Jonathan Leane is today’s guest blogger here at Rich Credit Debt Loan. Jonathan writes for Debt Loans.
Why Diversify Your Income?
Most people are familiar with the idea of diversification—it is common knowledge to not “put all your eggs in one basket”. However, this advice is most commonly applied to investing to suggest that you should invest in a variety of assets to protect yourself from a decrease in one particular asset. While this certainly is true, diversification can be applied to more than investing.
Diversifying your income can be even more important than diversifying your portfolio if you have many working years left. Imagine being fired from your current job—you would lose 100% of your income. By diversifying your sources of income, you can protect yourself from a loss of income in one area.
Ways To Diversify Your Income
There are many simple ways to diversify your income. Some ideas actually generate excess cash, while others indirectly increase your total net income by managing your expenses efficiently. Some good ways to diversify your income include:
- Investment Income- Dedicate part of your investment portfolio to generating passive income through interest, dividends, and distributions. After everything is set up, you will receive passive income multiple times per year.
- Rental Property- Rent some of your property (or even a room in your home) to generate income with existing real estate.
- Peer-to-Peer Loans- If you have a small amount of cash sitting around, you can put it to work by lending small amounts to individuals all over the US through Prosper.com to earn interest income.
- Part-time job- Finding an extra part-time job can help supplement your regular income; this can be anything from delivering pizzas to waiting tables. If you don’t want to keep working for someone else, then use this chance to start your own small business.
- “Free money” deals- Sign up for deals that offer you “free money”, such as receiving $100 for switching your savings account to a different bank.
- Save money (and time) with a debt consolidation loan- To lower your monthly debt loan payments (and find time to earn more money), you can replace your current debts with one debt consolidation loan which typically has lower monthly payments.
- Higher Interest Savings Account- Move your current savings account to an account that pay a higher interest rate—combine this with #5 to earn extra cash. These higher earning accounts are often found at online banks.
- Blogging with AdSense- Many people are able to earn spare income by starting a blog and using Google AdSense to host the ads. The good thing about this income stream is that your blog can generate income 24-hours a day.
- Sell unused items- Go through your house and garage to find old things that you don’t use anymore and sell them on Craigslist or eBay. You get the added benefit of a clean house as well!
- Refinance your house payment- Save money on your monthly mortgage payments by refinancing your home loan to a lower monthly payment.
These ten ways to begin diversifying your income are only the beginning. There are many more creative ways to earn extra income. However, in addition to bringing in more money, you also need to focus on ways to save money and manage your expenses. By adequately diversifying your income, you can protect yourself from an unexpected decrease in one source of cash flow.
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