10 May 2017

7 Things to Consider Before Starting a Side Hustle

7 Things to Consider Before Starting a Side Hustle

Making extra money on the side sounds great, right? Thanks to the internet and mobile technology, new ways of making money after work are becoming a norm in our society. Side hustles can serve several different purposes – from creating an emergency fund, retiring early, or making a down payment on your first house.

It seems like there are endless stories about people striking it rich from a random side gig, but there's actually much more to it than meets the eye.

Side hustles, no matter how small, are still a business. Just like you have to hustle to get ahead in your actual job, the same goes for side hustling, and it may be even harder because you are building it from the ground up!

Here are 7 things to seriously consider before starting a side hustle:

1. Do you have a business model?

This can be a fairly intimidating aspect of starting any type of business, especially if you don't have any prior experience. The most important part of building a successful brand is learning how to plan correctly and find your target market.

Here are a few things you'll want to think about when you are planning your side-hustle strategy:

  • Does the service you are providing actually provide value?
  • How will you advertise and find clients or customers?
  • What is the realistic amount of time it will take to get your business up and running?
  • Is there a specific legal structure that would work best for your type of business?
  • What are the tax implications that you may face later down the road?

While you may be thinking that your business will just be a hobby that you do in your spare time, it's always smart to make sure that you understand every aspect of your business before getting started.

Don't be afraid to hire an attorney to help you create a strong legal structure that will separate the business from your personal assets. If you don't, it's possible that your personal assets could be vulnerable in the unfortunate circumstances of a lawsuit.

You may also want to pay an accountant to give you guidance on the best tax strategy for your side hustle moving forward. If there is anyone you don't want to forget about, it's the IRS.

2. You may need startup capital

In addition to the professional services mentioned above that you may need to cover the cost for up front, there are also other business expenses that you may need to prepare for.

Even a service as simple as pet-sitting requires extra money in gas and potentially pet insurance.

Many side hustles don't require a massive amount of startup capital, but it's always a good idea to sit down and create realistic estimates on what it will cost you to run your business.

3. It can take more time than you think

The time that it takes to run a successful side hustle has to come from somewhere, and it's usually what would be your time to relax on the couch or go to a movie on the weekend.

Depending on the nature of your side hustle, you may need to schedule your time very carefully to make sure you are still able to do things that help you recoup from your actual job.

4. Your primary income comes first

It's easy to get obsessed about the extra income that is coming in from your side hustle, but your primary job still needs to come first.

One of the biggest risks involved with creating secondary income streams is that you are essentially burning the candle at both ends. The last thing you want to do is experience "burnout" at your main job or have your performance slip to a point where you could be fired.

No matter how great your side hustle is, if it doesn't at least match or even exceed your day job income – it needs to take a back seat.

5. Do you have a goal?

With as much time as side hustles actually take to become successful, you'll want to make sure that you have a goal going into it that will help keep you motivated to put in the extra work.

It could be as simple a goal as saving extra money for vacations, or as big a goal as retiring from your job 10 years earlier than you originally planned. Whatever it is, make sure that it's important enough to push you to put in the extra time.

6. You'll probably have to learn to sell

The reality of keeping a business alive is that you'll have to feed it with new sales. If you have no background in sales at all, trying to convince other people to give you their money for a product or service can be fairly intimidating.

While there are certainly sales strategies and tactics you can learn – it's going to take trial and error. Every time you have a successful sale, there may be ten times that you get turned down.

Just like with anything else, practice makes perfect.

7. It could fail

Before you take the leap into part-time entrepreneurship, you need to understand that your venture has a real chance of not making it. There are a number of reasons for this, but at the end of the day it's just the nature of business.

They just don't always make it.

Fortunately, if you provide a great service or product that gives value to your target consumers, you're much more likely to thrive.

Don't let this list discourage you

Even though the above list may make side hustles seem like an intimidating challenge, they are still an incredible tool for getting ahead financially and meeting your biggest goals sooner than you originally planned.

As long as you take your side gig seriously and treat it like a real business, you have a great chance to find success and create a viable second income stream.

-- Bobby Hoyt is a former high school teacher who paid off $40,000 of student loan debt in a year and a half. He now runs the personal finance site MillennialMoneyMan.com full-time, and has been seen on CNBC, Forbes, Business Insider, Reuters, Marketwatch, and many other major publications.

The opinions and advice expressed in this article are those of the author and do not necessarily reflect those held by the American Psychology Association (APA).
01 May 2017

Tackle Your Student Loan Repayment with IonTuition

Tackle Your Student Loan Repayment with IonTuition

IonTuition, APA’s newest member benefit, works to help you ease the financical burdens of student loan debt.  By providing practical tools, support and information, IonTuition enables you to take control of your debt and your financial future.  

APA is partnering with IonTuition because we understand how the issue of student debt is one that is crucial to the APA community. Ninety-one percent of PsyD students who graduate have student loan debt, with the median balance at $200,000 – that’s $125,000 greater than the average debt held by a typical PhD.  Though you know it’s not possible to repossess a college education – you also know that not paying back student loans can have long-term detrimental effects to your financial health.

APA members can now access, at no additional cost, all of the benefits of IonTuition directly from their MyAPA account. Simply log in and enjoy access to:

IonTuition

IonManage

Compare monthly payment options and find the payment plan that best fits your financial goals.  Get expert one-on-one advice from IonTuition’s highly trained loan counselors. They’ll work directly with you, presenting options and providing focused advice you can use to deal with your unique circumstances. This is not a student loan marketplace. Instead IonTuition will work with you to find productive, long-term repayment options that take the stress out of student loan borrowing and repayment

IonMatch

Going back to school or trying to determine the best undergrad program for your child? There are a variety of schools and programs from across the country to pick from. With IonMatch, you can search programs by distance, cost, field of study, size, and more – allowing you to determine the school that best fits your budget and where to get the best long-term return on your education investment.

IonLearn

Student loans are only one part of the total debt picture.  Credit cards, mortgages, car loans, and simple living expenses tend to take priority over student loans for many people. Those struggling to pay their student loans are often struggling with finances elsewhere. Being financially literate is a major step toward being able to gain control of all of your total debt. Explore the latest financial content provided in IonLearn’s glossary, videos, and modules to educate yourself and get additional tips toward your overall financial stability and navigate away from debt.

Take advantage of this new FREE member benefit and successfully manage your student finances with IonTuition.

 

20 Apr 2017

Eight Ways to Take Charge of Your Finances

Eight Ways to Take Charge of Your Finances

Financial literacy isn’t usually part of the graduate school curriculum. Here’s what students and early career psychologists should know as they embark on their careers.

After amassing $180,000 in student loan debt while pursuing his doctorate, Todd Hilmes, PsyD, felt so overwhelmed that he couldn't open his monthly loan statements. "I was definitely burying my head in the sand," says Hilmes, who earned his doctorate in 2011 and is now a clinical psychologist with the U.S. Department of Defense. "I was totally unprepared for what my options were when I started to repay it."

Hilmes is not alone. Research led by clinical psychologist and certified financial planner Brad Klontz, PsyD, of Lihue, Hawaii, has shown that compared with people in many other occupations, mental health professionals are more likely to have "money avoidant" attitudes, leading them to push aside their thoughts about money (Journal of Financial Planning, 2012). He's also found that these money-avoidant attitudes negatively affect psychologists' financial health. In a survey of more than 250 professionals from a variety of fields, Klontz found that mental health professionals are significantly less likely than comparable professionals to pay off their credit cards each month, to have money set aside for emergencies, to follow a budget, to have adequate insurance and to feel comfortable with their financial status (Journal of Financial Therapy, 2015).

He believes those characteristics were fostered in graduate school. "I was indoctrinated into the belief—as many of us were—that if you came into psychology to make money, you were in the wrong business," Klontz says. "Psychologists are just more likely to believe that money corrupts people, that there's virtue in living with less money and that we don't deserve a lot of money when others have less than us."

And such beliefs, he says, are associated with worse financial health, lower income and lower net worth than comparable professionals. How can students and early career psychologists better confront their financial issues? Klontz and other experts offer this advice:

1. Get past your discomfort

Klontz encourages students and early career psychologists to use their cognitive-behavioral training on themselves to examine any anxiety they may have about money and their beliefs about it. For example, in questioning one's belief that money corrupts people, you may find several examples where this is true, but it is by far not universal. "There are also many examples of people who are incredibly wealthy and who do incredibly wonderful things for people," Klontz says.

2. Understand your full financial picture

If you're a prospective student, find out precisely how much money you'll need to borrow to earn your degree. Tally tuition and the many other associated costs of obtaining a graduate degree, such as meals and living expenses, says Eddy Ameen, PhD, who directs APA's Office on Early Psychologists. "It's those indirect costs that people don't always think about that can really derail folks financially, like how much is rent going to be if they go to school in a large metropolitan area like New York City as opposed to a place like Columbus, Ohio, where they're already living," he says.

It's also crucial to compare each institution's full financial aid package and find out whether it includes nonbillable scholarships and grants or if tuition is covered mostly through loans that must eventually be paid back, Ameen says. If you're an early career psychologist with educational loans, it's important to understand exactly how much you owe—including what you may have borrowed as an undergrad—and compare your options for repayment (see step 4).

3. Ask about financial incentives

Students should also seek to reduce the amount they'll need to borrow, explore opportunities for nonfederal grants and scholarships—for being a member of an underrepresented group, for example—and ask your department chair or advisor about additional funding prospects, Ameen says. "While the university might not advertise this, oftentimes the graduate program itself will have tuition remission or tuition waivers in exchange for taking on a graduate assistantship or working in a research lab, which are things that you'd likely already planned on doing in grad school anyway," he says. "The trick is knowing what and who to ask to get the right information."

4. Understand your repayment options

Make sure that your payment plan reflects your individual needs, Hilmes says. Some early career psychologists who may not be eligible for loan forgiveness through their employers, for example, may choose to make sacrifices to pay off their debt as quickly as possible. But many new grads work in jobs that qualify for the federal government's Public Service Loan Forgiveness Program. After 120 consecutive monthly payments, the remaining balance on your Direct Loans is forgiven by the government. In addition, if your federal student loan payments are high compared to your income, new grads should consider applying for an income-driven repayment plan such as Pay as You Earn, Income-Based Repayment and Income-Contingent Repayment.

"Your first year out of grad school, your loan payment can be based on what you made your intern year, which for almost all students is very low," Hilmes says. Find out what options are available to you through the Federal Student Aid program at studentaid.gov. APAGS also offers a frequently updated financial literacy toolkit, which offers guidance on median salaries for new psychologists, as well as information about aid, grants and funding opportunities; loan repayment and forgiveness; and budgeting worksheets and other financial tips.

5. Create a budget

If you have never had a budget before, the best way to develop one is to track all of your expenses for 30 days, says Neal Van Zutphen, a certified financial planner with Intrinsic Wealth Counsel, Inc. in Tempe, Arizona. "Just as you would if a fitness trainer asked you to record all of your food intake for a month, use a small notepad and jot down every single thing you spend money on for a month," he says. Once you have your list of expenses, determine which ones are fixed or mandatory—such as your car payment, rent, phone, utilities and student loans—and which ones are discretionary, such as trips to the movies, new clothes or gourmet coffee. Van Zutphen reminds new grads to consider expenses that occur quarterly, semi-annually or annually, such as car insurance or membership fees, that they'll need to save a part of their income for when these bills come due. Then, add up all your expenses and subtract them from your net paycheck for the month. "Hopefully, you have more money than month left to go." If you're not a fan of the paper and pencil method, apps such as Mint and Personal Capital can also help with budget creation and tracking. Van Zutphen also recommends that psychologists of any age check out the U.S. Department of Labor's free resource on creating a budget and spending plan, "Savings Fitness: A Guide to Your Money and Your Financial Future."

6. Cut back for a month

One way to boost savings and better understand your relationship with money is to try an experiment that Van Zutphen refers to as "Crunch Month." For 30 days, only spend money on the absolute essentials, he says. "Cut out all Starbucks trips and any other discretionary expenses and see what happens," Van Zutphen suggests, noting that he's seen clients discover they can save between 20 percent and 40 percent of their net income. "One couple I worked with on this actually lost 10 pounds because they ate at home so much more," he says. While most clients eventually ease up on the Spartan lifestyle, he adds, they learn they can save a lot more than they originally thought they could.

7. Don't forget retirement

Many early career psychologists may think it's best to put every dime they have now toward paying off their student loans, especially if they have a high interest rate, Klontz says. "But it's probably still going to take you 20 years to pay the loan off, and by then you're nearing 50 years old and just starting to save for retirement," he says. That's why it's critical to contribute as much as you can to a 401K or IRA as soon as you get a job. Klontz recommends putting around 10 percent of your salary toward retirement while you're also paying off student loans, or at least enough to contribute up to your employer's matching amount, if they offer one.

8. Talk to a financial professional

These experts can help you fine-tune your financial goals, whether you are saving for a home or thinking about starting a private practice. "An hour with a professional can set you up with everything you need to know for the next couple of years," Klontz says. "So, pay for the help."

By Amy Novotney


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11 Apr 2017

12 Ways to Find Extra Money in Your Monthly Budget

12 Ways to Find Extra Money in Your Monthly Budget

If you've recently started a budget or have been using one for years, you've probably found at one point or another that it feels like your budget doesn't stretch quite as far as you'd like it to. One of the unfortunate realities of living in the time that we do is that we are constantly bombarded with advertising and temptations to overspend everywhere we look.

Also, companies are just really good at figuring out how to get every dollar out of us that they can. That paired with the ever-looming threat of rising inflation and higher prices can put a pretty significant squeeze on a monthly budget.

It's easy for anyone who has been working on a budget for several months or even years to get frustrated with the process. Truth be told, budgeting isn't exactly fun in the first place. Feeling like you aren't as successful as you could be only makes things worse. Fortunately, there are things you can do every month to get ahead!

Here are 12 ways to find extra money every month:

1. Take a hard look at your fixed expenses

While obviously "fixed" doesn't sound too promising, there is still no harm in trying to find flexibility in those expenses. Line items like rent and insurance can be negotiated down in many cases. Also, take some time and evaluate if you are overspending on your living expenses (i.e., living somewhere that is larger or more expensive than what you really need).

2. Consider finding lower interest rates (while you can)

For almost 10 years, we have seen the lowest interest rates in decades. The Fed has recently started introducing rate hikes, which will have a widespread effect on interest rates for things like houses, cars, and student loans.

If you feel that you are locked into any type of loan with interest that is too high, there is still plenty of time to search for lower refinance rates that may unlock money in your monthly budget. While there are still plenty of "deals" to be had, make sure to do some research and decide if a refinance of any kind is really right for you.

3. Review recurring monthly services

All of us have recurring monthly expenses in the form of cable, Netflix, internet and phone bills, and many others. One of the smartest things you can do to find extra money every month is to look through these discretionary expenses and see if you can either lower your level of service or remove the bill from your monthly costs entirely.

4. Slash the grocery bill

What you eat is important, so the idea here isn't to just change over to the lowest quality food possible. But making simple changes like using the store brands instead of the name brands, or adding more vegetables to your diet instead of meat, can lead to big savings in your monthly grocery bill.

5. Are your utilities too high?

Chances are, yes. Energy costs are specifically a big culprit here, and many times those costs can be lowered with a few phone calls. Double check what you are paying for energy in your home and see if you can find a better rate. Even one or two cents less per kilowatt hour can mean huge cuts in your energy bill.

Also, make sure you turn the lights off when you leave, opt for energy efficient light bulbs, and find areas where air may be moving in or out of your living space where it shouldn't be.

6. Consider your tax strategy

Are you hoping for a huge tax return at the end of the year? While getting a check at tax time may seem like a great thing, it actually means that you may be withholding too much of your paycheck every month. This means that you are giving the government an interest-free loan every year, when you could have that money added back into your budget to spend as you see fit!

7. Can you pay off debt?

If you have nagging debt like credit cards or student loans, consider making larger than the required payment every month to free up that cash permanently. Even if you just attack the smallest amount of debt that you have, you'll be surprised how much money that will add back into your budget over the long term.

8. Make your clothes last longer

While I can't pretend to be an expert on clothing, I can tell you that many people spend far too much money on new clothes. My personal strategy when I was paying off my $40,000 of student loan debt was to own just enough sets of clothing to get me through two weeks of work (you have to be strategic about how you mix and match).

Even if that sounds too extreme, you can still save money on clothing by taking better care of what you already have. Simple habits like washing your clothes on gentle and hanging instead of drying can make your clothes last much longer.

9. Learn to negotiate

If you can learn any skill to save money, negotiating may be the most effective. Most people are unaware that many items like furniture, jewelry, and even monthly subscriptions can be negotiated down.

Remember—businesses would much rather have some of your money than none at all.

10. Share meals at restaurants

Portion sizes are notoriously out of control at restaurants, so why not share? An easy way to cut down on the costs of eating out are to buy one entree, pair it with an appetizer, and share! Another great strategy is to order from the kids menu at restaurants (if they will allow it). The portions can be surprisingly large.

11. Set spending alerts

Most banks and credit card companies have rolled out great apps that feature detailed spending alerts. Many of them are customizable and will send the alerts to you in the form of an email or text alert. These are especially helpful if you want to check in on your budget more often than once a month.

12. Consider starting a side hustle

While this isn't really "finding" money, it's still an extremely effective way to add money to your monthly budget. Side hustles don't have to be complicated. I've seen everything from buying items on eBay and selling them on Amazon for a higher price, to knitting scarves and selling them on Etsy.

The emergence of the internet has created an environment that makes it much easier to make extra money on the side than ever before.

With a little bit of leg work every few months, it's not too difficult to uncover extra money in places that you may have never even considered looking! Whether it's taking a look at your subscriptions or something as simple as opting for store-brand items instead of name-brand ones, there are plenty of places to free up some extra cash in your budget.

-- Bobby Hoyt is a former high school teacher who paid off $40,000 of student loan debt in a year and a half. He now runs the personal finance site MillennialMoneyMan.com full-time, and has been seen on CNBC, Forbes, Business Insider, Reuters, Marketwatch, and many other major publications.

The opinions and advice expressed in this article are those of the author and do not necessarily reflect those held by the American Psychology Association (APA).

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03 Feb 2017

Keeping Your Debt Under Control After College

Keeping Your Debt Under Control After College

For many in the mental health industry, student loans can be a massive hurdle to deal with after college. Psychology professionals face a unique challenge in the health-care industry—the cost of their degree can be extremely expensive in relation to their early career salaries.

According to a recent study by the APA, the median graduate debt load was $110,000. Unfortunately, that number excludes undergraduate debt completely. Loan amounts of that size can have drastic effects on your career path, so learning how to effectively manage loan debt after college is essential.

On top of the professional implications, massive student loan debt can lead to confusion and stress in your personal life that is difficult to manage. It's hard enough trying to find your way in today's job atmosphere, much less avoiding potential missteps that could hurt your financial health over the long term.

Here are some tips for effectively managing student loan debt after graduation:

Make payments as soon as possible

Many of the various lenders (both federal and private) allow a grace period after a student graduates. This is designed to give the borrower time to secure a job before making payments—but don't be fooled by the word "grace."

The fine print will tell you that interest will still accrue on the loans during the grace period. That means you're taking on more debt, often times without even realizing it. I've had plenty of readers tell me how surprised they were to see their new loan balance when they finally made their first payment. The more money you borrowed, the faster the numbers start to pile up.

Be proactive and make payments as soon as possible, even if it means interest-only payments to keep the loan amount closer to what you actually graduated with!

Fully understand your loan responsibilities and terms

The vast majority of student loan borrowers have no idea how their loans actually work. Student loans can range widely in both the interest amount and the repayment terms. If you want to effectively manage your loans after college, you'll need to do more than just make the minimum payment every month.

Take a look at your loan terms and find out:

  • How extra payments are applied to the loan principle amount
  • The interest rate of the loans
  • Repayment term length
  • Possible penalties that result from missed or late payments
  • How the interest is calculated on the loan amount

Understanding the basic structure of your loans will help you make important decisions later that could save you money. It's impossible to know if you will save money through a refinance if you're unsure of your current interest rate or how long the loan terms are!

Research your federal loan benefits

Admittedly, the Department of Education doesn't always do a great job of getting the word out about its various federal loan benefit programs. Depending on the career path you choose, you may actually be eligible for student loan forgiveness and not be aware of it.

These programs generally require enrollees to stay current on their minimum loan payments for a set period before any loans will be forgiven. The overall concept for these programs is to entice new graduates to pursue government/public service positions.

The biggest thing to consider when researching these programs is that there is usually red tape involved. Be sure to find out how missed or late payments will affect your eligibility in the program, and also fully understand the time requirements. If the loan forgiveness program requires 10 years of service in a specific area, make sure you actually want to stay for the long haul.

Other important benefit programs provided by the federal government are income-based repayment, consolidation, and deferment if you fall on hard times.

Consider refinancing your debt

With a median starting salary of $60,000, it's possible that many psychology professionals won't actually qualify for the above-mentioned benefit programs. If this is the case, you may want to seriously consider refinancing your student loans.

With the current low interest rate environment, borrowers who refinance may be able to save substantial amounts of money over the life of their loans. Many of these lenders are creating online platforms that seamlessly guide users through the refinancing experience.

Another cool thing about some of the private companies that are refinancing student loan debt right now are the alternative benefits. These refi companies know that they have to compete with federal loan benefits, so they're getting creative. Some companies offer helpful benefits like job placement assistance, access to financial advisors, career support, and even unemployment protection if you find yourself between positions.

Track your money with budgeting tools

There are plenty of great financial tools available for tracking your finances in today's personal finance environment. Many of them are free and feature bank-level encryption to keep your personal information safe! In programs like Personal Capital and Mint, users can input all of their account info and see all of their account balances updated in real time.

These tools usually feature budgeting and net-worth tracking, which gives users an instant picture of where they stand financially and helps them track their student loan payments. I'd highly suggest taking some time to research all of the great tools available online and taking advantage of technology that wasn't available to previous generations.

Above all, be active

It's easy to go through the motions with student loans, and the honest reality is that loan servicers would prefer that you handle your debt that way (they make more money in interest and possible penalties when you slip up).

Be active with your student loan debt the entire time you have it. Managing it correctly will allow you to have more choices in life and create the career path that you envisioned in college.

If you'd like to consider a more aggressive approach to paying down debt, check out my earlier blog here. Or if you're looking for something more moderate, I have a post on that as well.

-- Bobby Hoyt is a former high school teacher who paid off $40,000 of student loan debt in a year and a half. He now runs the personal finance site MillennialMoneyMan.com full-time, and has been seen on CNBC, Forbes, Business Insider, Reuters, Marketwatch, and many other major publications.

The opinions and advice expressed in this article are those of the author and do not necessarily reflect those held by the American Psychology Association (APA).

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01 Aug 2016

The High Cost of Helping: Grad Student Debt in Psychology

It's never been more expensive to become a psychologist. Higher education costs have skyrocketed in the last decade, while salaries have stagnated and, in some subareas, actually declined. The confluence of these trends has created a crisis for students, recent grads, and early-career psychologists.

Even if you're fortunate enough to be debt-free, you're still likely to feel the effects on your career and psychology in general as an entire generation of potential and new psychologists face significant obstacles to surviving and thriving in the discipline.

In this webinar, "The High Cost of Helping: Grad Student Debt in Psychology," our panel of experts break down the causes and impacts of the graduate student debt crisis, including:

  • What are the trends regarding educational costs, debt, and salaries?
  • What tips and tricks can people use to manage and live within their debt burdens?
  • What are the unique mental and emotional stresses caused by debt?
  • How can students and grads avoid feeling overwhelmed?
  • Are psychologists uniquely prepared to manage the stress?
  • Will people become reluctant to consider psychology as a career option? What impact might it have on the discipline?

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31 Jul 2016

Financial Planning for Early Career Psychologists: From Repaying Student Loans to Successful Retirement

Financial Planning for Early Career Psychologists: From Repaying Student Loans to Successful Retirement

The financial planning process calls for setting personal and professional goals (including paying off debts1), assembling a portfolio of financial resources needed to achieve those goals, and adjusting your portfolio (mainly personal savings and investments) for life-changing events.

The task can be formidable, especially for early career psychologists trying to achieve financial stability and pay down debt at the same time.

This publication of the American Psychological Association and its Committee on Early Career Psychologists provides insight into the financial-planning process for psychologists and information on what financial planning comprises. Readers can learn financial-planning basics and then decide to do their own financial planning or select a financial planner to bring expertise and objectivity to the job.

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