Last week, I read a very interesting post by Sunil at Money Extra Blog asking if you would rather spend an extra hour on your profession or on your side business. I found this debate quite interesting as there is a huge discrepancy between what people say and actually do. It’s easy to say that you would spend an extra hour on your day job to increase your chances of getting a promotion but what are you going to do with this hour? The same rationale applies if you decide to use this hour wisely to work on your side business. So tell me:

What would you do with an extra hour?

I really want to know what you would do and am even more curious about what you are doing right now? Have you taken any steps to free up some time in your schedule? What are you doing with this precious time that you have cleverly wrestled away from one of those time eaters we encounter during a typical day?

I’ll tell you what I did during the last 2 years with not one extra hour but one extra DAY working on my side business!

Back in July 2009, I announced that I was working 4 days a week at my day job so I could have more time to hustle for my business. Now, 2 years later, I can tell you that it was the best decision I have ever made in terms of my personal finances.

Where I went before working 1 day a week on my side business

2 years ago, our online empire wasn’t that big. In fact, it was limited to:

The Financial Blogger

Intelligent Speculator

Gather Little By Little (which is no longer part of our empire)

And that’s about it. We were making roughly $4,000 per month from these 3 sites but it wasn’t enough to justify that we should work more than 10 hours each on the company. It was slowly growing and was easily managed. This is when you need to be cautious.

Cautious of falling into your comfort bubble and never escaping it

But we weren’t like that. Since we had several projects in mind, we decided that I could start working 1 day per week (which is 6 hours more) to work on these projects. That was really the key; when I worked during these 6 hours, I:

- Don’t write posts

- Barely answer regular email

- Don’t work on our main sites (unless for special projects)

- Therefore, I don’t do regular stuff

The key, when you are about to use an extra hour on your side business, is to direct your work towards CREATING VALUE

If you use an extra hour to write an article or to answer email, you won’t see much improvement. However, if you use this extra hour to:

- Work on the outline of a new site

- Look for private advertisers

- Create a group project with other bloggers (that will eventually drive traffic and new readers)

- Work on a product

- Think about your long term strategy

This is how you will create value and see amazing results. You want proof? Here we go:

In the past 2 years, with only an additional 6 hours per week (and counting 5 weeks of vacation ), we went from an average of 4K/month to an average of $8,000 to $9,000 per month this year. On top of this, we have diversified our income through a dozen websites and now count 5 major sites in our company. We now have 2 ebooks (Dividend Investing & Escaping the Rat Race) and are presently working on developing 3 other niche websites (which will be bigger sites than our current niche websites) along with 4 book projects on the table (the sequels to Dividend Investing & Escaping the Rat Race).

Would I have tripled my day job income with 6 hours more at work?

What would have happened if I had taken these 6 hours and put them into my profession? Would I have been able to earn a sustainable income out of it? I think the answer is pretty obvious: working longer hours at work will at best give you small benefits (such as a bigger bonus or at best a promotion) but it will never scale over time.

The best case scenario would lead you to a better job, earning perhaps 10% more income… and probably requiring you to work more hours . In comparison, I don’t work more on my online company but my gross income has tripled. It is true that I had to hire 2 VAs and more writers, but it was also with the purpose of creating a team that will be able to handle the growth over time. With our current team, I know that we can handle double the work we have on our plate right now, without increasing our cost… and without having me or my partner working more than 10 hours per week (+ my 6 hours ).

In the end, it’s not how many extra hours you are able to find in your week to work on your side projects, it is what you do with them . Try to outsource all admin work and focus on value creating activities.

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This is a big debate among many bloggers and readers; is blogging considered to be passive income? I know that many people will tell you that it is not because you need to write on a constant basis to keep your readership and traffic and consequently, your monthly income.

On top of that, there are several other tasks that are required on a monthly basis:

-          Doing technical updates (such as wordpress updates)

-          Following up with advertisers

-          Testing different ways to monetize

-          Connecting with other bloggers (for pleasure or business)

-          Doing research for your blog posts

-          Optimizing your site and content to be SEO (Search Engine Optimization) friendly

-          Answering the 150 emails you receive daily

-          Etc, etc, etc.

All right, blogging is a lot of work. In fact, if you look at it from this angle, it is far from being passive income! But when you think about it, if you start any kind of side business regardless if it’s online or not, it can’t really make money while the only thing you do in life is to go at the bank to cash your checks, right?

This is where the perception of passive income must be redefined. I think we need to go back to what makes passive income different from your day job. Do you have any clue? I have my own point of view about it:

When I work at my day job, I earn an hourly rate + a year-end bonus. Unfortunately, I’m even capped on the numbers I can work  and get paid in a week. I’m paid based on 37.5 hours of work per week. Considering the fact that I exceed my vacations and I would like to take an additional week off during my year, I would not get paid for this week off. Therefore, a regular day job income calculation is:

Number of hours worked X Hourly wage = Total Income

So if you want to increase your total income, you need to either work more or increase your hourly wage through getting a promotion or a salary raise (click here to find out about my tricks to increase your salary). But in the end, if you work less, you earn less. On top of that, when you are not working, you are not making any money.

What’s the Passive Income Equation?

Building what I call passive income requires a lot of time, energy and knowledge. However, it is done through leverage instead of earning money for each hour worked. It is more like the equation is actually exponential.

(Numbers of hours worked + a base of passive income ^{multiplied by your business structure} ) X Hourly wage ^{multiplied by your talent & knowledge} = Total Income

As you can see, the equation is not that different besides the fact that you have factors that push your income to another level. It is your business structure that will multiply the hours you work as if you were working 24 hours a day and even more!

For example, this very morning, I earned $250 through paypal while I was golfing. I didn’t work a single hour today but my business structure did it for me! It is the same way that I have earned almost $8,000 from my online company last month while both my partner and I were on vacation for half of the month.

So passive income doesn’t mean that you don’t have to work to earn money, it means that you don’t have to work DIRECTLY to make money. The number of hours you work keeps producing income even when you are done working because it is supported by a business structure. Just like money never sleeps, neither does your business!

When I work at my day job, I know that I have to start all over again each Monday morning as the work I did last week doesn’t count for next week. When I work on my company, I know that the work that I have done last Monday will continue to generate value (e.g. income!) for days, weeks, months or even years! This is how you can reach a 6 figure income while working less hours!

Are you looking to build a passive income structure? Do you think you can get out of the rat race simply by working at your day job? Tell me about your strategy to earn more income without burning out.

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I have lots of respect for bloggers. The hours are long and the work never ends. There’s always something new that a blogger wants to do. If only bloggers had as much time as ideas available.

As a blogger you know that need to keep up with the times and trends. Things are always changing and the landscape is becoming more competitive than ever. This doesn’t mean that you should give up. This jsut means that you should be willing to try new things once in a while. As Pat Flynn once said, “you need to make bold moves with your blog.”

Let’s look at five cool moves that you can make with your blog right now:

Start podcasting/video blogging.

It’s time that you got more interactive with your readers. They deserve it. Podcasts and video blogs really can add a personal touch to your blog. It’s also really fun to put a face/voice to your favorite blogger. It doesn’t have to be a daunting process. Use your default voice/video recorder and just have fun with it. You’re bound to get better at it as time goes on.

I made the classic excuse of not knowing how to do the technical work forever. This is why I put off starting my podcast for over one year! Now that I started doing audio interviews I love it and regret not starting sooner.

A podcast/video blog is a really cool thing that you can add to your blog.

Hire a staff writer.

I got sick of the plethora of garbage guest posts (aka free text links) that come in on a daily basis. I knew that I wanted a different perspective on my blog. I also knew that I wanted to reach a new audience. This is why I went out and hired a staff writer.

Sure this will cost you money, but it will add a unique touch to your blog. There’s only so much that one person could possibly cover before it gets redundant. You also get higher quality posts when you hire a staff writer that actually knows how to write for a blog audience.

Reply to every single comment.

As much as I want my blog to explode, I never want it to be so popular that I don’t have time to respond to my readers. A blog should be all about the readers. I love it when I see a blog like Financial Samurai or Smart Passive Income. Both blogs receive crazy amounts of comments. Both bloggers take the time to respond to most comments. I think that’s really cool.

Email all new readers.

I love to email a new reader and thank them for stopping by. No I’m not talking about the generic-standardized email that goes to everyone that leaves a comment. That’s just lame.

I love to email new readers because I remember how I felt back in 2008 when I started receiving emails from real people when I would shoot emails to the owners of my favorite blogs.

I try to send a quick thank you to all new readers that come by. One cool thing that I’ve seen is a customized reply to comments via email. That person turned me into a follower.

Work on a huge project.

You could put some serious life into your blog by putting out a huge project. This can be a premium product, a free eBook, a new series or whatever your imagination comes up with. Some of us are meant to put our energy into huge audacious tasks. Do you have a huge project that you’re working on?

What are some of the cool moves that you’ve made with your blog lately? Go ahead and show off!

(photo credit: sue richards)

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Last week I asked you guys if you could decrease your lifestyle spending. The idea of being forced to cut down on your expenses is always interesting because it forces us to challenge ourselves to see if we’re able to be more conservative.  There were some interesting and honest (which I always appreciate) responses to my question.

Financial Samurai wrote:

To answer your question, I could DEFINITELY decrease my spending even further if I had no job. I would go into survival mode and pretend I was broke and work harder to increase income and find a new job.

Mike (of this blog) wrote in:

I would actually be pretty grumpy but I would cut down on my expenses before going into debt to finance my lifestyle. I’m the kind of guy that would get 3 jobs and work 90 hours a week to get out of my mess. But still, I would still be pretty upset about it!

The reason I even got the idea to write the post was based on my own personal weakness in decreasing my expenses. Let’s go over a different scenario today. I wanted to ask a different question…

How would you make more money if you needed more money for some reason?

Let’s start off by looking over some common ways to make more money if you had to:

Find another job.

You might not be able to find another gig that pays as well due to the timing constraints. You can however find part-time work. If you really needed to find extra cash you could work at a part-time job whenever you’re off from your main job. This of course includes evenings and weekends. The obvious benefit would be the additional money that you make. The biggest setback is that you would pretty much eliminate your free time from your schedule.

Ask for more hours.

Depending on where you work you can pick up more hours. By working more hours or on higher level projects, you could easily find yourself making more money per month. The major setback would be that you would have to devote much more of your time towards your company than you really want to.

Go back to school.

If you’re thinking more long-term than you can go back to school to upgrade your skills. This will require a pretty heavy time and financial investment. The positive is that you can find yourself earning more money in the future by finding a much higher paying gig when you’re done school. Have you thought about going back to school? What’s holding you back?

Gamble.

Gambling seems to have a negative connotation (and deservedly so!). You could however make some decent cash through gambling. Whether you want to put your savings into the stock market, pick up poker, or spend more time at the horse races, you could make a little extra money by gambling. You could also lose this money. The risk is all in your hands and what you can handle.

Now that we looked over some possible strategies for making more money. What about some general thoughts? Let’s look at some other areas that you would have to think about as well:

The toll on your lifestyle.

What would be the toll on your lifestyle? The biggest issue that prevents most of us from making more money is the toll that it would take on our lives. Does making more money always have to be a negative? Could you scale a current process? I’m really fascinated by the idea of the toll that making more money would have on your current lifestyle.

 Your energy levels.

Do you find yourself drained after a long shift at work? My problem is that when I work on something that I don’t care for, I find myself very drained at the end of the day. This plays a major role into my energy levels. On the flip side, when I’m super motivated about a specific project, my energy levels are high and I can work on it all day. What effect do you think making more money would have on your present energy levels?

What if you absolutely had to earn an extra $5,00o per month or $2,000 per month? What would you do? How would you go about this? Would it even be possible for you?

(photo credit: rubenxaus11)

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If you have been following TFB since the beginning of the year, you probably noticed my switch of direction towards making money online topics. I actually want to lean towards a “making extra money” direction. This is why I recently talked about how I increased my income from 30K to 100k in 5 years.

My 2 main sources of income (my day job and my online business) are derived from the same asset: my brain. In fact, most of the work I do is thinking and my “product” is mostly to serve my clients. I offer financial advice and investment strategies to my clients and I write about personal finance on my blogs. What is cool about the service industry is that you can leverage your efforts in many ways. If I’m good at running blogs for example, I can take my experience from my main blog and use it to run 10 blogs.

But what if I was doing a hands on job? What if I was working in the construction field for example? Can I really lift 2 bundles of iron rods instead of 1 to work faster? Not really. So what can manual people can do to increase their income? After talking with my brother-in-law (who’s working in the construction field) on several occasions, I tried to find some ways to make extra income for all those people that find it’s not so easy to increase their pay check. So here are my thoughts on making extra income for hands on people:

Work extra hours

That’s probably the most obvious and simple idea I could find. Most people working in these types of fields are paid by the hour and often have the possibility to work extra hours (and getting paid overtime for these hours). It’s not an incredible idea as you are literally burning yourself out but it is still a good way to earn extra bucks.

Improve your efficiency

I’m a big fan of efficiency. Regardless where you work and what type of job you have, there is always space for improvement in your work environment. Since you know you job well and probably the company you are working for, as well; you could certainly make a few suggestions to management in order to improve the overall efficiency of your team. It could be through improving a process, changing a method or adding/modifying a tool that you use.

Great ideas always get rewarded. You will either get a bigger bonus or increase your chances of getting a promotion. On top of that, you will remain in your manager’s good grace (which is not bad if your company is going through a tough time and consider cutting down on the number of employees…)

Teach

You would be surprised how many professional schools, colleges and Universities are looking for people with experience in their field to teach people how to do their job. I have noticed that there is an interesting switch in their hiring process when they become very interested in adding expertise by delivering 1 or 2 courses in order to help students to make the link between theory and the real world. This can be applied by many individuals and it’s a great source of extra income. Unfortunately, this also requires more hours.

Start something else

All right, so you don’t want to work more than 40 hours a week and you won’t be getting a promotion any time soon. You are basically stuck in the classic rat race with a job that pays the bills but doesn’t make you happy. So here’s my question for you:

Why don’t you do something that would make you happy?

In your free time, consider starting your own business on the side. It doesn’t have to be a service, it doesn’t have to be on the internet (mind you, it would help!). It just needs to be linked to your passion. At the beginning of the year, I read 2 very interesting books on the idea:

The 4 Hour Workweek

Crush It

Funny enough, the first book, written by Tim Ferris, explains how to start your business in the internet world. Tim is a real wizard of efficiency and he found ways to benefit from the internet.

The second guy, Gary, made his fortune in the wine industry. He uses online marketing as well but his business was not an internet start-up, it was really a wine selling business.

I won’t lie to you, if you don’t want to use the internet at all in your business model, it could be very hard. However, if you don’t know much about technology, you can always outsource this part of the project once you get bigger. At first, you don’t need to spend thousands of dollar on your site anyways.

Leverage

If you really don’t want to get in the service world, you can always try your hand through leveraging. By borrowing to invest on the stock market or to buy land or properties, you can make a lot of money too. I’ll skip the investment topics since it is also something that requires a lot of time and financial knowledge.

However, buying a property is more accessible to everybody. All you need is good savings habit in order to build the down payment. Once you have it, you start with a small investment. When I was 20, I bought land for $28K. A year later, I sold it for 32K. Since I took a personal loan to finance the purchase, I literally made 4K out of nothing. By starting small, you can build capital and become a bigger player later on.

You’ll need to be patient

Regardless of which domain you are working, you’ll need to be patient before you see the extra income coming in. It takes time to build a business or to put aside enough capital to start earning some real extra money. If I take my personal case for an example; it took me 5 years to reach a 6 figure income and 3 years of hard labor on my blogs to build a 6 figure gross income business too. All that to say that money doesn’t come overnight!

Do you have any other tricks?

It was hard for me to find ways that you can make extra income without using the internet or the service industry. This is why I would like to hear from you about this topic. What other ideas do you have? Or examples of side business that worked for you?

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