I’ve been thinking lately about ways people make money. And I have what I believe may be a Grand Unified Theory of Making Money. It still needs some refinement, but here it is: There are three ways to make money: selling time, selling a product, investing, or some combination of these.

       That’s extremely simplified, so let me elaborate a little.

Selling Time

       This is probably the most common way people make money. If you work for someone else and get paid by the hour or a yearly salary, you’re essentially selling your time. But having a “regular” job isn’t the only way to make money selling time. There are several ways:

  • Sell Your Time to an Employer – This is your typical job. You’re hired by an employer to do a job, and they pay you an hourly wage or a salary.
  • Sell Your Time to Consumers/Clients – This is freelancing, contract work, or certain types of self-employment. You’re hired by clients (essentially, many employers) to do a job/jobs, and they pay you an hourly wage or set fee.
  • Sell Other People’s Time to an Employer – Think of temp agencies or a company that hires people and then fills an employment contract for another business. These aren’t extremely common, but you’re seeing more of them.
  • Sell Other People’s Time to Consumers/Clients – This is what a lot of businesses do, especially in service industries or professional companies (like CPAs, investment firms, law firms, etc.). They hire employees at a certain rate/salary, and then sell their services at a higher rate.

       Clearly, the problem with this strategy for making money is the limitation of time. There’s only so much time available – even when you’re selling other people’s time. Sure, you can raise rates, but only to a point. However, there’s a big difference in the limit between the first two examples and the last two.

Selling a Product

       Next up is selling a product. This can be any kind of product – basically anything that isn’t “time”. Again, there are several different ways to make money by selling a product:

  • Sell a Product for Someone Else – If you’re in a sales position where you get paid by commission, you fall in this category. Also, think of bloggers using affiliate deals or multi-level marketing (MLM) schmucks who haven’t developed their “downline”.
  • Sell Your Own Product – Farmers with road-side stands, bloggers with their own books for sale, and people selling a product they create/manufacture themselves are all in this group.
  • Get People to Sell Someone Else’s Product – Think retail businesses or MLM schmucks who found suckers to join their downline. Also, affiliate marketing networks (like Commission Junction) would be in this crowd.
  • Get People to Sell Your Own Product – Businesses that create or manufacture their own product and then hire people to sell that product fall into this group. In the online world, this would include businesses with affiliate marketing programs or bloggers who create their own products and offer a cut to anyone who will sell it for them (via affiliate links).

       Depending on which strategy you’re using here, you could be limited by your own time or abilities or the sky could be the limit. The only problem here is that you need to have people willing to buy. But that’s not necessarily a problem if you have a good, useful product and/or you’re a good salesperson.


       Investing is a way to leverage your own or others’ money-making efforts. You can:

  • Invest Your Own Money – If you’re buying securities or other investments or if you’re starting your own business with your own money, you’re in this crowd.
  • Invest Other People’s Money (OPM) – If you’re borrowing money to invest or if you’re managing someone else’s money and taking a cut (think mutual funds), you’re in this group.

       Again, there can be a variety of limitations here: your resources, others’ resources, your time, availability of good opportunities, etc. However, this is probably the one area where people have made ridiculous amounts of money – especially when they combine it with any of the other methods.

Any Combination of the Methods

       I won’t even go into the possibilities here as they’re simply too numerous. But in reality, this is what many people/businesses do. Take my wife’s grandfather for instance. He started an agribusiness, which has become quite successful. In the whole process of starting/growing his business, he has:

  1. Sold his time to clients by combining, spraying, chopping, etc.
  2. Sold other people’s time to clients by hiring them to combine, spray, chop, maintain equipment, etc.
  3. Sold products for other people/businesses like fertilizers, insecticides, pesticides, and herbicides, etc.
  4. Hired other people to sell others’ products
  5. Sold his own products (mainly corn)
  6. Hired other people to sell/produce his own products
  7. Invested his own money in his business
  8. Invested other people’s money in his business through prudent borrowing

       You can probably take any business and break it down into some combination of these methods.

Why in the World Does This Matter?

       Well, beyond the interesting theoretical implications, this matters because it can help you figure out how to make more money! Take a look at what you’re doing now. What are your limitations? How can you expand your opportunities to make money by looking at other methods? Maybe you’ve never considered any of these options beyond what you’re currently doing.

       If you want (or need) to make more money, thinking about the various methods might help spark a new idea for you. And that seems like a good enough reason to write about it!

I Need Your Help!

       As I said before, I feel like this Grand Unified Theory of Making Money needs some refinement. Which methods did I leave out? Can I simplify the statement: “There are three ways to make money: selling time, selling a product, investing, or some combination of these.“? What do you think about this theory? How will you apply it to your situation?

       Share your thoughts in the comments below!

       In the last part of this series, we began looking at God’s View of the World, Money, and our lives so we can start to focus on serving Him instead of serving Money. We’re continuing that discussion today, and we’ll finish it up in the next part of the series. Then it’s on to practical applications.

       In Matthew 6:19-21, Jesus teaches us that we should focus on storing up treasures in heaven rather than on earth:

       19 “Don’t lay up treasures for yourselves on the earth, where moth and rust consume, and where thieves break through and steal; 20 but lay up for yourselves treasures in heaven, where neither moth nor rust consume, and where thieves don’t break through and steal; 21 for where your treasure is, there your heart will be also.”

Matthew 6:19-21 (WEB)

This passage is also found in Luke 12:33-34.

       Jesus makes two main points here:

  1. Earthly treasures are only temporary. The wealth of this world provides no eternal security and very little security in this life. It is easily stolen, lost, or otherwise destroyed. On the other hand, heavenly treasures last forever.
  2. Whatever we treasure will control our heart. If we hold the riches of the World in high regard, our hearts will be focused on serving Money. If we value God’s Word more than the World’s riches, we’ll be able to truly serve God and experience His blessing. God will have the only thing He needs to work through us—our hearts.

What's in your treasure chest? (Treasure chest by markleggett on Flickr)       God’s View of storing up treasure is so different from ours. Instead of worrying about the value of our 401(k) plans and savings accounts, Jesus would rather have us thinking about how many people we’ve shown love to in the past 24 hours—and how we can share His love with even more people tomorrow. Instead of looking at things in terms of the past few months or over our lifetimes, we need to start viewing everything in light of eternity. It’s the only way we can really get God’s View.

       If we let the Things of this World come in and take over our lives and our hearts, Jesus tells us very plainly what will happen. In Mark 4:18-19, He explains the parable of the sower:

       18 “Others are those who are sown among the thorns. These are those who have heard the word, 19 and the cares of this age, and the deceitfulness of riches, and the lusts of other things entering in choke the word, and it becomes unfruitful.”

Mark 4:18-19 (WEB)

This passage is also found in Matthew 13:22 and Luke 8:14.

Thorn bush by Elsie esq. on Flickr       As Christians, we often discuss bearing the good fruit that comes from having the Spirit within us. But look at what Jesus says. If we let the worries of this life, the deceitfulness of wealth, and the desires for other things come into our lives and take over our hearts, we will be unfruitful.

       Getting caught up in the things the world reveres—wealth and all its trappings—chokes God’s power in us and keeps us from doing His Will. To fully serve God, we have to view everything in terms of eternity and reject the World’s view of money and meaning. Once we do this, we can break free of the thorns in our lives and flourish in God’s glory.

Want to read the entire Bible study series on Contentment? Download your free copy of Contentment Is Wealth: A Bible Study on Contentment now!

Bible with Cross Shadow by knowhimonline on Flickr       Today’s Personal Finance Bible Scripture comes from Proverbs 21:20.

   20 In the house of the wise are stores of choice food and oil,
       but a foolish man devours all he has.

Proverbs 21:20 (NIV)

       Same verse but in the New Living Translation:

   20 The wise have wealth and luxury,
       but fools spend whatever they get.

Proverbs 21:20 (NLT)

       I chose two translations because I think together they clearly tell us what this verse is saying. The wise save up some of their earnings, but fools spend everything they get.

       When talking about contentment and giving in the Bible, I’ve had people ask me if Christians should even save up money for emergencies or retirement. If we save, aren’t we relying on ourselves or our money instead of God? But, as with many things, it really depends on the motives in our hearts.

       If we’re saving up because we don’t think God can provide or we don’t trust in God’s provision, then we’re obviously serving money and not God. But God clearly tells us several times in the Bible that the wise save up some of their money. The wise do not spend everything they get, and the wise prepare for trouble they see coming ahead.

       God can take care of us in any situation, but He teaches us that it is wise to save up when we see that we’ll have a need in the future. This is why I don’t think God is against us having emergency funds or saving for a time in our lives when we won’t be able to work for pay. I’m not sure God wants us saving for things that don’t glorify Him, like a retirement where we golf every day or travel around the world purely for pleasure. It’s the same with anything really. If it doesn’t glorify God, there’s probably a good chance we should rethink it.

       The next time you want to spend all of your paycheck or when the money in your pocket catches fire, remember that the wise person saves but the foolish person spends everything.

       Yesterday I posted an article about how to create a balance sheet. Part of that process includes calculating your net worth. After I wrote it, I realized I should talk about net worth from a Christian perspective. After all, the tag line for this site is “Personal Finance from a Christian Perspective”. There’s nothing particularly Christian about that article. It’s helpful for Christians and non-Christians alike to review their balance sheet and net worth. But as Christians, we must be especially careful to realize that we are more than our net worth.

       There is danger in obsessing over your net worth – in defining your success based on a number. It is wise for you to prudently manage your finances, and tracking your net worth is part of that process. But you must always be aware that your value comes not from what you own but from who you are in Christ. It is in being a child of God that Christians find their true worth.

       Our net worth is infinitely positive. Christ has canceled the debt of our sin and we will inherit immeasurable heavenly riches. What you own or owe here and now does not matter in eternity.

       This warning goes both ways. Those who are rich must grasp this concept just as much as those who are poor – even more so. It is easy for the wealthy to trust in their riches and forsake God. Their prosperity may even tempt them to think of themselves more highly than the poor. Both outcomes are sin in God’s eyes, and the rich must be careful to avoid both. The rich should not glory in their high estate, and the poor should not be shamed in their low estate.

       The Bible actually has much to say about this topic. I’ve chosen a few verses to help you see why it’s important for us to understand our true net worth. Consider what God’s Word says:

       The rich and the poor have this in common: Yahweh is the maker of them all.

Proverbs 22:2 (WEB)

       17 …and lest you say in your heart, “My power and the might of my hand has gotten me this wealth.” 18 But you shall remember Yahweh your God, for it is he who gives you power to get wealth; that he may establish his covenant which he swore to your fathers, as at this day.

Deuteronomy 8:17-18 (WEB)

       Riches don’t profit in the day of wrath, but righteousness delivers from death.

Proverbs 11:4 (WEB)

       For what does it profit a man if he gains the whole world, and loses or forfeits his own self?

Luke 9:25 (WEB)

       10 He who loves silver shall not be satisfied with silver; nor he who loves abundance, with increase: this also is vanity. 11 When goods increase, those who eat them are increased; and what advantage is there to its owner, except to feast on them with his eyes?

Ecclesiastes 5:10-11 (WEB)

       Focusing too much on your net worth can cause you to glory in your riches or to feel shame in your poverty. We must remember that the Lord is pleased with neither. What does please the Lord? Those who glory in their knowledge and understanding of Him and who boast about His loving kindness, justice, and righteousness.

       23 Thus says Yahweh, Don’t let the wise man glory in his wisdom, neither let the mighty man glory in his might, don’t let the rich man glory in his riches; 24 but let him who glories glory in this, that he has understanding, and knows me, that I am Yahweh who exercises loving kindness, justice, and righteousness, in the earth: for in these things I delight, says Yahweh.

Jeremiah 9:23-24 (WEB)

       A balance sheet is useful because it helps you see what you own and what you owe. It’s also useful in estate planning as it allows you to clearly list everything in one spot and can help you determine how much and what kind of planning you need. If you want to create your own personal balance sheet, here’s what you’ll need to do.

1. Give It a Date

       A balance sheet is a snapshot that’s only accurate on one particular date. When you create your balance sheet, you need to put down the date you made it or last updated it. Simply write “As of {Month Day, Year}” at the top just under your name.

2. List Your Assets

       Now you’ll want to break the balance sheet into two parts. On the left, you’ll list your assets. On the right, you’ll list your liabilities and calculate your net worth. Let’s start with your assets.

       Your assets include anything you own. This doesn’t mean you necessarily own it outright – just that legal ownership belongs to you or your spouse. You’ll want to list your assets in categories by order of liquidity – how quickly you can turn the asset into cash. Additionally, you’ll want to indicate the ownership of each asset (Husband, Wife, Joint, etc.). And finally, be sure to use the fair market value – the price you can actually sell it at. What you paid doesn’t matter. All that matters now is the price you can get if you try to sell the asset.

       The first category will be cash and cash equivalents (things that are almost like cash). This group includes actual cash, checking accounts, savings accounts, money market accounts, and similar assets. Next up are your invested assets. Stocks, bonds, mutual funds, retirement accounts, businesses you own, and any other investments you’ve made fall into this category. Finally, you can list your personal use assets – things like your automobile, furniture, clothes, and house. Some people don’t include personal use assets or they use a lower value. It’s up to you, but I say if you can and would sell it then list it on your balance sheet.

       Add up the total for each category and then add up your total assets.

3. List Your Liabilities

       In the right column, start listing your liabilities – anything you owe. Write down your liabilities in the order that they’re due. Short-term debts will go first (like credit cards or auto loans) and long-term debts will go last (like student loans or mortgages). Include any personal debts as well if you’ve borrowed money from family or friends. List the total amount owed along with who owes it (Husband, Wife, Joint, etc.). I think it’s helpful to also list your interest rate in the description of each debt.

       Add up your short-term debts then your long-term debts. Finally, add up your total debts and list it at the bottom.

4. Calculate Your Net Worth

       This is the easy part. Your net worth is simply your total assets minus your total liabilities. It’s what’s left over if you were to sell everything and pay off all your debts. Since you’ve already listed your assets and liabilities, all that’s left is to subtract.

       If your net worth is negative, you owe more than what you own. If it’s positive, you own more than you owe. It’s as simple as that.

5. Update It Regularly

       Now all you need to do is update your balance sheet regularly. Once a year is fine, but you can do this more often if you like. Remember to change the “As of” date each time you update your balance sheet.

       If all this sounds like too much work for you (it’s really not that hard), programs like Quicken and websites like Mint will help you create your balance sheet and keep it up to date automatically.

       In the last part of this series, we began looking at the solution to the problem with The World’s message. We’re continuing that discussion today and over the next parts of the series. We’ll look at God’s View of the world, money, and our lives so we can start to focus on serving Him instead of serving Money.

       In Luke 18:18-30, we see the story of the rich ruler. The ruler asks Jesus what he must do to inherit eternal life. Here is Jesus’ response:

       18 A certain ruler asked him, saying, “Good Teacher, what shall I do to inherit eternal life?”

19 Jesus asked him, “Why do you call me good? No one is good, except one—God. 20 You know the commandments: ‘Don’t commit adultery,’ ‘Don’t murder,’ ‘Don’t steal,’ ‘Don’t give false testimony,’ ‘Honor your father and your mother.’”

21 He said, “I have observed all these things from my youth up.”

22 When Jesus heard these things, he said to him, “You still lack one thing. Sell all that you have, and distribute it to the poor. You will have treasure in heaven. Come, follow me.”

23 But when he heard these things, he became very sad, for he was very rich.

24 Jesus, seeing that he became very sad, said, “How hard it is for those who have riches to enter into the Kingdom of God! 25 For it is easier for a camel to enter in through a needle’s eye, than for a rich man to enter into the Kingdom of God.”

26 Those who heard it said, “Then who can be saved?”

27 But he said, “The things which are impossible with men are possible with God.”

28 Peter said, “Look, we have left everything, and followed you.”

29 He said to them, “Most certainly I tell you, there is no one who has left house, or wife, or brothers, or parents, or children, for the Kingdom of God’s sake, 30 who will not receive many times more in this time, and in the world to come, eternal life.”

Luke 18:18-30 (WEB)

This story is also found in Matthew 19:21-30 and Mark 10:17-27.

       When this rich ruler approached Him, Jesus knew that his heart was still focused on his wealth even though he had kept all the commandments since he was young. Earlier in our Personal Finance Bible Study, we learned that focusing on or serving Money keeps us from serving God. When Jesus answered the ruler’s question, he quickly honed in on this fact and challenged the rich ruler to give up his wealth if he truly wanted to serve God and inherit eternal life.

       But we see the rich ruler’s response. He was saddened at the thought of giving up all of his wealth. What would we do if Jesus told us to sell everything, give it to the poor, and follow Him? Would we be so attached to our material possessions and wealth that we wouldn’t give it up for Jesus?

Green My Apple iPod by Brianfit on Flickr       What if Jesus asked us to sell our iPods so we could feed the hungry? Or buy a smaller home so we could give clean water to those in third-world countries? Or forgo a new car and get a used one instead so we could give medicine to the weak? These are small things in comparison to selling everything we own, but there’s a good chance we feel resistance at the very thought of those actions.

       Naturally, we hold the Things of This World very dear to our hearts because we clearly and plainly see them every day. We easily understand the necessity of some things, and we enjoy the convenience and fun of others. But our focus on This World keeps us from seeing the necessity of God’s viewpoint—of realizing that love and relationships matter much, much more than iPods, big homes, and new cars. We can take nothing with us when we die, yet look at how we strive to accumulate so much Stuff all our lives! This is exactly one of the reasons that Solomon said everything under the Sun is meaningless.

       But if it is so natural for us to be attached to the Things of This World, how can we be saved if the salvation Jesus offers requires us to give up that very attachment to our natural world? We can try to remind ourselves that eternal happiness with God in Heaven is worth more than anything The World can offer, but we cannot completely remove the attachment to The World without God’s help. What is impossible for us on our own is possible with God. Through prayer and a close relationship with God, our hearts can be changed so we focus on God’s World and not ours.

Hot Meal by Ordered Chaos on Flickr       The reward of contentment is very great. Our lives are made easier and much more joyful here on Earth because contentment makes the smallest things very great. A hot meal, warm clothes, or a soft bed—all are great wealth to the person who is content. We also get the eternal reward of communion with God and everlasting life in Heaven. How can any benefit of the world’s wealth be greater than the benefit of God’s rewards for us?

       So this is the first part of God’s view we must begin to take on for ourselves. Our attachment to This World keeps us from fully receiving God’s gifts and fully serving Him. We must give up this attachment if we want to truly receive eternal life in Jesus. And we cannot do it on our own—we must ask God to change our hearts and teach us His ways. If it seems impossible, remember you are not alone. God can do it through you!

Want to read the entire Bible study series on Contentment? Download your free copy of Contentment Is Wealth: A Bible Study on Contentment now!

Should Everyone Go to College?

Corey —  July 28, 2010 — 1 Comment

       This article has been reprinted with permission from Gary Foreman of The Dollar Stretcher. You can find the original article here: Should Everyone Go to College?

       For at least the last few generations it was assumed that a college education was the ticket to success in life. Parents encouraged their children to strive for that college degree. But, like all assumptions, it’s a good idea to examine them periodically.

       A provocative article in USA Today by Patrick Welsh, a high school English Teacher does just that. And, what he found could provoke some heated discussions. His main concern is that many of the kids you enter college have no chance at earning a bachelor’s degree. He points to cases where 70% of students entering college drop out. His wonders if colleges are admitting students that they don’t expect to succeed solely to grow their schools and make more money.

       That’s the type of thing that’s almost impossible to prove, but sure looks like it could be true. More students means more professors and clerical workers. It means bigger paychecks for the administrator’s, too. It also means more clout in the community and with every one the school does business with.

       Unless I miss my guess, none of those administrators will have their pay reduced if too many students drop out. Nor will they bear any responsibility if students end up with debts that are much too big for their income level. In fact, they won’t have to face the problem since student debt doesn’t require payments until the student leaves school.

       Studies show that the average graduate has more than $23,000 in debts (NY Times). Which is a lot of debt for someone who might be making $30k per year or less. But, debt is especially nasty for students who don’t complete a degree. Their income potential and ability to repay student loans is even less.

       Now I’m not saying that everyone should avoid college. Far from it. Based on what I see many, many jobs will require continuous education. It will become very difficult to find a job where you don’t need to continue learning.

       But, I expect college to change in the next decade. The idea of devoting full time to college and attending classes in person will gradually give way to a different approach. One that’s not nearly so expensive. One that doesn’t require as many professors and ivy covered buildings. A continuing education model that will take what we need from colleges and blend that with an internet world. A new paradigm that will be much, much more affordable for students (yes, you can call it more frugal!).

       In the meantime, don’t be surprised to see an explosion of college debt defaults. There’s a little more than $600 billion in federal education loans outstanding (FinAid.org) and $45 billion are in default (7.5%). It’s almost impossible to get relief on student loans. Generally even declaring bankruptcy doesn’t make them go away. So the former students will drag these loans around. For some the choice will be between food/shelter or paying their loans. Guess which choice will win out.

       So should you plan on going to college? Well, maybe. If you know what you want to do and going to college is the only way to do it. But, for many people, the idea of going to college just so you can say that you went is becoming a very expensive luxury. A luxury that you might pay for the rest of your life.

       Keep on Stretching those Dollars!


       Gary Foreman is the publisher of The Dollar Stretcher.com, a website dedicated to frugal living. Click here for more information about how to find money for college.