One Stream of Income is Never Enough

One Stream of Income is Never EnoughI’ve had more jobs than I can count since I ‘officially started working’ at the age of 14. And I say officially because I was always hustling as a kid. There were the ordinary things like lemonade stands and selling my old junk at our family’s yard sales but I could get pretty creative when it came to making money. In high school, I remember asking my mom to give me extra bags of chips and snacks in my lunch so that I could re-sell them to my classmates for 75 cents or even a dollar. I was kind of a chubby kid so I guess my mom just figured I liked to snack a lot.

The one thing I learned though from all those childhood experiences though is that you never can depend on one source of income. Eventually my mom caught on and stopped giving me all those extra bags of chips and I had to figure out a new way to make money. No matter how safe something seems there’s always the chance that you could lose that income and be stuck with nothing.

I’ve come a long way since my childhood and even though I make a lot more now, I’m still trying to diversify my sources of income. I think people tend to get way too dependent on their main source of income and that can really hurt them when things start going downhill.

Forcing Myself to Think Of Ways to Diversify Income

It seems like common sense but it’s so easy to rely on your day job income to pay for everything. I used to get paid a lot of money to go into work and sit at my desk for 8 hours a day and then go home. No manual labor required, no staying late hours(in my case at least) and a pretty low stress environment. I loved my job and without fail, every two weeks on the dot, a nice fat paycheck would show up in my bank account. All I had to do was show up at work every day and I was pretty much guaranteed to get paid.

It sounds like a pretty comfortable situation but you have to remember that companies are always looking out for themselves first. If bad times arise, they’re going to do what’s best for the company and not the employee. In this case you won’t have any control about your future but sometimes you do.

In my situation, I knew that I would be leaving San Diego and quitting my job many months in advance. I knew when we’d be leaving but I didn’t know where we’d be heading(since my fiancee was applying to med school). That really forced me to think outside of the box and come up with some unique ways to make money, independent of our future location. I could have sat back and hoped that she got into a school in a city where I could find work as an engineer but I didn’t want to rely on chance.

How Do I Diversify My Income?

Since I knew I’d eventually be losing my day job income, I had to set realistic goals. There was no way I was going to make a six figure salary blogging and working online after only 2 years but I thought it might be possible to cover our monthly expenses for a few months while I took time off and looked for a new job. I already had some secondary sources of income and there were others that I specifically tried to build up.

Two months into my work hiatus and I’m doing well. I’ve made a little bit more than I’ve spent and I’ve worked about four hours a day on average. Ultimately, I’ll know I’m ready to make the permanent jump to a 4 day work hour when my passive income plus side incomes equal my day job income. Until then, I’m going to go back to my day job and keep grinding it out.

So what are my other sources of income?

Active Income

  • Blogging – I guess you could say I’m a professional personal finance blogger since I own two sites and I’m making decent money every month. The income started off slow but has been consistently increasing. It’s not as much as I make with my day job but my best blogging month was equal to about one paycheck at my old day job.  While I had to learn how to set up and use WordPress myself, you can learn how to blog and make money online at StartABlog123.com.
  • Freelance Writing – Since I started blogging, it’s been relatively easy to find work as a freelance writer. I don’t think I’m the best writer but I do have a lot of knowledge that people seem to be willing to pay for.
  • Coaching – I’ve been coaching ever since I was in college and I love it. And since I coach a club team, the time commitment averages only about 10 hours a week. The money isn’t great if you depend on it for living but it’s the perfect secondary source of income since it’s very easy for me to get hired as a coach(and it’s tax free through business deductions).
  • Lyft and Sidecar - Ridesharing is here to stay and it is the perfect part time income source.  In fact, I’ve talked to people who drive in major cities like Los Angeles and San Francisco who are making close to $100,000 a year!

Semi-Active

  • Real Estate Income – Since we moved up to Newport Beach, I started renting out my condo in San Diego. My monthly cash on cash return is $300(I charge $1,900 for rent and my total payments including mortgage, HOA, property tax and insurance are $1,600) but I also get back around $350 every month in principal and about a $150 tax savings per month. But even this income is inconsistent, since sometimes expenses will pop up like last month when I had to buy a new A/C for $3,000!
  • Credit Card Sign-Up Bonuses – This one might not seem like a source of income but ever since I discovered how lucrative churning credit cards can be I consider it part of my income. Just last year alone, I made over $10,000 tax free in travel, cash and gift cards from various sign-ups. It’s not as simple as just signing up for a card though, it requires a lot of research and some maintenance every couple weeks.
  • Blogging – I include blogging again here since if I wanted to I could basically outsource my whole site and just work 1-2 hours a week maintaining it and still make money off it(but a lot less).

Passive

  • Interest Income from things like bonds and CD’s – This is one of the only true forms of passive income since you can invest and let it sit in order to make money. CD’s and bonds aren’t paying nearly what they used to though so this has become a very difficult way to accumulate wealth.

These are most of the ways that I use to try and diversify my income. Add them all up and they’re still nowhere near my day job income but they’re getting closer every day. No matter how much you make it’s imperative to start thinking about additional ways to make money. Real estate and investing are some of the best passive sources of income but it’s also important to think of alternative active sources of income. For most people, those two things will never be able to equal your day job pay but secondary active sources could one day replace your day job whether you want it to or not.

Right now is the perfect time to think about diversifying your income since the economy is on the rebound. If you wait until it’s too late there will only be more competition to deal with.

My Plan

My reasons for diversifying income are simple: I want to be able to quit my day job eventually. But your reasons may be different, maybe your job isn’t that secure or your co-workers are starting to feel the pressure. It really doesn’t matter why you diversify your sources of income, what matters is that you do it. Making money won’t happen overnight with second sources of income so if you wait until it’s too late you’ll be screwed.

Instead, start thinking about diversifying your income now while times are good. You might even be able to use some of the capital from your main source of income to fund your second sources.

Readers, do you rely on one source of income or have you started thinking about other sources of income? Are there any other passive or active income sources you think I should look into?

-Mr. 4HWD

Get E-mail Updates

The Four Hour Work DayIf you're interested in receiving weekly updates when we publish new articles, please sign up here.  You can unsubscribe at any time.  No SPAM, we promise :)
The following two tabs change content below.
I'm Mr. 4HWD, I started this site because I think everyone should be able to work at a job they enjoy and still have time to do all the fun stuff. I don't want to retire early, I want to work four hours a day on the things I love for the rest of my life.

Latest posts by Mr. 4HWD (see all)

Comments

  1. says

    I was never a seller so wouldn’t have been able to sell chips to kids but I charged the lunch money to my mum and went out of the school to the supermarket to buy a cheaper lunch.
    Nice job on the CC churning, I wish I had such good ones..

  2. says

    Yes. Having only one source of income is certainly not enough. Having two could be good but I think you need more than 3 to live a great life. That’s nice to know that you have plenty of sources of income yourself.

    • says

      I agree, the more the better in my opinion. Often times, certain income streams will have a high correlation so it’s good to think about diversifying your income in that respect too.

Trackbacks

  1. […] Campbell @ The Four Hour Work Day writes One Stream of Income is Never Enough – I’ve had more jobs than I can count since I ‘officially started working’ at the age […]

  2. […] For those who are regular readers of my site, you’ve probably noticed a recurring theme: I don’t like to talk much about fare cuts, I never complain about driving for Lyft/Uber and I never make excuses as to why I’m not earning enough.  For me, rideshare driving is something that I do for extra income, it’s not something that I depend on to make a living since I’m all about creating multiple sources of income. […]

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

CommentLuv badge