Yesterday I was interviewed by an Australian Financial Review journalist about how the falling US dollar is impacting my business. There’s not much to say except that:
- 95% of my income comes to me in US dollars.
- 5 Years ago when I started experimenting with blogging for money the US dollar bought about $1.80 AUD.
- Yesterday it was buying about $1.11 AUD (approximately a 40% reduction)
I’m no economist – but I know I’m working a lot harder to earn the same amount of money these days.
I think that is a huge problem when you earn money with google adsense and the other services. The US dollar is much to low extremly too low for the Euro
Darren, $1.11 sounds pretty good to me. Over here, $1USD is still only worth $1!
It’s even worse for us in Europe, when 1 dollar is only 70 cents of the Euro, and it keeps loosing value every day.
The worst thing Darren is, I am an economist…
Pretty soon you can start hiring cheap American labor. :)
I’m also losing money here in Canada. Most of the checks I get are in U.S. funds and I’m taking a loss lately.
Darren,
I feel your pain.
However, there are some things you can do. For example leave money (or get it paid intot there) into Paypal and wait for the high days. Or, hold out until next year after Rudd is elected and the housing recession comes. The dollar will drop again soon. Even if you leave 10 grand in paypal if the dollar goes up 15 cents you make 15% on your asset!
I’ve been following this decline for a while now and Jon over at Art Of Money.org has an excellent piece on his view as a Canadian who has seen his relative income drop as well. You can read a good piece by Jon here:
http://www.artofmoney.org/us-inflation-is-costing-online-entrepreneurs/#more-546
Chris – I guess it’s all relative :-)
James – good idea. Soon we’ll start seeing bloggers with US sweatshops.
Rt – yes you’re right, holding money in Paypal can work – although with it taking 4-5 days to transfer money out of your paypal it can be something of a guessing game. Also only some ad networks pay via paypal and there are of course some fees associated with some of it. The other downside of holding cash in paypal is that it’s not earning any interest or offsetting my mortgage there. I guess you win some and lose some what ever you do.
Tyler – good link, thanks.
The aussie dollar is certainly climbing… I got different currencies that I want to convert into aussie, but it looks like I won’t get much from it!
I guess its better for us in the long run?
The mind boggles at what it’d be like to be blogging at the levels that many of us now are if the rate was what it was like in 2002. 40% more income – wow :-) Lets hope there’s a turn around!
As mentioned above, the fall of the USD is wreaking havoc on Canadians who earn USD. Just 5 years ago, $1 usd was worth $1.50 CAD! Now the same $1 usd is worth $0.98 cad.
It’ll turn around. It is just the way the world works – things go up – things go down.
Hmm.. Playing with the foreign exchange has always been a gamble. Which is why I always look at the US economy and the currency rates when I want to encash the cheques..
We have such a huge debt right now, and our wonderful president Mr. Bush has just asked congress for 200 billion U.S. dollars more to fund the Iraq War until the end of December 2008.
Our debt has become so huge we don’t care how much farther in debt we go because we have no intention of ever paying it back.
What are they going to do? Go to war with us and spend more money on the war than the loan was worth?/
I’m in the same boat, its a nightmare!
I still think you’re doing very well Darren! I’m in the US and I’m far from making a living by blogging. But maybe as a precaution, you should diversify a little more.
I like the comment by Chris @ Martial Development – here in the US a dollar is still just a dollar! :-)
For the time being, us bloggers in the UK aren’t doing so bad. With the Pound against the Dollar, not only is my business doing well, but my blog is too – happy days :-)
But, I’m sure it will level off early next year.
You could always move to another country with a weaker currency. You still loose a lot but at least not that much. Problogger can be done anywhere in the world. Why not an island in the Pacific.
Today I tried to convert my $1 into gas money and it only gave me about .33 units of gas. I wish my dollar was worth 1 gallon still… Oh well.
I know how you feel man, 5 years ago I cashed in a US cheque for $1000, got back almost $1600 (CAD), now a $1000 US cheque gets me less than $1000 CAD :-(
I’m from Europe and went on a 3 week honeymoon in the USA in September. We were way below budget because of the low dollar. Very nice.
I’m earning some money from adsense on my site. That’s not so nice nowadays.
Does anybody here know about any good European sites? I would like to have my ads in euro’s. You’d think that European companies (or Australian, Canadian, etc.) would jump into the market with a dollar course like this so that a euro will still be a euro.
I’m a Canadian web developer/blogger, and I’m feeling the pain, too. The Canadian dollar is now worth more than American… it’s kinda depressing to cash a cheque worth $2000US, and only get $1900CDN, when I used to get $3000CDN from the same cheque. :(
I like the comments regarding putting revenue into PayPal and leaving it there until the dollar recovers . . . good thinking!
Someone mentioned that PayPal does not pay any interest yet I just checked my PayPal Money Market account and it is currently paying 4.94%.
Actually, the decline of the dollar only hurts you if you’re converting your money into other currency. You’re not “working a lot harder to earn the same amount of money” unless your purchasing power actually declines. That is measured by indexes such as the CPI.
wow.. the dollar has taken a beating as of late.. however that as paid off for me in forex
Darren,
It might not be paying off your mortgage but where else are you going to hold money that earns 20% or even more? Even if that money stays there for 10 years it can be very worth it.
Uness you have some other investments doing well that is..
RT
Numbers don’t speak out as loud until you put them in a visual chart and that is one depressing looking chart.
RT – yes you’re right – although I’m not quite in a position to not access my main income streams for 10 years :-)
Matthew – “the decline of the dollar only hurts you if you’re converting your money into other currency. You’re not “working a lot harder to earn the same amount of money” unless your purchasing power actually declines. That is measured by indexes such as the CPI.”
That’s the point – I’m doing just that, converting money that I’m paid (USD) into money that I can spend (AUD). So I’m not working harder for the same amount of USD – but I’m working harder for the same amount of AUD.
James – an island in the Pacific sounds nice – although not sure my family would go for that for more than a month or two :-)
It seems that this is a worldwide problem for bloggers and other businesses like BPO.
Being in Japan, I’m lucky, I suppose, that the Yen is going down the toilet even faster than the dollar!
Between currency conversion and Paypal charges it’s seems to be getting worse every month. I’m looking at opening a USD account in the hope that maybe one day the dollar will strengthen again.
I think US needs to end the war. It’s really bad on their exchange rates! Bush is throwing money down the drain..
When the US dollar was at its peak last year, it was superb, but now, I can feel considerable impact from its drop…
*prays for the dollar to go up*
It’s the same situation here in the UK. When I started blogging, I remember that the exchange was $1.50 = £1. Now it’s at the $2 = £1 mark which means I’m getting less money.
I suppose the only good thing coming out of this, is that my domains and hosting are now costing less, but seeing as I earn more than I spend, I’m still doing worse off. Maybe now would be the time to do some hardcore investment into some sites? But again we still don’t know how far the dollar is going to slip under. Sad times for bloggers!
The real problem is that a lot of central banks around the world are holding reserves in US dollars. As the slide continues, they’re losing more and more. There’s talk that the Euro will soon replace the US dollar as the currency of choice for reserves. When that happens, if it is not already happening, the dollar will plummit further.
The conversion rate for US-Malaysia is falling as well but still I am fairly satisfied with the rate USD1=MYR3.3 which is still quite good but it used to be at MYR3.8 though.
I guess you are still earning very much and the rate will not do you much difference right?
We’re a Canadian business and feeling the pain lately too. We blogged about what should we do with our current rates./a> Leave them in USD? Convert to CAD? It’s a confusing game and not very much fun to deal with all around.
It’s even worse when I get my paycheck and convert it to CAD – I feel gypped.
Yep, same in the UK. US$1 is approx £2.05 now, or in other words, I get just under 49p per US dollar I earn. It’s good for buying services from the States, though, I guess. My web hosting bill has dropped a bit. Still not great, though.
Fortunately, a lot of my income still comes in UK pounds.
I get paid to write for a website in the US which employs several writers. We each get paid the same amount. So as much as I liked getting the advantage of the weak AU$, I can’t really complain, I still get paid the same and the same as the rest. Can I tell the guy who pays me to pay me more coz the AU$ improved?
It is frustrating watching the money in my PayPal account lose its value; however, if I find ways to spend it in the US, it still buys me the same as it always has.
Hi there,
Where did you find that chart? Or is it something you’ve made yourself?
“the decline of the dollar only hurts you if you’re converting your money into other currency”
This is far from true. It may be a lot more obvious if you convert it, but your buying power if you are in the US is being eroded dramatically as well.
@Tyler … thanks buddy ;)
Darren, we feel your pain even though we are in the States. Having the dollar tank affects everyone in the world, even those of us in the States.
Traveling to other countries is becoming too expensive for a lot of Americans. On the bright side, it is becoming very affordable for people to travel to the US…
Hopefully the US economy will turn around after the current administration is no longer. We can all use a change that will improve the US dollar…
Quite a few of my clients deal in USD, which ain’t so great when you’re spending British pounds.
Still, my local clients help pay for overseas excursions, and thankfully I’ve more of them than otherwise.
Sure it is bad if you do get paid in Dollars but it is really nice if you pay someone or buy something in the US. It is far cheaper to purchase domain names and websites now than it was a year ago.
I use Intellitxt next to Adsense who pay in Euro. Not for anyone though with their link scheme but the payout is really nice.
I’m in Canada, and I’m now losing money. I used to make an extra $300-600/mth back early this year.
I too, Darren, the good thing about the strong dollar is prices have come down.
It’s nice now being able to pay close to parity for products from America. It’s made Amazon *really* cheap. And Apple products are more affordable than ever, although still not matching the AU$.
So the equalizer is your AU$ buys you more.
Oops, I meat to say “I might add”
And double, oops, coz I just noticed Martin already made the point about better buying power. :)
Same here — though obviously to a much smaller scale. The conversion rate directly effects how much my freelancing is worth (if you could call it freelancing). What about a return to the days when the AUS dollar was worth x2 the US dollar? That’d be nice ;)
It’s the same for me. The dollar is only worth half of what it used to be when I started blogging for cash. It’s sad to know that I could have earned the double :(