I've paid him for first and the second month, in advance of the month. This is now my primary source of income. The dude somehow guarantees that site won't get penalized and it has not happened to any of his clients in years of experience. Anchor diversity isn't there either, I gave him 4 keywords and he's been working on 2 out of 4 with no generic anchors to be found in the report I received. Maybe I should fire him just to save my site from getting de-indexed.
Given that the site is your primary source of income, I'll restate the comment. You need to exercise extreme caution with regard to backlinking. The Google Product forums are completely covered-up with webmasters, site-owners and SEO people looking for a way to get their site back in the rankings, reindexed, etc... Some people are paying to have (thousands) of spam backlinks removed. Removal rates can be on the order of 10%. Getting a spam site to remove a backlink is much more difficult than paying someone to run automated software to create it. Cutts himself has said that in some cases it will be less time-consuming to completely abandon a site rather than try to bring it back.
Hiring "just anyone" to do SEO on a site that is your primary source of income is what I would call "gambling with your rent money". You seem to have some knowledge of SEO, backlinking, etc... but not nearly enough to do it yourself, nor even to adequately supervise someone else. Note the primary focus of that supervision should not be to increase the site's SEO effectiveness, but instead should be to make certain the site doesn't get punished. Some of these punishments are permanent. I can't post links yet, but you should find the Google Products forum and read all the anecdotes of people getting their site penalized. Many stories start out just like yours. "I hired a guy that sounded like he knew what he was doing, and now my 5 year old site has gone from #4 to page 11 on my primary kw, and my income is less than 10% of what it used to be." The money you "saved" by hiring the cheap guy may cost you 100, 1000 times as much in lost income.
You should always prioritize SEO efforts in terms of least risky to more risky, and from least time consuming to most time consuming. Do the safest, fastest efforts first. Save the risk for later. It may not be necessary at all. Particularly post-Penguin, while you are safely getting your site ahead, your competition could be taking risks and getting themselves penalized.
For right now, I'd recommend you do nothing at all, until you either inform yourself adequately on what to do yourself, or you find the right person to do the SEO work for you. At this point, as Cliff Claven said, you are in a dog-eat-dog world, and are wearing milk-bone underwear.
