Maximizing Income vs Minimizing Expenses

[Life_is_Simple]

I was thinking today that I spend too much energy minimizing expenses, as opposed to maximizing income.

When a person has 1 full time job, they basically have 1 steady income, so it makes sense to spend time trying to minimize expenses.

But for people who are self-employed, or have freelance jobs, or several part time jobs... I don't know... the income is not fixed.

A person can farm out some of their chores, and have more time/energy to create income. And sometimes it's better to buy things that are needed, without spending a lot of time trying to get the best bargain, because you're saving $5 when you could be spending that time to make $50.

I don't see many threads on this topic. I wonder if people have ideas, experience, or comments on this?

:thankyou:

[razz]

It is a matter of setting priorities. Farming out some life-sucking activities to those who are very efficient and free up personal time for activities that you can do better makes a lot of sense.
What types of activities can you see working for you?

[RosieTR]

I think it's similar to anything, in that it is what you make it. Some people farm out chores but then spend that time actually watching TV and so not being productive. Some chores could actually lead to productivity, esp if they something you can let your mind wander while doing so you might be able to come up with new ideas while you are doing the chore. Chores you hate that take a lot of attention may be well worth paying for, even if you don't otherwise use the actual time productively because it may leave you with more energy to do something that is productive and able to make contacts with the people you're paying for the chore that you wouldn't otherwise make.
I know Llamo's mentioned the Earn 1K course before, if you google it you'll get to Ramit Sethi's blog. He's a bit of a shameless self-promoter but he is very successful and has some interesting ideas about business, especially about what you're talking about: earning more rather than spending less.

[Life_is_Simple]

I know Llamo's mentioned the Earn 1K course before, if you google it you'll get to Ramit Sethi's blog. He's a bit of a shameless self-promoter but he is very successful and has some interesting ideas about business, especially about what you're talking about: earning more rather than spending less.
thanks for that link. I have been reading it :+1:

[Yossarian]

This is a longstanding beef I have with some of the cost saving ideas that get posted. So you saved a few bucks cutting your own hair, buying used suits and bringing your lunch? Great, you also missed that promotion because you look like crap and don't network. Makes it a lot easier to LBYM when M is more. Some cost savings can cost you more in the long run.

[ApatheticNoMore]

I've always thought there is only so much control one really has over income. I definitely don't believe trying for raises within a company is much of a way to maximize income!!! You can work you backside off and end up with little more than the usual raise everyone gets. Now one way I believe does has *some* potential to maximize income is to try to change jobs fairly regularly to companies that will pay you better. Also switching fields may have some potential sometimes (but really enjoying the work is more important if it comes down to that).

[puglogic]

My own rationale is that, if I still feel I have time to watch mindless television, then there's more I can be doing to save money. Example: If I could either be cooking from scratch OR learning the names of all the morons on The Voice or Chopped or Project Runway, then I'm going to choose the former.

But if I'm cannibalizing time that can be spent prospecting for new business, or building a new profit center, or networking, then it's probably not the best use of my time. That's where it can be really helpful to do YMOYL and figure out my actual hourly rate for the work I do...and then it becomes pure math. If farming out a task costs more per hour than I make, then I need to ponder whether to do it myself.

It's a fine line, and everybody has to find their own, I think.

[Life_is_Simple]

It is a matter of setting priorities. Farming out some life-sucking activities to those who are very efficient and free up personal time for activities that you can do better makes a lot of sense.
What types of activities can you see working for you?

I could gladly get rid of the following:
- drop off and pick up laundry weekly
- buy deli meat and cheese 2x per week (plus a few vegetables)
- pick up special yogurt at another store - every 2 weeks
- mail package about every 2 weeks
- order and pick up 7 loaves of special bread at a local store every 3 weeks
- pick up prescriptions - monthly
- shop & mail birthday presents - quarterly
- pick up some work supplies - monthly or quarterly
- light housekeeping - weekly

My hourly amount would be 2-3x what I would be paying a person to do this, so well worth it if I could set it up. That's the hard part. How to find a person to do this?

[treehugger]

My hourly amount would be 2-3x what I would be paying a person to do this, so well worth it if I could set it up. That's the hard part. How to find a person to do this?

I just read about this service in an article about women-created tech businesses. Cool idea. Task Rabbit (http://www.taskrabbit.com/)

Kara

[Life_is_Simple]

I just read about this service in an article about women-created tech businesses. Cool idea. Task Rabbit (http://www.taskrabbit.com/)

Kara

Oh, interesting! plus, it's in my area too :+1:

Thanks, I will look into this

[razz]

Ok, I was thinking a little differently about the topic.

We live on a farm that generates the wood that we harvest which includes 3+ years wood supply delivered so no labour on our part. We rent the arable land and that rent pays all the taxes and utilities plus insurance etc. We could farm it but found that we were further ahead financially renting for a fixed income than buying the machinery and input costs including contract labour for unknown results due to weather or disease.

More to your approach though would be our decision to buy a good portion of our year's produce in season from farmers in our large market gardening region as the labour and time involved in growing our own is simply not as effective. I buy in bulk fresh that day, process and am done for the year.

[crunchycon]

Doesn't it really all go back to values? Let's go back in time to Amy D. -- her values and goals were very clearly stated as wanting a big house in the country and a big family AND staying home to raise the kids. The solution to obtaining those goals was, for her, cutting expenses. To others, the values/goals might include having a much-loved career, so there might be an investment in terms of image, education, networking opportunities - all of which cost money. Translation: income increase.

All of this assumes that one is making a living wage....if the only job I could find was a minimum wage job that didn't quite put food on the table or pay the rent, I'd be emphasizing income increase AND cutting expenses.

[maribeth]

I have a medium-term savings goal. I decided to bring my lunch to work -- for health reasons, not so much financial ones, but hey, it will save some money.

Turns out I would have to bring my lunch every day for the next EIGHTY (80) YEARS to meet the goal. Guess I will be working on maximizing income (and saving it).

[uji]

I was thinking today that I spend too much energy minimizing expenses, as opposed to maximizing income.

You've put your finger on the significant choice: if you need more money, you (1) either make more or (2) spend less.

I'd like to encourage more people to consider the second option. My wife and I made a conscious choice when our children were young to follow the second course. We were able to retire early into a life-style we cherish while still helping our two kids through college and into their adult lives. We live small in a place we love. We can't take big expensive vacations, but we don't want to -- we love where we are and what we are doing. We don't have to worry -- so far (knock on wood) -- about emergency expenses, because we can keep enough in reserve to cover them: Our car is old, our house is small (and ours, not the bank's), and more money comes in than goes out. We grow lots of our own food (vegetable and animal); that means spending less money, but it's also enjoyable. We don't have a TV so don't have much use for cable, etc.; we've have a cell phone for road emergencies that costs us aroun 6$ a month; and if we want something new to entertain us, we get some geese to add to our dozen chickens and, presto, we've got a new channel to watch on warm afternoons. We're not particular frugal or penny-pinching. We've just found that if you have enough time -- if no one or nothing is hurrying you -- just about any "chore" can be enjoyable.

Some people need an urban environment to thrive, or so they think. We don't -- even though we are both artists by trade. We do what we do cause we love it, not because some gallery owner or critic is telling us it's good. But we are lucky, healthy, and had the opportunity to make this choice. Not everyone has that luxury. But, if you do, "spending less" is the way to go.

Not to run on too long but... We found that "reverse" budgeting helped. Don't worry so much about how much you spend on this or that -- all the categories and sub-categories; think about what you don't need to spend money on, and then don't. Plan by thinking not about projected income but about which expenses will go away over time. Subtract, don't add. I guess that about sums up all I've got to say.;)

[Polliwog]

ugi, I love your post. It sounds like you are really loving the life you live!

[catherine]

ugi, I love your post. It sounds like you are really loving the life you live!

+1