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.
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!
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.
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.
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.
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!