Ways to make extra money
The best ways to make extra money are:
- Save where you can
- Invest in your future
- Do something on the sideline
Save where you can
- Credit cards and loans - The interest on some of these are up to 20% a year! That means that over 5 years you are paying roughly double your initial investment! And that is only if you don't keep using the card again. Have a look at your bank statements and pay off the highest one first. The instant gratification of buying something you want does not outweigh the burden of the extra interest you will be paying. If that TV was advertised at double its price would you have bought it? Of course not but by buying it on your card that is exactly what you are doing! If you just pay an extra R500 into the highest interest card you have it will already bring it down much faster.
- Cars - Did you know that for the first 2-3 years of your car payments you are only paying the interest and none of the initial loan amount? That is ridiculous right? This gets even worse if you take a deal with a balloon payment or guaranteed trade in at the end of your 5 or 7 year payment plan. If you keep doing this you will never own a car and be paying monthly car payments for the rest of your life. What will you do when you are on pension and can no longer afford car payments? The only way to make it feasible to buy a car is to keep it for at least 5 years before trading it in and then using the full selling value as the deposit on your next car. Another alternative is to get a monthly rental car instead of buying one which actually ends up costing you the same per month as a car installment plus insurance would have cost you. Remember that a car is never an asset but rather a liability. Make sure you really need and can really afford that car. Do you really need 2 cars? Are you able to use public transport? Would it be cheaper?
- House - Unlike cars, houses are an asset and can keep or even increase their value, making it an investment. We will go more into the investment part later but as a monthly expense, once again try to eliminate debt and the interest that comes with it as much as possible.
- Stop buying stuff - By stuff I mean things that you want but don't really need. We all want nice things but imagine what nice things you could have if you rather invested the money into something that will make you more money. If you just wait a bit and work smart, you could have all the stuff you want. This is something that we especially need to teach our kids - that instant gratification does not pay so don't let them manipulate and guilt trip you into buying the name brand clothes that cost 3 times the price. Rather give them a set amount of pocket money (which they have done something for) and teach them to budget. Make them responsible for paying for anything they want that is more than you are willing to pay. So if they want those Adidas tekkies, let them pay the difference between the Mr Price tekkies price and the Adidas tekkies.
- Don't spend your money in advance - When you know your paycheck is on its way it is easy to spend it before it is even there. This leaves us in a space of never having money cos as soon as it comes, everything goes out again and we are left broke again, keeping the mentality of "lack"alive within us. Living this way puts you in a constant state of stressing and suffering which you think will be eased by the gratification of buying something, resulting in a repeat of the viscous cycle. Start by just for 1 month not buying anything unnecessary, nothing. Pay your expenses and then put the rest somewhere where you cannot access it like in a 30 day account or even better, into a credit card. Then lock the credit card away and pretend it doesn't exist. Keep telling yourself that this is for your future so that you can get out of this situation.
- Register a company - Even if you are working for a boss, you may be selling something or making money on the sideline. Unless it is purely cash, register it as a company. You can claim loads of things back from tax like a portion of your house used for business, petrol, staff (domestic workers), toilet paper, coffee, etc. In our "Business makeover" program we explain exactly how to do this.
- Auctions - Auctions are a great way of buying things for much less than you would anywhere else. You can find some great bargains and save loads of money. Buying second hand from Facebook, Gumtree, Junkmail and OLX can also be much cheaper than buying new.
Invest in your future
The single most important rule for the average Joe to become wealthy and financially free is to do just one thing every day which will improve your future!
This means that you need to have a plan, a destination where you are heading towards and every single day you have to do at least one thing to get there. In a year you would have done 365 things to get closer to your goal and your life will change dramatically just by doing this. It takes the "daunting" out of change and makes the goal a reality without it seeming like a mountain that needs to be crossed.
Here are some guidelines for things you can do to improve your future:
- Every day, or at least every weekend do something (even just one thing) on your house to improve it. Google is very clever, it can show you how to do almost anything DIY plus, the more you can do yourself, the less you need to pay contractors for and the more money you save.
- Learn a new skill even if it is playing a musical instrument, learning an art, studying further, doing an online course or a weekend course or watching YouTube videos to learn how to fix things. Every skill you have is another door that opens for you and another opportunity to make more money. In this day and age we are so fortunate to have the internet and everything it offers. There are literally thousands of online courses one can do for very little money that can open a whole new career for you!
- Dream - Imagine a wonderful future. Become passionate about it. Believe it is possible. Plan how to make it possible. Do what needs to be done to make it happen.
Do something on the sideline
Whatever you do, do not give up your job to start a business unless you have big, guaranteed contracts with buyers from the get go. Businesses take a while to get going and before you know it you may sit with no capital and shattered dreams. But, you could start something on the sideline and then do it until it makes enough money and needs more time. then you quit your job and go into expanding it full time (if it is worthwhile). Also, don't make debt to start a business. Rent a bakkie, use the resources you have, etc.
- Sell something on the sideline like Tupperware, Herbalife, Avon, Honey or Sportron - There are several companies which people from the public can become agents of and earn some extra money selling to their friends. This option unfortunately requires a certain personality type that can sell and doesn't mind doing so to their friends. If you don't have the confidence for that then maybe one of the other options will work for you.
- Livestock & game - If you have a smallholding, farm or access to free and safe grazing this could be a viable option for you. Most livestock and game have babies every 9 months, little money babies! So that means your investment is doubled every 9 months! This option would require some homework to be done so make sure you investigate properly before diving into it.
- Property - If you sell a house every 2 years or more and it is your primary residence and you don't make more than R2 million profit then there is no capital gains tax payable. Many people have made a great deal of money sacrificing the beautiful house and going rather for a "fixer upper". They fix it up and sell it 2-5 years later making a substantial profit. Of course moving every 2-5 years is not fun but if you are the adventurous type or like the reward of seeing something you create come to life then this can be a lucrative option for you.
- Rental property - Of course having a second property that you get rental income from is also a very good option. Just make sure that you can cover the bond payment if you sit without tenants for a month but otherwise, if you are in a position to do something like that, go for it. Use the rental income to pay the property off as fast as you can, then, after that, it is pure income! A great retirement plan!
- Renting out a piece of your property - If you have a domestic quarters, cottage or even a garage that you can turn into a cottage, this can be a very nice little rental income that helps to bring an income and cover the bond. If you have a big yard, maybe consider using a piece of it to put up a log cabin or a cottage. Log cabins are easier as they are removable and depending on the type, may not need building plans. There is a huge demand for cheap, garden cottage type rentals.
- Carpool - If you are taking kids to school or have a colleague that lives close by you could start a carpool and earn some extra money by letting others drive with you where you are going anyway.
- Auctions - Buying from auctions and reselling on Facebook and other online selling platforms can be a very lucrative sideline. I used to earn about R20 000 a month just from doing this! Furniture, tools, industrial equipment, etc all work really well. You just have to work with the following sum; people are willing to pay about half the new price for something in good secondhand condition so this will be your selling price. Therefore your buying price cannot be more than half of that (quarter the price it is sold at new). You never know what you will find at auctions but if you work on this calculation you will make money. Just stay away from electronics and appliances as they are often faulty and can be expensive to repair, killing your profits.
- Investments - Bank investments don't give a great return and there are many scams going around that convince you to invest your money and then disappear so watch out for those. Investing in stocks can be done if you know what you are doing but can be devastating if you don't.Generally the safe ones give a low return and the risky ones are very risky so do your homework properly before you invest anywhere. I, personally would rather invest in my own business or sideline income or education or debt before investing elsewhere.
- Your own business - You can start a sideline business doing anything you are passionate about, capable of or are willing to do. I don't know about you but I have experienced numerous times in my life where I wanted something done but apparently there was nobody doing it as a business. When you encounter something like that, that is a business opportunity! Even if it is already being done but you can think of a better way to do it, or a cheaper way to do it, I can guarantee you there are others who will appreciate it being done in a better way. That is a business opportunity! Don't look for excuses, look for solutions!