Why a Single Source of Income is a Bad Idea
May 15th, 2008
When it comes to investments everyone says that you need to diversify to protect yourself. If you invest everything into one stock and it crashes all of your investment goes along with it. Having one source of income is very similar. If all of your income comes from one job you’re at much greater financial risk if you happen to lose it or worse it becomes something you loath.
Personally I have worked for companies that have reorganized leaving me without a job and I have worked for companies that simply ran out of money forcing them out of business again leaving me without a job. The reality is when you make all of your money from one source you’re at great risk if you happen to lose it. There is little in the way of security when you only have one source of income.
Companies always try to have as many customers as possible, not only are they trying to ensure they make a profit but they are also ensuring that they stay in business if any one of their customers decides to leave. The reality is you can’t count on one source of income permanently.
The goal is to set up multiple sources of income for yourself to keep yourself protected. This isn’t always an easy thing to set up but even investing money in mutual funds that pay dividends can be turned into having multiple sources of income. Now that I am going to actively try increasing my income rather than just relying on cutting costs multiple income sources will be something that I am going to focus on. In some ways I’m already doing it but at a very small scale.
For most people they’ve only ever known how to make money from one source of income learning to add more to this is crucial to not being tied to your job. There are some simple ways of adding extra sources of income and I’ll start posting some of these ideas and my experiences if I have any with them (yes I’m going to be trying a few of them).
Posted in Financial Situation, Extra Income | No Comments
Alternate Income Streams
January 28th, 2008
Have you ever wanted to live without needing a paycheck? Or have you ever wondered what would happen if you happened to lose your job? Having only one source of income ties you directly to that source and makes you dependant on it. Having multiple income streams means that if any one of them vanishes you’ve still got the others in place so you don’t have to worry. A single source of income is prone to vanish at the worst of times, especially now that the American economy seems to be sliding into a recession and layoffs are constantly in the news.
If you’re conscious about your money and have been paying attention to the markets lately, you may have heard people mention that now is the time to make sure you have alternate income streams. The first question that really needs to be answered is what is an income stream? Very simply, it’s something that brings you income. For most people they have one income stream, their job. Alternate income streams are activities that you set up to bring you money from an additional source. For businesses this is essential in order to remain viable, but it also applies each individual in order to not be reliant on any single source of income.
There are two types of income: Active and Passive. An active source of income is something that requires you to commit your time and energy in return for money. A perfect example of this is a job. You spend 40 hours a week working for a paycheck; if you don’t go to work you won’t get the pay. Passive income on the other hand, is income that requires little, if any, input from you as a person. Some examples of passive income streams are dividends from stocks owned and interest on money in the bank. There are many more types of passive income but those two examples require no input from you and continuously generate income.
Personally, I would much rather have money coming in from passive income streams than active ones. I would love to have all the time in the world to travel and pursue activities that I want to pursue rather than go into an office. Another aspect to consider is, how many income streams do you have in place? If you have only one income stream, from your day job for example, you’re forced to maintain that job to pay for your bills. You are tied to this income stream and if you happen to be living from paycheck to paycheck this income stream becomes incredibly important. This type of reliance is what most people live with day to day. This is also one of the reasons that you want to set up alternate income streams.
Although your day job might be enjoyable and something that you’re passionate about it does not guarantee that you’ll get money from it all the time. I know the nay Sayers will argue that their job is secure but the reality is no single source of income is every guaranteed. Most of the time I like my day job but I am also tied to it because I have few other sources of income. In the back of my mind I worry about not getting paid (which happened lately) and the impact this would have on my life.
I’ve been working on a side project lately that would become an alternate income stream. Because I don’t have an extra 40 hours per week to concentrate on this project its slow in being set up but I’m making sure that when everything is in place there will be little need for my input. This will become a passive source of income for me. With a little planning most side projects can be set up this way. If this project works out the way I would like it to then my day job won’t be the only source of income that comes into my bank account.
Side businesses and projects are not the only means of setting up alternate sources of income. Saving money in a high interest saving account will do the trick. It might not be very glamorous but even 4% interest is extra income. There are many ways you can go about setting up alternate sources of income its just a matter of preparation.
Having alternate income streams means that you aren’t tied to a single job and don’t have to worry about the what ifs and issues if it happens to vanish. I think everyone should consider setting up a few income streams even if they are simple. If you can take the money you make and have it start making money for you then you won’t need to work as hard to maintain your lifestyle.
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2008 Goals
January 3rd, 2008
I wanted to start the year off with some goals that I have for the year. In the past I started off with some grand ideas about what I could and could not do. I’m sure a lot of people have the drive and start a great many things but the follow through is the issue. If you think about it most New Year’s resolutions end up broken within weeks if not days of being made. I think the biggest problem with a lot of these goals and ideas is the fact that they are very big. Often they are shifts in thinking which do not happen overnight. If you want to loose weight and you’ve been eating a lot and watching TV all year to all of a sudden expect you’ll be able to stop eating as much and hit the gym 5 times a week is a bit too much.
With that in mind I have some lofty ideas about what I would like to achieve but I am going to start off a bit smaller. I know that I would like to be in a completely different place this time next year from a financial point of view as well as from a personal one. So rather than say ‘I’m going to get rid of my debt and save X amount’ I would like to start off a bit more conservatively.
Some goals for the year include
- Cutting back on spending on unnecessary items such as alcohol and smokes
- Finishing my side project and registering it as a company
- Figuring out what I want to do about a job and a career (I’m up in the air and torn about this one)
- Concentrating less on the wasteful stuff and more on the meaningful things in life
I think I’ll start with those for the time being. Those are my short term goals and I will expand them once I see how I’m progressing. For example I am probably within a week of finishing up my side project and getting it into place. Once this happens and I’ve registered a business around it there will be a lot of work to actually start making money off of it. I’ve done the numbers and the business planning around it but I am not setting those as goals just yet; this project is an experiment. As with any experiment you know what you would like to see or even expect to see but trying it out gives you a better idea and in the case of a business if the idea isn’t successful you learn from this.
I don’t want to start the year off by saying I would like my side business to make me $20,000 by June because until it’s running I won’t have a clue what the potential returns will be. I’m going to start with the smaller pieces such as getting it up and running which is much more important now than mentally spending the money I haven’t made from it yet.
Cutting back on vices (such as smoking and drinking) is something I want to do anyways. I spend too much money on both and neither is an activity that has any real value or merit too it. But again rather than jumping in too far I’m going to set myself some smaller goals such as cutting back (on the drinking and shortly quitting on the smoking). These will help the financial situation but they will also help me with the final point, concentrating the more meaningful things in life. The consumer society we live in is extremely wasteful and although I personally don’t think I’m that wasteful nor frivolous I’m sure there are better things I can concentrate my energies on. Rather than watching TV two nights a week I can spend the time working on the side project. That would probably amount to 6-8 hours if I applied myself which might not seem like a lot but over time this adds up very quickly. It’s effectively a day of work. The rewards might be minimal at first but in the long run they might be substantial.
Overall I would like to say this will be the year of quiet change. I’m not going to try doing or taking on too much, but I would like to accomplish a few things. A slow quiet approach is probably the best way to do it for me right now. I think that knowing this is probably just as important as trying to accomplish the goals themselves.
Posted in Budgeting and Planning, Commentary, Extra Income | No Comments
Happy 2008 and 2007 in review
January 2nd, 2008
Happy New Year everyone! Hopefully everyone has had a safe and happy holiday season. This is the time of year where you get together with friends and family and enjoy the season. It’s also the time where you spend the most money in order to buy gifts and extra food and drink for entertaining. Each year I am amazed at how much money I actually spend on Christmas and this year is no different in that respect. Reading other personal finance blogs its obvious that a lot of people have some restraint when it comes to what they do and don’t spend on Christmas but I have this suspicion that a great many more people find they’ve spent too much.
Spending around Christmas is inevitable. That does not mean it has to be without merit. I’m currently finding myself a little tight for money until next pay rolls around but I think this year is a little different from years past where I recognize the excessive commercialism and glut of consumerism not only in society but in myself as well. The New Year is often a time of change and reflection for people and I think this is no different for me.
The past year was an interesting one. I changed jobs to start the year off and in the process took a large pay cut to do so. The job has been working out for the most part but I am starting to think that I’ve learned what I can from it; the benefits of the pay cut are not nearly as great as they could be now. I think the next couple weeks I’ll be reevaluating my work situation as a whole to see what if anything needs to be done about it.
I also realized the power of the entrepreneurial spirit this year. Working for a small company you end up wearing a great many hats over the course of any day. Its stressful work but you quickly realize how much potential an idea can have as a business. To this end I’m in the process of setting up my first company on the side. The goal is for it to be a smashing success but the reality is that bills need to be paid so the process will be a bit longer than I would like.
On a personal note I got married this year and it was one very special day for my wife and I. It was a very expensive day but completely worth it. On a slightly darker note I’ve realized that some of my vices are worse than they should be and I’ll be working to remove them before they become real problems. I’m a little unsure of myself going into the New Year but I am certain that it will be a good year. A few course corrections in the next couple weeks will probably ensure that it’s a great one.
I hope everyone has had a great holiday season and that the New Year brings the achievement of all your goals.
Posted in News/Misc, Commentary, Extra Income | No Comments
Doing your Prep Work
October 15th, 2007
A couple of the things that I’ve been working on lately has been investigating a couple possible investment/business opportunities and I have to say that making sure you do your prep work is in my mind becoming more and more important. I’ve always understood that a business plan was necessary but all the research into understanding what the business is supposed to be doing versus what’s happening in the industry.
I have never started a business, had a few good ideas that popped into my head but otherwise I’ve seen others do it. So rather than just start the business or in the case of one of them just try buying it the business plan is coming first. The main reason for this is to make sure that everything is planned out and we know exactly what’s going on, what’s planned and what’s expected. The second reason for doing this exercise is to see if it actually makes sense to do; is there any reality to the expectations or are they simply a matter of delusion and getting swept up in the enthusiasm of the idea.
This is new for me but I think its time to start moving in this direction I’ve identified no less than 5 potential businesses that I think are viable with a couple off shoot ideas that could turn into them. That tells me its time to start investigating some of these and start writing the business plans. The ones that aren’t worthwhile should be left alone but the ones that are really worth it need to be ventured.
In the planning stages the prep work and research are key in knowing what you’re attempting to do. Getting the lay of the land so to speak before you make any ventures into it. While the prep work is critical in my opinion there is a fine line between that and paralysis through analysis.
Posted in Budgeting and Planning, Extra Income | 1 Comment
Random Thoughts and Business Ideas
October 10th, 2007
I blinked and the date somehow turned from the 4th of October to the 10th! I cannot believe how incredibly busy things have been the past few weeks. Work has been relentless in its continuous push against me and I’ve been trying to step up and keep up the workload but its been trying as the volume of posts here will indicate.
A Belated Happy Thanksgiving to my other fellow Canadian bloggers out there! For those American bloggers out there who don’t know Canada has it’s Thanksgiving Day the second Monday in October rather than in November. I’m actually not sure why this is the case but its always nice to have a long weekend (especially when there are no communication devices around to beep, buzz, or ring).
Other than that a couple more potential business ideas have shown up on my radar and some very serious thought has been put into them on my end. All of the 4 ideas that I’m currently floating around in my head (and on paper) seem to have good earning potential which leads me to wonder what am I missing since not all of them can be the winners I think they are. Thankfully a couple of the ideas are geared towards a more passive income stream rather than a full lifestyle change which means that I can start those without going to the extremes of moving or quitting my job. Those will be first and if all goes well they will also potentially pay for the others.
Over the next few weeks work should start to lighten up a bit (hopefully) and I’ll be able to concentrate some of my down time to planning out and fleshing out the business ideas that I’ve got. Hopefully I’ll be able to actually get going on the couple passive ones that I’ve got and get them up and running. If posting is a little irregular please bear with me.
Posted in News/Misc, Extra Income | 1 Comment
The Purge has Begun!
July 19th, 2007
As you look around the room you’re in look at all of the stuff, papers, books, magazines, I could go on but it’ll change depending on the room you’re in. Regardless of how neat and clean you are if you look hard you could probably find a few things around that you don’t need but still keep. Our desks, rooms and lives are cluttered with stuff that we don’t need but can’t seem to convince ourselves to throw out. Essentially I’m at the point where I need to go through all of the stuff that I’ve collected over the years but for some reason haven’t thrown out and purge.
To start with this isn’t a process that only I’m going through but one that a few of our friends are in the middle of and one that a couple bloggers have posted about in the past little while. My wife and I started off by determining that we needed to clear up space and get rid of the stuff that we don’t need and identified a couple places within the house that had too much stuff. We started with closets and the den. My task was the den since has over the past couple years become the room in the house that collects stuff that belongs in no other room in the house. It’s the junk room and unfortunately for me its my default dumping space for anything that bring in.
The other thing that has been pushing me towards the purge has been the concept of efficiency and effectiveness that is peppered throughout the business books that I’ve been reading. That in turn made me thing about all the things that I do on a day-to-day basis and what could be better about that. Naturally the moment I stepped into the den with this line of thinking in my mind I thought about purging now its time to gt to it.
The Difficulties of Purging
Saying that you’re going to purge the massive collection of unnecessary things that are doing nothing more than collecting dust and actually doing are two completely different things. In Tim Ferriss’ Four Hour Work Week he suggest the idea of Elimination as key point to getting to that mythical 4 hour work week; as part of this he does say it’s not easy. Until you’ve started going through shelves of books you haven’t opened in years and papers that have 3-year-old scribbles you don’t realize it’s not as easy as it sounds. The den, my space, had all sorts of books and magazines – mostly computer related books. Each book I picked up the though that would run through my mind would be: “oh I can see when I might need this”. The reality is if I haven’t opened it in literally years there was no point in waiting for that mythical maybe time; visions of possible future use that might never happen was one of those mental challenges I needed to get over. Needless to say I’ve managed to throw out 4 boxes of books (well recycled) and the more I purged the easier it became and I got better at picking out the junk from the things that I wanted to keep. Trust me it gets easier as you get going on purging the trash it’ll become easier to suppress the thoughts such as:
- But Aunt Millie gave me that hideous blanket we never use – I can’t throw it out
- Oh this is an electronic gizmo I paid a small fortune for – I can’t throw it out I paid to much for it
- I got this when we were on vacation in Cuba that time – I know we’ve got 3 of them but I can’t throw it out.
Organization
When you live in a small space you need to be much more efficient about how you use your space or stacks of papers and books will threaten to drown you in an avalanche of paper. As part of this whole process we went to a store that sells organizational things and picked up a bunch of boxes and things to organize our place a bit better. The boxes are primarily for storing things that we don’t need right now but don’t want to throw away. Remember you can find a nice solution for keeping things and storing them away efficiently but you can’t use this as an excuse not to throw out the mountain of stuff that we’ve all inadvertently collected. There are lots of stores and products that can help you keep your life more organized, take advantage of them when you can – stores like Ikea have whole sections devoted to organizing your small places.
Some Perks to Purging
Now there’s one final consideration that you need to keep in mind; as you go through all of your stuff you’ll find things you thought you lost that are important to you. But you’ll also find a bunch of things you don’t need or want that have some value to them. Personally I found a camcorder that I bought on a whim for way too much money that I never use. I’m going to sell it for some extra money, which I’ll use to pay down my debt that little bit. Remember your old baseball card collection or your comic collection? Well they might be worth something if you sell it; especially if you’re debating throwing it out anyways.
Purging all of the unneeded junk that I’ve collected over the yeas and throw it out isn’t the easiest process in the world but having fewer things frees up space that I didn’t have and just lightens life up. Less clutter simply means that you can find more things and just don’t have to worry about knowing or not knowing if you have something. Then there’s the added perk of potentially finding some old treasure you forgot you owned not to mention finding something worth money you don’t need anymore that you can sell.
Technorati Tags: clutter, efficiency, throwing out stuff, cleaning, extra money
Posted in Commentary, Extra Income | 3 Comments
Making Money Blogging
May 16th, 2007
Recently I received a few emails asking me about advertising on this site and to be really honest with you I hadn’t ever thought about it, at least not at any great length. Site monetization for me has always been of the unobtrusive variety where I stick in some google adwords and a couple Amazon links and leave it at that. By that same token I’ve made virtually nothing from this site and although I would love to at least be paying for the hosting I’m not overly concerned that I’m not. But what those couple emails about advertising did accomplish was it got me thinking about making money blogging and specifically off this site.
I realized a few things rather quickly: 1) I really wasn’t making much money off this site, 2) I could probably do a few things to improve my chances of making more, and 3) I really don’t have enough traffic for making a lot of money so my initial expectations should be maintained. I started doing some research on the subject and ran across a few sites and posts that were interesting:
Sites/Articles About Making Money Blogging:
I wanted to get a little perspective before I really made up my mind about any of this monetization stuff. The whole idea of making money off a blog stirs up a lot of controversy or at the very least makes the individual question why they are writing on their blog. Of course we would all love to make more money but are we posting and creating content just to make money? Personally I’m writing about personal finance for myself; and to let anyone interested hear how I’m dealing with it and sharing my stories about my struggles with money. Making money on this site is a perk something that I wasn’t expecting to receive in any great abundance if at all.
Do I think that making money while doing something that you genuinely like is a bad thing? Definitely not nor will I ever; I went back to school because of a banner ad so I would be a hypocrite if I thought that there was no value to online advertising. Though I do believe that there is a line that shouldn’t be crossed. Sites that overdo it and bombard the reader with advertising take it too far. Also the bloggers out there that get paid to post without disclosing that they are making money off a specific post also make me question the validity of their writing and intentions (unfortunately these are often hard to discover).
The reason the whole idea of paid posting ever crossed my mind was that one of the requests for advertising also included the possibility of writing a paid post. Would I ever take money for writing a post on a specific topic to drop in a companies name and url? Yes I believe that I would as long as a few conditions were met: first off the tilt of the article could not be controlled by the purchaser (though I would give them the veto if they wanted the post to go up or not), as long as I had creative control over what I write then I would consider writing the post. Secondly it would have to be about a topic that is both related to my blog and one that I had something to say about. For example if someone offered to pay me about collecting Beanie Babies and how that could be an investment I would have to decline. A topic like that really has nothing to do with this site and I couldn’t care less about the topic. (My apologies if I just lost a potential advertiser). The final point for me that would have to be met if I were to write a paid post is that I would have to be allowed to disclose that it was a paid post. I’m open to this form of money making on a blog and I think it’s a very valid one as long as its limited and not hidden.
Thinking about monetizing this site really made me question why I post and raised a few questions about things such as traffic, trying to get more traffic and where to draw the line with my efforts to make money off the site. Realistically I don’t have the traffic to generate any substantial revenue off this site, but is this site all about making money? No I would much rather have more traffic because of the posts I write and giving the readers an insight into my struggles with my finances. Maybe by writing these posts I can help some people gain some better control over their finances and maybe help them get to their million dollars. At the very least sharing my thoughts, opinions and experiences might give them some ideas as to what they could do with their own money situations. So does traffic matter? Yes of course , I want to share my thoughts, opinions, and experiences with people. I believe that it helps both them and me, I’ve learnt a lot from other personal finance sites and I think I have something to offer. The generation of traffic is about the content for me.
I am going to be changing a few things around this site as a result of this whole line of thinking in an effort to reduce visual clutter and potentially make myself a little bit more money (it would be nice to cover hosting costs). I really liked what Steve Pavlina had on his site, a donate button, it’s a very unobtrusive way of asking for support from some of the readers that you have out there who are in a position to help out. Maybe some have been in a similar position and can offer some additional support through a donation. Either way I liked this approach rather than trying to help sell books on Amazon and as a result I’ve put up a donate button.
For those of you out there who are also struggling mentally with what do to about monetizing your site I highly recommend reading problogger.net and the great article by Steve Pavlina on the subject. They’re both very informative on the subject and in the case of the Pavlina article they make you question why exactly you’re writing which will change your approach to the matter. Blogging can be a great hobby and a great way to make a little extra money while doing something you love; maybe one day I can write for a living rather than having a day job (I won’t hold my breath just yet)
Posted in Commentary, Extra Income | 3 Comments
