Thursday, June 26, 2008

What is NonPassive Income?

Did you know I track how many visitors come to my little site, how they get here, and that kind of thing? Seeing my small statistics slowly rise helps me feel motivated to write. (I bet I still know half of you personally!) One of the things I can track is the words people used on search engines to find my site. One string caught my eye:

What is NonPassive Income?

It struck me how often we who are deep in Personal Finance throw around words that we assume everyone knows. So here we go:

Dawn's Down and Dirty Definition for NonPassive Income: NonPassive Income = Work.

Basically it is your job, or services you do for money, including tips and bonuses. It is traditional income.

Passive income, on the other hand, is ways to earn money without doing work. It includes things like bank interest, dividends from investments, rental fees earned, advertising dollars - things like that. I have thrown both terms around pretty loosely, so let's get down to brass tacks. Over and over I mention The List. The List is a legal pad of ideas I came up with as ways to try to get myself an extra $900 a month and keep myself out of foreclosure. There are basically only two ways to get more money - spend less and earn more. Since we are at the end of the month, I am going to do a wrap up of what I have done from The List over the last month and put it in terms of Passive and NonPassive Income and Savings.

Savings:

Lowered my mortgage payment - I wrote about this as one of those "follow through" things. I really didn't have to work at this, all I had to do was make a phone call to verify that my escrow shortage check was received and there you go - $80 in my pocket each month. What I love about savings like this is - I get this every month, I am not going to go changing my blog to "Getting Eight Hundred and Ten," but you see where I am going with this.

Changed how I handled "Emergency Savings" - This was simply changing a big fat spending habit I had. Since making this change I am no longer frittering away $50 a month who knows where. I have really seen the difference! Usually at the end of the month I'd be nervous about making sure that my bank account was "covered" so I didn't go into the red. This month the account is fat and healthy and I feel no need to dip into my savings at all.

Passive income:

Bank Interest - Last month I earned $7.23 in bank interest. It isn't much, but out of pennies, dollars are made! I did absolutely nothing for that money. Zip. However, it isn't exactly sitting in no-interest standard account either. Some of my money is in an online savings account while the rest of it is in a higher yield checking account with my credit union. To get the higher yield account (5%) I simply made one phone call and they set it up for me in less than 5 minutes.

Cell Phone Rebate - I had totally forgotten I was due a rebate from my new cell phone. It never got to me. I made one call and they reissued the check. That $50 was one of the first things I did to get my $900 a month rolling.

NonPassive Income:

My Job - I don't talk about it much here, but I do work a 40 hour a week regular job. My income from it pays the lion's share of the bills.

A Second Job - In the month of June I picked up two second jobs, one house managing and one being an extra in a car commercial. Both of these jobs were part time temporary work - I was an extra for 4 hours and the House Managing was for 3 nights. I got offered another one which I would have loved to take, but it fell right in the middle of my move this weekend, so sadly, I had to turn it down. I am hoping I can pick up more jobs like this - I have already got a word out about doing more House Managing in the fall.

Semi-Passive Income:

Selling Stuff - Some people call selling on eBay and things like that "passive income." It isn't. If done correctly, it is a fair amount of work. There are photos to be taken, descriptions to be written, and then the product needs to be shipped out. Nonetheless, it has been my big money maker this month. I sold $297.20 on eBay and $18.94 on Amazon and Half.com. My average price of eBay items is about $17.95, although if you take out my big score with the Mikli frames, it comes out to be an average of $10.45. So, we are not talking about big items, here.

Other things in the works:

I have not included my House Managing fee in the goal numbers for this month because I haven't got the check yet. I never include money until I have the money in an account. If it arrives in the next 4 days I will add it to June, otherwise it will be a nice start to July.

I am hosting a garage sale in July with my best gal friends. More on that soon, but I am hoping that will bring in a few more shekels.

I am also going to be looking into refinancing one of the home loans. It has two, one has a great rate, but one is high. I may combine them or just refinance - we'll see what the bank says.

Currently I am working with my brother-in-law, the insurance agent, to drop my insurance premiums. That should start July 7th, so more on that soon!

There are other things happening too - as I mentioned yesterday I have some exciting things happening at Prosper.com and with companies like eBates However, I will not add those until the funds are in hand. For example, I got a $25 bonus for signing up with Proper, but I am not going to count it until the loan I bid on is repaid. Mom always told me never to count my chickens!




EDIT: Looking for more information on online book selling? I am compiling all my articles about my experiences in one place. Check them out at The Online Bookseller.

7 comments:

cdreher said...

I don't have anything worthwhile to add, I just wanted to mention what a great post this is!! Look at the difference you have made in your bottom line in less than a month. I am stunned.

Dawn said...

Thanks Miss!! Still a ways to go, but feeling pretty good!

passivefamilyincome said...

Way to go Dawn! One question - Are you earning any advertisement dollars from your site? You didn't mention them so I was just wondering.

Dawn said...

PFI - Not yet. I am still hoping to, but I need to tweak some of the advertising, I think. It is a work in progress.

Curt said...

Great article. I like the side jobs.

Scott said...

Sounds like you have some great ideas for saving money and keeping your house. Your semi-passive ideas will work for you quickly. I've utilized both ebay and craigslist to sell items for myself and friends. Also cutting all non essential expenses can help too. Great post!

ChrisCD said...

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I hope the links are helpful.