Author Archives: Daniel Packer

How to Apply the 80/20 Rule to Your Side Hustle

Is your side hustle not going according to plan?

It’s a hard pill to swallow, but you’re not focusing on the right stuff. Or at least, that’s what Pareto’s Principle would tell you.

Simply stated Pareto’s Principle, or the 80/20 rule, says that twenty percent of what you do brings eighty percent of the results. In my own side hustle experiences I’ve found this to be true.

If your side hustle is failing, chances are you’re doing the busy work instead of the results-producing work.

You can turn this around by applying the 80/20 rule.

But First, Set Clear Goals

Before you can do anything to increase your chances of success you have to know what you’re working toward.

If you don’t have a goal then nothing is going to help you. So first define success (aka your goals.)

A set of clear goals for a side hustler might be reaching a certain amount of prospects each week, finding two new clients per month, or connecting with a certain person in your field of work.

Make your goals specific and actionable. But most of all make them meaningful to you.

20 Percent is Vital, 80 Percent is Trivial

Now comes the important part.

You see, as a side hustler you can often let fear, embarrassment, or laziness stop you from taking action on the stuff that really matters. Instead you do the same things over and over and over even though they aren’t bringing any results. And you wonder why you aren’t gaining any traction.

The truth is that twenty percent of what you do is vital and the other eighty percent doesn’t even matter – it gets you nowhere.

Free yourself from all the busy work and get down to the real business.

Focus on the 20 Percent

To find that twenty percent make a list of your goals and then make action steps to take you there.

Every day when you’re about to work on your side hustle make a list off all the things you need to do. Try listing ten things.

Now go through the list and immediately mark eight of those things off. Concentrate on the two tasks that will make a real difference in your business.

Everything else can be delegated to someone else or can be done at a later time. You shouldn’t even think about doing the eighty percent until you get the twenty percent completed.

Practice the 80/20 Rule Everyday

There’s no reason why you shouldn’t have side hustle success.

If you can eliminate the busy work and instead focus on the tasks that are vital to your business you’ll be amazed at how quickly you reach your goals.

On top of that your stress level will go way down. When you start your working day by first getting the most important tasks completed the rest of the day will be a breeze.

Try it today.

Get out of your rut and change up the way you do things. In a year from now you’ll be so glad that you did!

RBS follow in the footsteps of the payday lenders

The Royal Bank of Scotland is the first of the UK’s high street banks to try and fill the glaring gap in its personal banking division by offering its customers ‘loans within minutes’ as part of a £1bn overhaul of its retail business.

RBS claims the move is in response to the ‘wake-up call’ the taxpayer backed lender has received from payday lenders such as Wonga, which have proven extremely popular in offering UK consumers a simple, easy and fast source of short-term credit. Although it clearly has a lot of catching up to do, RBS believes it can find a method of making affordable loans available in minutes, rather than days.

Making banking simple, easy and fair

Les Matheson, the newly appointed head of personal and business banking, is determined to make personal banking services more accessible to RBS’ customers. To do this, he has decided to adopt some of the practices currently employed by the UK’s leading payday lenders.

The recent £1bn investment in RBS’ high street division is a step in the right direction for the UK banking sector. However, it still remains to be seen whether banks will be able to compete with the payday lenders on price, given the proposed cost cap which will limit the total cost of interest and fees to 0.8 percent a day.

The new caps, introduced by the Financial Conduct Authority, are currently in the consultation period before they come into force in January 2015.

Hampered by regulation

Currently RBS are fighting against the regulatory tide to make their banking service simpler for its customers. Despite their best efforts there are a number of glaring stumbling blocks ahead.

In 2012, RBS suffered a catastrophic IT failure that left many customers unable to access their accounts. In fact, Matheson openly admits that improving RBS’ range of digital services will not be easy given the bank’s outdated systems, which “don’t talk to each other very easily”. This will represent a significant challenge given just how quickly and effectively payday lenders can make lending decisions.

There is also the challenge of overcoming and reversing the hapless image the banking sector currently has following the much publicised catalogue of scandals and disasters. While the payday lenders receive a hard time in the press, many have a loyal client base who are happy with the service they receive. On the other hand, the banks face an uphill struggle against customer dissatisfaction resulting from PPI mis-selling, the Libor rigging scandal, business loan mis-selling and the catastrophic mismanagement that resulted in the costly taxpayer bailouts in the first place.

Lending to those who need it the most

Speaking of the payday lenders, Matheson said: “When you look at why people use payday lenders – because they are simple, easy and fast – in that sense banks need to do a better job. We should be able to find a way to make loans available as quickly – in minutes, rather than hours or days or weeks.”

However, it seems RBS’ short-term loan products will not be in direct competition with the payday lenders after all. While Matheson hopes to appeal to the payday lenders’ existing customers by delivering convenience and speed, RBS will not offer the small sums of money the majority of people use payday lenders to access.

Currently the average payday loan amount is £260 borrowed over just 30 days. RBS do not plan to go in that direction. Not only will they offer higher loan amounts, they will also retain the strict lending criteria that excludes many of those who currently borrow from payday lenders. Rather than competing with payday lenders, they will offer an alternative source of credit for their existing customer base, whilst those most in need of short-term credit to cover the cost of essentials will continue to use payday lenders.

Do you think there’s a genuine need for the type of short-term credit option RBS will offer? Will this dent the demand for payday loans? We’d love to hear from you on this topic, so please leave your thoughts in the comments section below.

-$114,000 Net Worth: Creating a Plan to Get Out of Debt

A friend of mine, “Doug,” came to me last week asking for some financial advice. He lives in New York City, has a stable job at a fortune 500 company paying $60,000/year, and we have very similar educational backgrounds. Except that he has $117,000 in student loan debt, $1,300 in credit card debt (maxed out the credit card and is paying 13.99% APR), and a 5 year old $4,000 debt that is in collections. Oh, and -$23 in his checking account!

creating a plan to get out of debt

It sounds a bit crazy, but that’s exactly why Doug came to me asking for some help. He’s exhausted all resources and while his parents have helped him get by, this actually may be holding him back from getting his finance in order rather than helping. In asking for my help, he agreed to (and actually recommended) using this on the site as a project.

Where His Money Goes

I took a quick look at his Mint account to get a good snapshot of where his money is going. The first step is taking inventory and finding out what’s happening now; later we’ll look at how to improve. His rent is $1,000/month, which is fairy reasonable for where he lives in Manhattan. And Doug iss smart enough to have a couple of roommates. But he has a lot of “random” expenses like cab rides and travel that significantly takes up his hard-earned money. He’s a mid-20s guy living it up in New York and hasn’t taken the time to get his financial life in order. But hopefully that will change soon.

Critiquing His Spending

The thing that stuck out most to me was that Doug spent $748 at restaurants, $185 on groceries, and another $106 on fast food. That’s $1,039 spent on food alone (not including alcohol and bars)! For reference, Lauren and I spend about $700/month on food, with about $100 of that being spent at restaurants). None of this is included in the $480 of cash/uncategorized transactions in the month. Finally, there are $51 in ATM fees/finance charges that could be simply avoided. That’s not preventing him from being in a good financial position, but it’s indicative of his general ideas about money: do what I want now and I’ll figure the rest out later.

spending too much on food

Creating A Plan

After getting over my initial shock, we discussed a plan going forward. The immediate need was to pay off the credit card bill to avoid the high interest and build a cushion in his checking account. Then we’d tackle the collections account and start some more future planning. How would we achieve this? We’d make just a couple of tweaks that would have a tremendous effect on his finances.

First, Doug agreed to eat out at most once a day. Previously, he was eating 2 meals out every day. And when you’re ordering $12 Chipotle multiple times a day, it makes it really hard to get by and save. Instead of $1,000+ a month, we reduced his monthly food budget to $500, which is completely doable and I’ve already seen him put the changes into practice.

Next, we reduced his 401(k) combined Roth and traditional contributions from 15% of his salary to 4%, enough to get the 2% match at his company. And that drop in contribution leads to over $550/month in after-tax earnings that he’ll be able to use to tackle his debt in the short-term.

One thing I made him do was call his bank and request that his recent $35 insufficient funds fee be credited back to his account. He told them it was a one-time thing, and they removed the fee for him. That was a very easy win, and it showed him that while it will take a significant amount of time to get into positive net worth territory, the immediate changes he was going to put into effect would have a positive impact.

Future Financial Plans

Looking down the road, once the immediate needs are taken care of (we project the credit card will be paid off in October), we’ll look to settle the collections account. And of course, pay down the student loans. It will certainly take time, but the interest rates on those loans are fairly low, in the 3-5% range.

This plan is not foolproof. Doug must be serious about changing his lifestyle and seriously cut back on his spending. He can’t continue to spend on taxi cabs, eating out daily, and unnecessary fees. The good news is that he is young enough that time is on his side and he won’t be saddled by debt forever if he gets his act together. It will be an interesting journey, and hopefully your encouragement will help give him the motivation to stay on track and turn his situation into one of having just about nothing to one where he is in control of his financial future.