The fundamental law of money is: To gain wealth, you must spend less than you earn. If you want to increase your wealth, you must spend less or you must earn more. (Doing both is even better.)
Often personal finance writers focus on the “spend less” half of the equation. Frugality is quick and easy to implement, and it’s something that anyone can practice. For good or ill, self-denial is easier for people than self-promotion. Yet often it’s this self-promotion — increasing what you earn — that can yield the greatest results.
Last week, Free Money Finance shared eleven great ways to earn more money. FMF writes:
I spent last year trying to earn an extra $10,000 above my salary. I’m doing the same this year, and I thought many of you would like to join me. As a starting place, I’m identifying all the major ways I’ve compiled on how to make more money.
His suggestions include:
- Ask for a raise.
- Earn a promotion.
- Change jobs.
- Earn income from your hobbies.
- Start a side business.
- Maximize your investments.
- Trade or barter your skills.
- Make the most of your current job skills.
- Sell stuff you own but do not need.
- Use credit cards strategically.
- Get money owed to you.
Though I’m wary of recommending credit card tricks to anyone struggling with debt, the rest of the list is solid. I’ve used several of these strategies to boost my income during my own financial journey. With a little creativity, you can probably boost your earning power, helping you to reach your financial goals more quickly!
[Free Money Finance: Eleven great ways to earn more money]
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For the past 3 years, I’ve carried a credit card balance and made minimum payments. Of course, the finance charges were just barely below the minimums, and a couple late payments meant I paid nearly my entire balance over that time period with penalties and fees.
I took advantage of a zero percent interest cash balance transfer, and now I’ve paid off 25% of that balance (will be 50% soon with tax refunds). So I can vouch that it does work if you also make a plan to pay it down concurrently.
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A few more ideas off the top of my head:
1) Outsource the activities that cost you less per hour than you earn. For example, if you make $30/hour, hire a house-cleaner at $15/hr while you work.
2) Use a cash rebate credit card, pay off in full monthly, use it for most purchases, and invest the rebates. I earn about $1500-$2500 each year doing this.
3) If self-employed, increase your prices. Offer better customer service and your customers won’t mind. In fact, we get even more word-of-mouth referrals.
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Credit cards aren’t bad. Credit card companies aren’t evil. With cash back and rewards cards, view it as a game. Play within the rules and its a sure win.
Only charge items you’d buy anyways. Pay off everything in the grace period. The WORST cash back cards are 1%, which is free money with no strings attached and no risk if you follow those simple rules.
The fact that people still think that all credit cards are evil baffles me. Managing a credit card is extremely simple. If you can’t have a credit card without incurring $1000s of dollars of debt you didn’t need, well thats your fault – not the credit card company’s. And extremely easy to avoid, especially if you are an adult.
If you are going to spend the money on something, you may as well get something back.
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I’m not sure this falls under “making money” but it does fall under “spending less money overall.” I’m an avid reader. If my library doesn’t have the book I’ll order it new or used from an online dealer. Once I read it, I decide whether or not I’ll keep it (some books I do keep to read again). If I don’t keep it I’ll resale it on half.com. This way books cost me very little. Of course some books have no resale value because the supply is too great – in that case I buy it used as cheaply as possible and then donate it to my library when I’m done with it – taking a deduction and reducing the clutter in my home.
I’m also an avid collector of baseball cards. Its an expensive hobby, but when I buy a box or case of cards I’ll usually sell the stuff I don’t want on eBay. Again I usually don’t sell enough to get all my money back, but I get some of it back and it allows me to keep enjoying my hobby.
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Credit card tricks are tricky. If you’re really smart and disciplined, you can bounce debt around to from one 0% interest card to another to get it paid off without a dime of interest (this is what I did a few years ago).
However, even now I couldn’t do this, as they’ve all started charging fees for the transfer itself. But you could still save significant money compared to paying finance charges over time.
The other thing to watch out for: get in trouble with ANYONE on your credit record for late or skipped payments, and boom, you lose those 0% interest offers right there and they go into very high interest.
You have to remember that it’s designed to trap you into paying them fees, period. That’s what they’re in business for. So you have to be very careful.
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I am glad to see that your current job ranked the first 3 slots on the list. It is important not to neglect your primary employer as you try to increase your income. Put another way, don’t lose your $4,000 per month salary over a $400 per month side business.
Best Wishes,
D4L
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Great article! I’m a teacher, so raises can only be gotten by earning “salary points,” aka continuing ed. units. It always amazes me, though, to hear other teachers talk about trying to save a few bucks here and there only to find out that they don’t see the point of taking more units to increase their salary. Sure, it costs money to take classes, but even at the average $400 for every 3 units, the salary raise is money that will be coming in every month for the rest of our lives! (Yes, life, because the higher your final salary when you retire, the higher your pension payments!) Over the next 6 months, for example, I’m going to spend $1700 on continuing ed classes, but if I finish before September, my salary next year (and every year thereafter) will be $4,000 higher than this year’s salary! If that’s not a good investment, I don’t know what is.
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that’s some good advice for sure
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I agree that messing with credit cards is not the best idea (frankly, I’m not in favor of anyone getting into debt for anything other than a house to live in or a college education). I also see the point that many (including myself) talk over and over again about reducing expenses–expenses can be reduced only so much. At some point increasing income needs to be part of the equation.
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Ryan
http://uncommon-cents.net/
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Thank you for saying “EARN” a promotion. Too many times I have employees that think they deserve a promotion just because they haven’t screwed up enough to get fired in the last three years.
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frankly, I’m not in favor of anyone getting into debt for anything other than a house to live in or a college education
For sure, ideally, but medical costs and the costs of helping out sick relatives and other such life events can put the best planners into debt. Even with emergency funds saved up.
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This is my first year trying to increase my income through other means. re # 10: use credit cards strategically. Countrywide has recently come out with a credit card for those having a mortgage with them that give you two percent back if you put the money towards the principal of your martgage. needless to say, we are putting everything on the card!
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I like the idea of earning extra income through my hobbies. I think you have the best chance of success when you work in an area that you are passionate about. We often put a lot of time and energy into our hobbies. If we can devise a way to make money while doing what we love, so much the better.
On the credit card issue, I believe that if you play with sharks, you take the risk of getting bitten. Reward points and cash back programs are not worth the risk. If “life happens” and you get behind, the late fees and sky-high interest rates will kill you.
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I think diversifying income streams is part of a good strategy to increase income. Putting all of your effort, energy, and eagerness in your primary job is certainly advisable. However, you could still lose the job through no fault of your own. Having income from a side business or investments will go a long way to alleviate the pain if you find yourself laid off.
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Start a blog about something you’re familiar with that is also marketable.
You’ll likely earn $3-5 a day even with a simple site that you contribute to weekly.
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Another idea along these lines is to relocate where the cost of living is lower. This is especially enticing for those mobile workers who are making an income online. Find a place you like where you can live the cheapest, and plant yourself. Then do what you do and let the money roll in.
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millionaire mommy:
keep in mind that your rate of $30, after payroll and income taxes is now worth $15. if you can find someone to clean your house for $15 an hour and you can pay them cash, then fine. but a legit business is going to charge you $50-75 an hour to send their cleaning crew over…
0% cards are great, keep transferring the balance while investing what you would use to pay it off.
ebay and amazon are good for selling things you dont use.
keep more money by doing things yourself. you save on sales tax.
dont buy things you dont need.
work more effeciently, get more done, make more $.
maximize retirement plans, buy rental real estate, earn money through dividends, etc. TO LOWER INCOME TAXES.
tax is the number one destroyer of wealth. learn the laws/rules and use the loopholes/appropriate plans to grow your networth.
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[...] Rich Slowly discusses the ignored side of personal finance; rather than decreasing your spending, how you can increase your income. I’ve had a part time job as well as my full time job since last millennium sometime, so I [...]
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I hired a housecleaner because I could get someone for 1/7th of what I bill per hour.
Many independent housecleaners charge less than a service. Those “legitimate business” services typically hire people for minimum wage, but pay them with schemes that work them to the bone and leave them with less than minimum wage.
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Millionaire Mommy Next Door Says:
January 20th, 2008 at 11:47 am
A few more ideas off the top of my head:
2) Use a cash rebate credit card, pay off in full monthly, use it for most purchases, and invest the rebates. I earn about $1500-$2500 each year doing this.
Which credit cards should I go for? I’m really lost when trying to find one.
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Having worked for a bank, I will say that in my opinion that credit cards are evil, the companies are evil, and the whole system is evil. I don’t think all of it was necessarily deliberate. A lot of the problems are due to the cumulative effect and interactions of different aspects of the system, rather than someone sitting down and saying, Hello! What can I do to screw my customers today?
You can manage credit cards strategically — I have done so — and somtimes that’s to your advantage. That doesn’t mean the system is good or neutral.
For evidence of evilness, I point to cash advances/payday loans, universal default, those checks I used to get where depositing the check meant I’d accepted a 34% loan, and the poor patching of the problem of “identity theft” — which would not be a problem at all if they weren’t so desperate to give credit to anyone as fast as computerly possible, without much checking.
And yes, Bob Sullivan is my hero.
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In reference to #10, using credit cards strategically, I recently covered how to do this on my personal finance blog at http://20somethingfinance.com/blog/2008/01/04/credit/
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The first three aren’t “earning above your salary”, they are increasing your salary.
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I’ve spent some time over the last two weeks putting #9 into practice. So far I’ve pulled in over $350 in extra income in a week. I’ve also started on #4 by blogging as a hobby which is both rewarding and potentially income generating. I’ve posted about my success at using eBay to sell my stuff recently on my blog (pretty neat how the two fit together like that).
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Over a year ago, I strung a few of the tips together for a real boost to increasing income: the primary move was to change my job. I left the comforts of enterprise IT (and Fortune 500 benefits) to a small business as an IT consultant. One of the smarter career decisions I could have made. It put me in a position where I was marketing my skills and away from the entitlement mindset that contentment breeds. A fresh start to rejuvenate and refocus my career doing what I enjoy…
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I was wondering how you earn money by running a blog?? I enjoy writing and think this is something i could be good at but can’t see how you earn money from doing it.
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never use credit card
work accord to your pocket
earn more & save more is the only way to increase wealth
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i do not use credit cards because no matter how much will power someone has there is something that always comes up.
working hard and doing over what is expected is a good thing to do but it will not most of the time get you reconized.
i do agree with making your hobbies into a little source of income because you already know where what how and who.
where to find the materials or knowledge
what to do to make it better or make it
how to market it
and who to sell it to
i am 25yrs old and i have came up with hundreds of things to do since i was 10 yrs old mowing yards, working at different companies, opening several different businesses, selling, and much more.
i have a chimney company i opened three years ago and its not a big company but it has a 40% growth every year i like meeting people giving advice for the situation at hand and giving the best customer service i possibly can i do have one suggestion though do not buy anything that is for sale on the internet for how to make money those are schemes all of them they will tell you what you want to hear or try to use reverse sycology to make you think that you are making the right decision but in actuallity they are the same people like us that gave up on trying and began scheaming
sorry about my spelling
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