Multiple Streams Of Income

Yesterday this got stuck into my head. I couldn't get to sleep so I laid in bed thinking about it for awhile. No amazing answers but I do have some thoughts. Maybe together we can come up with some real ideas.

I have read all the same stuff you have. Multiple streams of income from small depression proof home businesses that can be started for little to no money. (Ragnar Benson talked about this in his book on the underground economy.) That is a mouthful to say and has a lot of qualifiers. The various options typically given for these businesses ignores the skills you may already have. Some skills and career fields simply do not translate into a low start up cost small business. The 'depression proof' idea fails to acknowledge that if you can do it for little to no start up cash without specialized skills then somebody who is short on money can and will likely do it for their own self.

Most of us do not have a variety of good practical small business skills. Even highly skilled people may not have skills that translate to the one person or family sized business with little to no setup costs venue. However I don't think this means we would not be wise to pursue multiple streams of income. So lets take a step back from "small depression proof home businesses that can be started for little to no money" and just focus on multiple streams of income.

What does multiple streams of income mean? Simply put it means getting income from more than one place, hence the word multiple. The reason this is desirable is that our income is (or should be) more secure because while one stream of income might slow or run dry you have the others to keep things going. Think of the old "never put all your eggs in one basket" saying.

How can one get multiple streams of income? The first thing that comes into my mind is having a two income household. We have talked about the practicality, desirability and benefits to children of one and two income households at length in the past. While there are certainly benefits to having a spouse at home in the context of multiple streams of income it is desirable to have both partners working. By definition two incomes is 'multiple streams'.

Interesting discussions have been had where people try to say that a dual income (by definition 'multiple streams') households are actually in a worse place than their single income peers. The thinking is that since a dual income household generally relies on making more money they are more vulnerable. With one provision I disagree. That one provision is the assumption that households are living with the same difference between what they bring in and what they need to 'make it' as well as savings, etc. Obviously comparing a two income household with no savings, significant debt and a huge adjustable rate mortgage that is about to adjust with a one income household that has a solid emergency fund, little or no consumer debt and a reasonable fixed rate mortgage is apples and oranges.

The question is fundamentally one of how much money you make compared to what you need.

Lets say that the Smiths take home 85K a year from his job as a Mechanical Engineer. The Smiths live a reasonable lifestyle below their means and need about 50k to just get by at a circle the wagons  (not contributing to retirement or paying extra on the mortgage or prepping or eating out much, etc but bills are still getting paid) sort of financial level. He gets downsized and suddenly makes $400 a week unemployment. The serious drop in income from 85k to 20k is going to become an issue at some point. They have an emergency fund and a stocked pantry and could dip into other savings/ investments so they are OK, for awhile.

Their neighbors the Anderson family take home about the same amount of money as the Smiths. Mr. Anderson is an insurance broker and takes home about 50k a year. Mrs. Anderson works at the county court house and earns 35k a year. Conveniently they also need about 50k a year when in circle the wagons mode.  The company reorganizes and Tom's office gets closed so he is out of a job. He gets unemployment at about $400 a week also. Between his unemployment and Mrs. Smiths paycheck they can get still make ends meet. [Admittedly the math worked out a bit too conveniently, it was not intentional. However even if there was a gap between their new take home and the 'circle the wagons' income needed the Smiths are still in a far better position as they would be using up their emergency fund and savings at a much slower rate.]

If all other factors are equal a family with multiple streams of income will fair job loss or pay cuts better than a family with just one income.

Even for those whose inclinations and skills do not make them well suited for living solely on income from small home businesses I think multiple streams of income are a good thing to pursue. How can you do this?

My first thought is to do more or less what you do for a primary income now part time as a side job. A teacher could do some after school tutoring either for them self or one of the various agencies like Sylvan. A CPA for Johnson and McMillan could do a few tax returns on the side for individuals or small businesses. I know a man who made extra income doing that for a long time. A plumber or dry waller could do a small side job himself now and then. I have even known of some contractors who would pass small jobs not worth their time and energy off to employees to do on the side during off time. One could potentially have part time occasional working relationships with a few different individuals/ companies/ small businesses that are within your field but entirely dependent of your primary income.

One of the things my Grandfather taught me is that it makes economic sense to spend time working in the area that makes the most money. A guy who makes $35 an hour (unless he has a real do it yourself penchant) would be better off spending a few more hours at work and paying the laid off jack of all trades carpenter type from down the block $10 an hour to repaint the spare bedroom or whatever. That same logic extends to side jobs. The CPA I mentioned above should not be pursuing $10 an hour gigs doing farm labor but finding a few more people who need their taxes done.

Being diversified to the point where you have some income from an entirely different area is a nice idea. You might not have skills which lend themselves to this sort of thing but do not give up. Remember we are talking about streams, not rivers. A few hundred bucks here and a grand there start to add up and may be the difference between making it or not if one of the bigger streams (a primary job or business) dies out and isn't quickly replaced.

Could you put in a motor home hookup at your place?  Yeah it could be an imposition and might not work for everyone but getting 2 or 3 people paying you $300 a month adds up fast. If not the same plot as you what about keeping an eye out for  a few acres, maybe where they someone put in a septic before their plans fell apart. Where we lived a fellow had a piece of land out in the country set up for 6 RV's in such a fashion.

Maybe you have a big empty barn and could rent out some covered storage? Chopping one of those side parts of your barn which are a relic of the dairy the place was in the '40's could easily bring in a few hundred bucks a month.

What about selling a bit of your garden/ farm surplus? Up by where my Uncles lives there is a couple who sells corn and green beans during late summer and early fall. He is disabled (at least as far as the state is concerned) and they have a couple acre garden. Selling vegetables at a little stand on the side of the road and leaving a small trailer with a few baskets of vegetables, a board with prices and a jar to drop cash into pulls in a bit less than $2,000 a year for them.

Ideas are endless and only limited by reality, creativity and your economic situation. A modest duplex with fenced yards in a nice neighborhood is a great option if you have the cash. My Grandparents did very well with apartment complexes. Or course real estate is its own beast and not somewhere one should go unless they are sure they can really afford it.

It is also worth noting that maybe the stay at home spouse could pursue various alternate streams of income. Maybe if the Mrs. is already taking care of your one or two kids she could take care of a  3rd and 4th to make extra cash.

Some hobbies such as sewing, weaving, knitting or wood working could make you a few bucks also.

Back to small home businesses real quick. Not everybody is suited in terms of skills or inclination to "small depression proof home businesses that can be started for little to no money."

Working for yourself has a lot of benefits but also some definite drawbacks. It is true that when you are your own boss you will never get downsized or laid off because the boss's cousin needs a job. At the same time small businesses fail at an alarmingly high rate. Also having a 'business' where you don't make any money is really not too different from getting laid off anyway.

Some folks love hustling (not in the 70's pimp sense) up new work and making deals and buying and selling stuff. I have a friend who is like this. He will get someone to pay him well to cut down a problematic tree near their house then make more money selling the wood. He chases down deals and resells tools and equipment at a profit.

While he might be thinking about the next deal or job on the horizon as he waits to fall asleep I would probably be thinking about how to keep the roof over our head if all of them fell through. Personally I like that I know within about 10 bucks (somehow or another they are always a little bit different) what I am going to get paid on the last business day of this month as well as say, in mid June. Don't think either of us are wrong or right, just different.

Both of us work so we have two streams of income and a trickle (the blog brings in a few bucks but not a meaningful factor in our overall financial situation). Got to think about ways we might be able to get a couple more trickles........

Wifey says to "stop writing and go make some money" so I have got to go.

THE END