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You can summarize the answer to almost every financial problem in two words: Earn more.
Snag extra work on the side. Save every dime of this extra income. (After all, you don’t “need” the money. You’re already living fine without it.)
Boom — you’ve instantly super-charged your savings.
When I wrote that, a few readers said: “Sounds great in theory. Let’s see it in practice.”
Touché. Let me introduce you to Erika, who earned an extra $20,000+ in her spare time last year — while working full-time and attending graduate school.
Erika is a typical American. She lives in Orange County, California — the “home of the Real OC,” she describes.
She has a traditional, 9-to-5 day job in an office. Last March, she enrolled at California State University and began pursuing her Masters in Public Administration.
Her husband is an emergency medical technician, or EMT, who advanced to the level of firefighter this month. They married three years ago, and “the first couple of years (of our marriage) were REALLY hard financially,” she says.
Typical storyline, right? Office worker and EMT/firefighter fall in love, get married and struggle financially. We’ve heard stories like this a million times.
But Erika’s story takes an unusual twist.
The “normal majority” would either:
But Erika is a rebel. She chose a different path. She devoted every spare hour to hustling for extra money.
She started with small wins:
“We held a garage sale, and made like $100 bucks or something,” she says. “And then (I tried) mystery shopping. The money was paltry, but I was willing to try everything.”
Then she expanded into freelance writing:
“I looked for writing jobs on Craigslist. A lot of people need writers for their small businesses, but just don’t have the budget for big PR companies. This was my target. I ended up working for some start-up companies, as well as religious organizations. I even managed social media accounts.”
Notice her strategy — she defined a target client profile. Then she began visiting the forums where that type of customer hangs out. That’s savvy.
And she didn’t sell herself short.
“I never bothered with Odesk and eLance,” she says, “because I knew I could not compete (with low-paid workers based overseas.) I did not want to work for $2 an hour … I set a standard and I never worked for free.”
She snagged her first small once-a-week writing job. Then she found another one. And another one.
“It’s not like I get a deluge of freelance offers everyday — I would say more like one every couple of months or so — but I hold onto those relationships and build more,” she says. “I’ve also been referred by people I currently work for, and that has led to more opportunities as well.”
One of her clients asked her to become the Content Manager for their website. This now accounts for between 30 – 50 percent of her side income.
She also began monetizing her blog, and advertising on her website accounts for another 50 percent of her income.
How did her results grow?
Her hourly rate, she says, is around $25 – $35 per hour. She celebrated a major milestone last year, when her “side income” topped $20,000.
“It is SO unreal to me that I was able to pull this off this past year,” she says. “I am just a regular, normal person. I work a full-time 7:30 am to 5 pm job, I go to graduate school full-time, and I bust my butt on weekends and nights to freelance.”
Wait — when does she find the time to work this hard?
“I’m in an accelerated program through California State University that is designed for full-time working professionals,” she says. “I attend class on Saturday mornings twice every six weeks on campus, and then I have weekly classes online on Monday evenings.”
In other words:
Somewhere in the mix, she manages to study, run errands and exercise. Wowza!
Let’s crunch the numbers: If her payrate averages $30/hr, and she earned $20,000 last year, then she worked approximately 667 hours.
There are 52 weeks in a year, which means she worked about 12.8 hours per week, on average.
So let’s reframe it this way: She works a full-time job for about 45 hrs/week, plus “side gigs” for 13 hours/week, and attends grad school classes two days per week. This adds to a workload of about 70-80 hours per week … which is a typical schedule for many professionals, like doctors and executives.
I mean that as a testament to Erika. She holds high-caliber, top-performer work-ethic.
It’s a demanding schedule, yes. But millions of people work this type of schedule.
An extraordinary life requires extraordinary effort. And that effort yields real, tangible results that radically change your life.
In other words: Awesome is achievable. And Erika is living proof.
It’s not easy. Escaping the ordinary isn’t rewarding because it’s “easy.” It’s rewarding because it’s worth it.
What has Erika done with the extra $31,000+ she collected over the span of the past three years?
What advice does she have for Afford Anything readers who want to start hustling?
“I’d encourage people to spend some time — especially when they’re trying to establish themselves — to really research and network as much as possible,” she says. “I became vocal in (my) community that I was open to freelancing.”
Her goals for this year? They’re twofold:
“I want to go out to dinner … I want to go to concerts,” she says. “I want lifestyle inflation, people!”
Thanks to Erika for getting interviewed for this article. You can read her blog, Newlyweds on a Budget, here.
There’s a huge problem with traditional advice about how to earn more money.
Conventional wisdom wants you to sell yourself short. Most advice says you should trade your limited time and energy for a few cents.
Here’s what a quick search for “earn more money” found:
What’s the common thread here? With the exception of selling your sperm or giving birth for money (what?!), these jobs could be done by a middle school student.
In other words, these jobs don’t respect your time.
This menial work is fine if you’re desperate for some quick cash between now and next Tuesday. (You should build a bigger savings cushion, but that’s a different story.)
But man, oh man, don’t believe the writers who tell you this is the only way to earn more. You’ve got to start believing that you’re smarter than a 5th grader. You’ve got to start thinking big.
You have talents – c’mon, I know you do. You have special skills that can’t be replicated. You can do something that no one else can do.
You can create something special. Find a niche and conquer it. Don’t just earn a quick buck – create something amazing.
David Roth loves hanging out in his pajamas eating cereal and watching cartoons. So he decided to monetize it.
He could have earned pennies filling out surveys about his favorite cartoons or mystery shopping in the cereal aisle. But that would have wasted his time.
Instead, David Roth hustled. He talked to banks and investors, scrounged some funding together, and opened a little eatery where he serves people cereal topped with candy.
Seriously, that’s it. He pours some Golden Grahams and Coco Puffs into a cereal bowl, mixes it with mini-marshmallows and chocolate chips, and calls it the new breakfast S’mores.
(Actually, he doesn’t use cereal bowls. He serves breakfast in a Chinese take-out box.)
Instead of becoming a server, he hires servers – who wear pajama uniforms, of course. And yes, he plays cartoons in the background.
Natalie MacLean had a fairly average life in Canada, with a business degree and a tech-sector job. But after she had a baby boy, she needed a change of pace.
“… in a haze of postpartum sleep deprivation, I wondered around Loblaw’s grocery store and picked up the now-defunct President’s Choice magazine,” she told The Oran, a Nova Scotia newspaper. “They had beautiful food photography, but I wondered why there was no wine column.”
“I called the editor and asked if she’d be interested in an article and she said yes … (She) asked had I published elsewhere, so I said yes — thinking of my high school newspaper — and we went from there.”
She decided not to return to her tech job after her maternity leave ended. Instead she became a full-time wine writer.
“Eventually I’ll be donating my liver to science,” she jokes.
Lee Silber and his brothers pooled their cash together to buy a struggling little surf shack in San Diego.
The tiny retail outlet wasn’t earning much, so the brothers came up with a simple strategy: morph it into the type of place they’d like to hang out.
They played surfing movies, hosted skateboarding demonstrations, and challenged kids to compete in surf contests.
Their marketing was cheap and effective. Within months, locals were flocking to their surfing shop to watch movies and hang out – and the locals spend a few dollars while they’re there.
What’s the common thread to all three stories?
None of these people wanted to follow a conventional path. They didn’t send out resumes to 20 employers, hoping someone would hand them a job.
None of these people were wealthy, but they weren’t mowing lawns for money. They were thinking big and creating scaleable models.
None of them had any assurances that their gamble would work out. Most entrepreneurs, adventurers and risk-takers fall flat on their face at least once, twice, three times. Then they get up and try again.
David didn’t invent cereal. He’s not a top chef. But he combined his interests to create something clever.
Natalie isn’t a master sommelier, and she isn’t a Pulitzer-winning literary writer – but she combined two niches to emerge as the best wine writer.
Lee isn’t the best surfer in the world – but he’s a darn good surf shop owner.
Don’t waste your time competing with middle-schoolers for extra money. Find your talent – wine, surfing or even cereal – and spin it in a create way.
The world doesn’t reward mystery shoppers. Fortune favors the bold.
Welcome to another round of Reader Mail: Earn More Edition!
Today’s letter comes from Carolyn in Georgia.
You may remember Carolyn from an earlier post when she asked about creating passive income and traveling the world. Today she asks about becoming “location independent” – working from anywhere on the planet, as long as you have an Internet connection.
“I turned down two job offers in D.C. because I knew that wasn’t the lifestyle I wanted. There’s nothing that I could want more than to write on my own and become location independent. That’s why I took the easy day job in June to figure out how to make this possible.
So here’s the question that I’ve hesitated to ask but am dying to know the answer – How do you do it financially? I’m sure people ask you all the time, and I feel like I’m asking some huge secret to success. I’ve seen the few advertising spots on the footer of your pages, and I know you do one-on-one coaching, but certainly there’s more?”
I like that you put the phrase “huge secret to success” in your question. There’s no secret – although you might say there are plenty of secrets, plural.
Our cultural myth says there’s one solution: the Silver Bullet. The Holy Grail. Prince Charming.
This myth is convenient: Problem, solution. Villain, hero. Life will be great as soon as we find Superman / Sherlock Holmes / the winning lottery ticket.
Thanks to this myth, we say things like “I need to invest in the Next Hot Stock,” when in reality we need to invest in 500+ stocks, the majority of which grow profits and shoot out dividends.
We say “I need an awesome real estate investment,” when in reality we need to create several awesome real estate investments and invest in the market and earn a kick-butt income and not spend too much and legally minimize our taxes.
Funding my location independent life is a bit like finding college scholarships: I enjoy multiple streams of income.
[UPDATE 2015: I now generate enough passive income — via real estate investments — that this money alone can totally support my cost-of-living. The rest of this article, below, was written back when I relied on my freelance/online income to pay the bills. If you’re in that boat, enjoy this article – I hope it helps. ]
One client pays me to edit their weekly newsletter. Another client pays me to write two articles per week. There’s even a print magazine that asks me to write one story per year, during the holiday season when they need all hands on deck. It adds $600 to my pocket each December — enough for a plane ticket to somewhere warm.
Our mind can only track a limited number of tasks. The key this successful juggling act is that I charge what I’m worth. I won’t waste my time on projects that pay a pittance.
Imagine that you run a catering company. Each year you cater some massive event like the Wimbledon Championship parties or the SuperBowl box seats.
This annual event earns your business all the revenue it needs for the year: enough to pay your staff, pay yourself, and cover your overhead.
You could cruise the easy road and not look for any other jobs. You could bust your butt one month a year and relax the other 11 months.
But this would be foolish. Your company’s success or failure would depend on a single client. If they drop your contract, you’re screwed.
So you diversify your income. You start catering weddings, graduations, reunions. They’re less lucrative contracts — more work for less money — but they provide a buffer. If Wimbledon drops you, your company will survive.
Any business owner would do this to protect his company. So why don’t individuals do this to protect themselves?
Why do we put all our eggs in one basket — relying on one employer for 100% of our income — rather than diversifying into multiple income streams?
Most of the world sees self-employment – and a location independent life — as unstable. Most of the world is wrong.
People who have only one source of income — their full-time job – stand on shaky ground. Every dime hinges on just one “client,” their boss. If they get fired or if their company collapses, they’re screwed.
I have multiple streams of income. I’m diversified. I could lose a client and be fine.
But there’s a paradox that comes into play. It’s called the Pareto Principle. This principle – also known as the 80/20 rule – states that 80 percent of your results come from 20 percent of your efforts.
In other words, 80 percent of your income will come from 20 percent of your clients.
There’s a natural tendency for this to happen. I have a few high-dollar clients – my 20 percent – that pay substantially better than the rest. I put a high priority on making sure these clients are happy. But I also pad my income enough so that I’m not dependent on them.
Losing my best clients would be a bummer. But I’d be fine because I minimized my dependence on these clients – minimized my risk – in advance.
At heart, this post is about risk management. There’s no Silver Bullet or Superman.
A single income creates dependence. Multiple streams of income gives you flexibility.
Read a Related Post: The Time Paradox: A Surprising Way to Prioritize Your Life.
She can perform tricks and twists with a hula-hoop that few people have ever seen. To her, hooping is a serious sport, and she approaches it with the discipline of an athlete.
When she moved to Olympia, Washington, she needed some extra cash.
And she decided to get creative.
She approached a local fitness club and asked if they’d be interested in taking her on as a hula-hooping instructor.
“Just list me on the schedule,” she said. She’d teach the class; they’d provide the space and collect the student fees.
They said yes. It was a total win-win.
The fitness club was happy to be able offer a class that none of their competitors could offer. And Kim was happy to earn extra money on the side without having to rent a space or advertise for students.
Some people insist that it’s not what you earn that counts — it’s what you save.
That’s not entirely true. Earning more won’t benefit you if you blow your paycheck as soon as you get it. But you can’t save your way to riches, either.
Wealth comes from a combination of earning more AND saving more, just as losing weight comes from a combination of diet AND exercise.
That said, who wants a second shift from 6 pm to 10 pm every evening, as soon as you’re finished with your day job? Isn’t the point to increase your quality of life?
The best way to earn side income is through No-Obligation Jobs … side projects in which your responsibility (for even the most basic tasks, like showing up) is minimal-to-none.
This allows you to work only when you want to, and relax when you don’t.
Here are three ideas:
Companies are less likely to hire a full-time staff person to fulfill their needs. They’d rather take on a freelancer: someone who can do the work if it’s there, and who disappears when the project pipeline is dry.
The companies benefit because they don’t need to pay health insurance, payroll taxes, and all those other pesky little fees that come with hiring an employee — plus they have no obligation to keep the employee on salary.
You benefit because of the quid-pro-quo: you have no obligation to keep working. If they ask you to fill a freelance assignment next week, but you’ve already booked a trip to Aruba, you just smile and say “no.”
Freelancer jobs include writing, copyediting, web design, programming, data entry, web research, customer service, advertising, sales generating, and foreign-language translating.
Check out Elance for freelance opportunities — or try looking at industry-specific websites within your field, where employers usually advertise if they need freelancers.
Consulting is similar to freelancing in the sense that you drop in (like Mary Poppins) to help a company in need, then leave when you’re done.
Consultants are prized for their specific skills, long-term vision and direction. Freelancers complete specific tasks, while consultants help shape the company’s direction.
Consultants are usually in fields such as accounting, legal, finance and management, and have a solid track record.
Building a consulting business from scratch can be a demanding full-time job, but you can venture into it by:
The trick to making money is to go to the spots where people who want your skill will congregate.
Chances are, someone out there wants to learn what you know — whether it’s a skill within your professional field (like how to file taxes, or how to write a press release) or a hobby you’ve cultivated at home (guitar lessons, cooking, photography, knitting).
If you go this route, decide first whether you want to teach a class or teach one-on-one.
The pros to teaching a class: You prepare one lesson plan, deliver one lesson, and reach 5, 10, or even 25 paying students at the same time. This gives you a large “bang” for your hour.
The cons: Teaching an entire class can be a large undertaking. First and foremost, you’ll need to find a space to give the lessons. You could rent a space — but suddenly, your “earn money” plan now includes an element of risk. What if no one comes? What if you don’t earn back the money you shelled out on renting a space?
Think carefully about how you can create a win-win situation that will allow you a teaching space for free.
Here’s an example:
Christine is a yoga instructor. One day, she was walking down a busy section of Boulder, Colo., when she noticed a coffeeshop that didn’t have many people inside during the daytime.
She walked in, introduced herself to the owner — and scored a free place to give lessons, on the second floor of the coffeeshop. She was happy to have a free teaching space. The owner of the shop was happy to have yoga students who stayed after class to sip chai.
Of course, if you’d rather start with one-on-one instruction, or if you have a skill that lends itself better to one-on-one teaching, then you won’t have to worry about organizing a space. Your main tasks are twofold: design a lesson plan and advertise for students.
These days the standard “go-to” advertising area is Craigslist (in England or Australia, use Gumtree), but this is where you’ll encounter all your competition — many of whom are willing to undercut you in price.
You’ll tweak your approach as you progress. The most critical piece is to get started.