Image source: www.master-of-finance.org
For those not already in the know, Bitcoin is an online, peer-to-peer payment system where units (i.e. “bitcoins”) are stored in digital wallets and can be transferred in almost real-time anywhere in the world, between any two users. There is no central authority to Bitcoin. Transactions between wallets are recorded and verified by the entire network of users. But who the users are and who owns a specific wallet is mostly confidential.
In addition to being sent between users, bitcoins can be “spent” online and in retail stores, or sold for dollars, yen, euro or other real-world currency. Bitcoins valuations are volatile, and at the time of this post one bitcoin is worth about $125.
All of this trading in bitcoins requires a lot of computing power (to avoid hacks and fraud) so there needs to be a reward system. Bitcoins are created using a process called “mining” whereby users solve complex mathematical puzzles with their computers and get new bitcoins on a predetermined basis. Miners also get fees for verifying Bitcoin transactions.
Bitcoin is now big business, and its open nature means it’s time to look at it as a potential way to make money and get out of debt. Bitcoins are divided up to eight decimal places, so this is not only a rich man’s game.
Even the online auction house eBay is dipping its toe in the Bitcoin waters with listings on the site as well as the following informational video they just posted on YouTube:
This is despite the fact that a system like Bitcoin, which offers basically free online transfers, can post a serious risk to services like PayPal, which is owned by eBay.
So is Bitcoin for you? Maybe….
There are two ways to make money in bitcoin. One is to become a miner, which requires a pretty powerful computer and cheap electricity. If you are technically minded, this may be worth exploring. I can’t explain it all here, but you can find a wealth of information and beginners’ guides about the process on serious Bitcoin blogs.
The other way to make money in Bitcoin is to buy low and sell high. Because the value of bitcoin has jumped from as low as $65 to as high as $260 since I’ve been tracking it, those of you inclined to trade volatile commodities have a new one to look at. Bitcoins can be traded online at sites like MtGox, Coinbase and even on the street.
So if you’re interested, do your homework and at the very least you will be the smart guy at the party who can explain what the hell Bitcoin actually is.
If you need to borrow money in an emergency and all other sources of cash and credit are exhausted, it may be possible to ask your employer for a loan against your next paycheck. Commonly called an advance, there are pros and cons in requesting one, but you may at some point find yourself with no other options.
An employer advance from your employer is very different from a loan from a payday lender. Advances are typically granted without fees or interest, since they are seen more as a favor or benefit than a way to make money. However with an advance there may still be a formal agreement to sign outlining the terms and conditions of the loan.
In the days before credit cards and payday lenders, it was very common for employers to allow their workers to draw against their next paycheck. And in some industries, like sales, it is still very routine to let staff take money against future commissions or bonuses.
While this may sound like a nice alternative to paying cash advance fees or borrowing from a predatory check-cashing store, there are serious concerns that one must consider before looking for their employer to throw them a lifeline. One, not all employers offer advances. Two, unless you have another source of funds coming in then you’re probably going to fall short again when the next paycheck runs out.
However the biggest problem with taking an employer advance is letting your employer know that you are in financial trouble. This is never a good thing. Having your boss know about your debt problems gives them extra leverage over you and is often viewed as a sign that the employee is irresponsible and unreliable. This can result in long-term damage to your career opportunities at that company.
That’s why I always consider a paycheck advance a loan of last resort.
If you do need to explore this option, there are a couple key things to keep in mind.
- Do not discuss this with your coworkers. Your personal finances should never be a subject of office gossip at the water cooler.
- Ask if the repayment can be made over the course of several paychecks.
- If not, find out if there is an option for you to work overtime or on weekends to make up for the shortfall that you can expect when the money you borrowed is paid back from your next check.
- Get back to work. If your company does you this favor, you need to be the model employee from there on out or there might be resentment towards you from the people who know about the loan. Get to work early, stay late, cut down on breaks and pay attention to the little things your employer is always harping on.
I hope that nobody reading this ever had to go hat-in-hand to their boss asking for a handout, but things happen. Getting an advance is better than getting evicted, or not feeding your kids.