How confident are you that your job situation will never change for the worse? Are you 100% sure that your paycheck will be there next week? I was--I had been head of my department for 6 years, always received stellar reviews, on good terms with everyone up to the CEO, etc. Then one day out of the blue it was announced that the company was moving to another state, and only about 10% of the employees were actually going. The other 90% were either laid off immediately, or offered the chance to go to a new company that had taken over the majority of the old company's business... at a pay cut and a 50+ mile commute. Sure, that's not as drastic as being laid off, but I think it illustrates my point that almost nothing is ever guaranteed. One source of income is just not enough if things go bad.
I've always had a second stream of income of various amounts--in the past I've used it to survive being out of work, pay down (and stay out of) debt, raise a down-payment on a house, or even as a fund to pay for vacations or toys. So the job situation didn't worry me--I knew I had options.
In this series of blog posts I'm going to talk about why and how to create a second stream of income, and go into detail about ten different "side hustles" that could theoretically become your primary source of income someday. I have previously talked about summer jobs that you could start on Craigslist, but this series will go much deeper into these ten businesses.
Why Is It So Necessary To Create A Second Stream Of Income?
Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.
- Groucho Marx
Let's over some of the benefits:
- Unemployment--If you start a second stream of income while you're still employed, you hedge against future unemployment. Even if your side job is not making anywhere near what you make at your first job, it will still help pay the bills, and you can ramp it up when you've got more free time on your hands.
- Pay down your debt--Use that extra money to wipe out your debt! Once your credit cards, student loans, and car loans are all paid off, use that extra money to pay off your mortgage early.
- Save for college--We have three boys who are two years apart from each other, meaning we'll be paying college tuition for six years straight, most of the time for more than one person!
- Be your own boss--You'll never have to grumble about the stupid thing your boss wanted you to do today!
I've talked to friends about my "side hustles", and many times they are unimpressed--the income I made was a lot less than I was making from my job, so why should I bother? Why not just go home and relax? Well, let's say you make an additional $1,500 per month; here are a few different ways of looking at that:
- Why not just earn extra money off my savings? Currently, about the best rate you'll find on a CD (Certificate of Deposit) is 2.25%. To earn an extra $1,500 per month (or $18,000 per year), you need to have $800,000 in savings!
- OK, so I'll invest it instead! Over the past 10 years, the S&P 500 has averaged a 7.2% return on investment. That means you'd need $250,000 invested, and on those years when the S&P lost money, you'd have no income.
- I'll just work harder and get a raise! There aren't many jobs where you'll see an $18,000 raise in one year...
- My job pays fine, I don't need extra! I've already talked about the benefits--around here, $1,500 a month will cover a mortgage on a pretty decent house.
How Can I Start A Second Stream Of Income When I'm Already So Busy?
I won't argue with you, finding the time to start a side job can be rough. But there are ways to balance having two jobs at the same time:
- Don't try to do it all yourself. This applies to both your new business and household tasks that you might not have time for. If you can earn $30 per hour on a side job, and pay someone $40 to do the housecleaning that would have taken you 2 hours, then you still come out ahead.
- Keep a good calendar. Even if you don't have specific due dates for projects (like when you're first starting), it helps to give yourself deadlines.
- Make your time count. Instead of going out to lunch with your coworkers, could you get 30 minutes of work done while you had lunch at your desk? Supposedly the average American watches 5 hours of television per day--why not cut some of that?
- Make sure it's worth it. Is the second stream of income that you've chosen really worth your time on an hourly basis? If your new job is selling flea market finds on eBay, and it takes you 20 hours (including buying, selling, shipping, etc.) to clear $100 (after all of your fees are taken out), then you're only getting $5 an hour.
- Keep a goal in mind. Always remember what you're working for, whether it's a safety net, being debt-free, or even someday being your own boss.
10 Ideas For Earning An Extra Income
Here are 10 ideas on how to go about generating a second stream of income. These are really just teasers to wet your appetite--in the coming weeks I'll be going into great detail on each one. You would want to choose something that best fits your skills, interests and personality; not everyone will want to do everything I have listed, but there are probably at least a few that would be a good fit for you.
- Start An Online Business--You can make money with your own website in many ways--blogging, affiliate marketing, selling your own products or services, or creating a membership site that people subscribe to.
- Do Freelance Work--This could be anything from writing articles to graphic design to programming--wherever your talents lie.
- Create An Outsourcing Service--It's possible to create your own IT support company even if you know very little about the topic. You can find offshore programmers through sites like Elance, and you would be the project manager for local companies.
- Write e-Books--Literally anyone can publish an e-Book on Amazon today--if there's a topic you're knowledgeable about, and you can get the word out, you have the potential to sell many copies.
- Start A Collectibles Business--Do you collect coins, stamps, comic books, firearms, autographs, sports memorabilia, (I could keep going, you get the idea)? Then you know there's a market for what you're passionate about, and in most cases it doesn't require a brick and mortar store.
- Become A Virtual Assistant--A virtual assistant can do just about anything for a client that doesn't require their physical presence. Many bloggers hire VAs to help with daily website tasks, do social media posts, and more.
- Start A Handyman Service--Do you know how to install a dishwasher or wire up a ceiling fan? Then your ahead of many people, and those people will pay for your knowledge.
- Go Into Real Estate--This could be either getting your real estate license and selling properties, or trying your hand at owning and running one or more rental properties.
- Become A "Picker"--You've probably seen the reality shows where people scavenge through someone's barn for items to resell. It's become harder to do this lately, but it's still possible.
- Become A Rideshare Driver--With the advent of new services like Uber and Lyft, it's possible for anyone with a vehicle to become a new type of taxi driver, making up to $35 per hour (according to the company's own data).
What Are My Own Income Stream Goals?
At one time or another I've tried almost every one of the ideas I listed above. Personally, I'd rather have 10 income streams each paying me $500 per month rather than a single income paying me $5,000 per month. That way, if one of them goes bad, I don't take as great of a hit as I would if I lost the single income source.
Additionally, my ultimate goal is working for myself. One of our plans as a family is to get a piece of land that we can actually homestead on, and if I'm tied to a job in an urban area, that's next to impossible (unless I want a 2-hour commute each way).
So stick with me over the next few weeks for some great information!