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I disagree that you have to work until 65 just because you don't have any "extra income". The reality is that the amount you can save from your total income, regardless of the source, combined with how much you spend, will determine when you can retire.
Another thing to keep in mind is that not everyone wants to work extra hours for money. A lot of people would be well served (perhaps even better served) to work on spending less money rather than trying to earn more. Another idea is that someone who perhaps makes a good salary could use some of their extra time doing things that they would normally hire someone else to do like house maintenance, cleaning etc. This won't provide extra income but it will save a lot of $$.
A word of caution: While the J.K.Rowling example does show it's possible to find the time to write best-selling novels when you are truly busy, do keep in mind that not everyone will be able to write well. Rowling had a wonderful set of ideas, she created a unique fictional world, and she fleshed it out beautifully. If you want to write a novel, fantastic. Go for it. Just realize that you have to read your genre to know what sells and what has been done to death. You have to learn about writing techniques (points of view, tenses, etc.), and you have to practice. A lot. You also have to learn about the industry. Just because you and your mom like your work, doesn't mean an agent will, or that it will sell. You also have to learn to take (constructive) criticism and apply it, no matter how much it hurts at the time.
My point is to become wealthy, so continue to increase your income in the process.
But you said it best, "If you are strugging with debt, spend less than you earn!
All that said, I doubt you'd ever get caught if you did this.
Best of both worlds thinking is a little utopian. Especially when it is you that has to live your life.
I'd be interested in knowing how much of your advice you take yourself.
I guess what I'm trying to say is this: Stick with the great goals and the true talk about reaching those goals... but be realistic about the goals others will actually set for themselves.
@FourPillars: Mike, I agree you don't have to get "extra" income per se, but the idea is that for most people expenses will increase over their life, so if revenues don't, too, you'll lose ground. As you and I both know, kids add expenses for example. Not working extra hours for extra money is of course fine. Not everyone wants early retirement - many people are happy enough with the status quo, and that's not a bad thing. And I agree that spending extra time doing house maintenance, for example, is in effect "earning" extra income.
@Fecundity: Definitely not everyone can write well, and Rowling is definitely an anomaly. However, not everyone needs to succeed to her level. It's simply an idea. I could just as easily have put "write songs" or "paint pictures" or something like that. Your advice for writing a novel is good!
@Early Retirement Extreme: The law of diminishing returns kicks in for some moreso than others. If I can write a book, or invest in a business that grows and returns some of that investment to me, etc., the effort I have to put in initially in fact decreases while (hopefully) revenue grows. Selling things on eBay? Yeah, that's limited. But saving - as I said - has a firm limit of the amount of revenue you take in. I can't save 110% of my revenue. I can increase my revenue 10%.
@Ruth: That was, exactly, what I was getting at - looking for ways to take things you might already be doing and make some money off of it. I like to think I'm doing the same thing with blogging - I'm taking something I have been doing for free for years (Brip Blap was a very unsuccesful political blog for years!) and enjoying it and making a little money off of it. Win win. :)
@Moneymonk: There is definitely a huge difference in increasing wealth and decreasing debt - it's two different activities. That having been said, there are some great debt-reduction blogs filled with tips on getting extra income to help reduce debt quicker.
@deepali: Ha! :)
@LazyMan: You are correct. It is probably not legal, and I actually removed the burning suggestion. That having been said, I doubt the artist gets paid when you buy used CDs, anyway, so even reselling it hurts the artist.
@DollarFrugal: Glad it helped! You're right, this is the time of year people start thinking about taxes and cleaning up for the new year and how the last year went, so making next year better becomes a preoccupation!
@HeMan: As I said to LazyMan above, you're right. And yes, it is a little utopian - it's a goal. That having been said, I do apply this in my own life. My wife and I both worked professional jobs four years ago, and lived in Manhattan near Central Park - i.e. very expensive. Since then, she quit her job to stay home to raise our son, we moved to a significantly less expensive suburb of NYC (although still very expensive), I quit my time-consuming job to become a contract consultant, and despite reducing our take-home income by about $70,000 all told we save 25% or more of my annual income, both of us started side businesses, I do freelance writing work, I'm working on a book and we are adjusting our investments to maximize future income from them. So yes, I live a significant amount of this advice. Some of it, as I mentioned, comes from friends of mine - so it's not something I do, but something I know people have success with. I know people who do almost all of these things (making the calendar was just an idea off the top of my head, I confess). I save and at the same time we both work hard to increase our "non-job" income. Other people are, of course, free to take or leave what parts of my advice they see fit!
I think it is most important to choose things that you can do once, and make money from again and again. That usually involves creating some kind of intellectual property. For example, books, ebooks, blog posts and web sites (supported by advertising or other income sources), or other ways of creating or inventing something that can be sold again and again.
Nice food for thought--I look forward to reading more of your blog.
Cathy
I did that for a long time and thought I was doing all right. But then I woke up and I realized that I didn't have enough in the way of savings to retire comfortably or to pursue options that might become available in the future (business opportunity? rural property? graduate school?).
It is not enough just to spend less than you earn, at least not for me. In my case, all spending is not equal. I have to sit down and really ask myself what is important and then eliminate spending that does not align with my values. I also have to think about what kind of things I need (insurance, for instance) and might want to have in the future, and then look for alternate income streams that can help me afford those things.
Most of us will not have the time or the particular talents to do all of the suggestions on Steve's list. But some I am doing already, and a few others are ones that I had not thought of but could easily do on occasion and would not require a lot of time.
I think that reading the things on the list will help me get into the proper mindset -- the mindset of looking for a way to turn an interest or an item into an alternate income stream -- that will help me come up with more ideas on my own.
At any rate, it was a great read. Thanks for sharing! I plan to include your article in my weekly carnival review Friday.
Best Wishes,
D4L
I came to your blog through the Carnival on personal finance. It is completely amazing to see what you have written.
Initially when I read the title I was surprised to the point of annoyance. However the title seemed so catchy that I got hooked up with the flow and read it throughly. I love all the points...they are simply amazing. I understood your point once I went through the article. :) And one more thing....I will be waiting for the sale of Brip-Blap T-shirts for sure.
Thanks for a great post.
And what you say is so true. In my business, whilst we do benefit by cutting costs, we benefit far more by increasing our profits.
I imagine that if you obsessed about cost cutting to much, you'd find it much harder to attract more money into your life.
Thanks for all the suggestions. I have also tutored and scored essay questions on standardized tests, and I've heard of people proctoring tests, teaching informal classes, and delivering phone books.
I'm much better at thinking up ways to be frugal than ways to increase my earnings, so I really enjoyed this entry. I'm going to think about selling something on etsy or cafe press.
Anyway, it would be much more lucrative to work nights at Starbucks than write a novel. Only people who feel absolutely compelled to write a novel, and/or have good reason to think that they know how to write (having been paid real money for your writing is a clue) should tackle novels.
YOU do the math ...
Good ways to get started, but the bottom line is simple... Provide value...
i.e Create value, and deliver it = Money Money Money!
http://www.cashforcds.com/
I've used them and they pay promptly. No guarantees how much they'll pay for your stuff, but I bet they're a better deal than Half-Price Books.
Think again. With used CD's the artist got paid for every copy out there. With pirated CD's, they got paid for no more than 1/2 of them. If I no longer want to listen to a group, but you do, the original royalty isn't lost. It's when two listen but only one paid that there is economic loss.
Frankly, I think the artist got 'messed over' long before the pirates ever burned their first copies. But that's a digression.
Good blog. I don't know that I am even oriented toward being wealthy so long as I have food on the table and a roof over head. But others are. Carry on.
This is a revolutionary way of looking at personal finance and passive income generation. You not only have to not spend all your money but also earn more and more
I believe, maintaining to be frugal and live a frugal lifestyle is what will make you richer.