How I Earn Extra Income By Renting Out Extra Space

The following is a guest post by Bryn Wied. Bryn is a stay at home mom whose love of travel and budgeting needs only grew when the kids started coming. You can find more thrifty travel parenting stories, ideas and tips at her blog at http://www.ihavekidswilltravel.com/. Enjoy! 

Landlording on the side can be a quite profitable side gig and another way to add a couple hundred extra dollars to the travel fund. The great part it is it can almost border on passive income, meaning it doesn’t take a lot of extra work or time, especially if you can land yourself a full time boarder position. You get to meet new people, make some money from home, and walk away with a couple of good stories and a few lessons learned along the way.

These days, you don’t need to be a millionaire with an entire house to rent out to become a landlord or to make money renting out to borders. Any extra space you may have, from a house, guest cottage, tent, or even an extra couch, can be up for grabs as a potential to bring in some extra cash.

My husband and I first moved across the country in an RV. After upgrading to an apartment, we weren’t able to sell our camper because we still owed money on it from when we first bought it. So we decided to become “landlords” and rent out our extra space instead! Not only did we immediately start making money off of it, but we have since paid it off and now have a steady stream of side income coming in with little to no work involved.

 

Attracting Business

Utilizing online resources will probably be the best way to attract business when you are first starting out renting. By all means spread the news through word of mouth, because you never know where networking can lead you. But unless you happen to know someone who is actively looking for a place to rent, there are a handful of great websites that are already set in place to help you start renting as soon and hassle free as possible.

I briefly dabbled in airbnb.com. It was very easy to use, and much easier to protect yourself by collecting information ahead of time, secured payments, etc. I also received quite a few inquiries, although the clientele consisted mainly of occasional vacationers who needed a night or two, so if you are looking for a steady renter you should probably try elsewhere. The key is to under price the competition; I consistently do research for similar finds or even just all finds in my area and underbid them by $5. You wouldn’t believe how much business I have attracted simply by underbidding the competition. The same people who look for alternative housing tend to be the same people who think outside the box and are always on the lookout for a deal.

I also used craigslist.com, and have found the most success for long term renters here. The obvious drawback is Craigslist is sketchy. I only did month to month rentals, nothing shorter so as to attract only people who were going to be there for a while and less likely to bounce without paying. I met potential renters with my husband, never alone, and always in a public place first. It helped that the RV we were renting out was stored in a very active and well maintained RV Resort, so there were always lots of people around and a good security system in place. Do what makes sense for you, but just be smart.

We also found a fair amount of business through local church bulletin listings and newsletters. There were a few people who were in need of housing in-between moves or were looking for a place to stay while they looked for more permanent housing in the area.

 

Safety

Obviously as a stay at home mom, safety of my daughter is a big deal to me. In our specific situation, we didn’t have anyone staying with us, so it wasn’t as if I was sharing my house with someone. We still did face some issues, like renters not paying on time, and the possibility that someone could show up and literally drive off with our RV in the middle of the night and we would have no idea.

The first safety measure that should be put in place is collect money UP FRONT. I know this sounds like Captain Obvious, but we admit we made this mistake, and unfortunately with a long term renter. It took us 2 months to kick him out, and in the end I still don’t think we were ever fully paid. He was also an incredibly sweet guy, which only made it more awkward. My advice would be to avoid that whole situation and just get paid up front and on time.

A great way to make sure this happens, and another step to have in place to protect yourself, is get something in writing. You don’t have to have a law degree to write up a very functional agreement or contract that will protect you in the case of a misunderstanding down the road. Be sure to include:

  • Everyone’s name
  • Date
  • How long the agreement is valid for
  • When rent is due and what sort of fine/termination is allowed should rent not be paid on time
  • What your responsibilities as landlords are (who pays utilities? What if something breaks?) and what is the responsibility of the tenant
  • Any safety deposits needed and their return time
  • Move out date

You can add additional information if needed. The important part is to print it out, and have everyone involved sign and date it. Make sure to make 2 copies, one for you and one for the tenant.

Another good idea if you are renting out a larger space such as a guest house, room or RV is to take pictures of the area before your rent it out. That where there is no confusion as to who is responsible for the stained carpet or the broken mirror.

 

Live Long and Prosper

Hopefully none of the above scares you away from renting out extra space for supplemental income. As a stay at home mom, I can take care of collecting rent and do nothing else while still earning an extra $300-500 a month consistently for the past year and a half. That’s around $4000 a year of extra income we get to use traveling! If we ever get sick of renting, we can turn around and sell the camper for an extra couple thousand. As a bonus, our current renters have become great friends and now are permanently renting the RV.

***Photo courtesy of http://www.flickr.com/photos/106574022@N04/11415400896/in/

The Pitfalls of Bad Credit

More and more in today’s economy, we hear of people and businesses alike getting behind on their loans and bills, and even having to default / go bankrupt. This obviously can be devastating for a person’s credit rating, report, and score.

Along with the psychological impact, there are some pretty detrimental material ramifications of having bad credit as well. Let’s walk through a couple of these common pitfalls today to see what sort of benefits can come from potentially repairing your credit.

 

1. Employment

Back in November of 2014, I started a new job after finishing graduate school. After going through the interview process and accepting the job offer, one of the final paperwork items I had to fill out was a release for the company to perform a background and credit search, if they desired.

Since most jobs in today’s society involve some sort of interaction with monetary / budget management, you can imagine that if an employer pulled your credit report and saw a bunch of overdue loan and bill payments and delinquent accounts, it just might jeopardize your job chances.

 

2. Mortgage Approval

On December 30th, 2014, my wife and I closed on a single family home purchase in Colorado. Prior to even really talking seriously with a real estate agent, the first step was that he connected us with a mortgage lender to secure home loan pre-approval. During this process, our ability and history to repay debts, credit card balances, and utility bills was scrutinized.

Along with the ability to actually secure a home loan in the first place, having bad credit history can drive up your interest rate and/or add mortgage origination points (to mitigate the bank’s risk), which can increase the cost of your home ownership.

 

3. Having Your Dream Business Flourish

Do you have a dream of owning your own business? If so, having bad credit can be a pitfall to this plan as well.

First, unless you are planning to open up a virtual business, most brick-and-mortar businesses require a fair amount of capital investment in the first phase of operation. If this capital investment exceeds the amount you can personally round up from friends, family, and investors, you will probably be looking at obtaining a business loan from a bank or grant from a small business association. Both of these routes will involve a thorough investigation of your credit history, and therefore, having bad credit can be quite detrimental.

Next, if certain contract businesses, clients can demand the right to perform a background check on you and your company. If this happens, you want to make sure your credit history is positive.

So there we have it – three fairly significant pitfalls of having bad credit. If you feel like any of these may be important to you, repairing your credit may be a very logical, important, and beneficial next step. Good luck!

***Photo courtesy of https://www.flickr.com/photos/jakerust/16610023059/in/

The Hidden Cost of Hybrids

toyota-prius-my-personal-finance-journeyThe following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Hybrids first went mainstream with the introduction of the Toyota Prius that boasted an impressive fuel efficiency of 42 miles per gallon in the city and 41 mpgs on the highway. Compared to the typical average of well below 30mpgs, this car was simply amazing. It was quiet, high tech, surprisingly spacious, and had some decent power considering its efficiency. Obviously, this car would save money in gas, but were there additional costs associated with the hybrid that few car-buyers would notice before the purchase? As with most purchases, unfortunately yes, there are costs that may hurt your ability to save money in the long run.

1) The Higher Initial Costs

When purchasing a newer model, many dealers like to talk in term of payments, rather than the actual total that the car is selling for. Often, this is because they do not want their customers to experience sticker shock. It’s much easier to wrap your head around a $300 a month payment than it is to spend a total of $28,000. Also, to make the costs between gasoline-powered vehicles and hybrids seem negligible, they can extend the time frame of payments on the hybrid so that the per-month price is basically the same.

In reality though, the sticker price on the hybrid model is often much more expensive than the non-hybrid – typically $2,500-$5,000 more expensive. So immediately you are starting in the hole by purchasing a hybrid vehicle, just hoping that you can make up the difference in fuel savings.

2) Variable Fuel Prices

One of the biggest selling factors for hybrid vehicles in 2013 and much of 2014 was the steep cost of gas. If you typically spent $2,000 a year at the pump, purchasing a hybrid could immediately save you $750 a year, which would cover the initial purchase costs in just five years!

However, at the surprise to many, gas prices actually started going down in the fall of 2014 and they still remain relatively low today. With these reduced running costs, the break-even time frame extends beyond the five-year mark and is now more like eight or nine years! It becomes a little more difficult to justify a purchase when it won’t start saving you money until a decade after the purchase.

Cost of gasoline over 2 years-my-personal-finance-journey

Source: GasBuddy.com

3) Highway Trips

The people that are typically the most interested in hybrid vehicles are the ones that travel great distances to work. It certainly makes sense that they would be looking for better fuel efficiency with the miles that they’re racking up each year, but the only problem is that the hybrid vehicle isn’t really built to save as much fuel with long highway trips. In actuality, the hybrid actually gets better fuel efficiency with more starts and stops in the city (which is why they often boast a higher city efficiency rating). And on the flip side, gasoline-powered vehicles often get better gas mileage on the highway, so the divide between the gas mileage of the hybrid vs. the gasoline model isn’t that great.

As an example, let’s compare my 2001 Honda Civic to the 2000 Toyota Prius. My Honda gets 27mpg city, and 34 mpg highway. As we stated before, the Prius gets 42mpg city and 41mpg highway. If I drive mostly long distances, then I’m likely taking the highway almost everywhere I go, and the fuel efficiency is only a slight amount better than my non-hybrid vehicle, so the savings is even less than you might initially think.

4) The Cost of the Battery

Hybrid vehicles have a specially made battery that is powerful enough to power the entire car for periods of time. This amount of power is impressive, but it doesn’t come without a hefty price tag. If a hybrid car needs a battery replacement, it can often cost between $1,000 and $6,000 dollars. Yikes! If your car is eight years old at this point, then it might not even be worth the amount of the replacement!

Because people are scared of this cost, used hybrid vehicles can often be more difficult to sell. So, even if your battery doesn’t fail, you will still be eating some of the cost because you’ll have to sell the car for cheaper than a run-of-the-mill gas-powered model.

Before your next car purchase, be sure to review the hidden costs!

How about you all?  What hidden costs did you encounter when purchasing your last car (regardless of what kind it was)?

Share your experiences by commenting below!

Save Money on Food with Your Own Garden

Vegetable_garden_my-personal-finance-journeyThe following is a post by MPFJ staff writer, Jeff.  Jeff writes about reducing waste, saving money and building freedom at his website, Sustainable Life Blog.

My wife and I have had our fixed expenses (aka our monthly nut) under control for quite a while now, but occasionally we still spend way too much in the non-fixed categories, which can break the budget and really cut into the savings we want to put away to reach our goals.

The category can change based on things going on (such as house renovations) but typically the one expense that can always blow the budget is food.

One of our favorite ways to combat this is to plant a garden. Planting a garden doesn’t cost a lot, and can be a great hobby that many people will enjoy. Not only do people enjoy it, but aside from a few things the hobby is free and should keep you from spending money in other areas!

You don’t need a lot of skills for gardening, and in some areas you can garden almost all year long. Even in Wyoming where I live, you can garden from early April to late October as long as you’re planting the right things at the right time.

Look at What You Already Buy

The first way that we saved some money with a garden was to look at what we buy at the grocery store. During the summer, my wife & I like to eat salads with a bit of protein (chicken, fish, etc) on them, so we started there. Our first try at a garden included salad fixings, such as tomatoes, cucumbers, carrots and kale. We knew that we would eat these things once they grew, so all we had to do now is not kill them.

We got a packet of seeds for each of the items we wanted at the local flower store and our total cost was about $10. After that, it was simply labor that we did to get the garden going. We watered daily and waited until the fall to reap what we had sown.

After The First Season

Our first season in the garden was not all that successful, but we still were able to recoup all of our costs and save quite a bit of money on our food that fall. While our grocery budget didn’t go down for every single month of the year, we were able to make quite a bit of progress during the 3 months that we harvested stuff from the garden. We were able to lower our grocery bill by 20% or so each month, which was quite nice.

No Yard? No Problem!

For you apartment dwellers: don’t despair! You can give your own veggies a try in some pots on the patio or deck, but I suggest starting with herbs.

Herbs typically cost quite a bit of money at the grocery store and I can never seem to use them all before they go bad. Having them in pots out on the porch will allow you access to fresh herbs all the time, and you can even move them inside when the weather goes bad. A few of my favorites are basil (for pizza, salads and more) and mint (for mojitos!).

So if you’re looking to get started, think about what vegetables that you eat frequently and give some of those a try. All you need is some seeds and the willingness to do a little work outside in the summer time – which shouldn’t be too difficult.

How about you all? Do you have a garden? If so, what do you put in there? Has having a garden saved you money at the grocery store?

Share your experiences by commenting below!

***Photo courtesy mym [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

4 Solid Reasons Why You and Your Spouse Should Share One Bank Account

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Throughout the past couple years of chatting with various couples about money, I have noticed a shift from the words, “our money” to “his money” and “her money”. It seems that fewer and fewer people are combining their bank accounts and have instead decided to keep them separate.

When you stop and think about, it kind of makes sense I guess. People are waiting longer to get married and have therefore become self-reliant for many years. And, many more people are living together before marriage (with separate accounts still) and just continue to live the same way even after they do eventually get hitched. One of them covers the mortgage, the other pays for groceries, and when they go out to eat it might be a toss-up for who covers the bill. This method seems to work well for some, but I’m still a promoter of shared finances.

 

Why I Believe in a Joint Bank Account

When I was growing up, I remember my parents sitting down at the table once a month to do two things. One was to type up sales receipts for the cars my Dad had sold (he owned a car dealership as his side-business), and the other was to pay the bills and balance the checkbook. They held the belief that since they were married, they therefore agreed to share their possessions, which simply meant to place both of their incomes into the same account. After viewing this first-hand as a child, I have seen four positive outcomes stem from their joint account.

 

1) It Encourages a Common Goal

When people have separate accounts, it is less likely that the two individuals share a common goal. If I would split them up and take them into separate rooms to ask the question, “What are your goals 10 years from now? How about 30 years from now?” it is very unlikely that they would provide the same answer.

A shared account encourages a common goal between the two individuals. If they commonly spend all of their money each month and contribute nothing to savings, they will probably ask each other the question, “What are we doing? And why are we not saving for something in the future?” In other words, “What are our goals?” As they both view the account, it is more likely that they would come together and spend (or rather, not spend) with a purpose for the future.

 

2) It Yields Built-In Accountability

If I were married (it’s happening soon by the way) and my spouse and I decided to try and save $300 each month, but instead, I had a bad habit of spending this money on random magazines, candy, and coffee, then this would be a serious problem. The joint account would probably make me think twice about spending the money on pointless things, and would instead provide me with a new accountability partner, my spouse. This might be a nuisance in the present, but it will create a much brighter future.

 

3) His/Her Money Becomes “Our” Money

Adults are sounding more and more selfish these days. Wives want more appealing décor in their house and men want new fishing rods, but each of them say, “I’m not wasting my money on that purchase. Why don’t you use your money?” When you spoke your vows at the wedding, didn’t you both agree that what’s yours is hers and hers is yours? Then what’s this “my money” and “your money” business? Simply put, it’s just a whole bunch of childishness.

If, however, you both have a mindset of that pot of money being both of yours, then you’ll have to come together and decide what’s stupid for your future and what’s smart. If you both can’t come together on a decision, then you don’t purchase the item. Simple as that. Let me tell you, stupid purchases occur much less frequently this way.

 

4) No Hidden Purchases

When you’re married to someone, there should be no secrets. No hidden relationships, no hidden actions, and no hidden purchases. If you’re trying to hide something, then you probably shouldn’t be doing it in the first place. Joint accounts leave everything out in the open, which will encourage each of you to stay on the straight and narrow and if that happens, it should bring you both closer together.

Many couples say that they fight much less frequently since they separated their finances, and I believe them. The only problem is that instead of being one in their marriage, they have now made themselves into two individuals that live under the same roof. Sure, there are less fights, but I believe that separate accounts are actually distancing both of you from one another. If you want to truly care for each other and build up your common goals, then I think a joint account is the ticket to get there.

What do you think? Are you an advocate of a joint bank account?

 Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/exalthim/3800467037/in/