A photo from the screened in porch of our former “Sweet Home, Alabama”.
We purchased a lake house as a way to get my husband, Darren, to unplug and relax so he could come back re-energized to work at our consulting company, STS. And while it did serve the purpose of getting him revitalized so we could bill out more of his hours, in truth, most of the time the place sat empty and was more of a drain than a help for our finances. So how did we turn the situation around, and what lessons can we take from that experience?
1.) Turn liabilities into assets.
Whenever possible, turn the things that cost you money into things that earn you money.
Let's say on a whim you decide to buy a giant tortilla making machine like the ones they used to have at On the Border (am I the only one who remembered those things?). While you have piping hot fresh tortillas whenever you want, most of the time the thing is off and you are just making payments, because how many tortillas does one household need?
In this scenario. the tortilla machine is a liability (and likely the source of some fights with your spouse).
Now, imagine that you decide to rent the machine out for parties. Or you keep it running 24×7 and package up and sell the tortillas. Suddenly, that machine has shifted from a liability to an asset.
If you are willing to work through your own resistance, nearly every liability you own can be turned into an asset.
You can rent out your car, your boat, your spare bedroom – nearly everything you own through the sharing economy.
If times are tough, thinking about what you own in a different way can radically shift your financial situation.
2.) Turn expenses into business expenses.
Technically we learned this lesson with our IT consulting company, but with the vacation rental there were whole other categories of expenses we could write off. If we went out to eat while staying at the vacation home and then wrote up a review of the place for our visitors guide, that meal sounds to me like a business expense. If we had to fix up wear and tear on the property, those repairs were now business expenses. Basically everything we did associated with the vacation home became a pre-tax expense that we got to write off against the rental income. While the process of renting the house out did create some expenses we otherwise would not have had, there were definite expenses we would have had either way that now were business expenses.
Now, I'm not a CPA, so take what I'm saying as inspiration and talk to a professional to understand how to apply this to your situation within the boundaries of the law. We don't want to mess with the IRS. But whenever possible, paying for life in a pre-tax way is a great hack.
3.) Plug into an existing marketplace.
When we decided to rent our our lake house, I made up flyers, posted on Facebook, and emailed people I knew. Not a lot of activity was generated that way.
If you can, plug into an existing marketplace. If you make hand made goods, people are more likely to find you at a booth at a holiday fair than at home in your spare bedroom. Etsy already has traffic – your brand new baby website does not. No one is looking for you if they don't know you exist. Whenever you can, plug into an existing marketplace to boost your traffic and revenue. These sites will likely take a bite out of your revenue, but this is a cost of doing business and for getting leads you wouldn't have gotten otherwise.
This, by the way, is what network marketing companies are doing TO you, not FOR you. They are hooking into your existing network of friends and family. Yes, occasionally someone may come to their site and get directed to you, but for the most part, you are the sales and marketing for those products. Copy their model for yourself by plugging into other people's networks whenever you can.
Hopefully these tips will help you think differently about your money and increase your financial successes.
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