Money might not be able to buy us happiness but we sure can't live without it too. Everyone's yearning for financial security, to fortify our livelihood and savings. One way that I'm doing this is by looking at my alternative income. What is alternative income, read on to find out.
I caught Moolanomy's 40 alternative income ideas and resources through my feed-reader this week. It's a great article with a lot of tips (40 of them obviously). However as I was going through them, I realized that we don't share the same definition of alternative income. This was reinforced by the comment that Dividend Growth wrote on my last alternative income report, "If you get a part-time job at Wal-Mart, you can increase your "alternative income"...
Defining alternative income is very difficult. I think many people may consider it adding any type of income stream. I can't agree with that view. I would simply call that additional income. In my opinion alternative income has to be something different. Here are a few things that I'd look for in my alternative income...
- Position Not Paid Hourly - If you want to get a second job, I've found that there are many of them available. However, trading a fixed amount of my time for a fixed sum of money is usually not what I'm looking for in alternative income. It's good for regular income - provided that the the money:time ratio is right. If that ratio is high enough, I'd be interested, but it has to be exceedingly high or it will be a long time until you get your financial freedom.
- Salaried Positions that Don't Require "Face Time" - I have friend who recently got a job with a company on a contractual basis. Instead of getting paid hourly, he priced his offer by the month. He's an extremely smart individual and realized that he can accomplish the task in limited time. As he gets more and more experienced, he increases that money:time ratio.
- Don't Require Exhaustible Resources - I see people list "selling items on Ebay" all the time as alternative income. Most of the time it involves selling items that they bought at full price. In general, this transaction loses money which isn't really income. (A good Ebay business to be in, is a middle man. You get a contract to buy many widgets at $X and you can sell them at $X + $Y profit. These kinds of things are hard to find because there is no barrier to entry - anyone can put things on Ebay to make $Y profit for themselves. Often they do and you are forced to lower your profit margins until it's no longer worth it.)
These restrictions make earning alternative income really difficult. This is a large reason why my alternative income consists of three things... money made from investments, money from real estate, and money from online ventures (such as this blog). The first two are limited because they require you to have money to start with. The last requires a lot of sweat equity with essentially low pay before it starts to pay a decently hourly wage. That's if it ever pays a decent hourly wage, I'm still waiting on that. I welcome other ideas of alterative income in the comments below.
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