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Publishing Your Own Book: eBook or Traditional Print Format?

The following is a guest post from David at MoneyNing, who recently published his own budget travel book. He graciously wrote this post when I asked about this entrepreneurial pursuit. If you like what you see, I encourage you to check out his personal finance blog for more.

In the good ole’ days, only the most common and commercially viable books saw the light of day since publishers carefully pick and choose what they believe the market will digest. As a result, many would-be best sellers don’t even get a chance to reach the marketplace because those authors either didn’t have the connections nor the reputation to get editors to even turn to the first page.

Luckily, those days are over. With the rapid advancement in publishing, inventory and printing technologies, it isn’t a question of whether to publish a book but whether the book should be published through print or digital. When I wrote The Little Budget Travel Book, I chose to go through print even though I was primarily doing business online. Below outlines the reasons why I chose that route.

The Case for eBooks
Whether to publish it as an ebook was a question I pondered long and hard because it seemed like the more natural route. As an internet marketer, I was very familiar with the online buying process. Without a physical product, the lack of shipping and handling also allows more control of the whole sales funnel from advertising to delivery. The entrepreneur in me is saying “the simpler the better”. In addition, ebooks are:

  • Trivial to Reproduce – Unlike a printed book, there’s no need to print a physical copy every time someone buys.
  • Free to Distribute – As I already have a website, putting a section up for distribution is easy and free.
  • Easy to Update – As easy as changing a word file.
  • Instant Payment – Since you control the payment process, you receive your payment as soon as someone makes a purchase. With a printed book, it takes at least three months before a sale’s revenue gets to your bank account.

Furthermore (and this may sound counter-intuitive), I actually found that the market is willing to absorb self published ebooks at a much higher price. With less overhead and higher revenue per book, the financial aspect heavily favors an ebook.

The Case for a Printed Book
The path to a printed book is much more complicated. I need to communicate with the printing company who needs to make money, and adhere to the strict rules about specifications of book sizes, margins and fonts used. Then there’s the bookstores. They need to hold inventory, catalog the book and take another cut from sales, and there are other charges that just aren’t necessary in the digital world. On the surface, it doesn’t look like a good option at all, but there are a few tangible benefits. A printed book gives you:

  • Credibility – Having your book printed improves your reputation amongst your peers online and off. Forever and ever, you can tell everyone that you are “a published author”. In addition, the book will help my blog and vice versa.
  • New Marketing Channel – By having a printed book, I’m able to tap an otherwise untouched market. With it on sale at websites like Amazon and Barnes and Noble, my name is out there just that much more.
  • Hands Off Customer Service – When you sell an ebook, you are handling all customer inquiries. When a printed book is sold, customers generally deal with the bookstores for any customer service questions. For someone who’s time is valuable, this advantage cannot be taken lightly.
  • A Bigger Sense of Accomplishment – It’s hard to describe the excitement of holding the printed book for the first time. In fact, you can see my reaction when I first got the book in the video below.

The Cost of the Printed Book
As I mentioned earlier, a printed book comes with many charges. Need to make a change? $30 dollars please. Need some more copies? Pay up. It doesn’t stop there…

Setup Charges

  1. Digital Catalog Fees – $12 a year. The are fees to catalog the book within the online retailers
    basically. So it’s a surcharge by the printing company so they will help
    you get the book listed on major retailers.
  2. ISBN Number (a barcode for book catalog purposes) – I bought 10 for $275 (works out to $27.50 a book), but you can get one for $125
  3. Proof – $30 for the first printed copy after you submit the digital files

Each Printed Copy

  1. Printing – The printing company charges by pages, but you can expect it to be no less than $2 to $3 per copy.
  2. Bookstores – You actually set wholesale pricing, so you can theoretically control how much the bookstores make. However, if you don’t give them at least 20%, they will not catalog your book. In addition, online stores like Amazon will split the wholesale discount with their customers. For example, if you see a book that is on sale for 12% off, it means that the publisher has set a wholesale discount of 24%.

I’m Thinking of Publishing a Book. When Will You Start to Make Money?
With editing, cover page design and all the costs I discussed, it takes about 100 copies for me to break even. Much of the ROI will depend on the wholesale discount and the actual price of the book, so don’t take this as the rule but a starting reference point.

Will I Do it Again
Publishing the first book was amazing, because the experience was worth all the effort I put in. While many of the benefits aren’t present the second time around, I suspect I will do this again based on the reader feedback I’ve already receive for the book. If you are thinking of writing a book as well, you can contact me through my blog at anytime and I can answer any questions to the best of my ability.

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Should You Keep Your Emergency Fund In Your 401k?

Before you jump to an answer or nasty comment, please give me a chance to elaborate. :) Recently, I ran across an interesting article in the Bogleheads Wiki titled Placing Cash Needs in a Tax-Advantaged Account. Essentially, because of the way the U.S. tax code works it can often be better to keep certain asset classes like cash inside tax-advantaged accounts like IRAs and 401ks. Therefore, if your emergency fund is cash, why not put it inside as well?

I’ll use the example given. Let’s say you have a 401(k) with a balance of $10k and also taxable assets of $10k, for $20,000 total. You choose to have $10k in stocks, $5k in bonds, and $5k in cash for your emergency account. The “traditional” placement for an emergency fund is in your regular taxable account, perhaps in a bank savings account. The rest of the assets are distributed according to this tax-efficient placement chart.

However, in this scenario all your interest earned on your cash will be taxed at your marginal ordinary income tax rate, which can be as high as 35%. See table of 2009 Marginal Tax Rate Brackets. Meanwhile, your stocks will mostly give off dividends, which are taxed at a current maximum rate of 15%, and possibly quite less. So why not put the cash into the 401k?


You may wonder what happens if you do need access to that $5,000. You would simply sell $5,000 of the stocks in your taxable account, and simultaneously buy $5,000 of stocks in your 401k plan. This way, your final asset allocation will look exactly the same as if you just spent your cash from the traditional setup:

If you happen to sell your stocks at a loss, then you may be able to deduct a loss if you avoid a wash sale. You can do this by not purchasing a “substantially identical” security within 30 days, but you can buy something very similar. For example, you might buy the S&P 500 ETF (IVV) and sell the Russell 1000 ETF (IWB). They are very strongly correlated, as shown in this chart. This may or may not be worth the hassle depending on how big a loss you’re looking at.

If you happen to sell your stocks at a long-term gain, then you’ll again only paid long-term capital gains taxes of at most 15%. If you sell at a short-term gain (held less than a year), then you’ll have to pay ordinary taxes on the gain. So it might be good to wait a year to institute this new setup.

The Catch
So there you have it, there is an argument for some people to put their emergency funds into their 401ks! However, for most people I don’t think this idea is very practical. For one, most people have relatively small emergency funds, so the difference in taxation scenarios won’t be very high. This is especially true in the current low-interest rate environment. The highest potential tax savings would go to those with large 401k balances and high income tax brackets.

Finally, besides a few stable value funds that I’ve seen, the yields on money market funds found inside retirement plans are rarely the best available. I can usually find much higher interest rates outside my 401k, usually by at least 2% APY or more.

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