This is actually a pretty complex question, and I’ll need to dip into the distant past a bit to explain. At the moment I have four income streams: Jobby-job/W2 income, collectibles income (Amazon, eBay, and Facebook), and real estate income. I’ll explain each below in more detail with some numbers, but I’ll explain the ‘how I got here’ first.
‘How I got here’ is fairly simple. In 2006/2007 (told you, distant past) I was working and making (I think) $8.25 per hour. I was part of a grant program for first time homeowners targeting 2008 for a home purchase, and I knew I wasn’t going to be able to max out that program just through saving income. I think that allowed me to save up to $1,000 that would be tripled with match funds for the down payment. As I knew I was moving when I bought a house, and I didn’t want to schlep all my crap around, I decided to sell my book collection and some collectibles. That was moderately successful, so I’ve kept it up through today. I bought my house in July 2007 for $82,000 with $3,000 down from the program mentioned above, and an additional $5,000 forgivable grant of down payment funds if I lived in the house for three years (I did).
My job is un-thrilling, but the pay is good at (currently) $58K per year.
Amazon and eBay income: this is inconsistent, but still nice. I buy books (generally) from local outlets like Goodwill, my library friendshop, or garage sales, and sell them on Amazon. I sell collectibles on eBay. Much more recently I’ve also been selling through Facebook. Fees and shipping are high (generally about 20% in total) through Amazon and eBay, but some income is better than none. There are minimal fees (beyond the cost of moving funds through PayPal and time/shipping) through Facebook, which is why I’m transitioning to selling more through that channel. You’re definitely exchanging time for money with these channels, though, so it helps to have some kind of passion for what you’re selling. I really love digging around in thrift stores and libraries, so this suits my interests.
NOTE: I’m not a CPA or lawyer, so consult with those folks before doing stuffs!
For book/collectibles sales I show net income in 2017 of -$4,854 and net income in 2016 of -$3,597. The net is the very, very, very important part here. I urge absolutely everyone to have at least one business/side hustle. In my mind, that’s primarily because you can stack expenses, particularly the mileage expense, against income. Let’s say, for example, that I sell something on Amazon. I package it up and print the label. Because I have to take it to the post office (my USPS carrier won’t take packages – that’s a whole other thing) I can drop it off on my way to work. That trip is now a business expense at whatever cents/mile. I also periodically go on buying trips in town, and if I can stack an errand into that trip it’s all for the good. If you perform some business action on a trip out of town (for me that’s buying comics to later sell at the moment) you can also deduct the mileage and tolls for the trip as well as the product purchasing. In essence, you’re increasing your business expense in order to retain more business income. I believe the rule is you need to make a profit one out of every five years, but you still get the advantage of the business income. You get the biggest benefit of having a business if you stack as many expenses as possible onto your business balance sheet. I think it was Scott Trench in his book Set for Life (NOTE: this is an affiliate link, as I figure it’s low hanging fruit that can make me a few pennies, so I’ll be adding ads and affiliate links if I can figure out to in the future.) that said the truly rich only really worry about controlling assets, not owning them. In my mind, having a side business and increasing your expenses in the business instead of your personal life is a way of controlling your income.
Paper losses for the win!
