When it comes to maximizing my multiple incomes streams, just as important as getting more income is minimizing expenses across income categories. Now, I’m not about frugal living, and I don’t write about it often, but I also don’t like being wasteful with my money.
As I discussed in the Most Common Multiple Income Streams, here are the basic categories of income: salary, rental property, online or hobby business, freelancing, and investing. In each of these categories, there are easy ways to minimize the expenses involved.
Salary
The most common income stream for most people is salary. And it is also the one that most people don’t think about lowering the expenses involved with. Just look at your most recent paycheck – you most likely had a good one-third taken out before you got it! You may be thinking, well, how can I minimize what is taken out? Well, there are some easy things to do:
First, do you get back a huge tax refund each year? If so, you are letting the government withhold too much! Change your exemptions so you get to take home more each paycheck. By letting the government withhold your money, you are essentially giving them a free loan. If you want to loan money to someone, check out Prosper, where you may be able to earn upwards of 10%.
Next, you should really take a look at your retirement options. Why? First, if your 401k offers a match, you need to take advantage of it or you are leaving free money on the table. Second, contributions to your 401k are tax deferred, so you can minimize your tax liability by contributing. More savings!
Rental Property
Many individuals choose rental property as a income stream, and it usually works out well. One of the biggest expenses with rental property is the mortgage. Right now, this can also be your biggest savings. With mortgage rates near all time lows, it may make sense to refinance. And if you are thinking about refinancing a rental property, you may want to consider going to a 15 year fixed. The great thing about rentals is that the rent pays for most of the expenses. By switching from a 30 to a 15 year fixed, you save about 50% of the lifetime interest. So, while you may pay more, over the 30 years, you will make 50% more money in your pocket by going with the shorter term mortgage.
Online Business
If you run an online business, there are many different fees and costs you may encounter. My first side business was eBay, and as such, I encountered eBay and PayPal fees. What many sellers don’t realize is that eBay offers discounts for being a good seller. Simply keep your reputation high (98%+ positive feedback), and you can start qualifying for reduced fees. A nice incentive to save money.
If you have started a website or other online businesses, you most likely pay for hosting. If you do, you need to shop around. Don’t just go with GoDaddy or something because you bought the domain name there. I’m a big fan of BlueHost, and they are currently offering $3.95 per month if you sign up for 2 years. That is an awesome price, and they have great service and reliability.
Freelancing
If you are thinking about freelancing, one of your biggest fees will be merchant account fees, such as PayPal or using services such as oDesk or Elance. My biggest tip for saving money using these sites is to ask for the buyer of your services to cover your fees. You’d be surprised how many will be okay adding 4% for PayPal or 10% for oDesk. They are hiring you for your services, and they usually will not mind covering this extra amount so that you get the full amount due.
Investing
The biggest costs in investing are fees and commissions, and you should pay minimal of these! First, if you are paying more than $7 per trade, you are paying too much. There are many brokers out there that offer lower or free commission structures, so switch over today. And if you are paying any type of account fees or annual fees, get out of that broker ASAP! With so many discount brokerage firms these days, there is no reason to be paying these fees! Minimize your investing expenses and switch to a new brokerage!
This post was written by
Robert is the founder and editor of My Multiple incomes, a personal finance site dedicated to highlighting how anyone can create multiple income streams and diversify their cash flow.
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Nice overall view. For investing, I would like to stress that you should also watch out for fees if you do go with ETFs or Mutual Funds. These days you can get pretty much any product you imagine for a low fee.
That’s a good call. The fees can eat up your returns!
Great tips on lowering expenses. I agree that a 15 year mortgage can save you lots of money over the long run, but a 30 year mortgage can provide a necessary cushion for those who don’t have the income coming in. I’m still debating myself on what would be the best option.
Yes, you get cushion – but you could literally earn hundreds or thousands of dollars more over the course of 30 years by going with the 15 year loan.
Nice suggestions, especially the ones about looking at your salary. I agree that is one area that many people overlook. Since open enrollment season is likely coming up soon, another thing to consider paycheck-wise is taking advantage of flexible spending to reduce taxes.
WEll organized synopsis. I like to idea of adding 4% to paypal. Very good strategy!
These are awesome suggestions. I have been making a real effort to diversity my income lately and knowing how I can save in the process is really helpful. Thanks for the great tips.
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[...] @ My Multiple Incomes writes Maximizing Income Equals Minimizing Expenses – When it comes to maximizing my multiple incomes streams, just as important as getting more [...]