Yeah, this is a big post. I haven’t written anything substantial in a while. As you may know, if you’re a subscriber or frequent reader, I work for a company that’s been — ahem — “acquired” and I’m going to be looking for a new job real soon. I could lament about the fact that it’s the 4th quarter, nobody’s hiring, the holidays are near, nobody’s hiring, I’m a single-income family, soon to be zero-income family, nobody’s hiring…but…
You didn’t come here for that!
You, like me and thousands of others, either are looking for new jobs or soon will be. The economy tanking, the government doing its best impersonation of Sergeant Schultz (“I see nuuuthing!!!”), and companies increasingly getting by with less have all lead to higher numbers of unemployed, and an almost-never-uttered underemployed. That is to say, there are thousands, maybe millions, of people who have full-time jobs that don’t pay much or they have several part-time jobs that — again — don’t pay well. In any event, neither group is making ends meet nor are they counted amongst the unemployed (if you’re not looking for a job, you don’t count).
This post will cover three ways of earning an income. Mix and match, go solo, or do all three — it’s completely up to you. There’s the “traditional” way, the “alternative” way, and the “passive” way. First, the traditional way. But with some unconventional twists.
Most of us want a “job” where we trade our time and knowledge (otherwise known as “work”) for money. We produce a product, sell a service, build a bridge, write a book, etc., all in return for a paycheck that either comes once a week, twice a month, or once a month.
Millions of people — the majority, in fact — who consider themselves “employed” (as opposed to unemployed or self-employed) have jobs. It’s supposed to be — and usually is — a symbiotic relationship, in that both the employer and employee gain something from the relationship.
I’ve had lots of jobs. Too many in fact! If there’s one thing I know how to do, it’s how to get a job! And I’ve had many different kinds of jobs. Here’s a short list:
(not in chronological order)
With each job, save for one, I boosted my income considerably from one job to the next. However, that one set back killed my income growth for 3-4 years!
Nevertheless, here’s what you need to do to get a job. It’s a long list. The short list will come later.
The short list:
Nearly every good job I got through knowing the right people. I’d like to think that I got the interview because I had a good recommendation but that I got the job because I deserved it. Maybe. Maybe not. But whatever the case, knowing people and interacting with them bears fruit!
This post is tied to several posts (Learning to Earn, Part 1 of … Many?, Ten Commandments of Personal Finance, 7 Things You Must Do Financially) I wrote a long time ago about alternative income. You’ll find “alternative income” all over the Personal Finance blogs; I implore you to read these articles first, and then come back. I’ll wait.
(Tapping toes. Joyously waiting for your return. Here are a few more from very reputable sources.)
The short story is that there are literally hundreds of alternatives to the traditional job. They all require that you start your own business, or at least require that you earn money outside the typical employer/employee relationship. Here’s a short list of alternative income ideas:
So-called passive income is derived from doing as little as possible. The classic case is income from investments, such as interest and dividends. Wealthy people can afford not to work because they have assets throwing off income. Generally, this comes in the form of cash dividends from stock investments and interest from bond investments. You, of course, probably don’t have this luxury. That is to say, if you had assets like this, you wouldn’t be reading a blog about how to make money (you already have).
But there something to be said about this, from an asset perspective. In any income-generating endeavor, whether it is from working for somebody else, generating affiliate income, or building your own business, all the income you derive comes from an asset. Your ability to labor is an asset. Your ingenuity is an asset. Your capital is an asset.
Strive to make as much as possible of what you own a performing asset. If you’re at home sitting around watching TV, you’re wasting an income-generating asset (your intellect, or your ability to create something). If you’re delivering pizzas, you’re using your car (an asset) to generate income. If you buy a new gadget like an iPod, ask yourself if it can generate any income. If it can’t, think twice twelve times about buying it. See?
For most of us, it’s our time that is our most valuable asset. Time is finite, too. We only have so much of it. But we can turn that thinking on its head and instead of trading time for money, we can use an asset to produce an income. Think about that a bit.
When you think in these terms, your future becomes limitless. Time doesn’t matter any more. It’s what you do in the time you have that determines whether you earn a generous income or not.
I hope that I’ve given you some food for thought. To summarize, most of us just want a fair wage for the time we put in. That’s perfectly acceptable. However, I think I’ve given you some ideas about how to generate more than just a trade of your time for money. You can certainly enhance your monthly take-home pay by incorporating alternative and passive revenue streams into the mix.
Money isn’t everything. It’s the only thing. Wait. That’s only for football.
Enjoy life. Spend time with your family.
Prime Time Money tagged me with the challenge to “Find one step you can take to make your financial system better or more organized.”
Being the philosopher I am, I turn to Confucius, who is rumored to have said (did I tell you I’m a skeptic, a cynic, and sarcastic?)
My single step was buying a little software program in the late 80s (I was still a kid! Really, I was) called Managing Your Money which led me to the inspiration and contributor to the software, Andrew Tobias. I found out that Tobias was a personal finance author (what are those? You mean there were experts before blogging?); one of his books was humorously called “The Only Investment Guide You’ll Ever Need.”
In this book, I can truly say that I learned at least 95 percent of what I know today about personal finance, investing, banking, and saving money. I also learned 100 percent of what I know about wine (which is still very little, by the way).
Tobias is an advocate of index fund investing, buying in bulk (he provides the ROI calculations, too), yet only investing money that you can truly afford to lose.
And he’s lost a lot! He’s lost his shirt in Broadway and off-Broadway plays, futures and options, commodities of all sorts, real estate, collectibles, and limited partnerships in oil and gas. You name it, he’s invested in it, and he’s lost money in it.
He goes through the various ways he’s lost money to illustrate the idea that you just cannot win in the investing game by going for broke and paying tons of fees. The experts in commodities, for example, will always clean your clock. These speculative “investments” are zero sum games: One guy wins, you lose.
Contrast this with the stock market, where one man’s gain isn’t necessarily another man’s loss. We can all win; or, in other words, a rising sea lifts all boats. The stock market, even though it’s sucky now (financial term for “underperforming”), is your best bet for long-term growth of your money.
I still follow Andrew Tobias. Though he talks a lot of politics on his site, the focus still is on financial planning, frugality, and investing. He’s funny, witty, and smart.
So that was my first step:
Finding somebody to follow.
Many choose “gurus” like Dave Ramsey, Jim Cramer, or Ric Edelman. I found Andrew Tobias. It’s been a great find!
Now, whom shall I tag?
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First in a series of 40 quotes from famous fund managers, sports stars, comedians, and other noteworthy folks.
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In case you hadn’t guessed by now, I’m an economics junkie. Schooled in the discipline of economics, I never really “let it go” when I found other interests in which to pursue for a career.
In that vein, then, you’ll find me talking about the economy and monetary and fiscal policy a little more than “those other Personal Finance” bloggers.
I wanted to draw your attention to something that will no doubt be in the news for the next couple of years: Inflation.
Inflation is the general rise in prices. If prices rise by 5% this year over last, the rate of inflation is 5%. We’re pretty lucky here in the United States. I just read that Venezuela’s inflation rate is north of 30%. But at least it’s not as bad as Brazil’s nearly 1,000 percent inflation of the late 80s.
Inflation is a drag on the economy. It means that the paycheck you earn doesn’t go as far this year as it did last year. Gas, food, energy, and shelter (look at rents) are all more expensive this year than last year.
What drives it all? Some say it’s a monetary phenomenon. The Fed is offering “easy money” — in short, the Fed has created too much money too fast.
Some would say it’s input costs: The manufacture of a tire consists of many inputs (rubber, energy, overhead, advertising, transport from factory to sales floor, etc.) and many, if not all, of these costs have risen.
In short, inflation can be caused by a number of things. It doesn’t get really hairy until the inflation rate rises above 5 or 6 percent. Prior to that, sure, it’s a bother, but it’s not like gasoline doubled in a year (it did) or the price of onions rose by 400% (it did), but those costs haven’t fully been absorbed into the cost of finished goods (yet).
You can bet that the Fed will do all it can to keep inflation in check, even if it means causing a recession (or worsening it, as the case may be).
Take a look at the graphic I just placed near the bottom right-hand side of the page — it shows the most current rate of inflation. Just one more way I’ll be bringing you topical, up-to-the-minute news about the economy. If you enjoy this sort of thing, by all means, let me know. If you don’t, please kindly disregard it (because I like it).
The graphic looks like this —
Thanks for stopping by.
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