How This Problogger Is Dealing With Uncertain Economic Times

As you guys know, my business is problogging. I make my living as a blogger, and more recently I am making a business of showing other bloggers how to do the same.

However, it is really easy to get so involved in MAKING money that you forget to figure out how to KEEP it.

At the same time, it is really easy to get so involved in the business that you forget to look at the world around you and see what’s happening. After all, this stuff is a lot of fun! I really enjoy learning new ways to make money and improve the business. I enjoy following the world of technology.

If we look at the offline world, however, I see a storm brewing. I see a federal government increasing in size. I see a volatile economy and a government which seems quite insistent on doing the wrong thing to fix it. After all, no economist in the world can justify the logic of spending more money and raising taxes on the producers in society in order to avoid an economic downturn.

The “stimulus” is anything but, and is just putting another huge nail in the coffin of the U.S. economy. The U.S. debt is now totaling around $600,000 for every family of 4 in this country. All signs point to a period of high inflation ahead, and some are even wondering if we’re facing a new Great Depression in the years ahead. If that happens, some are going to use the confusion to seek to institute anti-capitalist policies which will only seal the fate.

I’m just telling it like I see it. That said, I am not a doomsday kind of guy. I am, however, an “eyes wide open” kind of guy.

The answer to this lies in understanding economics and in practicing sound fiscal policy on yourself, your family and your business.

Over the last few weeks, I have been spending a little time thinking about my long-term financial security. After all, I have a family and I am responsible for them. I have been able to provide a good living for them thus far by blogging for a living, but there are bigger things to consider than just my own business when it comes to future.

After all, all of us who work online also operate in the real world. And that world is changing. The economic environment ebbs and flows and it affects our online businesses.

In this article, I’m going to provide my advice. At least as I see it.

You’re Not a Consumer, You’re a Producer

Partly because of the fact that most people completely lack any understanding of what makes an economy tick, people have become used to being called “consumers”. That’s ridiculous. If we have a nation of consumers, the country fails.

You should think like a PRODUCER, not a consumer.

Your entire financial bedrock is based on the fact that you need to CREATE more than you consume. You produce more than you consume.

Those people out there interested in just getting by, in milking as much as they can from the system… those people are looking at certain financial ruin, even if they don’t know it yet.

The valuable final product of whatever you’re doing for a living should be something which is exchangeable with others for money. This could be in the form of a physical product, a service, or information.

As bloggers, our valuable final product is information. Information is valuable because it can be exchanged for money. After all, people will pay for information they can use. Therefore, it is a product. So, create more value than you need to live. My job, then, as a problogger, would be to create more value than I need to live. It would be to help other bloggers collectively build more wealth for themselves than I would need to live. This would be value to others.

I could sum this up like this:

  1. Never forget that your business needs a valuable final product, exchanged with others for money. A lot of bloggers tend to forget that this is how you actually make money in this business.
  2. Focus on providing maximum value to your “customers” (whether they be paid customers or simply readers of the blog). By providing maximum value (more than you need to live), while also doing #1 above, you’ll always have enough money.

Converting To Assets and Preserving Wealth

It is one thing to make money. It is another to keep it.

Now, I’m not one that preaches the virtues of saving. Keeping money in your bank is actually pretty stupid as a long term strategy. Here’s why…

The biggest problem here is inflation. Those dollars we work so hard to earn are based on essentially nothing but our confidence. The dollar is no longer based on gold or anything else which is tangible. When you combine that with the fact that the government is printing money like crazy, inflation is inevitable. It is happening right now, and I believe we are looking at a hyper-inflationary period very soon because of the HUGE deficit spending by the idiots in Washington.

What this means is that those dollars become less valuable. And that means you can’t buy as much with it.

The unfortunate thing about all this, too, is that most Americans are trained into the idea of saving. We’re trained to think in terms of IRAs, 401(k) plans, and building a nest egg for retirement so that we can ideally live off the interest when we’re old. The problem is that inflation is happening faster than these savings vehicles can work.

Here’s a video from Robert Kiyosaki (author of Rich Dad, Poor Dad) where he claims that “Savers Are Losers!”:

So, as we make money with our online businesses (or however you go about it), it is smart to think about how to preserve that wealth, and how to hedge against loss. By doing this, you maintain the value of your assets and keep what you build.

Now, I am not a financial planner. However, here is my view on how to do this…

  1. Invest in metals. Gold and silver are traditional hedges against inflation and an insurance against economic crisis. There is a finite amount of supply in the world, and gold is an asset which has intrinsic value independent of currency. Especially right now, gold is increasing in value tremendously. Now, realize that gold is also a commodity and that means it is subject to market forces of supply and demand. Purely as an investment vehicle, there is an argument to be made about how well gold works. However, as a hedge and as a way to preserve wealth, I believe it is unquestionable.
  2. Consider real estate. Real estate is a good place to have money – IF you do it right. The thing to consider about real estate is that it is not a liquid asset and that, in a deflationary period, you’re going to be more likely to be in a position where you can’t get rid of it. Case in point, a lot of people’s homes have lost value in the last couple years and, due to oversupply and other issues, cannot sell the home. When the market is bad, buyers disappear. So, the thing about real estate is BUYING LOW. Then, you can turn it into a rental property. As more and more people cannot afford to buy houses, they will need to rent.
  3. Invest in income-producing assets. A car is an asset. A computer is an asset. Yes, we need these things, however they depreciate and are no way to preserve wealth. On the flip side, buying an asset which can produce wealth is very smart. For example, buying up defunct web properties which you can then turn into income-producing websites might be a good idea. Buying information which you can then apply to produce more money would be a good idea (an investment in yourself). Think in terms of creating new income streams.
  4. Be Smart With Debt. It is probably pretty obvious that having no debt is ideal. That said, the use of credit is actually a very helpful thing – IF you practice sound financial planning. Never use credit based on the HOPE of being able to pay it off. In my case, I use credit solely for the purposes of turning a purchase into a payment stream. Instead of forking over a large chunk of cash at once, I split it up into payments using credit. But, I NEVER use credit for short term gratification when I don’t have it exactly laid out where the money is going to come from to pay off that debt. It is short-term thinking with use of credit which has gotten so many people into credit trouble.

How I’m applying this:

  1. I am making moves to transfer some of the wealth I have created with my online business into gold and silver. I am doing this strictly as a hedge against the hyper inflation I think is coming. I have a CD with my bank which I have used in the past to invest business financial reserves and overcome inflation. The problem is that interest is really low right now and inflation is higher. So, the actual purchasing power of the money in this CD is decreasing. For this reason, I am planning to liquidate the CD and invest a large portion of it into metals and other types of assets.
  2. My wife and I are seriously considering selling our home and renting instead. First and foremost, we want to live somewhere else and closer to the beach. 🙂 At the same time, though, this house has already lost value due to deflation of real estate prices. We could either move out and rent this house out and be in the likely position of having to spend more money to keep it than I could make in rent…. or we could sell it, cut losses, and therefore be independent of further deflation in the market. I think the next few years are going to be even HARDER to sell a property than it is currently. For a few reason, I’m really seeing the virtues of renting for the next few years rather than owning.
  3. I’m working my ass off to build my business and produce new income streams. This is no time to get conservative and wait anything out. This is high time to bust some ass, build assets, build the customer base, build a brand. By doing that, you will take over where other people in your market drop the ball.

The overall point of this article can be summed up by these few points:

  1. Make as much money as you can by providing a valuable product in exchange for money, and producing more than you consume.
  2. While making as much money as possible, keep your eyes on the economic climate we operate in. Do what you think is smart to maintain the value of the wealth you create and realize that we work and operate in an ever-changing world that you need to plan for.
  3. Focus on building online assets, building your brand, and giving as much value as possible. The people who do that will be the ones at the top of the food chain as the economy finds new equilibrium.

As one last thought, let me say this. This digital economy we have here on the Internet is fairly new territory. The idea that information has value (even though, in the real world, it is just a collection of bits on your hard drive) is a new one, but that doesn’t obviate the fact that people are paying for information and seeking it out each and every day. The Internet, and businesses which operate online, are poised to do incredibly well during any economic peril.

Case in point, 2009 has been my best financial year to date since I begun working online. This while the fundamentals of the economy I live in are getting much worse.

So, for readers of this blog, there is every reason in the world to delve into this stuff and get busy with it. This is no time to worry. This is a time to get things done.

So, what about you?

What are you doing to manage and preserve your wealth? Are you even giving it some thought?


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  1. It is nice to keep up with the economy specially for Pro-blogger like you keeping you revenue stable for your expenditures are really a good thing good luck to you mate my best wishes for you.

  2. It's nice for people to know and actually understand what they can do and what they should do, anyway thanks, you really provided us some great ideas.

  3. I probably wouldn't do more gold right now; I'd invest in corporate bonds for long-term appreciation, and dividend stocks. My IRA is all dividend stocks and a double short ETF of the S&P 500. MPW was my most recent acquisition; I picked it up at $6.98 for an 11% annual return…though the stock itself may fall in the coming months.

  4. Hi David,

    Recently down in Australia every person has been given a 'stimulus' package of $900 to spend and put back into the economy.
    People has rushed out and spent the money, some people using it as deposits on new plasma tv's, cars etc. It's almost unheard of to put this money in the bank! We'll be paying for it in tax hikes anyway….

  5. Hello David, still not sure what you mean by “produce more then you consume” or “produce more overall value than you require to live”.

    To simplify my point, a farmer on a self sustaining farm can choose to produce only enough to keep his farm going. Or he can produce a surplus (more then he can consume). By producing more he gains a little security for the future but there are disadvantages:

    1)He needs to work harder
    2)He needs to build a barn to store the excess.
    3)There is always the possibility that the barn will burn down.

    I assumed that this is what you were stating is the problem with savings in the real word, regardless if your savings are in currency or the metals there is always the risk that the economy will wipe out your savings – all that hard work of producing a surplus gets wiped out. A major disadvantage to accumulating savings: you have to work hard and there is a chance it gets wiped out.

    To answer your question: Which one is more secure – the saver or the produce only what you can consume guy? I would say they are about equal. Producing more then consumption and then saving does not protect you against the future economy any more then simply producing only as much as you consume.

  6. When I say “produce”, I'm not referring to personal wealth. I'm referring to producing those products which you SELL to other people. So, what I'm saying is that you have to produce more overall value than you require to live.

    Which do you think will be more secure? A person/company which produces in excess and over-delivered to it's customers? Or one focused on only producing what it needs for itself, just barely scraping by?

  7. Hello David,

    One thing that I do not understand. Why do you advocate that we should produce MORE then we consume. I would think that all you need is to produce only as much as you consume.

    The advantage of producing only what you consume is that you avoid the problem of savings completly. No need to buy metals of worry about inflation.

    Or as you claiming that we should produce more today so that later we can stop production and only consume? Is that your plan – to stop producing one day (shut down this blog) and live off your accumulated metals?

    For a football player who needs his young body or a nuclear physicist who needs his brain surplus production is neccessary – but a blogger? A successful blog should be able to produce even after there is six feet of dirt between you and the sunlight.

  8. Very thought provoking and well written article, David

    We are living in a time of great uncertainty and you are wise to consider your family's long-term financial security. This is something that everyone needs to do, if they haven't already.

    Gone are the days of stable employment and dependable retirement plans. Anyone with a 401k can attest to that, as many of us watched many tens of thousands of dollars evaporate into Wall Street air over the past several years.

    Households, which should be operated like any other business, really have to seriously map out their futures and consider making adjustments if needed.

    History has taught us however, that some of the most successful businesses were born doing economic downturns. This is why I look forward to the future as online entrepreneurs develop tomorrow's business models.

    Keep blogging!

  9. Great info! These economic hard times is why I Started my Blog in the first place. Your financial advice is something we all need THANKS BUDDY!

  10. Really interesting post, and I did pick up on you talking about buying metals on Twitter the other day – I'd be really interested in hearing more about that from you.

    I don't agree about selling the house though. I bought three properties a few years ago as long term investments and the rental income has dropped this year, so we're having to put money into each to cover the mortgages, but here in Europe the first signs of recovery are everywhere and I know from past experience that property prices will show a big rise following the recession, so I have my finger's crossed for an on paper wealth bonanza soon!

  11. David, this is a great article – keep up the good work. I maintain an art/word blog that focuses on encouraging people to find right work (as you are saying… start PRODUCING beautiful things again America!)

    We are a good people, and a good nation. We will get back to being producers again as the masses wake up (slowly) and realize – the times, they are a changin! PEOPLE GET OFF YOUR LAZY ASSets, and START MAKING AGAIN!!!
    God bless you.

  12. Excellent article David. Very spot on view of current and uncertain times we're living in and in pointing out that now is the time to produce even harder.

    I agree.

    Linda F

  13. Hi David,

    I've covered some of this on my own blog as well. I did buy gold the day after Bush's economic stimulus plan passed, at a time when the spot price was $865. I have 10 1oz. gold coins, and I purchased from Monex after doing some research on various vendors.

    Gold is not a great long-term investment due to losses on both sides–buying and selling–and the fact that gold generally appreciates less than money. It is, however, a nice diversification.

    All of my money that would have been in CDs is now in Lending Club; I'm making about 12% there.

    Yes, the gov't is printing money, but credit is contracting faster than the gov't can print, so we are currently in deflation. Do you read Global Economic Analysis? It's the primary blog I trust. Denninger over at Market Ticker is also good, though a bit doomsday for my preference.

    I probably wouldn't do more gold right now; I'd invest in corporate bonds for long-term appreciation, and dividend stocks. My IRA is all dividend stocks and a double short ETF of the S&P 500. MPW was my most recent acquisition; I picked it up at $6.98 for an 11% annual return…though the stock itself may fall in the coming months.

    MPW and its ilka re good hedges vs. actually buying and having to maintain real estate. I wouldn't invest in any real estate ETF that does strip malls or commercial buildings. I like MPW because they do medical offices, which aren't as affected by the downturn.

    As always, do your own research, I am not a certified financial planner, yada yada. 🙂


  14. Not sure if I agree with selling the house if you have already paid it off. If the maintenance, taxes and insurances on your current place are high, you could perhaps sell and buy a cheaper place, but I wouldn't go back to renting long term. All your other points are excellent.

  15. I agree with most of your points. Not sure if I'd sell a house to go back to renting if you have already paid it off. If taxes, maintenance and insurances are high on it, you could sell and buy a smaller, cheaper place perhaps.

    Your other points are excellent.

  16. Great post David.

    I totally agree that now is the time to work harder and build up. I am going through some difficulties of my own, but I know I need to work harder to build up my business. As you said, with the way things are going, who knows where we will be in a few years.

    Thanks again and keep the good stuff coming.

  17. Wow, another great article. Actually, I think this is among one of the best articles I've read from you to date. It really helps put everything in perspective. These are definitely things that I've been thinking about recently. I don't have any kids yet, but when my wife and I do decide to take the plunge, we want to make sure that we do things right, so that they can have a good life.

    I too am making some of the same strides that you mentioned here. I'm working my butt off to build my online business. You are right – we are in the information age and information is extremely valuable. I'm glad to see other people doing the same. My wife and I actually considered investing in real estate this summer, but decided to wait a little while until the business is even stronger. It gives me something to work towards.

    I've never thought about investing in gold as you mentioned, but that's definitely another solid idea. I need to start looking into that, at least for the information sake.

    Once again, thank you and thank you! Keep up the great work here. I loved this article!

  18. Hi David,

    It's good to see you're taking steps now, while there's time to take some steps.

    The Gov is trying to call this recession “over,” but unlike two years ago when people didn't really understand what was about to happen, most people I know aren't buying it. I just hope this summer isn't the “calm before the storm.”

    Bullion is good. Coin is better, Eagles or Maples. If you buy the GLD ETF, make sure to read the prospectus *very* carefully.

    If we really head into deflation, cash will be king.

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