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PPP009 I’m Kathleen and I Save Half My Income

This week I am thrilled to bring on guest Kathleen Celmins, owner of Frugal Portland, For Profit Blogging, personal finance influencer, and partner at several other big online properties.

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Eric Rosenberg: Ladies & gentlemen, boys and girls, children of all ages. Welcome back to the Personal Profitability podcast. I’m so excited to have you back here. I think this is month number 4 that we have been going, so if you’ve been with me all along, thank you for your dedication. I’m so excited to have you back. And if you’re new, welcome to the party. Speaking of parties I have a great friend, she’s another Portland local who is joining us today. This friend I met at FinCon. I don’t know if it was the first one or it was a few years back. We’ve known each other a while. She was actually one of the few people I knew in Portland when I picked up and move here, for out of I think three people, she was one them. It’s a great pleasure to welcome my good friend Kathleen, formerly Kathleen O’Malley, now Kathleen Celmins, to the show. Give everyone a hello, Kathleen.

Kathleen Celmins: Hi!

Eric: So, Kathleen, just a little background on her history, she started out with a blog called Frugal Portland. And that has developed into a mini blogging empire. She has worked for other companies. She has managed other blogs. She is now partnering with another online partner doing lots of cool things. She has a blog that teach you how to make money blogging which is a very useful thing if you want to make money online. We’re going to start off, as we start of all of our interviews, both Kathleen and I are having a beer because finance should be fun. This your opportunity to hit the pause button if you’re at home to go grab a beer to join us. As always, if you are in the car or if you are at an office where that is not an okay thing, don’t feel bad to miss out. But if you’re able to, use your pause point to grab your beer. Okay, welcome back, un-paused. So, Kathleen what are you drinking on your side?

Kathleen: I have a Ninkasi Dawn of the Red India Style Red Ale.

Eric: That’s sounds fun. I haven’t had that one. I like Ninkasi. I had few local Portland people on before and we all had Oregon beers which is kind of fun. I have a Hopsmack IPA here from Cascade Lakes. I don’t know if have had that one on before, but it’s a delicious one, and you know, me my hoppy beers, friend and listeners. So, here’s a little clinky-clink cheers.

Kathleen: Cheers!

Eric: The virtual clink, we’ll get started chatting. So, Kathleen feel free to have a gulp along the way ‘cause I’m sure our listeners will.

Early Days of Blogging

Eric: So, let’s start with your history, and how you started with your online blogging experience. How did you come up with the idea for Frugal Portland and what motivated you to get started?

Kathleen: That’s a great question. I woke up on my 30th birthday in 2011 and I still had credit card debt and I thought, you know what, this is ridiculous. I’m a smart person. I know how to do all the right things. I understand Math. And I can’t believe I still have credit card debt and I am 30. And then at that same time there was a blip in the Google universe where blogs were making ten, twenty, thirty, fifty thousand dollars a month in private ads. And I thought, that would really help with my credit card debt.

Eric: Totally.

Kathleen: That was like November, December 2011. By the time Frugal Portland got up and running, it was like March and that blip in the Google Universe had been fixed. So, I never really saw the hay day of those amazing couple of months, but I got hooked. I was reading a bunch of personal finance blogs and I thought you know what I can probably get this started. My hobby has turned into an empire.

Eric: I like building empires.

Kathleen: Right!

Eric: I’m always trying some project or another, I actually just wrote it in my most recent income statement that I might be trying a new little start up, so we’ll see how that goes. I figure if I keep adding new businesses eventually one is going to work, right?

Kathleen: Exactly!

The Start of  a Blogging Empire

Eric: So, you tell us a little bit more about Frugal Portland and a life cycle there and what you did with that site?

Kathleen: Sure! It’s started as a ‘Dear diary’ kind of blog. I’m frugal and I live in Portland that will be great. And so I did a lot of income statements, debt pay-off progress, and talking about debt, and getting out of debt. Then I got out of debt and thought, ‘okay, now what?’ And now, what it’s transitioning into in the next weeks, it’s turning into other people’s debt stories, because I think those are really inspiring, and as well as cheap and fun things to do in Portland. Because I think with the name when Frugal Portland, that’s what you expect.

Eric: That makes sense, you know, looking to save a few bucks, have a fun day out in Portland which they do.

Kathleen: Exactly. Like good happy hours, fun thrills, good bike rides, stuff like that.

Eric: What’s your favorite happy hour if that’s going to be featured? I need to know.

Kathleen: Actually, in my neighborhood there’s a bar called “Side Bar” that has a $5 happy hour that I just went to the other day. I thought, ‘whoa, dinner for $5’, I had a really hard time coming back home and making food after that.

Eric: Yeah, I get that. Cool!

On Having a Main Job Related to Blogging

Eric: So, that blog has evolved and changed a bit. And I know along in the way you had a different job that was your main job and you switched to a different main job that involved some online income and what not. How did that all come to be?

Kathleen: Yeah. That’s another fun story. I was working for a company that sold a software solution to farmer’s markets. There are little bit ahead of their time, but now they are up and running and it’s amazing. The best software of its kind on the market. For a long time it was the only software of its kind on the market and I loved it. And then I really loved blogging more than that. I went to World Domination Summit two summers ago and joined their Facebook group. And after World Domination Summit I saw somebody else in the group posted a job that was a blog manager job. And I thought, that’s what I do for fun and I’d love to do that for real. Thirty-five interviews later that’s what I do for a living. I’m a blog manager for the center for sales strategy and we have an in-house blog. We also do inbound marketing for companies, so teaching companies how to be a part of the prospects research stage.

Eric: For those of you who are unfamiliar, I think I mentioned on it here before, WDS is World Domination Summit. It’s a feel good get-together that happens every year in Portland. It’s run by a guy named Chris Guillebeau who I definitely have mentioned here before. I’ve given a few copies of his book on the podcast. Chris has his own blog called “The Art of Non-Conformity” and he has visited every single country in the world including the new one that was founded since he started travelling. He’s has done some pretty amazing things and brings his great get-together, together. I got to go last year and met one of my blogging heroes and got to hang out with Kathleen and some pretty cool folks. It’s a cool thing to go there and have that lead to career change.

Now when you left the old job to start a new job was that, did you leave at the same time as you started the new job? Was it a direct income replacement? Did you make more or less money or are you happy with change? So how did that take place?

Kathleen: Yeah. I helped them for a little while a couple of hours a week while they found a new person. The income is pretty similar although with the other job I had commission, here I don’t. So, there’s less there, but then I don’t have to sell directly.

Eric: The paycheck is a little steadier?

Kathleen: Yes. Definitely steadier, much more even. I consider my online stuff the commission part of my old job, so it’s about even.

Getting Out of Debt

Eric: Okay. So, along the way you started Frugal Portland writing about your debt payoff. At what point in here did you start getting your debt really paid off? And did your online income have any big influence in being able to pay that debt off?

Kathleen: You know it didn’t. I mean, in as much as anything did, I was so focused on paying of my debt that I put every single dollar toward it. You know my grandma would give me twenty five dollars at Christmas and I would put that toward my debt. So anytime I got anything from the internet it went to straight to my debt of highest pain. I think it was probably less than a thousand dollars total. So sure, it helped. I mean just like everything helps, but it wasn’t quite what I thought it was going to be when I started it in 2011. By the time I’ve gotten out of debt I was about three weeks from buying a condo. So I never really knew what being out of debt felt like because I replaced my credit card + student loan + car loan with a mortgage, which was much bigger!

Eric: Yes. So what timeline was that how long did it take from when you said “I’m going to pay off all my debt” until you got those credit cards pay off.

Kathleen: No, the credit cards were paid off in 6 months. And then everything was paid off in 18 months.

Eric: Do you mind sharing how much you paid off in that 6 months?

Kathleen: Six months was $12,000.

Eric: That’s pretty big. It’s like two thousand a month? It’s a good chunk of change for a lot peoples. Congratulations! Good job on that! You know that’s cool.

Kathleen: Thank you! The better thing to congratulate would not be getting into that position in the first place.

Eric: Yes, definitely. I hear that. So, along the way Frugal Portland now you said probably made less than a thousand dollars towards the credit card debt. Has the income from that grown and has that become a major online income source for you?

Kathleen: It’s not a major online income source for me and I don’t think it’s setup to be. If I had known what I know now in 2011, I don’t think I would have gone so niched into frugality and debt blogging within a specific regional area. It’s very hard to talk about ways to make more money or normal lifestyle things when the whole tone of Frugal Portland is about saving as much money as you can. That whole side is about learning how to live minimally and save half your income, and how to do that kind of thing. It has made me money, but mostly in AdSense and affiliate links.

And I was saying to this Eric off the record, but the way that we talked about it on For Profit Blogging is that there are different tiers of money making. I believe that anybody can make money with their blog. I don’t believe that everybody can make ten thousand dollars a month. There are three different tiers in my mind. There’s the top one which income replacement and then below that it’s something that pays the bill, so that the blog acts like a roommate and pays your rent, or part of your rent, or your mortgage or a lot of your bills. And there is the smaller tier which is what I called the ‘Thai food tier’ which means that the blog pays for your food every once in a while. It buys you dinner every now and again.

And I would say that Frugal Portland is that middle tier. It doesn’t make a lot of money. It makes enough to pay staff writers and it makes enough to bring in some AdSense revenue. I went from giving the pay out every year to giving them the pay out now almost every month. There are ways you can do it. It’s just not the intent of Frugal Portland.

Make Money Blogging

Eric: Speaking of For Profit Blogging, as Kathleen just mentioned, she has another blog that she started along the way that I’ve said earlier. It’s about how to make money blogging. Could you share a little about how that idea came to be? And how you went about launching that?

Kathleen: Yeah. That was a mastermind group kind of thing where one week I would say “Hey! There’s this new tool that you should be looking at” and my mastermind group would be like, ‘Neat! That’s really fun!’ Or “Hey here’s how to put images on pictures and optimize for Pinterest’; ‘Cool! That seems really neat!’ And so, like all the time I was nerding out with these tools and I needed an outlet. Basically, like every URL I bought, I thought I wonder if forprofitblogging.com is taken. The first one I tried was blogforprofit.com and that was taken which I wasn’t very surprised by. But then I was really surprised that forprofitblogging was available and I thought well the universe says that I should have it, and that’s eight dollars or something and so I bought that. I did more of a strategic launch with that one. I wrote thirty posts before I went live. Then I was able to flood with posts every couple of days even without having to write them all the time which was really helpful at first because when you’re launching you want to make as many connections as possible. Now what it has turned into a sort of ‘Here we tried this on this site and this is what worked. And this is what didn’t worked’.

Because now, I’m maybe getting ahead of myself, but I am partnering with Joel Saul-Sehy of Stacking Benjamins, you probably know from him from his podcast. He has two websites, and I have two websites and we use For Profit Blogging to talk about things. One of the latest posts on there is how we went through redesign of stackingbenjamins.com. It’s a really fun place to talk about blogging because one of the things I see in a lot of personal financial blogs is that those turn into blogs about blogging which I don’t think belong. I don’t — I think with Personal Profitability that makes perfect sense. You can talk about how to make money and that’s great, but for people — there’s a lot of blogs that are, “ipaidoffmydebt.com” and if you go there and you see how to optimize for keywords in a blog post. I don’t think those belong. It’s a fun outlet to talk about ways to make money and there’s a lot of chance for affiliate income there because lots of companies like to sell things to bloggers.

Eric: Definitely. Part of what I try to do on Personal Profitability, there’s plenty of, just like yours there’s some really good blogs about blogging and I figure, people aren’t coming here to learn about how to blog, although that might be a piece of what they want to learn. I tried to feature all the other businesses I have which a lot of wouldn’t exist without the blog. I think it’s kind of interdependent thing, I got my freelance work and all I do that all started because I have a blog and learn how to do that well. That leveraged different relationships with people, “hey will you do this for me? I’ll give you money.” It’s kind of fun. That’s my little take on how the name came to be that way as well. It’s like how I make people more profitable. Anyway, I’m losing my train of thought, just talking here.

You have, For Profit Blogging, how is that performing financially compared to Frugal Portland? Is that making more money? Since I know you put more thought into it as you build it.

Kathleen: It is making more, certainly on the percentage of page views basis. Because I have the audience dialed in. People who come to For Profit Blogging are coming to learn how to make money blogging. There’s nothing kind of bait-and-switch like Frugal Portland kind of is. Because they are coming there the lot of them are landing on product review posts. They end up clicking through if I like something, if I didn’t they might click there anyway. It doesn’t have the traffic that Frugal Portland does yet, but a lot of that is just a matter of time. It’s not as old.

Eric: So most of the income you’re making from that site from affiliates?

Kathleen: Yes. I would say 90%. Well, AdSense too, I guess ‘cause it’s all under the same umbrella now.

Eric: For those who are not initiated, affiliate links are what —  and I have several on Personal Profitability that you’ll come across, if you click on a link to a product and you have a relationship with the product you are writing about you might get a little referral fee if you sign up. Let’s say I write about Capital One 360 checking, so I think it’s a good checking account, I have it myself. If you click through my link and sign up, depending on the relationship you have I might get $20 or so something like that. Some affiliates sales pay really big percentage, some pay really small percentage. It really depends on — there is big affiliate networks you can go through like Commission Junction, cj.com is probably the biggest out there. And there is fixed rates for each blogger relationship that you can sign up for, but if you are superstar or you work with them or they have their own private network which some products do. You can negotiate a better rate or things like that, so that’s a little tiny crash course on what affiliates is.

Property Tax Woes

Eric: So Kathleen, along the way I know you bought that condo you mentioned and you sold it and recently bought a house. Can you share a little bit about, I know you ended up in a nasty situation with taxes and things in the old condo. Can you share what your initial payments where and what you expected them to be along the way? What happened when you had your big shock moment?

Kathleen: Sure. Actually we didn’t sell the condo, we’re renting it out. When I moved, and I know a lot more about real estate than I did, but when I moved, I signed all the paperwork and said ‘okay, great!’ ‘Your mortgage payment is going to be $900 a month’ and I thought, “Okay, I can do that. That’s a $100 more than my rent, that’s fine.’ Then I understood that there was an HOA and that wasn’t very much. At least in terms of how much HOAs can cost elsewhere. My tax assessment went up because they didn’t do a survey on the property taxes while the building was empty. They waited until people came in and so the estimated taxes were about $1,800 a year. It jumped so my payment in December was $900 and then they asked in January for $1500 or $1400 or something like that. I thought, “Oh, my gosh. What am I going to do? I’m going to have to get a roommate.” This is a lot more money. And it turned out that we were out of reserve. The mortgage company holds money in escrow for taxes so that you pay them every month instead of paying like a ridiculous amount at the end of the year. We had depleted those reserves and then some, so I had to pay back escrow for a year. Now it’s ok, now it’s back down like its $1100 a month and that’s fine, and that works out just fine. That’s just the mortgage or mortgage and tax, I guess.

Eric: A funny thing which, about Portland, for people who live elsewhere, we have no sales tax here so we can go shopping spree and there’s no sales tax on anything, food, drinks, restaurants, stores. But our income taxes are a bit higher than most places you’ll see. And our property taxes here are pretty high and that’s part of Portland living. The government gets their money somehow.

Kathleen: Yes. Especially with new construction as you know.

Eric: Totally. Actually I haven’t gotten my big tax assessment yet from the city. We’re waiting on that but we are escrow and estimating will be pretty high just because we’re new construction and we assume we’ll have a lot of taxes here. So everybody who is listening, please click through that Amazon link on the Personal Profitability podcast page because that helps me pay that astronomically high property tax and I appreciate it.

Managing Finances with a Partner

Eric: Anyway, I know you did get a roommate, this guy, I don’t know if you say his name on the Internet?

Kathleen: I do.

Eric: Okay. So we can call him B just as I have.

Kathleen: I know.

Eric: Or R, just give him some random letter. So you had a roommate move in who you ended up marrying. Congratulations, I was happy to be at the wedding and cheer for you. So you did have a roommate move in; we’ll call him roommate for financial purposes.

Kathleen: We have to for insurance purposes too. If I needed a rental agreement like, ok.

Eric: Interesting. So you have this roommate move in and sort of having two income household, did that change how you manage your finances at all?

Kathleen: You will like this because it’s kind of your fault. Remember that time we all went out and you we’re talking about the Southwest card. How you could get the plus and the two different tiers of Southwest, and you could get an extra year of companion fares?

Eric: Yes.

Kathleen: You remember that? Okay.

Eric: Just to give you a little background what Kathleen is talking about, there is a deal that pops up occasionally, I don’t know if it’s up right now, where you can get 50,000 bonus miles when you sign up for a Southwest credit card, which those come from Chase. There’s a business version and a personal version and how most airlines work you can earn miles from their credit cards and use them for flights and that’s the end of the day. But with Southwest miles you earn through your credit card, including the bonuses, count towards a companion pass. If you get 110,000 miles earned within a calendar year, you can get a companion pass for the entire rest of that year, plus the following calendar year. If you do it really early in the year, you’ll get two years of a companion pass, which means every flight that you book on Southwest, whether it’s with miles or with dollars, you can take a designated companion which you can’t just change it for every flight, it has to be one person. You can change once in a while but not much. And that person flies free. You just pay, I guess $5 per one way and taxes. That’s what Kathleen is talking about there. And with the two credit cards, you can get a 100,000 bonus points from spending, I think it’s $2,000 or $3,000 per card. You don’t actually have to spend real money out of your pocket, these things called manufactured spending. Actually I have I really long travel I can post, I’ll try to remember the link to that in the show notes to everybody so you can check that out. That’s what Kathleen’s talking about here is trying to use those two credit cards so get lots of free flights.

Kathleen: Yes, but we didn’t have to do manufactured spending because we had just gotten engaged and in case you don’t notice getting married is really expensive.

Eric: Yes it is.

Kathleen: So we had all these deposits we paid in full in January. After we met up with you he got those cards and then kind of de facto had combined our finances. Because we were both, I mean if we swiped on the card, who should pay for this we didn’t think about it because we have the same credit card. Then by the time the credit card bill was due we thought, we might as well put our money in the same place so we that can pay this off without having to divide it. Like, you should pay for chairs and I should pay for ice cream. Who knows how you’re supposed to do that.

One of the real benefits of having Frugal Portland was that when Brent and I first started dating, he thought — I sent him a link to a post that I had written and he read the whole thing. He knew all of my financial demons. He understood that I had a history with spending out of control and I’d come back. I’d come through on the other side, but it was funny because the conversation about combining finances wasn’t really a conversation. It was just like, “Well we got to get this credit card bill paid. In full. Every month.” Just want to put that out there. Whenever you use credit cards, you got to pay them off. It’s funny because we we’re like, “I guess that was Eric’s fault.”

Eric: I feel like we should write a new blog post, “Credit Cards – A Love Story”.

Kathleen: Yes, right.

Eric: Let see how that comes together.

Saving Half of Income

Eric: Now I know you’ve gotten on the track towards saving half of your income each month. Can you share where you learned about that idea, what that takes and how that affected your finances?

Kathleen: Yes, it changes everything. I saw a post on Financial Samurai when I was paying off debt.  I said, “Wow! That’s amazing.” If you don’t know financialsamurai.com, it’s a blog done by a very smart guy who typically has spreadsheets that prove his thesis statement. He made it pretty clear he had different people started of in different places and he had assumed like every five years, somebody would get a raise, and if we saved this much, this is how much you can work less. The more you save the shorter your career has to be. He was just like minutes from financial independence at that point. And he was really inspiring and I wrote. I remember writing in comment and say, “Gosh, I wish I could do that.” He wrote back and said, “Hey, debt payment counts as savings. Why don’t you run the numbers again?”

I found that I was saving more than 30% of my income, it think it was almost 40% of my income, if you count debt payment. I know it’s really controversial, but if you’re paying down debt that has an end point, the sooner you pay that off, the sooner that money is yours. I think that counts. It doesn’t count as savings if you’re swiping a credit card, for something you can’t afford and you pay it off in two months, that’s not savings. You shouldn’t bought those shoes or whatever.

Eric: I like that philosophy, I think it’s a good idea.

Kathleen: It’s really inspiring, ’cause he said, “Look, you are already doing it.” Once I got out of debt, I thought, “Well, I can still do this.” Brent was on board, and for us, because my income was variable at the time and still is to a certain extent, because you can never know what you’re going to make online. Instead of taking a percentage, we just decided on a number. We’re working toward a number. I posted this on the internet, so I can say, last year we saved $75,000 only to turn it into a down payment, but still we had the cash.

Eric: That’s equity. That’s an asset. That’s on the balance sheet.

Kathleen: Yes, we can’t do that every year.

Eric: Some people actually, Sam, from Financial Samurai, I’m buddies with him, he’s a good guy. He runs a few investment properties. I think a few. He did just that, he saved up for down payments and he turned them into rental properties. I’d say an asset is an asset, count it.

Kathleen: Right. Our goal this year is to save $80,000, which is, let’s put this out there, more than I bring in. Our goal is to live a normal Portland life. For people who don’t live in Portland, there’s a lot of really delicious restaurants, and so we’re…

Eric: And breweries. ‘Cause I know Kathleen, you can’t enjoy every brewery but for those who don’t know Kathleen as well as I do, she is a gluten intolerant. Some beers that we can have she can’t, but she have lots of good options in Portland.

Kathleen: The food scene is incredible, so one of our things is we don’t want — we know we could live eating rice and beans but we prioritize saving for our future selves. But not saving 90% of our income or anything more than 50%. Like I said, our goal is $80,000, we track it every month on our own. It’s a little bit boring so I stopped posting about it, but I really like looking at the spreadsheet. It’s very exciting when we are able to put more and more into Vanguard.

Eric: Do you have a target early retirement plan? Or do you think when you retire, you still really want to work on internet things and hobbies that have become passions?

Kathleen: I don’t know. I’ve been told I’m a bit addicted to workahol, so…

Eric: I just heard that from my wife about a half hour ago.

Kathleen: So you understand. I have all kinds of projects in my head. I’m not sure what financial independence means, and I also don’t know the future. I don’t know if we’re going to have kids, I don’t know if we’re going to stay in Portland forever. There’s so much that I don’t know, that I can’t say like, “Hey! By the time we’re 40 we’re not going to be working. We’re going to be drinking Mai Tais on the beach all the time or something like that. I don’t know that.

Eric: I very much like your idea of save as much as you can but not at the expense of your current self-enjoying. For listeners, I just got back from Spain last week. I was there for two weeks with my wife in Spain and Gibraltar and Portugal and we travel half bits of the flight so it’s pretty cheap and accommodations are pretty cheap, but still crossing the world for a couple of weeks. Expense adds up and it’s important to think of your money as a tool that you can enjoy. It’s not, when you have a ton of debt it can be, money can be a hindrance to enjoying your life. Once you have that paid off or you have it all paid off, let’s say mortgage or student loans here, chipping away, you can use your money to do great things, like save for early retirement or financial independence or trips around the world or going to have the best fried chicken in Portland or something. There’s a lot of cool things that you can do with your money. There is one big finance blogger who Kathleen and I both know, Mr. Money Moustache, he’s probably the biggest name in early retirement, save half your income kind of stuff. If you’re interested in that, in addition to Frugal Portland and my blog, that’s another good place to take a read.

Kathleen, is there any other big stuff you want to share from your story that you want other readers to hear that you think could be an interesting tidbit?

Kathleen: No. I’m working on physical product, but it’s not ready enough to talk about yet.

Eric: That’s exciting. I’m excited to hear about that one when it is time to hear about. That’s fun.

Kathleen: Yeah, you won’t be able to get rid of me when it’s time to hear about it.

Eric: My Facebook will be full of Kathleen saying, “check out this thing I’m making.”

Kathleen: Right, exactly. ‘Who needs a guest post from me?’

Eric: If our readers we’re inspired, love your story, where are good places for them to go out and find you on the inner webs?

Kathleen: You can find me at frugalportland.com, you can find me at forprofitblogging.com and I’m in ever increasing presence over at stockingbenjamins.com

Eric: Twitter, any preferred direct contact methods?

Kathleen: Sure, my Twitter is @omalleyk.

Eric: Okay. So Kathleen, thank you so much for being a part of this episode. I found it very interesting hearing parts of your story that I didn’t even know about. It was great for me, I think it was great for everyone else. I just want to pick up my beer and give you another virtual cheers. Thank you so much for being a part of it.

Everybody thanks for coming and listening. As I’ve mentioned few times lately, we just got into the iTunes stores, if you’re listening on iTunes or Stitcher or wherever else, please take a moment to give a little rating if you think we’re awesome. Five stars would be swell. If you think we’re bad, please send me an email and let me know what we can do or what I can do better to improve your experience. Everyone, until next time. Stay profitable.


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