Second Income | Till Debt Do Us Part

Internet Job versus Internet Business

Aug 112008

This is a continuation of the series of articles about trying to generate a second income part time on the internet and then using this second income to repay your debts.

I have already investigated the possibility of generating a second income through Second Life. In the end I decided that it was not for me. You can read my reasons why here.

In this article I want to investigate the income generating potential of getting a part time Internet job as opposed to starting an internet business.

Internet job versus Internet Business – what’s the difference?

When I first started to investigate the possibility of generating a second income online it didn’t occur to me that I could get a job (i.e. work for someone else) that would allow me to operate from my home and in my spare time.

To me the Internet was all about trying to start your own website and generating an income by selling a product or by selling advertising.

Recently I came across a couple articles about Internet Jobs. These jobs ranged from data entry to completing surveys. To be honest when I started to read about the online jobs on offer my eyes glazed over. There was nothing much that appealed to me in terms of the work that was on offer. Boring and tedious are the two words that I’d used to describe the jobs I came across.

Part of me wanted to stop exploring the idea of getting a second job online and move on to something else. However I realized that if you are in debt and looking to earn extra income the focus should not be on finding ‘interesting’ work or work that you love rather the focus should be on finding a second job online that pays and is not a scam (more on this later).

With this in mind I began researching internet based jobs versus internet businesses. My criteria were that the hours had to be flexible, I could work from my home, the pay was reasonable and I was confident that it was not a scam i.e. the company that I would be working for was legitimate.

So far my results have been mixed with more negative results than positive.

It appears that there are a lot of scams out there – so be careful. Make sure to do your homework and to research fully any offer of an online job. When researching simply type the name of the website that is offering the job along with the word ‘review’ into Google and check the results. I found that a couple of websites that had caught my attention had been scamming people so it was a lucky escape.

I found this on Yahoo! answers. It is short but well worth reading the comments.

Is there a legal legitimate way to work at home and make good money that is not a scam?

On a more positive note I have come across some websites that seem to be genuine. I have not used these websites myself so I cannot confirm whether or not they are genuine but so far from what I’ve read they look good.

This article from msnbc.com provides some useful ideas about websites that you could potentially work for. Again do your research before you commit to anything.

Delete your commute with new internet jobs.

Searching for a legitimate online part time job is proving to be a little more difficult than I thought. In my naivety I simply thought that it would be a case of doing a Google search and I would be spoilt for choice. I thought that I could then simply do hours and hours of tedious form filling and I would be on my way to paying down my debts and financial freedom.

Unfortunately this is not the case and I have received something of a wake up call.

Getting a decent online part time job seems to be a lot more difficult than I first imagined.

Making money in Second life? Not for me.

Aug 082008

My initial enthusiasm for making money through Second Life is starting to wane. The more research I do into making money in Second Life the more I realize that to make serious money there are a whole range of new technical and software skills that I would have to learn before I could add any real value. In turn if I don’t add any real value I can’t realistically expect to earn any serious income.

Each time I think about it I keep coming back to the comments that Second Life entrepreneur Anshe Chung made in relation to people who come to Second Life solely to make money.

“Most people who just come here (Second Life) for money fail miserably”.

This point bears repeating. I think one of the key drivers behind the success of Second Life has been the community spirit that has developed. People are there because they really want to be there. They don’t go there specifically because there is money to be made – those who do “Fail miserably”.

The question you have to ask yourself as someone who is looking to generate income online is whether or not you are prepared to get involved in the community that is Second Life? Is it for you? Can you put community first and profit second? Are you prepared to learn all the necessary technical skills required for you to add value to the Second life community? In the end it is this added value that will allow you to monetize your efforts. If you don’t add value it will be hard to make any significant income.

If I’m 100% honest I can’t see myself doing it. I think too linearly. I just don’t feel I have the creative skills or the desire to learn them that is necessary to make money on Second Life. So for me I think I’ll give trying to make money on Second Life a miss.

In the end it wasn’t a hard decision for me. The combination of the small amount of people earning over $500 per month in Second Life (see statistics here) and the fact that to even get close to that amount of income each month there is a lot of effort and start up costs involved.

That said I will let you decide for yourself. Just because I don’t think its for me doesn’t mean that you won’t enjoy and succeed at it.

I was recommended to get a book called “The Entrepreneur’s Guide to Second Life: Making Money in the Metaverse” if I wanted to make a serious go at it. I recommend that you do the same if you are interested in making money in Second Life.

You can read an extract from the book here. ‘The Entrepreneur’s Guide to Second Life’

So where does that leave us?

Making money in Second Life – some facts and figures

Aug 062008

My quest for further information about how to make money on Second Life continues.

This is a whole new area to me so I am threading very carefully as I don’t want to get my facts and figures wrong or indeed make some Second Life newbie mistake.

So here’s what I’ve learnt so far.

You can make a million real US dollars on Second life.

One user who goes by the avatar name of Anshe Chung has made a million real USD from her activities on Second Life. I found an interview with her from a few years back when her Second Life activities were worth a real 250,000 USD. This interview is very interesting as it comes from a person who is actually making serious money on Second Life. You can read the full interview here – Virtual Land, Real money.

There are two things I want to point out that I noticed in the interview.

The first is that back in 2006 when this interview happened, Anshe Chung had a whole team of people working for her. So my advice is not to think that she is making serious money on her own. In the interview she says that at that time she had a team of about seven freelancers working for her but that she had also just created a team of ten full time people in China to manage billing, accounting and development. This is a serious operation and not a one person show.

So straightaway it gives some idea of the effort involved in generating serious income in Second life. That said our aim is create a decent second income in Second Life and not to build an empire.

The second thing that struck me was that she gave an incredibly valuable piece of advice to anyone thinking of joining Second Life to generate an income. Here is the quote directly from the Business week piece.

“To what do you attribute your success?

One reason for my success here, I strongly believe, is that I am not only here for business. I am very deeply rooted in this world, like a real native person. Most people who just come here for money fail miserably. They are foreigners, act like foreigners, and lack deep understanding of this virtual country. Many of them are also lazybones who think you just need money to make more money. The truly successful people I know here all are deeply involved in life and society here too.”

The key thing to take away from her answer is “Most people who just come here for money fail miserably”.

To me this simple sentence speaks volumes. Unless you are prepared to make the effort to fully integrate and become part of the Second Life community and experience, it appears that your chances of successfully generating an income are limited.

The figures speak for themselves.

You can check the earnings statistics on the Second Life website here.

The statistic that we are interested in is about half way down the page with the header ‘Linden™ Dollars’ and the sub header ‘Unique Users with Positive Monthly Linden™ Dollars Flow’.

From what I can gather this statistic basically shows us the number of people who are making positive income in the Second Life and how much they are making.

I’m going to use a well worn cliché – but the figures really do speak for themselves. Of the 57,821 people that generated a positive income on Second Life in June of 2008 – the vast majority earned less than $500 – 55,732 users to be exact. Most of these people earned less than $50 – 47,546 users. That’s $50 for the whole month. Not exactly a decent second income.

This makes for slightly discouraging reading. If you thought that Second Life was a quick route to riches or even a quick route to a decent second income then you need to think again.

If you examine the figures closely they seem to be representative of nearly all businesses and markets – where the top five percent make the most money. This to me illustrates nicely that Second Life is acting just like any other competitive market where there is real money involved. The winners win big while everyone else struggles on.

But Second Life is different.

Er no not really. When it comes down to it the people who succeed are those who put in the effort or as Anshe Chung puts it ‘are deeply involved in life and society’. The same with any other business venture really.

So I’m still not convinced about generating a second income from Second Life. I’m sure it can be done – Anshe Chung as well as the other 2089 users who made over $500 in June have proved that its possible.

The question is what will it cost to get to the level of income that you are happy with? How long and how deeply integrate in Second Life do you have to become in order to start generating a second income?

That’s my next bit of research…

Can you generate a Second Income in Second Life?

Aug 052008

I’m currently investigating a very interesting way of making money online.

Second Life

Second Life according to PCmag.com is defined as

“A virtual world on the Internet from Linden Research, Inc., San Francisco, CA (www.lindenlab.com), in which “residents” create an identity, meet people, buy land and build their own environment or purchase an existing one. It is a “massively multiplayer online role playing game” (MMORPG), but one that offers users total freedom to create and interact as if they were living another life. Playing the game requires a client download for Windows, Mac or Linux.”

The definition goes further and you can read the rest of it here. But I thought the first paragraph was enough to give you a feel for what Second life is about. Second life is effectively a massive virtual world where users interact much in the same way they would interact in the real world.

Don’t ask me I’m a newbie.

If I’m honest I am completely new to Second life. I had read a few articles about it a few months back but didn’t look into it any further. However as I was researching ways to generate a second income online Second Life kept coming up so I decided that it warranted further investigation.

I’m still in the process of investigating Second Life and from what I’ve gathered so far there is a lot to learn and understand. That said I have also read that there is potential to make some real money by having a presence and interacting on Second Life.

I’m now focusing on learning more about Second Life. The key thing I am concerned about is whether or not it is feasible and realistic to generate a second income via Second Life.

As with any other method of generating a second income before I commit any serious time and resources to it I want to understand more.

For those of you who are interested in doing the same here are some very useful links to articles about Second Life.

A Second Income on Second Life

The truth about earning money in Second Life

How to earn Linden Dollars in Second Life

Economy of Second Life

From my reading and understanding of these articles my initial reaction is that it is possible to generate income in Second Life but not necessarily a huge amount of it. However I would imagine that you could have a great deal fun doing it and this could compensate for the low income. I will continue my research and keep you posted.

I now have an interesting way of possibly generating a second income to focus on. After yesterday’s trawl through the internet looking at dodgy “earn thousands using our plug in profits system” websites I was becoming a bit disillusioned. I was beginning to think that the web contained nothing but scams…anyway enough of my babbling. I’ve got a Second Life to consider.

Online Second Income success stories – not many

Aug 042008

I’m scratching my head as I search on the internet for success stories of people who have made a good second income online. Most of the stories I have come across are very fake and unbelievable. Most of these ‘success stories’ are on websites that are trying to sell something. Usually it is a miraculous new income generating profit system. Geez thanks for getting my hopes up. Again it’s that cheezy sales pitch that keeps putting me off.

So far I have had no success in locating a good and believable story about generating a second income online.

The reason I’m focusing on generating a second online is because it ticks all the boxes in terms of flexibility and start up costs for someone who is currently in a job. In previous articles I’ve discussed the factors that need to be considered before trying a method of generating a second income. You can read that post here: Debt elimination –the next leg. Generating a second income.

In that post I focused on getting a second job as a way of generating a second income. The reason for this was because it was determined that getting a second job was the quickest and most effective way of generating a second income. I wrote about the need for the logistics to make sense. Can you realistically do a second job all the while maintaining your current job?

Now for many people getting a second job simply isn’t an option. People with children may not be able to afford the additional childcare costs. Or there simply may not be any second jobs available in the surrounding area. As a viable alternative to this, generating a second income online offers the flexibility to allow someone to work from home in their spare time all the while meeting their current job and family commitments.

So far so good, working online from home in your spare time seems the ideal solution. Unfortunately the reality of trying to generate a second income is not so easy and straightforward. Given the low barriers to entry the competition on the internet can be intense. That said there are ways of generating a second income if you have the time and patience to do it.

Here is a very useful article from the The Times newspaper. This article is simply called ‘10 ways to make money online’ and offers valuable ideas and information on how to generate a second income online. I recommend that you take the time to have a read through this article as it will serve as food for thought.

In the meantime I will continue to look for believable online success stories. I know they are out there it’s just a case of finding them!

Second Income? Of course I’m bitter it didn’t work out.

Aug 012008

You know what really annoys me? Those cheezy websites that offer you a once in a lifetime opportunity to earn hundreds of thousands of dollars. Supposedly you can do this in your spare time at home. You will earn fantastic sums of money if only you would just buy their automated system and follow their instructions. It’s really simple just plug and play their system and you will be on the road to riches.

What makes me even madder is the images these so called second income ‘Gurus’ use on their websites. Images of bundles of cash, fast cars and beaches make me want to vomit. How naïve do these ‘Gurus’ think we are? Do they think that those pictures and some slick sales letter will dupe us into buying their automated system?

There’s one born every day.

You can probably guess by my tone that I have been seduced by these websites more than once. I’ll admit the reason those cheezy websites annoy me so much is because I was foolish enough to part with my money in the past. It embarrasses me now when I think about it but I have spent a lot of money pursuing these so called ‘Internet businesses’. What sickens me even more is that I’m sure these internet businesses did make a lot of money…for the person selling them!

If you’re in debt then spending your money on business concepts that do not work or depend on unsustainable methods can knock the wind out of you. The last thing you need is to incur more debt in the pursuit of opportunities that simply don’t exist.

The question I should have asked was ‘If the system was so good then why were they selling it and creating potential competitors instead of just keeping all the money for themselves?’

Learn from experience.

To truly learn it is said that we need to experience things first hand and make mistakes. You don’t learn how to drive or swim by reading a book about it. You get stuck in and start making mistakes – the more the better. This is how we learn.

The same can be said for generating a second income.

I have to admit that I am far from an expert but I am willing to learn. Up to this point I have spent a lot of money learning about what does not work. Often I have wondered if the problem lies more with me and not these so called ‘automated cash machines’. I don’t think so. I could be wrong but in the past I have invested a lot of time, money and energy into these business ventures with very little to show for them.

Could I be getting it wrong every time?

Maybe but I would like to further explore the idea that a sustainable second income can be generated online. Is it really possible to take advantage of all the internet has to offer in terms of leverage and access to a 24 hour a day market?

Over the next articles posts I am going to research and write about online business opportunities to see if it can be done.

I’m toying with the idea of subscribing to one of the more respectable internet business opportunities and really making a go of it to see if it can be done and if it is possible to generate a reasonable second income.

Stoozing – Use your credit cards for profit

Jul 082008

No I didn’t believe the headline either. Not at first anyway. That was until I was introduced to the wonderful world of stoozing. Now at this point I will let Wikipedia offer you a definition of stoozing.

“Stoozing, derived from the verb stooz, is a slang term used to describe the act of borrowing money at an interest rate of 0%, a rate typically offered by credit card companies as an incentive for new customers. The money is then placed in a high interest bank account to make a profit from the interest earned. The borrower (or “stoozer”) then pays the money back before the 0% period ends. It is important to note that the borrower does not typically have a real debt to service, but instead uses the money loaned to them to earn interest.”

So how you make money is that you borrow as much money as you can from credit card companies that are offering introductory offers of 0% and then you place all this money on deposit at a higher rate of interest say for example 5%. Then at the end of the introductory 0% period you take your money out of your deposit account and repay your credit card company. In effect you have made 5% interest on the borrowed money.

There are a number of things to take into consideration before you engage in a stoozing campaign.

How much can you borrow?

How long does the 0% interest rate last?

What are the balance transfer fees?

What rate of tax will be applied to the interest that you earn?

What deposit rate will you get? You need to have a high yield instant access deposit account in order to make your stoozing effective.A couple of other things that need to be considered include.

You will need to continue to make the minimum monthly payment on your credit cards.Stoozing works best if you have little or no debts as your existing debts would be better served if you transferred them to the 0% card and focussed on paying them off.

There will be a lot of administration and form filling involved so if you are not comfortable with this then may be stoozing is not for you.

There are a couple of excellent websites that cover the topic of stoozing in a lot more detail than I could hope to so I will direct you to them. One is focused on the UK market and the other is focused on the US market. I suggest you look at both sites as the principles of stoozing are the same and the only differences are the types of cards and interest/tax rates that apply.

Stoozing.com

Moneyeconomics.com

Remember this is a potential way of earning a small but not insignificant extra bit of cash. So while it may not be for you I recommend that you take the time to learn about it because it gives a useful insight into how you can be creative with your credit cards.

Passive income? Look at your passive expenses first

Jun 092008

Do a search for the term ‘second income online’ and you will be hit with a hundred and one articles and stories about how someone makes $1000 a day in their spare time. More interestingly you will notice that the buzzword that is thrown around a lot is ‘Passive income’. Passive income has become the holy grail of the second income prophets. They talk about it in hushed tones. It almost has a reverential quality. Create a passive income and become financially free is their tagline.

If only it was as simple as some of these articles make out. Many times the authors of these articles are trying to sell you something. Some piece of software that will automate your selling or investing. Either way they are trying to make their ‘Passive Income’ by selling the idea of ‘Passive Income’ to you. In the end it resembles something like a pyramid. Person one at the top sells the idea of passive income to two people those two people sell the idea of passive income to another four people. This continues until eventually you have a couple of thousand of people all trying to create passive income by selling passive income tools.

I know about this because I’ve tried to create passive income in the past but with limited success. Generally I end up working very hard for the so called ‘passive income’ that I do generate. Passive income in itself is supposed to be self perpetuating by its very nature. Once you set up a passive income system it is suppose to carry on by itself using its own momentum.

So where does that leave you? You’re in debt or maybe not but either way you want a piece of this ‘Passive Income’. Well to begin with if you are truly going to go after passive income you are going to need a lot of time. Time is the one of the key elements.

Lets be honest most of us don’t have the time or energy to create a second income. I know I hadn’t. I was so busy doing nothing (well nothing important) that I made excuses and couldn’t get anything done. The few times I did get start passive income projects they invariably died a quiet death never to be mentioned again.

So what’s the alternative? It’s a lot closer to home than you think.

Passive expenses – the mirror image of passive income

No one ever really talks about passive expenses. Or certainly no one talks about them in the context of your personal finances. To illustrate what I mean about passive expenses take the example of gym membership. Say you have membership of the local gym that costs you $80 a month and is paid by direct debt. This $80 will be taken from your account every single month regardless of whether you are in the gym every day or whether you haven’t seen the inside of the gym since January 2^nd.The point is that the expense is passive you don’t have to physically go out and buy anything for it to occur. You signed up once and now you pay via direct debt every month.

Now as an alternative to generating a passive income a simple solution would be to eliminate as much of you passive expenses as possible. The net result is the same. If you manage to eliminate $100 worth of passive expenses each month then that is still $100 staying in your account and not going anywhere. It means that you don’t have to invest time and energy into generating a passive income of $100.

Here is a list of some of the typical passive expenses.

Phone bill

Have a look around for a cheaper provider. There are always better deals to be had.

Electricity bill

Look for ways that you can permanently reduce your electricity bills. For example use energy saving bulbs. They may cost more initially but they will save you money in the long and there are more environmentally friendly. You’ll need to get creative while at the same time trying not compromise your standard of living.

Magazine subscriptions

Do you really need these subscriptions? Can’t you just check the magazine out in the store, see if there is anything interesting in it and then buy it if there is but don’t buy it if there is nothing that interests you in it.

Gym memberships

Be honest, how many times have you gone to the gym in the last three months? Is there anything that you do in the gym that you cannot do outside the gym? Things like going for a run, cycling etc.

Insurance

Shop around for the best offer. Usually if you go with one company for your home and car insurance then they will give you a discount. Keep looking!

Website memberships

As with magazine subscriptions – do you really need the membership? Most of the information contained in the website is probably available for free on the web somewhere else. It just takes a bit of searching.

Cable TV

Do really need those 200 TV channels? When was the last time you really watched anything on channels 50 to 200?

Rent/mortgage

If you have a mortgage, then shop around for a better deal. There are some good deals still on offer but it will depend on your individual situation. With rent maybe it is possible to rent a place for $100 cheaper a little further away from your current place? It might be worth a look. That extra $100 would go a long way.

Banking fees/credit card fees

Again shop around. Change banks if you have to. A lot of these fees can be reduced or eliminated.

The list above is only a sample of the passive expenses that people incur every month. There are other things that you could probably identify in your own situation that could be classified as a passive expense.

If you are determined to generate a second income then may I suggest that before you start that you tackle your passive expenses first. You are better off, initially at least, spending time and energy reducing your passive expenses. That way you can be sure that any additional income you earn will be adding to your bottom line and not to go to pay passive expenses.

It could be the case that in some situations if you reduce your passive expenses enough that the need for a second income could be eliminated. You may not need to take a second job or start a side business in your spare time.

Debt and Lottery tickets – Is this the answer?

May 262008

It’s funny the way the mind works. We can convince ourselves that we are justified in buying $10 worth of lottery tickets each week when we are up to our eyeballs in debt. We say to ourselves that if we win big that all our debts will be wiped out in an instant. This type of logic is fundamentally flawed. Yet why do we persist?

I’ve often heard the lottery referred to as a tax on the poor. I couldn’t agree more. Why is it a tax on the poor? I think it has to do with the fact that it is poor people who have the most to gain if they win the lottery. If they win they can go from a place of zero wealth to a place of massive wealth overnight. The dream is that all their problems can be magically solved overnight. It is poor people who have the most to gain materially from a lottery win. It is this dream that spurs us all on to buy lottery tickets every week. Ironically it is the people who can least afford to play the lottery that plays it most often.

The lottery by its very nature plays on the hopes and dreams of people. It is very effective at this – without even trying. People just see all those millions and start dreaming about what they would do with all the money. I’ve done it. On numerous occasions, especially for the really large rollovers, I have found myself planning out my future with millions in the bank and to be honest I really enjoyed the feeling that yes it could be me that wins this time. Unfortunately it never is me. I won’t say that I have given up on winning the lottery but week after week it did feel like I was banging my head against a wall so I don’t play that often anymore.

From a debt management point of view it would be very easy of me to say that this money spent on lottery tickets would be better spent paying down your debts. The simple fact of the matter is that you know it is true. If you spent $10 a week on lottery tickets then that is $520 a year that could be spent on something more useful. Tell me – how much have you won on the lottery in the last year? Was it over $520? No? Really? You know deep down that the lottery is a waste of time and money. The choice is yours as always but I would ask you to consider cutting it out or certainly cutting it down and diverting those funds to paying off your debts. In the long run the returns will be much better from paying off your debts.

Now before we go on I want to make it clear that my first instinct for someone in debt is to cut out all the luxuries and in my opinion playing the lottery is a luxury. What I’m trying to point out is that playing the lottery is something that brings a little hope and although you know deep down that you are not going to win there is a strong emotional attachment to the ritual of checking the numbers. This ritual can make it hard for people to break the habit. You have to accept the responsibility for your actions and if you decide to continue playing the lottery then you need to live with the consequences.

Ok lecture over.

Now here is the interesting part. If you are determined to continue playing the lottery then you need to do something to increase your chances of winning. Currently the odds against you winning the lottery are astronomical. In reality there is no point in even playing. But yes I agree with the logic of “You gotta be in it to win it” and it gives you a glimmer of hope in what can be an otherwise bleak situation if you are in debt.

The goal here is not to spend more money on the lottery but to use the money you currently spend on the lottery in a more efficient manner. So what I suggest is that you either form a syndicate or join one. For those who don’t know what a syndicate is it is essentially a group of people who come together and pool their funds so that they increase their chances of winning.

If you compare the your chances of winning with your weekly $10 against a syndicate of 20 people each with $10 for a combined $200 in lottery tickets, you can see that the syndicate will have a better chance of winning. You might argue that if you win with your $10 on your own that wouldn’t have to share your win with anyone and you would be correct. In a syndicate the winnings are split among the members. My thinking on this is that there is a trade off to be had. You will win a smaller amount with a syndicate but you have a much better chance of winning (the odds against winning are still huge). For example 5% of $20m is better than 100% of nothing.

I’ve been part of a few lottery syndicates mostly at work and to be honest they are quite a lot of fun. Ok we never won big but we all had this common thing to talk and joke about. It certainly helped to liven up the atmosphere especially when there was a big rollover.

Syndicates are not without their problems. To start one up requires a bit of organizing. There needs to be rules in place that cover things like how much is played each week, who looks after collecting the cash, who is in charge of buying the tickets. You need to make it absolutely clear from the beginning what the rules of the syndicate are and if you are joining a syndicate make sure you know the rules. How often have you heard horror stories about people who didn’t pay up in time only for the syndicate to win big and they subsequently missed out? Don’t let it happen to you.

I know most of you were probably expecting me to mouth off about cutting your lottery out and reducing your debt. I suppose I had initially set out to write about that but then I realized that we are all adults and that we can make our own decisions and that you don’t need to be spoon fed. For me the lottery is a bit of fun. I don’t do it that often anymore and I’m no longer part of any syndicates. When I think back over the times that I have played it then I certainly had most fun when I was part of a syndicate. What I will say is that if you do decide to continue to play is keep it small and keep it real and if you want to increase your chances of winning then use the power of numbers and let other people share in the fun.

What type of Second Income person are you?

May 162008

The headline screams at you “Make $5000 a month in your spare time”. Curious to find out how this is possible you read on. It appears that it is a Multi Level Marketing (MLM) scheme. You read a little further and then you lose interest thinking to yourself that it is a scam. How on earth can someone make $5000 per month in their spare time? I tend to agree with your first reaction – initially at least. It does seem like a bold claim.

Dig a little further into something like MLM and you are confronted with even bolder claims of wild earnings. The same sort of thing applies to “Internet Marketing”. Stories abound of people who claim to have made lots of money in their spare time. The thing is you only ever hear about the success stories. I doubt that you will ever see a headline like “I lost $2,000 trying to make it in MLM”. The truth is thousands of people try and fail at MLM and Internet Marketing – myself included. In the quest for that elusive second income people spend thousands and make very little in return.

It always made me curious as to what separates the winners from the losers in the game of trying to generate a second income. Now my focus isn’t just on MLM or Internet marketing. You can take any part time endeavour such as a second job or trading on eBay and you will see that long term success is limited to a select few. The turnover of staff in part time jobs tends to be large. The long term success of your average eBayer is not guaranteed.

What makes the difference? Well to be honest I struggled with this myself for a long time. If you want to generate a second income you have a number of factors to consider. The key one is how badly you need the money. If you need it bad enough you will do anything. However this attitude will only work in the short term. To really generate a significant second income you need to be thinking long term.

Your focus needs to switch from short term activities to something that you can maintain in the long term. Ok this is best explained with an example. Say you are in debt and you need money fast. You have a day job but you get a part time job as a security guard to make extra money. You personally find the work boring but you need the money so you stick with it. You took the job to improve your situation and clear your debt but in the long run if you don’t like it then it will become a burden. My advice is to do it as long as it takes to make the money you need to pay your debts. Then look for something more suitable for you for the long term.

What suits you long term?

When you are considering the best method for you to generate a second income you need to examine your personality very closely. How well do you know yourself? Just because a MLM advert promises riches does this mean that the work involved is suited to everyone? Could it be that the people who really make it in MLM are pushy extroverted people who are extremely driven? How comfortable would you be hard selling products to your friends and family? I know I wouldn’t be comfortable with it but I know people who would have no problem with doing it.

The way I see it is if you want to successfully generate a second income in the long term you need to play to your strengths. You need to do something that matches your personality. This seems pretty obvious but I don’t know how many people I have heard about or met that go into something just because there seems to be a lot of people making a lot of money at it. I think it is easier to pick an income generating activity that matches your personality rather than trying to force your personality to match the requirements of an income generating activity.

So if you know yourself, your strengths and weaknesses then you can begin by drawing up a list of activities that you think would suit you. The secret is if you are well suited to an income generating activity and you genuinely enjoy it and put the effort in you will make money at it. It’s as simple as that. It may not happen overnight and you may not make a million but it will give you the satisfaction of knowing you are controlling your financial destiny.

Second Income – One man’s journey of learning to do it right

May 152008

It’s strange the way the world works. Lately I’ve been thinking a lot about how to generate a second income. I’ve even written a few posts on it. Everywhere around me I see people working double jobs or running some small side business to generate a bit of extra income. Anyway I got an email from a friend that I hadn’t heard from in a couple of years. He had a very interesting story to tell and one I’m sure that you will find very useful if you are thinking about how to generate a second income.

Ok to protect the innocent I’m just going to call my friend Jon. This is not his real name. A bit of background is important here. Jon has been working in the IT department of a large corporation for the last seven years. Jon hates it – absolutely hates it. He admits now that he made a couple of wrong choices after he left college and ended up in a place that he didn’t want to be. After college he was in debt and was determined to pay off his debt and to him this meant staying in his job.

As the years went by Jon became more comfortable in his situation. He still hated his job but he knew it inside and out and was happy to remain in it. Jon always had a bit of an entrepreneurial flair in him and was always looking at business ideas. The thing was he only ever looked at them and very rarely did he actually go out and do something about them. That is until he got caught up in the property boom.

A few years back Jon began to notice a lot of people making a lot of money in the property market. At the start he didn’t know a thing about property – how to flip, how to manage rental properties, where to buy etc. This would eventually lead to his undoing.

Jon was concerned that if he did not act fast he would miss the boat. Off he went to his nearest real estate agent and began looking at property. He didn’t have any strategy he just wanted in. He didn’t care how he did it he wanted his piece of the pie. These are his words not mine. He’ll admit that he was too eager and innocent and was taken for a ride. Anyway he bought an apartment off the plans. He was assured by the people in the know that this was the quickest way to make money from the property market. He could ‘flip’ the property and make a quick buck. And you know what? It worked! First time out on the field and he hits a home run. He made $12,000 on the deal. The man now had the fever.

Every week Jon went to look at different properties. With credit so freely available he was able to buy three properties in quick succession. His goal was to flip one and keep the other two as rental properties. This worked out. He made another $15,000 on the second property he flipped and then he managed to rent out the two properties. All the time Jon still had his job. Life was rosy. Jon reckoned that at the rate he was going he’d be a millionaire by the time he was 35.

We all know how this story ends.

At his peak of property dealing Jon had three rental properties and was looking at buying a fourth. He had managed to flip four properties and had rolled all his profits into doing more property deals. Two of his three rental properties had tenants and one of them was vacant. He was still doing ok. His cash flow was positive.

As Jon puts it – the signs were there. It wouldn’t have come as a big surprise to the seasoned property investors. The season property investors would have known how to read the signs and back away from the market. For the likes of Jon it was like blindly walking over a cliff. Jon had got carried away and bought into the hype that property only ever goes up.

What happened next has been written about and written about everyday for the last year. The whole credit crunch and decline in property prices hit Jon very hard. He was able to maintain his cash flow for a while but then one of his property deals went wrong and he was forced to take a $50,000 drop in his selling price. This pretty much ate up all the profit he had made. Then it got worse.

One of Jon’s tenants got laid off. Jon is an understanding type of guy and let his tenant have a grace period of a month. Unfortunately his tenant had taken this kind gesture as a sign of weakness and began refusing to pay their rent. It got a little ugly but eventually it got sorted out. This left a bad impression on Jon and it added further to his stress. He now had three rental properties with tenants in only one of them.

Jon was able to survive financially for a while but he was dipping into his savings a lot. He knew it was unsustainable in the long run so he did everything he could to rent out his vacant properties. He had mixed results. He was able to rent one of the two vacant properties out. He now had to sell the other vacant property.

After months of trying Jon managed to sell his vacant property. Jon reckons he was lucky as he only lost $35,000 on the deal. Man that is tough!

At the end of Jon’s property journey he had a net loss of about $25,000 – this was costing him $400 a month in repayments as he had taken out a short term loan. He was also losing $450 a month on the rental properties.

Jon’s new plan

Jon realised that he’d made a mistake and instead of giving him a chance to leave his job his property escapades meant that he would have to stay in his job even longer. Jon’s a positive guy and after a couple of months feeling very sorry for himself he picked himself up again. He was soon back looking for ways to generate a second income. This time he was going to take a different approach.He looked around his current life situation and skill set and he thought long and hard about how he could generate cash. The only thing he could think of as something he could monetize was his computer skills. He had seven years experience working in IT for a large corporation.

He started small and placed an advert in his local free sheet advertising a computer repair service. Things were slow at the start. From his existing customers he noticed that there was a demand for education courses on how to use computers. Particularly from his older customers. He decided to advertise a class on the basics of computer use. He rented a room in a local college. All he need was ten students to breakeven. He got seventeen.

Jon never looked back. He continues to work in his day job but three nights a week and at the weekend he is either giving computing classes or he is repairing computers. He told me that his average income after tax is about $1000 per month. This is on top of his salary. He is able to meet his commitments on his loans and also he can save a small amount towards replenishing his savings.

All round it appears to be a positive outcome. Don’t make the mistake of thinking that Jon’s journey was easy. It wasn’t. His initial attempt to generate a second income failed and ended up pushing Jon further into debt. It was then a case of ‘necessity is the mother of all invention’. He ship was sinking under the weight of his financial obligations and he need to start pumping fast. Knowing Jon I don’t know if he would have bothered teaching the computer course had it not been the case that he was desperate for cash. I’m not sure if his pride would have let him. This is something he will admit himself. He said that at one stage he was prepared to work in a fast food joint. His situation had become that bad.

Where does that leave you? Well if you are in debt and need to generate a second income take heart from Jon’s story. When he got desperate he looked around his life to see what skills he had and how he could use these skills to add value and generate income. He did it and so can you. It may take time to get things up and running but keep telling yourself that you are building a better future because you know what? You are building a better future.

Debt elimination – the next leg. Generating a second income.

May 142008

The benefits of generating a second income are obvious; if you are in debt then the entire second income could be used to pay down your debt. Your debt would disappear fast. For every salaried employee out there who is doing the 9 to 5 generating a second income is the holy grail of personal finance.How easy is it to do? Well that depends on who you are talking to. Put something like “make money online” into a search engine and you’ll get a zillion pages. Each one of them trying to tell you how easy it is to generate a second income – from the comfort of your home, in your spare time, while your watching TV, ok you get the picture.

On the other hand you might talk to someone who has tried a couple of different ways and has had bad experiences. They may have lost money. They may be cynical and negative on even trying anymore. They would probably advise you to work hard and stay focused on your 9 – 5 job.

I think the truth lies somewhere in the middle of these two extremes. I don’t believe it is easy to make millions in my spare time yet I do believe that with a lot of hard work and motivation it is possible to make a nice second income. You may not be able to retire or quit your day job but it could be the key factor that allows you to be rid of your debt burden. After all that is the focus here – eliminating debt. Once the debt is gone we can worry about where we will put all our money after that.

Before you decide to pursue a second income you will need to put a lot of thought how you are going to do it. More importantly you need to consider what method is best for you given your preferences and needs.

How badly do you need the money?

There are two aspects to this – if you need cash badly enough you will do almost anything to get it and I discuss this further in the next section. The second aspect and the one I want to discuss here is the time lag. If you are badly in need of cash then there is little point in trying to build a website or buying a rental property. The reason why is because of the time lag between when you start your website or buy a property and when you begin to generate income. By the time you receive your first bit of income you could be further in debt.

If you are in need of money you need to look at the time lag and how soon you will get paid. For example if you were to take a part time job waiting tables you can be pretty certain that you will either get paid at the end of the night or end of the week or in the worst case the end of the month. With a website/rental property it could be months before you generate any income.

If you need money urgently then you must pursue the method that will allow you to generate income fastest. You may have to swallow some of your pride. No it won’t be easy and yes it will be a lot of hard work but what you have to always do is think of the prize. The prize in this case is eliminating all your debt.

What are you prepared to do for the money?

Nothing illegal I hope!

What you are prepared to do is directly related to how badly you need the cash. As I mentioned above if you are desperate you will do almost anything. But let’s imagine that you are not desperate but you do need additional income. In order for you to successfully generate a second income you need to think strongly about what exactly you are prepared to do for the money. If you are an accountant by day would you wait tables at night? If you were a waiter by night would you work in construction during the day? I’m not saying there is anything wrong with these jobs – nothing whatsoever. What I am trying to point out that in order to generate a second income you may have to do things that you would not normally be prepared to do.

Aside from getting your hands dirty so to speak what else are you prepared to do? Are you prepared to give up TV? Spending time with your friends? Going to the Gym? The reason I ask is because when you make a determined effort to generate a second income a lot of what you currently do in your spare time will have to take a back seat. If you go to the gym three times a week you may find that you simply don’t have the time to go anymore. For someone trying to keep in shape this can be tough. Remember this doesn’t have to be a permanent lifestyle change. It only has to be until you get your debt situation sorted out.

Do the logistics make sense?

Imagine that you were working your normal 9 to 5 but you have taken a second job working for 4 hours each night in a call center. You finish your day job at 5 and the call center job starts at 7. Now let’s say that it takes an hour to drive from your place of work to the call center but that most days you don’t actually finish work until 5:30 and that the traffic is really bad and sometimes it can take up to two hours to drive to the call center. So you end up arriving at 7:30. This isn’t sustainable.

The logistics have to make sense. The method you use to generate a second income has to fit well with your current environment. By environment I mean the physical buildings, roads and transport. You need to get from A to B fast. But by environment I also mean the emotional environment. Does the fact that you will be very tired from working late on a second job fit well with the people around you? Will your partner support you if you arrive home late and cranky demanding to be fed?

Do the numbers add up?

This is a crucial thing to consider. You may think that by working twenty hours a week in a job that pays $15 an hour makes sense for you but you need to consider the numbers. How much do you make after tax? How much does it cost to get you there and back? How much do you spend on food? Do you have to pay a baby sitter? Before you decide to try to generate a second income you need to look very closely at how much of the income you generate do you actually get to keep?

A lot of the focus in this article has been on generating a second income by getting a part time job. There is a reason for this. For many people in debt there is a pressing need to generate income quickly. Apart from selling your possessions getting a second job is the quickest way to get money fast.

Learning how to trade shares online or learning how to build a property portfolio are great ways to generate income. The problem is that there is a lot involved in both and it takes years of learning and experience to be able to do it effectively. That is why I pointed out that time lag is crucial. If you have a long term perspective then by all means go and learn about shares and property but if your focus is on the short term removal of debt then you should focus on those activities that will generate money fast.

The key thing to remember with generating a second income is that it only has to be for a short time. What would be the point in spending all your day working and all your night working too? You would eventually burn out. The goal you should have is to only continue with generating a second income if it makes sense for you – physically, financially and emotionally. Only do it as long as it takes to repay your debts. Once you have achieved that goal then reassess your situation. Take some time out and think about your next financial goal.

Generate a Second Income? – You can't be serious?

May 132008

You have a job and you have a lot of debt. There is only so much budgeting and belt tightening that you can do. Your focus has now shifted from reducing outgoings to increasing incomings i.e. you want to generate a second income. You can take all the second income and ring fence it so that it goes directly against your debts. You will have your debt problem solved in no time. Unfortunately the reality is a lot different.

To gain an appreciation of how realistic you need to be in order to generate a second income there are a number of key factors that you need to consider. Generating a second income is not as easy and as straightforward as some people would have you believe.

The options

Here is a quick list of ideas off the top of my head and in no particular order that could generate a second income for you. Take a moment to think about each and how they would fit in with your current lifestyle.

1. Get a part time job.

2. Rent out a room in your house.

3. Buy a rental property and rent it out.

4. Trade shares online.

5. Build a website and sell a product.

6. Start trading on eBay

7. Start selling a Mutli-Level Marketing (MLM) product.

8. If you have a trade or skill start doing them on your own account in your spare time.

There are dozens of ways of generating a second income. I just wanted to throw these ones out there to get you thinking.

All fired up yet?

When I look at the list above I say to myself that I could do any one of the items on the list. A nice warm feeling fills up inside of me as I think about how I am going to pay off my debt in double quick time. Oh this is going to be great!.

Then reality hits me square on the chin.

If you have ever tried to generate a second income you will know exactly how difficult it is. Each method of generating a second income has its own drawbacks and limitations. In theory they all seem so simple yet the only person who seems to be making any money is the person who is selling the latest ‘Get rich in your spare time’ course.

Over the next few articles I’m going to be examining what are the best and most effective ways of generating a second income. Is it really possible from a long term perspective to generate a second income? Why it can be hard to generate a second income and finally what are the key factors you need to consider before you can generate a second income effectively.

Till Debt Do Us Part – Pay off debt fast