want to be able to get my own place, temporarily work a better job, and live where the prices are a lot less than NYC, especially on food cost. (Most of income goes to food even though I do my best to eat on a budget)

What I am doing about it?

"Well firstly I'm with my mentor discussing ways to tackle my situation at the same time invest with him.

Secondly, I'm hawking my spending and business expenses in order to beat my expenses with my currently income through a spreadsheet."


What does that mean? "Hawking" means to sell something. And a spreadsheet will give you a nice, orderly picture, but will not beat anything unless that data causes you to change behavior.

"Thirdly, I want to see if there's a way to work elsewhere, anywhere in the world where I can live a lot cheaper than I would be in NYC, increase income by getting a temporary job that pays more. What this will do is increase my productivity by 20X more and this should affect my monthly income/expenses in a good path."

How will working elsewhere (i.e., not NYC) and living cheaper increase your productivity at all, let alone 20x?

"What would you do in my position?"

Stop spending on the CC, review and squeeze your expenses hard, and find a higher paying job.

"My online businesses involve ecommerce mainly. Before ecommerce I tried getting to online consultation, marketing business for B2B. But ultimately ecommerce is something I work best with. It still comes with its headaches of course but that's how business works. It beats trying to start up a store with a huge up cost investment."

What expertise do you have to sell as a consultant?

"My mentor is someone that I do know.
In the past, I've been in situations where I had mentors who didn't give a crap about me other than the fact that I paid for their services."


If you are paying them, you are not a mentee but are a customer, and they are not mentors.

"But with my mentor now, he never markets himself to help others in financial needs or any of that crap. So I know when I see a bad quality mentor who only wants my payment versus someone who generally cares. I personally came to him for help. He owns multiple businesses from hotels to restaurants and I have verified everything."

Verified how?

"So far we've had 2-3 hour weekly calls to discuss a plan of action, ways to tackle my current debt, and focus on ways to increase streams of income as well as financial tracking like my daily living, daily expenses, etc."

Streams of income sounds like marketing terminology from someone trying to sell you something.

AJ [You are working at $15/hour. For a 2000 hour work year, that's $30,000 pre tax.
You are living with your parents, rent free?
You have $60,000 CC debt, part on your Mom's CC.

Is that a decent summary?]

"Yes. That's the overall summary of my situation."

"If my income to expense is a positive cashflow because of my current work and income, then at least that would bring in an extra $200+ a month (Hypothetically speaking) which means more money in my pocket to pay off the debt (this is considering after business expenses).

If one depended solely on a 9-5 to pay off CC debt then it would take centuries to pay it all off. As long as my business is in positive cashflow regardless of how much and is being tracked on a spreadsheet, I don't see the problem with it."


Do you not consider the value of your time? A 10-hour/week part-time job at $10.00/hour would bring in more than $400/month gross, and probably $300/month net. Time and half at your current position for 1- hours/week would be $225/week gross.

"Another way is consolidating my debt, it would make more sense to pay a flat rate fee and eliminate several cards and never use them again versus racking up on CC's high interest rates. Agreed?"

What are the card rates, and could you obtain a lower rate consolidation loan? I do not like raining on your parade, but it seems unlikely to me.

"My mindset has changed over these years."

How?

"I'd rather take these risks than to work a 9-5 for the rest of my life. So that's why I am where I am now."

But taking these risks is no guarantee, and launching a successful business is often way more than 40 hours/week commitment.

Regards, JAFO
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JAFO31,

You wrote, What is travel hacking?

It's usually a term used in certain blogs to mean applying for travel rewards credit cards to earn free miles, companion tickets, whatever … so you can fly for free. Or close to it. It's also related to the term churning. Churning is where you open credit cards just to earn the rewards, then you abandon or close them and do it again.

Of course to play these games you usually have to meet some minimum purchase requirements on those cards to earn the signing bonus. This was a trap for him because he wanted to travel for free, but didn't have the resources (or the sense) to just buy things he could afford to spend money on anyway and still pay off the card within the offer period.

Travel hacking is similar to the game I occasionally play with credit cards (and bank and brokerage accounts). I occasionally sign up for accounts with a signing bonus that's almost too good to believe. But I always make sure I can satisfy the terms out of my up-coming spending (or available cash) before I sign up. Then I collect the bonus, pay off the account or whatever and close the account (when necessary).

Or sometimes the account comes with some lure that really is attractive long-term. That's why I switched to Bank of America / Merrill Edge last year and while I mostly use their credit cards now - they offer a pretty sweet deal to their best customers with their Preferred Rewards scheme. But I digress.

These games are sucker bait … if you don't know what you're doing and/or don't have the resources. I have the resources and I know what I'm doing and I never get into a deal that wouldn't pay me for my time. And by pay me, I mean my threshold is $100 - $200 / hour for every hour I figure I'll need to spend on it after accounting for any expenses, fees or lost interest.

Personally I almost never go for travel deals. That's working to garner something I'd only use for pleasure. But I'm not trying to be too judgmental - some people would have done the travel anyway, so getting a card issuer to pay for it makes sense. Cash deals on the other hand can be used for anything at any time, including travel. That makes them more sensible. At least to me.

But they're all traps for people that are less clever than they think they are. Clearly timmyturner has found this out the hard way.

- Joel
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<<JAFO31,

You wrote, What is travel hacking?

It's usually a term used in certain blogs to mean applying for travel rewards credit cards to earn free miles, companion tickets, whatever … so you can fly for free. Or close to it. It's also related to the term churning. Churning is where you open credit cards just to earn the rewards, then you abandon or close them and do it again.>>


You are an education.


I see these kinds of offers ----and stay away from them. Not worth my time, energy and the risks they entail, to my way of thinking. Maybe you can make them work, or perhaps you aren't as smart as you think you are, or perhaps the company's you deal with are willing to screw you like your are trying to screw them.

I prefer to keep my finances nice and simple, and deal with companies for decades at a time that I have come to trust and that have treated me well. That's a lot more important to me than trying to skim a few dollars through some kind of exploitive offer.

THAT is one of the benefits of having more money than you need.



Seattle Pioneer
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No. of Recommendations: 5
SeattlePioneer,

You wrote, You are an education.

I don't think that's how that word is used in a sentence. ;-)

Also I prefer to keep my finances nice and simple, and deal with companies for decades at a time that I have come to trust and that have treated me well. That's a lot more important to me than trying to skim a few dollars through some kind of exploitive offer.

THAT is one of the benefits of having more money than you need.


Companies are rarely trustworthy on the whole. They usually have selfish motivations, the same as you and I.

Also you don't know how much money I have. And if they can suck in the weak like timmyturner here, there's no reason I can't play them for the fool too. It's not like I'm going to bankrupt *them*. If they're smart, they bake in the fact that guys like me are going to just take the money and run. But they're playing a longer, unstated numbers game - one I'm not bothering to play.

And by calling it "a few dollars", I'm not sure you understand how much I tend to gleen from offers. Last year I think I took in over $2,600. This year looks like it's going to be half that - around $1,300.

And yes that probably is pocket change for me… But since I've been averaging close to $200/hour from these offers, I see no reason to quit any time soon.

- Joel
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No. of Recommendations: 3
<<SeattlePioneer,

You wrote, You are an education.>>


You wrote an excellent explanation. Your post was an education. That's high praise.


<<Also you don't know how much money I have. And if they can suck in the weak like timmyturner here, there's no reason I can't play them for the fool too. It's not like I'm going to bankrupt *them*. If they're smart, they bake in the fact that guys like me are going to just take the money and run. But they're playing a longer, unstated numbers game - one I'm not bothering to play.

And by calling it "a few dollars", I'm not sure you understand how much I tend to gleen from offers. Last year I think I took in over $2,600. This year looks like it's going to be half that - around $1,300.

And yes that probably is pocket change for me… But since I've been averaging close to $200/hour from these offers, I see no reason to quit any time soon.>>



If that appeals to you, help yourself. I've already explained that I consider myself excessively risk averse. It's not something that appeals to me.

Some companies seem to operate like rackets ----cell phone and cable companies are examples. They are so busy offering special deals that it's hard to figure out what the price is, and you can expect the price to change all the time/ That's the way they seem to operate all too often to me, and I prefer to stay away from doing business with such companies.

But if you can make it work for you, help yourself.


I'm mainly describing my own biases here.



Seattle Pioneer
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No. of Recommendations: 2
joelcorley:


JAFO31: <<<You wrote, What is travel hacking?>>>

"It's usually a term used in certain blogs to mean applying for travel rewards credit cards to earn free miles, companion tickets, whatever … so you can fly for free. Or close to it. It's also related to the term churning. Churning is where you open credit cards just to earn the rewards, then you abandon or close them and do it again.

Of course to play these games you usually have to meet some minimum purchase requirements on those cards to earn the signing bonus. This was a trap for him because he wanted to travel for free, but didn't have the resources (or the sense) to just buy things he could afford to spend money on anyway and still pay off the card within the offer period."



How did OP ever think he was going to win that game?

30k gross, less FICA and whatever (WAG 10%, probably more)
- 3k =
27K net, less Rent @ $1k/month
-12k =
15k for all other spending, and probably not all on a credit card, let along multiple cards.

Now that I understand what was meant, to win that game, you need to have natural spending that meets the minimum and sufficient funds to pay the card(s) in full when due (i.e., without paying interest), and avoiding any fees (including annual fees).

Regards, JAFO
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Thank you Joel for clarifying that.

Seems like you're the only one who gets it.

And yes, I started off Travel hacking successfully in terms of being able to pay my balance while hitting the minimum spend and have not carry a balance.

Eventually as more cards racked up, Eventually I got caught in the trap and got disorganized. On top of that I was getting started on creating new online business ventures so everything mixed in without tracking everything messed me up. And yes, this lead me to learning the hard way. Now I'm here to fix the problem I caused. (First step to fixing anything in life is to admit it and take responsibility, Right? I'm denying nothing here.)

It seems like a lot of people on these forums are being negative about the way I'm trying to fix my current issue and nitpicking the details on every word I say.

There's a lot to what I do but overall there's a reason to what I'm currently doing. Just keep in mind, I was young and dumb when I made my mistakes. I'm not perfect and neither are you guys.

Firstly, I'm not trying to start a business that's shooting into the dark without knowing what I'm doing. That's just stupid. Agreed?
I know what I'm doing cause I've made loads of mistakes in the past which lead me to CC debt so now I know what NOT to do.
I have weekly mentor calls to fix on things that can improve my eCommerce business. Which is actually working by the way.

Secondly, What's wrong with having a business that's generating profit and positive cash flow?
If I'm keeping track of all business expenses and at the end of the month, I'm profiting then how is it harmful to have a business open?
I would rather generate $200 extra a month (along working a 9-5) to help have some cash flow THAN to not have a business open and generate only one type of income which is my 9-5. Agreed? That's absolute logic and I'm going to continue this route whether you guys disagree if I should have a business opened or not. It's more smart to have more than 1 income stream.

You guys sound like something my dad would lecture me. Don't take it personally, it's just my point of view and impression.
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timmyturner says You guys sound like something my dad would lecture me.

LULZ!
I suspect that every reply was by a poster that is old enough to be you dad or mom. Some of us are old enough to be your grandparents.

You say your e-commerce business is generating a monthly profit of $200? Good for you! 🙂. I absolutely did NOT catch that information.

You say you are keeping track of all business expenses and at the end of the month are showing a profit. Does this mean you have a business budget?

Then get a personal budget, too.

I'll ask again- do you have a plan for paying off the CCs? If not, make one, and WRITE IT DOWN... Then follow that plan. The budgets are part of that plan.

Good luck 🙂
ralph

Are you living at home? With your parents? If so, do some chores and assume some responsibilities without being asked. Man up. Show your parents that you ARE an adult. 🙂. If you are not living at home... Still do some chores for them. Over time, it'll help your relationship 🙂.
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timmyturner: "It seems like a lot of people on these forums are being negative about the way I'm trying to fix my current issue and nitpicking the details on every word I say."

The devil is in the details.

And you already know that- "got disorganized. . . . getting started on creating new online business ventures so everything mixed in without tracking everything messed me up." but seem to be denying it, too.

"Secondly, What's wrong with having a business that's generating profit and positive cash flow?
If I'm keeping track of all business expenses and at the end of the month, I'm profiting then how is it harmful to have a business open?"


Not at all, but do you understand the concept of opportunity cost? How many hours do you spend on your side "business"? Does the profit generate more per hour than you could generate in you were using such time in a different manner?

"I would rather generate $200 extra a month (along working a 9-5) to help have some cash flow THAN to not have a business open and generate only one type of income which is my 9-5. Agreed?"

It is not as binary as you want to make it.

"That's absolute logic and I'm going to continue this route whether you guys disagree if I should have a business opened or not."

So you had already decided and you are just looking for confirmation opinions and not real advice and suggestions?

Regards, JAFO
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Yeah there's a lot of details I may have missed out with my original post. but at least now you get the bigger picture since I added more details.

I'm 26 years old, and I know for a fact that some of you guys or other people off this forum were or still is in a deeper hole than I am in. This makes me feel not alone and a lot better emotionally.

The strategy to tackling this debt?

1. Paying off the CC that has the least amount first then working on one card at a time. (Snowball effect strategy) Or starting off with the one with the highest interest first.

2. Getting a debt consolidation. ($12,000 loan to at least cover 3 CCs!)

Someone said that a debt consolidation that help but worsens the overall debt. If this is true please state the reason. Logically I see that a flat rate fee beats a variable interest. Even doing the calculation, a consolidation saves me more money overall versus trying to pay all of it over the course of 5 years or so. Why is consolidation bad again?
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"It seems like a lot of people on these forums are being negative about the way I'm trying to fix my current issue and nitpicking the details on every word I say."
--Welcome to the board. It is a very tough love, straight to the point kind of place.

"There's a lot to what I do but overall there's a reason to what I'm currently doing. Just keep in mind, I was young and dumb when I made my mistakes. I'm not perfect and neither are you guys."

--All true, but they are pointing out that mistakes are not always made in isolation (they are patterns we get into).

"I have weekly mentor calls to fix on things that can improve my eCommerce business. Which is actually working by the way."

--If you don't invest with this guy, will he still take your calls?

"Secondly, What's wrong with having a business that's generating profit and positive cash flow?
If I'm keeping track of all business expenses and at the end of the month, I'm profiting then how is it harmful to have a business open?
I would rather generate $200 extra a month (along working a 9-5) to help have some cash flow THAN to not have a business open and generate only one type of income which is my 9-5. Agreed? That's absolute logic and I'm going to continue this route whether you guys disagree if I should have a business opened or not. It's more smart to have more than 1 income stream."

--What is the time spend on the business(es)? If you are only making $200 a month and working 20 hours a week (80/month), your profit amounts to an earn of $2.50/hour. If you got a minimum wage job and worked that same 20 hours, you'd be grossing $600/month (before taxes, sure). If you are spending an hour a month on it, then that is a different question, but maybe you'd need to spend more time doing it.

You guys sound like something my dad would lecture me. Don't take it personally, it's just my point of view and impression.
--They'll do that. They won't take offense. They offer good, useful advice. Not to everyone's taste, and rarely sugarcoated.
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Why would not understand the concept of opportunity cost? I would be in business generate cash flow if I didn't understand it. I spend as much time needed on my business at home, sitting on chair, relaxed while generating revenue. Once again I keep track of all my numbers on a spreadsheet. I budget my expenses, cut off what's unnecessary and utilize the necessary assets.

Are you suggesting I get my ass up and do some hard work labor to make an extra $9-$10 an hour when I'm not working my 9-5? Yeah no thanks. I'd rather make money the smart way. Unless you have other suggestions, I'm all ears buddy.
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"Why is consolidation bad again?"

As they said, the philosophy is that it makes the debt easier to pay (one payment, perhaps less interest), and takes things off the cards. If you go from having to pay 2K a month to say 1K, and you've freed up 60K in revolving credit, then you feel like you have an extra 1K a month to put on and pay the credit cards. Which puts you putting money back on the credit cards. Which now means you have that debt and the consolidation debt. Which means your hole is much bigger, and so on.

It is a philosophy, as it is the prevailing philosophy on this board to be very careful with debt. If you were to consolidate, close your credit accounts, shred your cards, and never put another dime on those cards, it could be okay, but you are back to "investing" in your business, so that won't happen.
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--"If you don't invest with this guy, will he still take your calls?"

Yup. Because we're friends. If we weren't, he'd charge me. Believe it or not, there are nice people who are genuinely willing to help.



--"What is the time spend on the business(es)? If you are only making $200 a month and working 20 hours a week (80/month), your profit amounts to an earn of $2.50/hour. If you got a minimum wage job and worked that same 20 hours, you'd be grossing $600/month (before taxes, sure). If you are spending an hour a month on it, then that is a different question, but maybe you'd need to spend more time doing it"

My business is a passive business which I forgot to mention. I'll generate sales when I sleep or if I'm sitting on a toilet. I just put more effort on it with my time because efforts compound. Did I mention, I'm scaling every month? that $200/month will become $300/month then $400/month, etc. That's why it's hard to say how much I'm generating on a per month basis because it varies and it's scaleable. I'm giving you the worst case scenario. Because that's just how I am.
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Are you suggesting I get my ass up and do some hard work labor to make an extra $9-$10 an hour when I'm not working my 9-5? Yeah no thanks. I'd rather make money the smart way. Unless you have other suggestions, I'm all ears buddy.

It doesn't have to be a second job of hard labor. It could be education/training to enhance your skills for your 9-5 job so that your pay goes from $15 to $20 or more per hour. Or education/training to quit your 9-5 job for a better 9-5 job. Your posts seems to indicate that your e-commerce business will continue to be a side business and not become full-time.

PSU
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The strategy to tackling this debt?

1. Paying off the CC that has the least amount first then working on one card at a time. (Snowball effect strategy) Or starting off with the one with the highest interest first.


Paying the highest interest card pays your total debt off faster and with less interest paid. That's what the math shows. Paying off the cards with the smallest balance (assuming card not also highest interest rate) can provide emotional victories which can keep them from reverting to old ways.

A third option you didn't mention is paying the joint amounts with your mother first.

PSU
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The strategy to tackling this debt?

1. Paying off the CC that has the least amount first then working on one card at a time. (Snowball effect strategy) Or starting off with the one with the highest interest first.

2. Getting a debt consolidation. ($12,000 loan to at least cover 3 CCs!)


Actually, in your case, your strategy should be:

1. Separate into your cards vs. Mom's cards
2. Pay off Mom's cards first - start with the one of hers that has the highest interest rate, while continuing to make the minimum payments on all cards

You have abused your mother's good credit, and you need to fix that first.

Someone said that a debt consolidation that help but worsens the overall debt. If this is true please state the reason. Logically I see that a flat rate fee beats a variable interest. Even doing the calculation, a consolidation saves me more money overall versus trying to pay all of it over the course of 5 years or so. Why is consolidation bad again?

If YOU (not your Mom, or your Mom co-signing) can get a loan that lowers the interest rate and doesn't increase cash flow and doesn't increase your debt by charging a large origination fee, it would be a good idea. Given your lack of income, I doubt that you can qualify for such a loan on your own without committing fraud. That would be a BAD idea.

AJ
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My business is a passive business which I forgot to mention. I'll generate sales when I sleep or if I'm sitting on a toilet. I just put more effort on it with my time because efforts compound. Did I mention, I'm scaling every month? that $200/month will become $300/month then $400/month, etc.

Really? How passive is passive? If you have to put more effort on it that doesn't sound like it's passive. Passive would be NO effort. How much time do you spend monitoring, updating, maintaining, fixing, scaling up, paying expenses, etc.? Even if it's 30 minutes a day, that's 15 hours a month. If you are netting $200, that's only $13.33/hour - less than you make at your day job. You really need to look at it with an effort vs. benefit view.

Sure it might be easy, but if you spent that 30 minutes a day getting a job that paid you $20 or $25 an hour, you'd be a lot better off in the long run.

AJ
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The least amount of effort invested at this point is a lot less than me working a physical labor job to get paid by the hour.

I don't know about you or you guys, but I'm going for the long term here which is business expansion (opening up more stores to generate more passive income and scaling) up to a point where I won't even have to invest more than 2 hours a day just to check up on how my eCommerce business is doing because it would be automated by then. (Yes, this is absolutely possible and because it's proven and I'm not the only one doing it) I'm not the type of person to reinvent the wheel.

In this new generation new, everything can be automated and still generate cash flow with an online business. We're not in the roaring 20's anymore.

And while things are automated, I can find ways to open up more income streams while paying off debt.

The thing is that I'm not trying to be 9-5 worker for the rest of my life. So why should I wait to fully pay off debt then start a business? Time wise, that would be stupid. If there's one thing I value it's my time. And if it's working on my end then why stop? Are you not seeing my Point of view yet?
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timmyturner:

OP {{{--"What is the time spend on the business(es)? If you are only making $200 a month and working 20 hours a week (80/month), your profit amounts to an earn of $2.50/hour. If you got a minimum wage job and worked that same 20 hours, you'd be grossing $600/month (before taxes, sure). If you are spending an hour a month on it, then that is a different question, but maybe you'd need to spend more time doing it"}}}

"My business is a passive business which I forgot to mention. I'll generate sales when I sleep or if I'm sitting on a toilet. I just put more effort on it with my time because efforts compound."

Is it passive or does it depend upon your effort? You contradict yourself in adjoining sentences.

"Did I mention, I'm scaling every month? that $200/month will become $300/month then $400/month, etc."

No. You did not, and we cannot read your mind. And how scalable, is it really?

"That's why it's hard to say how much I'm generating on a per month basis because it varies and it's scaleable."

At month end (or shortly thereafter) you should always have the data to know how much you generated in that month.

timmyturner

"Why would not understand the concept of opportunity cost?"

Nothing that you have said so far indicates to me that you do; which is why I asked.

"I would be in business generate cash flow if I didn't understand it."

I am not even sure what you mean with that sentence but generating cash flow does not necessarily mean generating profit, and even generating profit does not explain understanding the definition of opportunity cost.

"I spend as much time needed on my business at home, sitting on chair, relaxed while generating revenue. Once again I keep track of all my numbers on a spreadsheet. I budget my expenses, cut off what's unnecessary and utilize the necessary assets."

And how much time is "as much time as needed"? I have now asked twice and you still do not answer, which makes me suspect that (1) perhaps you do not track it and thus cannot answer, or (2) you do know but do not want to disclose it, which causes one to wonder why. Perhaps because it is not the most efficient use of your time

"Are you suggesting I get my ass up and do some hard work labor to make an extra $9-$10 an hour when I'm not working my 9-5? Yeah no thanks. I'd rather make money the smart way. Unless you have other suggestions, I'm all ears buddy."

First, I am not your buddy. And I can do without the passive aggressive tone of your writing. PSU has already addressed the substance of this question.

If your business is as passive and easily scalable as you say, why not quit the 9-5 job and just go all in the business and scale it up to support your self in the style you wish to live?

Regards, JAFO
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I don't know about you or you guys, but I'm going for the long term here which is business expansion (opening up more stores to generate more passive income and scaling) up to a point where I won't even have to invest more than 2 hours a day

So, currently, you are investing more than 2 hours/day? That's 60 hours a month, which means that you need to net $900/month just to pay you what you get on your day job.

The thing is that I'm not trying to be 9-5 worker for the rest of my life. So why should I wait to fully pay off debt then start a business? Time wise, that would be stupid. If there's one thing I value it's my time. And if it's working on my end then why stop? Are you not seeing my Point of view yet?

Not really.

You first said you wanted advice on how to pay off your debt. We told you that you needed more income, and advised you to spend some time on getting a better job. You apparently see the ecommerce business (which was what you claim got you into your debt in the first place) as the way to get more income, and have spent a lot of time trying to justify (to yourself and us) that 'the business' is what you should be spending your time on, rather than trying increase your income by getting a better day job, or another side gig that pays you more than $200/month.

If 'the business' is really the way you think you are going to increase your income, then quit spending time here justifying yourself, and spend it on the business. If you really want advice on how to pay off your debt, then lay out what is owed, whose debt it is (yours, Mom's, joint), interest rates, minimum payment amounts, and your monthly income/outgo.

You seem to have already decided what you need to do, so I'm not sure what you are asking for. If you're looking for approval on what you have already decided to do, you probably aren't going to get it here.

Good luck to you.

AJ
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"Is it passive or does it depend upon your effort? You contradict yourself in adjoining sentences."

It's semi-passive for now. Sure I have to put in some effort, but at some point it was a lot more effort in the past than it was now. Make sense?


"No. You did not, and we cannot read your mind. And how scalable, is it really?"

I can't give you a finite answer but it's scalable. Do some research on eCommerce and see for yourself. I'm not your only source.


"At month end (or shortly thereafter) you should always have the data to know how much you generated in that month."

Didn't I saw that I track everything on a spreadsheet?


"And how much time is "as much time as needed"? I have now asked twice and you still do not answer, which makes me suspect that (1) perhaps you do not track it and thus cannot answer, or (2) you do know but do not want to disclose it, which causes one to wonder why. Perhaps because it is not the most efficient use of your time"

There's no finite answer to that either. It all depends. Some days I'll work 2 hours, some days ill work 12 hours. But to make it easier for you to visualize, Let's say that I work right after my 9-5 on weekdays. So 7-11 on weekdays and then 8am-3pm on weekends.


"First, I am not your buddy. And I can do without the passive aggressive tone of your writing. PSU has already addressed the substance of this question."

Well, You triggered me.


"If your business is as passive and easily scalable as you say, why not quit the 9-5 job and just go all in the business and scale it up to support your self in the style you wish to live?"

There's a plan for everything. Right now I'm investing my time on 9-5 to help cover necessary expenses in life. I have currently 2 income streams that I fulfill my time with. Better to have 2 than 1 right now, it speeds things up a bit. Eventually I will transition into full time ecommerce. I'm trying to show you that I'm being productive, create and maintain an online business and slowly transition out of the 9-5 lifestyle.
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I don't know about you or you guys, but I'm going for the long term here which is business expansion (opening up more stores to generate more passive income and scaling) up to a point where I won't even have to invest more than 2 hours a day just to check up on how my eCommerce business is doing because it would be automated by then. (Yes, this is absolutely possible and because it's proven and I'm not the only one doing it) I'm not the type of person to reinvent the wheel.

You described a business with a low barrier to entry. If it's proven, can be down with minimal effort in spare tire, and others are already doing it, then there are many others out there already looking to get into it so you'll have a lot of competitors.

Why do I feel I can find this on a late night informercial?

PSU
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So, you are, by your estimation, roughly putting in 27-34 hours per week (if you work Sundays) or roughly 108-136 hours a month. At a monthly profit of $200, that time spent is earning you something like $1.47 to $1.85 per hour, assuming that your spreadsheet accounts for the self-employment tax.

Are you running a drop shipping business? You are being productive, from an economic perspective, but are you really speeding anything up? If it is scalable, scale it up. If it won't scale, and is slowing down your stated goal of paying down your debt and the debt your mother is dealing with, then you may have to cut bait. One thing about this board is that they are ruthlessly agnostic to things like the intangible benefits of entrepreneurship. It is a very goal-focused board, and is a great light to hold up against your actions and thought processes. While 2 revenue streams may beat one, to the board, thicker beats more. You'd be doing better with your time if you were able to work 3 hours of overtime a week, for example, and would get back almost 100 hours of time from the side job each month. That is part of the opportunity cost, of course.

You know that. But there is a difference between knowing the path and walking the path.
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Right now I'm investing my time on 9-5 to help cover necessary expenses in life.

Well, you're not being very successful with that, are you? You have to live with your parents rent-free, and you may just be making enough to pay for food and your minimum credit card payments.

Although I suspect that your Mom is probably the one who is making the payments on her cards, not you. If that's the case, you aren't even making enough to cover the debt that you ran up, much less the 'necessary expenses in life'.

AJ
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Hi Timmy --

Welcome to TMF. As you have already seen, people generally will challenge your thoughts on almost everything. That's good because it will make you rethink and really focus on whether you are making the best decisions. It can also be bad if it paralyzes you. I have been through this wringer and benefited tremendously from it. I certainly did not take all the advice that was available and did several things differently than what was recommended. Nonetheless, allow yourself to absorb some of the advice. It's generally good.

One thing that I didn't see asked was what your skill sets and expertise are. If you're making $15 an hour in the 9-5 gig and a few dollars a month on the side hustle, that's great! And to improve on those numbers, you need to build on the skill sets you have in both arenas. In the regular job, the best way to get a better job is to be really good at your current job. Is your boss's boss happy with the work you do? If not, why not? That can lead to skill improvements of a wide variety of types.

And in the side hustle, if you love it, great! Spend time on it. Here too, though, the question is how you build your skills to make the business that much stronger. It can look like a lot of different things, but the more you do, the better.

And finally, many people have reinforced the need to pay off the debt your mom incurred on your behalf before anything else. I will strongly support this idea. Owing money to family members is always hard. Paying it back -- with appropriate interest -- can rebuild trust and confidence in all kinds of ways.

ThyPeace, and one more thing -- I hope that one or the others of your jobs gets you a solid dose of physical activity each day. That's important. And yes, at 26, most of the people here are old enough to be your parents or grandparents. We've seen everything, and many of us have been both employees and had businesses of our own. The ecommerce thing is not all that new-fangled. And if you've read the 4 Hour Work Week, I hope you have also gone on to read Tim Ferris's later books. He eventually realized that he was most successful and happiest when he was really using his skills to their fullest for the benefit of others. I suspect you will eventually discover that, too.
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timmyturner: "It's semi-passive for now. Sure I have to put in some effort, but at some point it was a lot more effort in the past than it was now. Make sense?"

JAFO "And how much time is "as much time as needed"? I have now asked twice and you still do not answer, which makes me suspect that (1) perhaps you do not track it and thus cannot answer, or (2) you do know but do not want to disclose it, which causes one to wonder why. Perhaps because it is not the most efficient use of your time"

"There's no finite answer to that either. It all depends. Some days I'll work 2 hours, some days ill work 12 hours. But to make it easier for you to visualize, Let's say that I work right after my 9-5 on weekdays. So 7-11 on weekdays and then 8am-3pm on weekends."

7-11 weekdays, 4 hours x 5 days = 20 hours; 8-3, say 6 hours on Saturday (and I will assume that Sunday is a day of rest) for 26 hours/week, at least 104 hours/month to clear $200, which equates to $1.923 per hour for your time (assuming zero cost of capital) - way less than minimum wage and significantly less than your 9-5 job, and that after putting in "more effort in the past".

"I can't give you a finite answer [to how scalable it is] but it's scalable. Do some research on eCommerce and see for yourself. I'm not your only source."

Actually, you are, because I am not looking to run an eCommerce business, so do not care to research it further.

"Didn't I saw that I track everything on a spreadsheet?"

What you said was: "Once again I keep track of all my numbers on a spreadsheet. I budget my expenses, cut off what's unnecessary and utilize the necessary assets."

It was not clear to me that all your numbers included your time. Your numbers seemed to be focused on your expenses.

Good luck.

Regards, JAFO
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<<2. Getting a debt consolidation. ($12,000 loan to at least cover 3 CCs!) >>


I would only do this to pay off the debt you owe you mom or her credit cards.



Seattle Pioneer
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"First, I am not your buddy. And I can do without the passive aggressive tone of your writing. PSU has already addressed the substance of this question."

Well, You triggered me.
====
I'd feel better if you owned responsibility. For example, "I got triggered by your comment." Or "I chose to react badly to what you said." See how that is your responsibility and not someone else's who happened to push one of your buttons?

Anyway, it has been my experience dabbling in e-commerce that it takes a lot more time than many tell you. Those who make a ton of money do so by getting people like you and me to purchase their supposed expertise or software or courses so we can set up a business like theirs. Rarely does it work. The rich guys make money off me and you trying to be them.

That being said, there are certainly ways to make money in e-commerce but I have not found it easy for people who don't have deep expertise in programming and pyramid marketing. Perhaps you are that rare individual who can turn time and minimum investment into a fortune. I hope so.
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<<Anyway, it has been my experience dabbling in e-commerce that it takes a lot more time than many tell you. Those who make a ton of money do so by getting people like you and me to purchase their supposed expertise or software or courses so we can set up a business like theirs. Rarely does it work. The rich guys make money off me and you trying to be them.>>


I'm inclined to agree. But obviously Timmy does not.

And perhaps he can make it work. He's certainly entitled to try again, and it's not unusual for people to take several tries at running a business before they find one that works well for them.

My principle concern is that I think Timmy should make paying back his Mom his #1 debt repayment priority.


The only other issue is that Timmy's kind of on line personality tends to wind up looking for other people posting as sources of investment capital and/or consulting of one kind or another. I do hope we avoid descending into that kind of abuse.


Seattle Pioneer
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What do you guys think?

Well, after skimming this hot mess of posts, I would say you are in a MLM scheme and you need to get out - now.

Really? A passive income selling stuff while you sleep? I hate to say this, but you don't really get to make money online, or anywhere really, unless you create some sort of value that you get paid for. Do you produce what you sell? Or, are you just trying to snare suckers like you got snared. Even bloggers create value that drive people to their site so that they can sell advertising.

Anyway, a crappy office job that pays $15/hr in NYC? My 17 year old some works part time in fast food and makes $12 in the suburbs of Denver.
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