In 2008, Andrew Schrage co-founded Money Crashers, a financial blog that catapulted him into prominence as one of the Internet’s youngest and most trusted pundits on personal wealth and entrepreneurship. Originally from Boston, Andrew majored in Economics at Brown University before moving to Chicago to work at a hedge fund. He has counseled countless visitors to his site, as well as appeared on MSNBC, AOL Daily Finance, ABC’s Good Morning America, and more to give the low down on money and finances. Check out our interview with Andrew for an in-depth look at one of today’s biggest financial advice phenoms.
Hi Andrew, great to have you with us today. First off the bat, can you tell us the significance behind the name of your personal finance site Money Crashers?
I get a lot of questions about that. We look at our website as more of a community than anything else, where readers came come and "crash," so to speak, and just talk about what's bugging them, or what they've had success at, regarding their money and finances. It's a memorable name and certainly one that sticks in people's minds.
Before you founded Money Crashers you were working at an investment fund in Chicago. You cited your frustration with the corporate work environment as what led you to leave that position. Could you elaborate on what specifically about the corporate atmosphere was not for you?
I've always had an entrepreneurial spirit inside of me, and I definitely felt constrained by the corporate environment. There was little room for creativity, and although I felt I performed well at my position, there was also a sense inside of me that there was something better out there for me to do with my professional life. I also never really liked the political end of things in the corporate world. Cutthroat coworkers doing anything they could to get ahead, promotions passed out for things other than performance, and things of that nature.
You’re a major proponent of starting a side-business while still working a day job – after all that’s what Money Crashers began as. Could you list the top four or five reasons why starting a company in addition to keeping a full-time job is actually advisable?
First of all, you take a lot of the risk out of the equation. Quit your day job and start a business, and it's "make or break" from Day One. If you manage your time well, it's certainly possible to start a side business and work a traditional job, and if you already know that your monthly bills will get paid regardless of the success or failure of your venture, you take a lot of the pressure off yourself too. It also allows you to expand in moderation. There's no need to rush into any expansion initiatives because you need to generate more revenues. Utilizing that strategy can easily lead to failure. Also, you don't need to wait to start your business until you have a ton of money saved. As long as you have a steady income coming in, you can launch your business on a shoestring budget and expand it as more funds become available.
Now, starting a side-business is no easy feat, as any entrepreneur will tell you. What are the top things anyone thinking of starting a company needs to consider before taking the leap?
Start your business while continuing to work at your current job, for the reasons I just stated. Choose an industry or niche that you're either very passionate about or that you are an expert in. It simply takes too much time to learn a new industry and start a business, and if you're not passionate about your idea, it'll be too easy to get frustrated and give up. There were many times when my passion for finance and helping others were the only things that kept me going.
Next, you need time to start a business. There are plenty of time management tips to put into place both in your personal life and in the running of your business that will help. Minimizing and eliminating unnecessary interruptions is probably the biggest one. Saving money should be at the top of your list as you launch your business. You can market it for free via social media, and there are plenty of office supplies and equipment that you can get for free or at least purchase pre-owned to cut costs.
Most startups fail because their founders overestimated market size, weren’t able to secure sufficient funding, or just didn’t develop a sellable product. What are two or three pieces of advice you can give to our prospective entrepreneurs reading this to help them avoid running into these problems?
Do the research on your market online beforehand. There are plenty of resources available through generic Internet searches. Save as much of your own money as you can in the months preceding the launch of your business and you limit the amount of financing you need. Starting off slow and expanding your business as revenues increase is another solid strategy to avoid the need for significant outside funding. To create a sellable product or service, focus on identifying a current consumer need and develop your product around that need instead of creating a product or service and then trying to identify a market. I began working on Money Crashers during the height of the recent recession which played a role in deciding what type of business we created.
You mentioned in an interview with MSNBC that one thing that should discourage anyone from starting a side-business is being in debt. What are a couple practical ways someone can start relieving themselves of that debt so they can even think about building a startup?
Get yourself on a budget. The website Mint is a great (and free) option for creating one. Minimize your monthly expenses by researching the competition for your cable TV, internet, and mobile communications needs. Bundle those services and you save even more. And although it sounds rather outdated, clipping coupons is still a solid method for saving money on groceries. If you struggle with credit card debt, pay for everything in cash for one month and you'll be surprised at how much less money you spend.
One thing you recommend to other entrepreneurs, and always look to do better yourself, is time management. Can you step us through your routine when setting up your schedule for the day, week, month, year, or even five years out?
I use the calendar function on Google Mail to organize and plan my day and week. I realized early on that I'm an early riser, so I get my most challenging work out of the way first each and every day. It also didn't take me long to realize that breaks are also a necessity for staying sharp and productive, so I make sure that I take mine. Whenever I found myself burning the candle at both ends, my work suffered. I have monthly and annual goals set for myself which I also review on a timely basis and adjust as needed. I tend to stay away from setting goals or benchmarks further than one year out as I don’t want to get too far ahead of myself. So far, that strategy has worked out quite well.
Part of your money-saving philosophy is to distinguish between wants and needs, and then focus on cutting those costly wants out of the budget. Several experts have emphasized the same approach, but I’d like to hear how you go about separating your own wants and needs and sticking to the essentials. Do you have a few techniques you use regularly to discriminate between your necessities and your luxuries?
The best way to distinguish between luxuries and necessities is to ask yourself one easy question before spending any major amount of money – do I really need this? What you'll find is that answer is no in a lot of cases. Another easy way to make the distinction is that if you can't afford to pay for something completely by the time the credit card bill arrives, then you simply cannot afford it. Avoid the urge to purchase new electronic gadgets every time a new version hits the market (the new iPad or iPhone 5 for example) and stick with what you have.
Let’s say someone falls prey to a financial scam. What are the first couple of steps they should take on the road to recovery?
If you were scammed via one of your credit cards, report the issue to your provider immediately. Then contact the police and your state's Office of the Attorney General.
Thanks so much for meeting with us today, Andrew. Before we let you go, do you have any last bits of financial knowledge to send our readers away with?
Take control over your finances – either you run them or they run you. Make sure you start saving for your long-term goals like retirement as well as an emergency fund as soon as possible. Always avoid credit card debt and always live beneath your means.
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