Defining Alternative Income |
17 Comments |
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 $Y profit for themselves. Often they do and you are forced to lower your profit margins until it’s no longer worth it.)
These restrictions make earning alternative income really difficult. This is a large reason why my alternative income consists of three things… money made from investments, money from real estate, and money from online ventures (such as this blog). The first two are limited because they require you to have money to start with. The last requires a lot of sweat equity with essentially low pay before it starts to pay a decently hourly wage. That’s if it ever pays a decent hourly wage, I’m still waiting on that. I welcome other ideas of alterative income in the comments below.
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April 29th, 2008 at 10:46 am
When you say real estate and then passive… are saying passive equity? We don’t include rentals as passive I hope. Real estate has been a great investment. But will it continue?
Think about this… if i gave you 500k, and you bought 5 houses for 100k ea. Then rented them out and each cash flowed 600 per month, you would theoretically have 3k per month right?
Ok. Say I gave you 5k and asked you to put my idea, which was information that would save someone at least 400$ (time)off a learning curve or litterally save the 400 bucks. I asked you to formatt it so I could sell it. If i sold two per day anywhere in the free and unfree world at a profit or cost really of 50 bucks. I would have 3 k per month.
Huh.
April 16th, 2008 at 7:49 am
I missed you Dave.
I don’t use multimedia because I can’t quickly skim it to find if there’s anything interesting in it.
April 16th, 2008 at 7:40 am
I’ve debunked about 10 of those alternative income ideas in my blog posts and in my downloadable seminars.
I don’t confuse my readers between ads and content and I use multimedia for a reason.
March 14th, 2008 at 3:35 am
I’ve been trying to get my alternative income to go up for a while now without any luck. Then last week I noticed my Adsense finally notched some nice gains. Then I referred a couple of people on ING, I saw Amazon finally moved up from $0, and then I got a check in the mail for the freelance job I’m doing. And it was so great and rewarding (even though it was a total of less than $100), I feel like I’m finally on the right track! I finally have enough to track and see how it grows from month to month.
March 13th, 2008 at 6:43 pm
I like your definition, but I understand why other people use different definitions as well. I especially agree with Dough Roller’s statement - my blog takes up a very large portion of my time! But I enjoy it, and I make money from it. I consider it alternative income because it is not from my day job.
Passive vs. active income… that is another issue entirely!
March 13th, 2008 at 6:26 pm
Lazy Man, I think you sum up alternative income well. I too have stock market investments, rental properties and of course a blog. The stock market takes almost not time, rental properties a fair amount of time, and the blog ALL my time. But the alternative income is nice; it all goes to the bottom line.
March 12th, 2008 at 11:57 am
Blogs and the like are fun… and it’s a good way to make yourself visible. The way you make money off them is to make ad space available through Google AdSense/AdWords and through other pay per click programs. What I have found with my site, however, is that hardly anyone click through to the ads. In fact hardly anyone clicks through to anything… the typical web surfer finds pages through a search engine looks at the landing page and 98% of the time looks at nothing else.