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Budgeting Epiphany: Dave Ramsey Says To Budget Monthly

February 8th, 2019

My wife and I have created various budgets over the 20+ years of our marriage… but we haven’t done much more than just create them. Usually they were created in a time of financial frustration.

This last weekend we packed our bags and holed up in a hotel to talk about finances with no distractions. I want to share one epiphany that I had this weekend.  I’ve heard Dave Ramsey say you should create a new budget every single month. We never did. We just created a big annual budget, based on past spending, and then kind of divided each line item by 12.

For example, we have seven people in our immediate family. We spend about $100 on a birthday. With this annual-budget-logic, we’d take that $700 budgeted, divide by 12, and put $58 in each month on the “birthday” line.

The problem with this is that in February we have two birthdays. In March we have none. So the reality of what we should budget in February is $200, not $58. And in March, it should be $0, not $58.

Looking at the year, it kind of makes sense. Looking at the month, it’s all kinds of messed up.

So, we put together a February budget (based on our annual budget, but changing things we knew needed changing for just this month).

Folks, money is a big deal. In a marriage, money is one of the top five issues. Another top five is communication. This year’s JibberJobber theme is income streams… what you spend is a negative income stream. Let’s get serious about it.

I’m reminded of a guy I met who was unemployed… and had been for a while. He had a nice car and a nice house and what looked like a nice life…. and told me that his past financial decisions, and how he spent his money, and how he managed his debt, made his transition much less stressful than the average job seeker. It was a beautiful thing to witness.

How much fun would your job search be right now if you didn’t have the stress that living paycheck to paycheck, and being backwards on your money?

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How much does it cost to buy something for $100?

January 22nd, 2019

Continuing the annual theme of income streams… today let’s talk about spending money.

Let’s say you want to buy something for $100. How much money do you have to earn in order to buy it?

$100?

Assuming you have taxes, you would have to earn more than $100 to be able to buy something for $100. You’d have to earn 100 * 1.(your tax rate)

If your tax rate is 20%, you would have to earn 100 * 1.20, or $120.

Your $100 purchase cost you $120.

This is simplified, of course. You could pay more in taxes, and you could add on variable expenditures based on your income (for example, tithing). You might be contributing a percentage of your income to a 401k (so, you don’t see that money until you are old enough). Perhaps you need to make $130+ in order to buy a $100 thing.

How much would a $50 dinner cost you? Based on these numbers, it would cost you (or, you would have to earn) $60 to $65.

Look, I’m not trying to be a killjoy. But I want us to change our relationship with money. I want it to be a healthy relationship. Earning money, and increasing revenue streams, is great. But we need to understand what we are really spending. We should know, to the penny, what we are spending. Dave Ramsey’s cash flow system is called “every dollar” because he wants you to track every single dollar.

An analogy: my wife and I recently started the keto diet. The way we are doing it requires that we measure what we eat… either weigh food, or use measuring cups. We’ve found that if we just “eyeball” it, and guess how much we are eating, we are wrong… every time. Our eyeballing is inaccurate.

I bet this is what we are doing with our spending. Just a little here, at this restaurant, and just a little there, at that splurge, is okay, right?

Wrong.

We really should track and measure what we are spending, and compare that to what we are earning.

And part of understanding our expenses is to understand how much we have to earn in order to spend that much.

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I got laid off. Again.

December 10th, 2018

In February I got my “dream job” at a “best companies to work for” place here in Utah. It was great… while it lasted.

And then it wasn’t great.

And then it didn’t last.

That’s another story for another day. Instead of going there, I want to share something awesome with you.

Almost 13 years ago I got The Big Layoff. It was… I don’t know, devastating? Life changing?

It was hard. Really hard.

A few months later I came up with the idea for JibberJobber. I was passionate about the idea of creating “multiple streams of income,” in part because of the book by the same title, by Robert G Allen. I read about half of the book while on vacation, and I really wanted to have more than one way to make money.

When I lost my job in 2006, the people who made the decision to let me go took away 100% of my income.

Does that make any sense? Why do we let others, who have very little (if any) interest in our future have 100% control of our income???

I started JibberJobber thinking “if I can just make $100/month, the next time I get laid off they won’t be able to take away 100% of my income. There will be a little part of my total income that they can’t take away!”

Fast forward almost 13 years. I’m sitting in an office with my new boss (not the boss who hired me), and she’s saying all the words to let me go. “Your final day is November 30th…. ”

As she continued to talk, I kept thinking about the three active revenue streams that I have built over the last 13 years. Of course, I have JibberJobber. I also have Pluralsight royalties. And, not by plan but by happenstance, I have two rentals, both generating income.

Three income streams.

In reality, my job was one of four income streams.

I tell you this story because the contrast between my layoff in 2006 was drastically different than my layoff in 2018. In 2006 they took away 100% of my income. In 2018 they took away less than 50% of my income.

Who was empowered?

Which scenario would you rather experience?

For years my Career Management 2.0 presentations where about two things: networking and personal branding. I’ve struggled, for years, to imagine what else should be included.

And now I can comfortably say it is multiple streams of income AND how we spend our money. If you add the financial part to the networking and branding part, I think you can be in much better control of your career present and future than if you do just one of those three. Or if you don’t do any of them (and let your career just sort of happen).

 

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The Negative Income Streams

January 2nd, 2018

Yesterday I announced the 2019 theme to be “income streams.” I’ve talked about your job being one income stream, and I encourage you to create other income streams.

What we haven’t talked about is the important topic negative income streams. This feels harder for me than thinking about creating a new income stream!

I’m talking about what you are spending. Where does your money go. How much money goes to fast food. How much money goes to things that are frivolous. How much money goes to things you don’t even know about, like subscriptions that you don’t use. What can you do to decrease your negative streams?

I want to plant this seed in your mind, as you think about income streams, because decreasing negative income streams decreases your need to add more income.

I like Dave Ramsey…. you might like someone else. Think about this topic, though, and plan for it. I want you to become financially independent, and decrease the power that someone who can terminate your job has over you. Understanding how and where you spend money, and taking charge of it, can help.

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Job Security vs. Income Security

April 3rd, 2017

What do you think about job security?

If you have a job right now, you passionately want to believe in it… that it will last. At least for you.

If you are unemployed right now, you are likely soured on the whole concept, realizing it’s a farce.

Back in 2008 (maybe earlier) I had an epiphany: having a JOB (or as some people have called it, Just Over Broke) is not bad.  But relying on that one job to be around forever, and to meet your financial needs (not wants), can be really risky.

When I lost my job, on Friday the 13th in 2006, I had invested too much of my personal and professional life into that one job. I invested myself into that role, company, team, and outcome. And when the job was taken away from me, I was left with nothing.

I counted on job security, when I should have been working on a personal income security strategy.

What is that?

It is a strategy that helps me (and my family) have the income I need (and want), with a plan for the future.

What does that look like?

If you take a purely professional, non-entrepreneurial position, it looks like a great, solid career that doesn’t happen by accident. You have gotten the right education and continuing education (training, certificates, etc.). You know, and are known by, company and industry executives and movers and shakers (including those that work for the competitor). You carefully craft a branding strategy and work to share your brand appropriately. You have taken on extra responsibility at your company, and are known as someone who gets the job done, someone who others want on their team, etc.  You are pleasant and very competent, and other people wonder how your team, project, or company could ever survive without you. From the outside, it looks like you have been lucky, a lot, in your career.

If you take a non-traditional position, you are a great worker, and you have side gigs. You might have rentals, or sell cupcakes on weekends. You might manufacture something in your garage, or consult. Your job is a one aspect of your income, but you are excited about, and empowered by, other revenue streams that you have created. If you lose your job, you have other things to fall back on, and you wonder “should I look for another job, or should I just hit this other stuff really hard?”

Those two ideas address the money-making side of things.  The other side is what do you do with your money (how do you spend it), and your debt.

  • When you get a bonus, how do you spend (or, invest) it?
  • How is your retirement account?
  • How much credit card debt do you owe?
  • When will your house be paid off?
  • When will you pay off your student loan?
  • When will you be debt-free?

Income security has to do with how you earn money, how you spend money, and as important, how you think about money (ie, is it “evil”?).

I’ve been talking about income security for a long time. I invite you to seriously think about what you can and should do to increase your personal income security. I am… because I want financial peace of mind, for now and for many years to come.

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Planned Surgery Without Obamacare

February 1st, 2017

If you’ve followed my blog, you know I broke my ankle on the 2nd of January. I thought it was sprained so I put off having it checked for two full weeks.  My bad.

I didn’t want to go to an urgent care only to spend a couple hundred bucks to tell me it was sprained, and to just R.I.C.E.  So I just did R.I.C.E. at home, for free.

But then, after two weeks, it was time. It wasn’t getting better at all.  The pain and symptoms were too much, so I may have conceded to defeat, shed a tear or two, and got packed into the van to go to an urgent care.

I’m not here to give you any medical advice, but I want to share things I’ve learned in this latest medical “crisis.”  I have found information very difficult to find, and I believe that no matter what your insurance is, it’s powerful to be informed.

One of my biggest fears/annoyances is paying for a doctor only to have them refer you to someone else.  And that’s exactly what happened. I went to the urgent care where they took xrays. The nurse who took care of me 80% of the time (the other 20% was a P.A.) said “do you want to see the xrays?”  Of course we (my wife was with me) did.  “See that?  That’s obviously a break.”  Ugh… it didn’t look very small :(  “Let’s go talk to the P.A.”

The P.A. basically said “you have to talk to an orthopedic doctor.  We have one in our network…”

That cost $119.

45 minutes later we were checking into another urgent care to meet with the ortho.  He basically said “You have to have surgery.  If it were 2 millimeters separated I like to avoid surgery, but you are almost 10 millimeters.”  I asked “how much do you think this will set me back?” He responded “I don’t know, but I’m guessing between $7,000 and $12,000.”  He gave us a few surgeon referrals to call.

My goodness.

Because we didn’t have the first urgent care put a splint on (because they said we would just have to do xrays at the next place, and I thought they’d just do it there), they charged us an extra $80 to make a splint.  That was a bad choice on our part.

That cost $119 for the ortho to get surgery and $80 to make a splint (that would have been included in the first urgent care trip).

I spent a couple of days calling surgeon offices… that was not fun at all.  But one office stood out, night and day, from the others.  The office staff sold me on using their surgeon, not because they were in sales mode, but because they were very nice (even after knowing I was self-pay, or “pay in cash, before the service”). Learn more about those phone calls, and what I learned for job seekers, here.

On that Tuesday I had made an appointment for the following Monday (which was the earliest they could get me in), and possibly surgery that afternoon, but then I got a call asking if I could come in on Thursday. I was elated to get in earlier.

With the 20% self-pay discount, that appointment cost $200.

The purpose of this post isn’t to be a surgery-log… I want to give you an idea of how I got to a surgeon I liked, and how much it cost.  So far we are up to about $520… just to get referred to the right person, and for him to say “okay, I’ll cut you.” Aside from a splint, so far there’s be no medical care (but hey, the xray and diagnostics is worth something).

$520.

In my experience, a surgery will generate at least three bills: the surgeon, the hospital (or surgery center), and the anesthesiologist.  What do you figure each of those cost?

Four years ago I had emergency gall bladder surgery.  I went into the emergency room at 2:30 am and had surgery a few hours later.  No shopping around.  I was pretty much doped up from 3am until I came out of my anesthetics, with some big nurse over me telling me to “BREATHE!!”

I wrote about the costs here… can you believe that the surgeon, after his 50% off cash pay discount, cost only about $800?  The guy in charge, the guy calling the shots, the guy doing the cutting and repairing… $800.  That seems awfully low to me, especially when the total cost of surgery and ER was over $20,000.  The surgeon’s got less than 5% of the total payments.

Well, here’s how ankle repair surgery came out, for me.  Mind you, this was a “pretty simple” surgery, with two screws and no plates.

Surgery center: $1,305 (after a 75% discount!!)

Surgeon’s office: about $1,400 (I can’t find the exact number, but it was after a 40% discount)

Anesthesiologist: $600 (apparently this was only a discount of $40. I’ve never gotten a good discount from the anesthesiologist)

90 days followup visits with the surgeon are included, although I’ll have to pay for xrays and extras. And I’ll have to have physical therapy, which I’m hoping isn’t more than $500.  Altogether, this misplaced kick-resulting-in-broken-ankle is costing a little less than $3,000.

Not fun, but definitely better than the guess of $7,000 to $12,000.

How might you get an expensive medical procedure for such a low (or “reasonable,” or “affordable”) cost?

  1. You shop around. Let them know you are self-pay and ask if they have a discount.  Don’t argue, just ask. You aren’t negotiating, you are simply gathering information.
  2. Don’t go to a hospital for a planned surgery (if you can help it).  Check out “surgery centers” in your area. This is a MUST READ regarding surgery centers.

Now here’s the interesting thing: After the first frustrating day of calling surgeons the doctor recommended, I called the surgery center and asked them who they work with, or recommend.  That was my short list for calling the second day.

I’m not saying that not having insurance is awesome.  Not at all.  But for those of you who can’t get insurance, you need to know that not all hope is lost.

Oh yeah, for those of you wanting to do the math… assuming I paid $1,000 a month in insurance, with a $10,000 deductible, I still would have had to pay for this entire surgery out of pocket.  Just saying.

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Income Security Amid Layoffs

February 4th, 2016

Tis the season to get laid off. And you thought this time of the year was the best time to get a job!

Well, sure, it is a great time to get a job.  But layoffs are still happening.  And they will, forever. Autodesk lays off 925 people, BP will lay off 7,000 people after a “damaging fourth quarter”, and  Yahoo will recorrect with a sayonara to 1,700 people, to “revive company growth.”

Those are just some of the big ones.  There are gobs of little layoffs.

As I talk to job seekers and JibberJobber users I realize that many of them have the same feeling that I had in my job search: why work so hard just to land a job that you might not like, at a company that might have a crummy culture, working for a boss who really should be your employee, and having the promise of job security that is as solid as vapor.

Let’s reconsider what a job is.  A job is simply one revenue/income stream.  We really should have multiple income streams.  When you have, say, three income streams, and you lose one, it hurts, but it doesn’t hurt as much as much as losing one income stream… if you only have one!

When I was hitting rock bottom during my job search, I came to terms with this idea. I figured what I really needed was money to pay my bills.  I didn’t care if that mean I got a paycheck every other week, or once every 10 years… as long as it was legal, moral and ethical, I was open to it.

Realizing this helped me realize that any future jobs I would have would mean I had another revenue stream… but that that didn’t have to be my sole revenue stream.

See where I’m going with all of this?

HOW CAN YOU CREATE OTHER REVENUE STREAMS?  I guarantee you that the people who have multiple revenue streams have different feelings, and are further ahead, than people who don’t have other income streams, when the layoffs come.

I’m not talking about job security, which to a large degree is out of our control. I’m talking about income security.

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Entrepreneur-thinking is the New Job Security

May 1st, 2015

I meant to write five blog posts this week about being an entrepreneur.  Many of my users are looking for a job, but they are also looking for security, and thinking about starting their own business.

So I wrote two posts about being an entrepreneur… but I need to wrap up my thoughts before the weekend on this entrepreneur stuff. (my two posts: When an Entrepreneur Quits and Has to Find a Job, Funding Your Business: The Four F’s and A Novel Idea)

We all know job security is gone.

I’m not saying that entrepreneurship is the new job security, I’m saying that thinking like an entrepreneur is the new job security.

I think having a job is simply one revenue stream.  It might be your only revenue stream, or it might be your biggest of multiple revenue streams.  But it’s just one revenue stream.  In the olden days, when there was such a thing as job security, you would not worry about whether you were going to have a paycheck come in the next two weeks… it would automatically come.

Entrepreneurs don’t usually think that way.  They are always concerned about the top line (revenue), the bottom line (profit, or how much might end up in your pocket), and cash flow (when you can pay your own bills).

Today, we need to think about top line income (how much money we bring into our household), bottom line (how much we get to keep after taxes and all of the bills), and cash flow (when the money hits our account, and how that matches up with our bills).

We need to have the financial mindset that entrepreneurs have.  This means:

We think about our revenue streams more than we had to before.

We think about our pipeline… who are the prospects that we are courting (or should be courting).

We think about our current income streams, and how long we’ll have them.

We look at our competition and the market, and try to make decisions based on where things are headed.

We think about our product (aka, ourselves): are our skills outdated?  What can we do to be more market-worthy?

We think about our relationships, and who in our network could help us, and how we can help them.

The stuff I wake up thinking about is the stuff that every person who needs to make money should think about.  Your degree ain’t going to cut it, nor is it going to be the thing that gets or keeps you that job.  I got a CIS undergrad and an MBA, neither of which (a) saved me from getting laid off, and (b) helped me get another job.

What is it that will provide you INCOME security?

How are you positioning yourself to create income security?

Those are two of today’s new career questions that we need to get serious about.

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Funding Your Business: The Four F’s and A Novel Idea

April 29th, 2015

When I started JibberJobber I learned a little about how venture capitalists and angel investors fund businesses.  It was a fascinating journey into a world that seemed exciting and a little dirty/sleazy.  I learned about the Four F’s… have you heard about these?  These are the four sources of funding that an entrepreneur should look at before they go to a VC or an angel.  They are:

  • Friends
  • Family
  • Fools
  • 401k

I used two of these sources to fund the early days of my business.  It was necessary, and I’m forever grateful to have had those sources of funding to help JibberJobber get onto it’s own two feet.

But it bugged me that that is what I needed to do. I had this novel idea that my business should have been funded by… get this… people paying for it!  That’s what you might call “self-funding.”  Many companies are not self-funding… they rely on continual investments to fund their payroll, rent, parties, etc.  Companies like Amazon, who seems to own the retail world, did this for years.

Anything wrong with self-funding?

For most of you, starting your own business, getting funding from VCs or angels isn’t the right route, and you might not be able to tap into the Four F’s.  So how do you fund your venture (aka, pay your rent and buy food) in the early days?

The answer sits in understanding the basic nature of your business, and whether you are offering products (that you are creating) or services.

JibberJobber is a product, which meant that we spent months to develop it before we went live.  A book is a product… you spend months writing and editing and preparing for the publisher, and then you have one, or a thousand, or a million.  Your job is to take this *thing* and market it.

A service might be something where you charge an hourly rate to do something, like an hour of consulting, a day of speaking, doing a haircut, writing a resume, mowing a lawn.  Typically, you can start doing a service, for money, right now, today, without any investment.  I have plenty of ideas of things you can do in exchange for money today.

Is one better than the other?  A product can require a significant investment up-front, with the idea that you could sell it when it’s made, or you could sell the company if you prove it successful.  Expect to continue to invest in R&D.  The payout could be crazy.  The failure could be ruinous.

A service might take no money to start, and you could get gobs of money per hour immediately (for example, consulting for $250/hour, or speaking for $5k an engagement).  But you might not be able to sell your company later, no matter how good it performs, because for a while, YOUR ARE THE PRODUCT.

When I started JibberJobber I had illusions of grandeur about how much money I was going to make.  All the while, I required investment from family and my 401k.  It took a couple of years before my company was in the black.  A COUPLE OF YEARS.  That was not in the business plan!

The same month I started JibberJobber, I had a friend, also laid off, who started a business, but his was a consulting business.  He was billing clients in week 1, and every week since then.  Where I was burning through lots of money, he had very low overhead and was bringing in more per hour than he had ever done.

Who was the fool?  Was it me, for not self-funding, or was it him, for going down a path that would not have a big payday (acquisition) in the end?

I’d say neither were the fool.  But looking back on it now, I wish that I would have figured out how to consult for one to two hours per day back in the early days.  That would have been a way to self-fund.

I know a guy who was starting a business while working at the grocery store at nights stocking shelves.  Glamorous?  Hardly.  But it worked for him and his family.  It was his way of finding funding for his venture.

Let’s wrap this up… funding a business can be hard.  But there are many, many options.  You don’t have to just hope to get on Shark Tank, or get laughed out of one hundred VC offices. Be creative.  Many of the businesses that we enjoy today were started in someone’s basement, garage, or even bathtub (ecolabs).  Without funding. With a dream and hope and elbow-grease.

Just don’t be too proud to consult for a couple of hours a day, or to work at the grocery store at night.  Eventually, your own little business will be self-funding.

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When an Entrepreneur Quits and Has to Find a Job

April 28th, 2015

Being a entrepreneur is hard.

Even though I wrote a book about alternatives to a job (51 Alternatives to a Real Job), and I talk about multiple streams of income, and I regularly present to youth and adults about starting their own business, and I think that being creators trumps being consumers any day, I know that being an entrepreneur is hard.

It’s not for everyone.

And at times, it’s not for anyone.

In a recent email from a JibberJobber user, I read: “One of the discoveries I made is that I am an entrepreneur at heart, but not at the moment.”

Not at the moment.  Sometimes the timing is right, but that doesn’t mean the timing is always right.

A few months ago a close friend who has owned a software business for years closed shop and got a “real job.”  The emotions in this type of transition has to include:

Elation beyond measure, to get a regular paycheck (no more high ups and low downs).

Sadness, because of having  to move on from having built something that is just not buildable anymore.

Embarrassment and shame to quit on your dreams of so many years, and admit that you simply weren’t good enough to make it work.

But circumstances shift, needs change, support from family changes, markets evolve. At the intersection where dreams meets reality, you learn just how hard it is to get something close to break even, much less highly profitable.

Your respect for those who founded and created businesses from yesteryear skyrockets as you realize that to get to what looks like an easy, privileged and exotic lifestyle, founders had to sacrifice health, relationships, and sanity.

I’ve seen this over and over.

I’ve seen entrepreneurs-at-heart pull the plug on their dreams and get a job.

And here’s what I think: THAT IS OKAY.

I read Seth Godin’s book, The Dip, and what I got out of it was you have to learn when to quit or change course.  He’s not talking about quitting in a depression and giving up on life.  He’s talking about figuring out when to change what you are doing, either in a big way (close your business) or a small way (change your strategy, offering, packaging, etc.).  Change, re-evaluating, and some-might-call-it-failure, is OKAY.  It’s necessary. It’s expected.  It’s important.

You’ve heard that you should fail quickly, learn from it, and move on, right?

This is a really, really hard pill to swallow when it’s your idea, your business, your attempt.  It’s your ego, and eventually, your identity.

Quitting means you don’t believe in yourself.  You slip into a depression where you have validated, once again, that you weren’t as competent and qualified as you thought you were.  Perhaps you will only amount to being a cog in someone else’s wheel.  This is not the career you envisioned.

But in reality, you shouldn’t think that way.  Whether you are a cog in someone else’s wheel, or you create the next Facebook, you have value.  And as I mentioned earlier, circumstances change.  Maybe your role as cog today will lead you to successful entrepreneur in the future.  Or maybe you’ll be a great cog, with a great career, with financial stability and all the joys that can come from having a fulfilled life.

I admit that I have always wanted to be an entrepreneur, but I couldn’t figure it out until the idea for JibberJobber came.  There were a few false starts with other businesses, but my heart wasn’t in it, and they weren’t the right path.  I eventually pulled the plug on them.  But when JibberJobber came, it was like a calling from God.  And for parts of the last nine years, that calling has been hard to fulfill.  I’ve done the stuff I’d heard about from other entrepreneurs: lived off of credit cards, borrowed ridiculous amounts of money from family, burned through my 401k, payed my employees for months without taking any salary, etc.

Glamorous?  Only in the movies.

Hard?  Indescribably hard.

Did I think about giving up?  Many times.

Did I have any way out?  I’ve had job offers and buyout offers over the years, but none of them were right.

For now, this is my calling.  I’m blessed to have a wife who is all-in, and gets the vision of what I’m doing. Not to say that there haven’t been times when she wanted something different (like a paycheck every other week), but she gets it.  She supports it.  And that’s the reason why I can still be here, as an entrepreneur, fighting the fight, while I might otherwise get a high-paying job with benefits and vacation, and some facade of security.

Luckily we figured out the money part of this business, which is something that my ex-competitors can’t say.

I choose to fight this bloody, messy fight.

Getting a job?  Pulling the plug on entrepreneurship?  If it’s right, right now, then do it.

I think that’s only a step in the big journey of being an entrepreneur.  After all, with the state of job security being what it is now, aren’t’ we all taking entrepreneurial risks?

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