Set Goals to Create Additional Streams of Income

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

How many streams of income do you have? When my husband got laid off early last year, we realized that one stream of income just won’t cut it anymore.

Diversifying your income can provide you with more financial security which is why it’s a great idea to set goals to create additional streams of income this year.

Why You Need More Income Streams

Most millionaires have an average of 7 different streams of income. Whether you’re trying to be a millionaire or not, you can probably agree that the more income you have coming in from various different sources, the more financially secure you’ll be.

When my husband got laid off, he lost his entire income in one fatal swoop. Luckily, I was working at the time and freelancing on the side with more than 10+ different clients. It was safe to say that by me having multiple streams of income, it really helped up get through that rough patch.

Income diversification can not only help you feel more stable, it can also allow you to meet your other financial goals quicker and allow you to earn more money over time as well.

Here are a few ways to diversify your income this year.

Start Freelancing

If you can provide a service to others on the side of your full-time job, it can be a great way to create an additional stream of income. There are so many different ways to freelance whether you like to write, edit, design graphics, take photos, do customer service or data entry work and so on.

The best part about freelancing is that you can choose your own clients to work with and set your own rates and hours. You don’t have to work an extra 30 hours per week if you don’t want to or know you won’t have the energy. Once you build your network and start finding clients, you can maintain as little or as much work as you want.

If you want to perform the tasks you do at your day job on the side for others as well, that’s an option as long as your employer is okay with it. For example, if you work at a daycare and want to offer some of the parents babysitting services on weekends, as long as your employer is fine with it, you can earn some extra money that way.

I used to take my son to a child care center that allowed that and parents like me were relieved since the center was closed during evenings and weekends.

Back when I worked at a web design firm, I used to think about how much the graphic designers and programmers I worked with could have earned if they did a few freelance projects on the side.

A graphic designer can easily earn an extra $1,000 per month by taking on only 1-2 extra projects on the side.

Sell a Product

Want to sell a product your created or a product on the market that you believe in? Consider this semi-passive way to diversify your income.

If you like to create handmade products and goods, consider setting up an Etsy shop and selling your items online. You can also design t-shirts to sell, create an e-book, flip used items for profit by selling them on sites like Amazon and Ebay.

I knew a blogger who wanted to pay off her student loans so bad that she started buying gently used designer clothing at thrift stores for cheap then selling them online for a profit.

As another option, you can sell products through a direct sales company so you can earn commission from each sale. Companies like Avon, Stella and Dot, Beach Body and Premier Designs, are all great options but there are tons of direct sales companies out there depending on what you’re interested in.

You can show your product catalogs to family, friends, and coworkers and make extra money that way.

Invest

Investing is a great way to diversify your income by creating passive income streams. You can invest in the stock market or in peer-to-peer lending.

You can also invest in real estate. Crowdfunded real estate will allow you to share the costs of investing in commercial and residential properties if you don’t want to purchase a property entirely on your own.

However, if you do purchase a small home or condo, you can earn money each month by renting it out and allow your tenants to pay off the mortgage for you.

Start Brainstorming With This Master List of 20+ Ideas

As you can see, there are quite a few options for diversifying your income this year. Below, I’ve compiled a list of specific ways that you can create additional streams of income. With these ideas, you shouldn’t even consider having one job or a single income stream a possibility anymore.

  • Babysit
  • Offer a cleaning service
  • Buy a rental property
  • Drive for Uber or Lyft
  • Rent out your car when you’re not using it with Turo
  • Rent out your home or a property with Airbnb
  • Write an ebook that helps a specific target audience solve a problem
  • Start a blog and monetize it
  • Sell your crafts and creations on Etsy
  • Design T-shirts via Tee Spring to sell online
  • Become a freelance writer
  • Become a virtual assistant
  • Become a freelance photographer
  • Sell your images to stock photo websites
  • Sell clothes or books online
  • Tutor students online or in your community
  • Invest in the stock market by building a dividend portfolio
  • Flip a house
  • Become a peer lender
  • Buy website domain names then resell them online
  • Host direct sales parties

How about you all? How will you create additional streams of income this year?

Share your experiences by commenting below!

****Photo courtesy https://www.flickr.com/photos/striatic/101594790/

Two Important Strategies for Successfully Earning (and Living) on Just One Income

mom-and-baby-my-personal-finance-journeyThe following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

From the time I was little, I knew I wanted to stay home and raise my kids when I eventually had them. But life doesn’t always turn out the way we plan.

Instead, when our first child was born, I was working full-time while my husband worked part-time and attended graduate school full-time. It would take another long six years and two more children before I was able to realize my dream of being a stay-at-home mom.

But, like so many people who drastically cut their salaries when one parent decides to become a stay-at-home parent, my husband and I didn’t change our lifestyle. We still lived as if we had my good full-time salary and his part-time salary. We had lost at least 50% of our old income, but we spent like we hadn’t lost any income.

We continued to pay for our oldest child’s last year of private school, we went out to eat, we had cable, I bought adorable outfits for the babies (on sale and with a coupon, but still, we didn’t have the money for them).

In the first 18 months after I quit my job, we racked up so much debt, we’re still paying it down. (Though to be fair, that amount does include my husband’s student loans during that time.)

Here’s the simple truth—if you want to have one person become the stay-at-home parent, you have to learn to live on one income. The sooner you do this (even while both partners are still employed) the better.)

I don’t have a time machine to go back and change those early years of living on one income (though I wish I did!). However, we’ve now been primarily a one-income family for five years, and we’ve learned to live within our means. Better late than never.

If you’re new to learning to live on one income, successfully doing so depends on two factors.

Finding Contentment

Like I did for so many years, you may dream of being a stay-at-home parent. Then, once it happens, you might find yourself fighting discontentment.

At first, I found myself a bit bored staying home all day. I tempered that boredom by spending. No, I didn’t go out on a clothing spree or anything like that, but I went to the grocery store too often so I’d have something to do.

I also found myself a bit disgruntled at our lower income. I’ll be honest here—I was spoiled. I wanted the privilege of staying home with my kids without the sacrifice of losing my income. I wanted to stay home, but I didn’t want to change my lifestyle.

What I should have done then, and what I try to do now, is find contentment in my situation. Many, many parents want to stay home with their children but don’t have the opportunity to do so. I am lucky.

Over the years, as I’ve practiced contentment, I’ve learned to appreciate things that would have bothered me when I worked and we had a higher income. For instance, our minivan is 11 years old, has 160,000+ miles on it, and has a broken back door handle on one side and a broken coil on the other back sliding door. I can’t get the kids in the car unless I open up the driver’s side door and reach behind and open the back door from the inside.

Is this embarrassing? Yes. And a few years ago, I would have just focused on how old and decrepit the car is. Now, I’m grateful that the car is paid for and that it still runs and gets us around town.

Gratitude can make all of the difference in how you feel about staying home and living on a limited budget.

Be Frugal and Know that You Can Always Cut More

While we weren’t frugal the first 18 months after I quit my job, we had to rein in our spending when the debt started accruing.

We now do many frugal activities that we should have started five years ago:

  • We air dry clothes instead of drying them in the dryer,
  • We go out to eat for birthdays only,
  • We cook at home,
  • We don’t buy convenience foods,
  • We buy secondhand clothes and homeschool materials,
  • We drive an 11 year old paid for vehicle with 160,000 miles on it,
  • We only have one car,
  • We buy groceries that are on sale and plan meals around those items (rather than buying what we think sounds good for the week)
  • We have flip phones instead of smart phones which we use only in emergencies.

Living this way has allowed us to avoid accruing any new debt and to make headway paying off debt we have.

Yet, we don’t have a lot of wiggle room in our budget, and we want to buy a new-to-us car without taking out a loan. I started searching for ways to cut our lifestyle even further, when it occurred to me. We should live like we’re in the 1950s.

The 1950s—Living on One Income, without Debt

Why the 1950s? That is probably the last era when one-income households were common. Families then had relatively little debt outside of their mortgages. Credit cards weren’t frequently used.

While we may romanticize that time in history, the lifestyle back then was much different than we are accustomed to now. Consider what life was like for a family of four or five in the 1950s:

  • They lived in a house that was likely less than 1,000 square feet. They all usually shared one bathroom, and if there were three children in the family, at least two of them shared a room through their entire childhood.
  • There were no cell phones.
  • There was no Internet or cable television (or even televisions period for much of the 1950s).
  • Vacations, if taken, were usually within the family’s home state or within the United States. Elaborate trips to Disney or Europe or any other expensive destination was rare.
  • Two-car families were unusual.
  • Long commutes were unlikely. Many families lived close to where the family breadwinner worked.
  • Families rarely ate at restaurants.
  • Parents cooked at home with natural ingredients and did not have convenience foods to rely on.

Wow. Looking at this list, life in the 1950s doesn’t seem so romantic. Can you imagine life without your cell phone or the Internet?

Probably not.

Some things we have now like the Internet are necessary to function in modern life. Still, most of us could look at this list and find ways to scale back.

When I really researched how people used to live even just sixty to seventy years ago, I once again realized how truly blessed we are.

Rather than feeling sorry for myself because we bought a house that need cosmetic fixes that we haven’t been able to afford to make yet, I find myself grateful that we not only have a house but one that is 1.5x bigger than the houses most families had in the 1950s.

Many houses back then didn’t have central air. How lucky we are to have that.

There are many conveniences and luxuries that we have today that people even just a decade or two ago didn’t have. We all need to take the time to realize how much we do have, even when it feels like we don’t have enough.

If you want to stay home and successfully live on one income, take the time to realize how truly lucky you are and understand that your lifestyle will likely not match the neighbors’ who have both spouses working full-time. That’s okay. You just made a different choice.

How about you all? Do you or your partner stay home with the kids? If so, how did you adjust to the difference in income and lifestyle compared to what you were used to or wanted?

Share your experiences by commenting below!

***Photo courtesy https://pixabay.com/en/happiness-kids-mom-sye-987394/

Make These Moves Now To Lower 2015 Income Taxes

income-tax-my-personal-finance-journeyThe following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.

As the year draws to a close, there are still many opportunities available to lower 2015 income taxes. Taking these steps before the end of the year has the potential to lower your tax bill by hundreds or thousands of dollars, depending on your income. It is important to act fast since once the year is over, it will be too late to do much about your tax bill. Fortunately, there are no significant tax changes looming as 2015 winds down that could trip you up.

Here are some effective ways to lower 2015 income taxes before the end of the year.

Boost Retirement Plan Contributions

If you haven’t maxed out contributions to your 401(k) or 403(b) retirement plan, consider doing so before year-end to lower your taxable income. The maximum amount of money you can sock away in these plans this year is $18,000. If you are not already contributing to a workplace retirement plan, you may be able to reduce your 2015 income taxes considerably if you set up a 401(k) plan through your employer by December 31.

Minimize Adjusted Gross Income

Make your adjusted gross income for 2015 as low as possible by making pretax contributions to health, dependent-care or retirement plans. The 3.8 percent surtax on net investment income and the 0.9 percent Medicare surtax typically only applies when the adjusted gross income of a married couple exceeds $250,000 (or $200,000 for a single filer). Itemized deductions on Schedule A, such as for mortgage interest or charitable gifts, generally cannot be used to lower your adjusted gross income because these write-offs are taken after your adjusted gross income is calculated.

Maximize Your Deductions

You can lower 2015 income taxes considerably by taking everything that you can as an expense and making sure that deductible payments are made by the end of the year. Qualified expenses may include payments for rent, mortgage payments, phone bill payments, and car payments. If you pay your January 2016 mortgage bill in December, you can deduct that mortgage interest on your 2015 income taxes. Second mortgages, home equity loans and lines of credit can also be used for deductions, but those deductions are limited and depend on a number of factors

Don’t Neglect These Medical Deductions

Many people are surprised by the number of medical deductions allowed by the IRS. You are currently allowed to deduct unreimbursed medical costs that exceed 10 percent of your adjusted gross income (or that exceeds 7.5 percent for people 65 and older). In addition to doctor’s bills, hospital charges, and expenses for prescribed medical devices, you can also deduct a portion of assisted-living expenses, most skilled-nursing-home costs, and certain expenses for special education. IRS Publication 502 has the full list of qualified medical expenses.

Split Large Taxable Gains

Large taxable gains have the potential to raise your adjusted gross income into phase-out or surtax territory. You can split large taxable gains over two years by selling or donating shares this year. The resulting savings could be considerable for investors facing this choice.

Offset Capital Gains With Capital Losses

Tax-loss harvesting involves selling securities in your portfolio at a loss to offset capitals gains, thereby lessening or eliminating that tax burden. Before the end of the year, examine your taxable accounts for gains and losses that can be used to offset each other. Taxpayers are allowed to use realized capital losses to offset realized capital gains, plus $3,000 of ordinary income such as wages, annually. Taxpayers are also allowed to carry forward unused losses for use in the future.

Make Charitable Donations

You can lower 2015 income taxes by making charitable donations by year-end. These charitable donations can be in cash, in property, or in stock, according to current IRS rules. Donors who make a charitable donation of stock often get a deduction for the full market value of the shares while avoiding tax on capital gains.

Make A Tax Free Gift

Each taxpayer is allowed to make tax-free transfers of up to $14,000 annually to recipients. One partner of a married couple can make $28,000 in tax free gifts if the other partner doesn’t make any. Givers can typically take the full deduction for the gift in the year it is made. If the gift is made to a qualified 529 college-savings account, federal law allows givers to bundle five years of annual $14,000 gifts, or $70,000, in a single year.

Pay Estimated Taxes Before Year End

If your taxes aren’t withheld through payroll and you are paying estimated taxes, which are due each quarter, falling behind can result in interest charges and penalties. If you settle your tax debt in the last quarter of the year using IRA distributions, you can avoid paying any additional fees.

One Last Note:

If your taxes are complicated, you can benefit from talking to a tax professional who knows what they’re doing. These tax professionals can help you develop a strategy that fits with your overall financial plan while helping you lower 2015 income taxes. It is important to use someone who is familiar with the tax laws in your state, as state tax laws can vary considerably. Choose someone that comes highly recommended and who won’t charge you an arm and a leg for their advice.

How about you all? Have you tried any of these items and have been successful in lowering your income taxes? Do you have other tricks that have worked in the past?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/86530412@N02/8266136492

Increase Your Net Worth with Education

graduate-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.

Did you know that the more education you have, the higher you pay will likely be? I know it probably doesn’t shock you, but it’s absolutely true!

When I was in college for engineering, I was concerned that I would need to continue my education again and again in order to keep up with the changing dynamic of the engineering world. In fact, it was one of the reasons that I left engineering school.

Looking back, I was an idiot kid that didn’t realize that all occupations require continued learning. It’s expected that you continue to learn, grow, and improve in the working world. In fact, if done properly, it can actually be a great way to advance at your place of employment.

Feed Your Brain

So what is the best way to improve your knowledge and advance your career? As much as I hate to admit it, getting your Bachelor’s degree will probably provide you with the greatest degree of advancement. Just be sure not to spend too much on your degree. It might be easier to find a job coming out of an Ivy League college, but it will definitely cost you more money to receive that luxury (often two or three times more). Instead, look at going to an in-state university or a smaller college such as Gwynedd Mercy University The cost will be much lower, but your employer will likely still be impressed by the name of the school on your resume.

If you have your bachelor’s degree and work in an office setting, the next suitable degree would be a Masters. Again, focus on getting the education from the degree and don’t worry so much about the name of the school you are getting it from. Just having the degree will mean quite a lot to your employer.

Finally, if you are not interested in obtaining degrees then I would suggest being your own teacher. Take a hold of your own education and get yourself over to your local library. What are you interested in learning more about? Company financials? Leadership? Management? The library holds your answer to each of these topics and many more. Find out what you would like to learn, teach yourself through books and online courses, and then be sure to use your new-found knowledge in the workplace.

Prove Your Worth

Getting a degree is admirable, but if you apply none of your learning then you really don’t deserve to advance in the company. No matter where your education came from, if you expect to move up the career ladder to that next job, then you’ll certainly need to apply your learnings in your job.

A few years ago I sought out a mentor. This is the exact message he conveyed to me as well. Sure, a piece of paper from the University is nice, but it doesn’t do anything for the company if the education goes unused. Instead of just displaying my diploma in my cubical, he encouraged me to teach some of my knowledge to the rest of my department.

Within a couple of weeks, I discovered that many of my coworkers did not know how to use Microsoft Excel efficiently. Instead of using a function to transfer information from one file to another, they were copying and pasting information. To help them out (and to prove my worth to the company) I held a class for 14 people. I taught them how to use functions and I was immediately deemed “The Excel Guy”. It increased the company’s awareness of my skills (not just in Excel, but in teaching others) and it showed my increased value to the entire company. This simple action led to a promotion just four months later. If I hadn’t displayed my knowledge, I would likely be working that same menial job today.

Increased Knowledge Equals Increased Income

As you may have gathered, and improvement of knowledge will soon lead to an improvement in your income. As you learn and grow and display your skills to your employer, you will no-doubt be rewarded for the increased value you have brought to the company. Your knowledge will lead you to higher ranking jobs and will also increase your salary with each jump up the ladder. Education is almost certain to increase your salary, and therefore your net worth.

How about you all? Are you working to increase your knowledge? Are you displaying your new skills at work?

Share your experiences by commenting below!

**Photo courtesy http://www.flickr.com/photos/nottinghamtrentuni/14714286904

The Best Ways to Ask Your Boss For a Raise

ask-your-boss-for-a-raise-my-personal-finance-journeyThe following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

For a lot of people, one of the most difficult work related tasks is having to ask your boss for a raise. Though it should be something easy to do if you feel that you absolutely deserve one, it’s usually a tense situation. In no small part, this is due to the fact that there is a built-in reluctance on the part of employers to give raises. After all, the more an employer pays a staff member, the less profit that will be available in the budget.

One of the best ways to ask your boss for a raise is be prepared in advance. Doing so can stack the deck in your favor, and make it less difficult to pull off. Before you ask for a raise, try some of the following steps.

Research Your Market Value

Unless your job classification is very unique, the job market largely determines how much your employer is paying you, and how much they may be willing to increase your pay. This is all about defining your market value as an employee, and that’s all about determining how much you make in relation to other people in similar positions.

There are various web based information sources on salary levels, but the most comprehensive is the Bureau of Labor Statistics (BLS) Occupational Employment Statistics website. The BLS is an agency of the US Government, and not only does the site provide salary ranges for nearly every job classification in existence, but it also provides specific regional salary statistics. This is important because for example, an accountant is likely to earn more in New York City than in Nashville.

If you are on the lower end of the salary range for your job classification in your geographic location, you’ll have more room to ask for a raise. But if you are at the higher end of the range, you need to tread lightly. Your employer has access to the same information, and could use your request for a raise as an opportunity to remind you that you’re at the top of the salary scale.

The BLS site also provides ten-year growth projections for each career classification. This information is not to be underestimated. The greater the future demand for your job, the more flexibility you will have in asking for a raise.

Figure Your Employer’s Financial Position Into the Mix

You also need to consider what your employer’s financial position is at time you’re asking for a raise. If the company is losing money and cutting staff, asking for a raise may be a difficult proposition at best.
If you are on the lower end of the pay range for your job classification, you may still be able to get a raise even if your employer is not prospering. But here’s where you will need to do some careful analysis. As yourself the following questions:

  • How important is your position to your employer’s overall operation?
  • How well are you performing on your job? Can you objectively rate yourself as a high performer, a medium level performer – or something less?
  • How difficult or desirable would it be for your employer to replace you?
  • Would your getting a raise put your employer in a difficult position with other employees?
  • How much do you like working for your current employer, and would you be willing to make a move if you don’t get a raise?

If you are a key employee at your company, you are a top performer, and you are well below the top range for your career in your location, you can still ask for a raise. But if your answers to a few of the questions above are generally negative, you’ll want to use caution.

Document Your Accomplishments

It’s unfortunate that many employers do a much better job in documenting your mistakes and blunders than your accomplishments. And that’s why you need to be prepared to step in and fill the void.

Seriously, this is a step you cannot leave to chance. Asking for a raise is very much a negotiation process. While you’re asking for the raise, your employer is pushing back and trying to justify why you shouldn’t be given one, or given one that’s less than what you’re asking for. You’ll need to be fully “armed” for that outcome.

You should literally have a file that includes positive past job reviews, commendation letters, and any other examples of outstanding work. If you are in either a production position or have budget authority, you should be fully prepared with hard numbers that document your statistical improvements.

You don’t need to pull these out early in the negotiations, but rather to have them available just in case things don’t go your way. If your employer resists giving you’re a raise, citing your performance as an issue, you’ll be ready with evidence that tells a better story.

Remember That It’s Business, not Personal

It’s very difficult not to get emotional when asking for a raise. After all, you’re asking your employer for an improvement in your compensation, and that’s a true “gut issue”. Be that as it may, you have to do your best to keep your emotions out of the picture. No matter how personal it truly is, it really is a business negotiation.

It’s best to be as cordial and respectful as possible in approaching your boss about a raise. You should always want to stick to the facts – as provided based on the research you have done in the steps above – and to avoid emotional generalities.

You should also fully expect some form of resistance. If you don’t get any, great! But if you do, you’ll be prepared. As noted above, your employer will have their own reasons for wanting to limit your income. Your job will be to prove – based on the facts – that their conclusion is incorrect. But in the process, keep in mind that you are merely asking for an increase in pay, and not attempting to justify your existence on the payroll. That means do your best to reasonably promote yourself, but avoid getting defensive at all costs.

You want to make sure that your request proceeds as a friendly negotiation, and doesn’t spill over into the realm of conflict. Make it clear that you are both on the same side, that the raise will help you to do your job better and to increase your performance.

Also be fully prepared to be flexible. If you’re asking for a 10% raise, and your employer counters with 5%, be ready to meet in the middle. This isn’t about winning, but about getting yourself a better compensation package.

Have a Strategy Just in Case the Outcome is Negative

Despite your best efforts, your request may still be denied. At that point you’ll need to determine whether you will be able to continue on with the employer knowing that your pay will not be increased. And that will depend on whether or not there are better alternatives with other employers.

The strength of your negotiations will rest largely on you knowing that information beforehand. If your career field is in strong demand, in you’re at the lower end of the pay scale, you’ll have the confidence of knowing that you have other alternatives going into the meeting with your boss. That confidence will likely come through, and could win the day for you. But if it doesn’t, you will have to be prepared to go elsewhere.

Should you decide instead to stay on with your employer and make a request at a later date, you will have to be certain that the denied raise doesn’t negatively affect your attitude. No matter what, continue to do your best work! This will be important on two fronts:

  1. Continuing strong performance will put you in a better position to ask for a raise again at a later date, and
  2. It will make it easier for you to find a position with another employer, since your performance will likely get you a favorable reference from your current employer.

There are risks to asking for a raise. If you should carefully consider those risks, and prepare for them in advance, not only will you have a better chance of getting the raise that you want, but you’ll be able to do it with more confidence.

How about you all? Do you struggle at the thought of asking for a raise? Have you tried asking for a raise in the past?

Share your experiences by commenting below!

**Photo courtesy of https://www.flickr.com/photos/usdagov/14605147054/sizes/n/