Recessionomics 101: How to Make Extra Money

This article is part of a series related to being Financially Fit

Jennifer Winslow wanted to earn some extra cash without giving up the flexibility of working part time.

An avid cook, she and a friend initially planned to cater meals for busy families. When that turned out to be too time consuming, she tried baking. More than five years later, she has a thriving bakery business in Winslow, Maine (her husband's family has been in town a long time).

Now on her own, she supplies four restaurants with cakes and other sweets and makes desserts for individuals and weddings.

A growing number of Americans would like to follow Mrs. Winslow's example. Job loss, tighter credit and a renewed appreciation for savings is persuading more people to cut expenses.

But you can cut only so far. Two full years of recession have not left many unexamined family expenses. Meanwhile, prices -- from gasoline to utilities to food -- haven't fallen. And incomes, if you still have one, aren't exactly shooting through the roof. It's time to make some money.

Fortunately, there also are many ways to earn extra cash even when full-time jobs and extra shifts aren't an option. They include taking in boarders, starting a small business and getting paid for your opinion. Some of this work provides only a free meal and $10 fee but others, such as tutoring or selling Grandma's diamond broach, could be quite lucrative.

The key, according to Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling, is to "find your skill or what you think would be fun to do." She says, for example, someone with computer skills may want to teach a class, install computers or create Web sites.

"Think about what are people willing to pay for," says Ms. Cunningham. "Who do you know and how can you leverage existing relationships." For example, does your dentist need someone to clean the office or does your accountant need someone to cater the Christmas party?

1. Sell It: One of the fastest and easiest ways to get extra cash is to sell unwanted and unused stuff. And it's never been easier to make hundreds or even thousands of dollars. You could post a few signs in the neighborhood and sell everything at a Saturday garage sale or you could try the online route with services such as eBay or Craigslist.

Linda Lightman first tried eBay more than 10 years ago because she wanted to help her sons get more for their old videogames. It was so easy that the former lawyer started selling her old suits. Then, friends asked her to sell theirs.

Today, shoplindasstuff.com has 50 employees and expects to reach $7 million in sales this year on eBay. "The economy has been the perfect storm for my business," Ms. Lightman says. "More people need cash, and more people are looking for bargains."

Auction houses also are a popular place to sell potentially valuable items. Alexander Eblen, head of the jewelry and fine timepieces department at Leslie Hindman Auctioneers in Chicago, says people often don't realize the value of an old watch or grandmother's Art Deco jewelry. For example, a Tiffany broach recently sold for about $68,000.

Don't overlook some of the more mundane items, such as books and sports equipment. Many bookstores provide cash or store credits for "gently" used books. Similarly, stores like Play It Again Sports provide cash and store credits for gently used sports equipment. Check with local stores but they often need golf clubs, ice skates, lacrosse equipment and other gear.

2. Rent It: Your home, probably your biggest asset, is a potential source of extra cash. A growing number of people are renting out a room or grabbing a roommate for extra income. It's less difficult for residents in "destination" locations near colleges, resorts or cities to rent a room or even the house for a few weeks, months or long term.

Some homeowners prefer using a real-estate agent, others like finding renters themselves, online or through friends. Either way, it's crucial to vet the potential tenant and spell out expectations. Rents vary from a few hundred dollars to thousands in large cities.

Another option that's a longtime favorite of students and young adults is earning extra cash for house and pet sitting.

3. Say It: Many businesses are willing to reward individuals for taking opinion polls, testing products or being a secret shopper. The compensation varies, and it's crucial to avoid scams. Work only with reputable companies and avoid anything that requires a membership fee. One place to start is OpinionPlace.com, which lets poll participants choose Amazon.com gift cards, PayPal credits or American Airlines AAdvantage miles. There also are stores such as CVS, whose Advisor program provides consumers who complete surveys with ExtraBucks coupons.

People won't make much but they might have fun working in a focus group or evaluating products or services as a mystery shopper. Once again, watch out for scams. Don't pay any fees or respond to unsolicited emails. A good place to start is Volition.com or Mysteryshop.org, the Web site for the Mystery Shopping Providers Association.

4. Do It: One of the best ways to earn extra cash is by creating a business using existing skills and interests. An artist may teach a class, a photographer may do weddings and a sports enthusiast may referee or caddy.

"What are you volunteering for that you could get paid for?" asks Ms. Cunningham. She says it could be as simple as getting paid for office work or watching your child's classmate after school.

One of the most popular and lucrative part-time jobs is to tutor, either for a college-prep class or a specific subject. Typical pay ranges from $30 to more than $100 an hour, depending on where you live.

Mrs. Winslow always loved to cook. "People would always ask me if I could bring the dessert if I was going somewhere for dinner," she says.

A master at multitasking, she works about 20 hours a week for Jennifer's Edibles. Her advice: "Start small and do things that are manageable. Don't get so overwhelmed that you want to quit."

Grow your business with Email Marketing

Email marketing is one of the most effective and inexpensive ways to find and keep new customers. Email Marketing is the process of sending e-mails to acquire new customers and convince existing customers to make additional purchases. It is also used to enhance the relationship of a business with its customers and prospects and encourage customer loyalty and repeat business.

By building a mailing list, a business can create an extremely valuable asset.

The advantages of email:

• Email lets you send information to a wide range of existing and potential customers at a much lower cost than direct mail or printed newsletters.
• E-mail marketing allows you to track your return on investment exactly and is often reported as second only to search marketing as the most effective online marketing tactic.
• The delivery time for an e-mail message is short (i.e., seconds or minutes) as compared to a mailed advertisement (i.e., one or more days).
• E-mail marketing is paper-free (i.e., "green)
• Once you have a large list, you can "rent" your list to 3^rd party marketing firms that will mail other offers to people on your list - this can be a significant additional source of revenue for your business.

How to build your email list:

Include an email sign-up box on your web site. Giving away a free report or "how-to" white course is a great incentive for people to subscribe to your list.

You can also collect the email addresses of people that drop-off of your cart page after entering their email address. You can then send them a follow up email offering a discount to complete the sale.

Once a person submits their e-mail address to you they become an opt-in subscriber. Don't just send emails that attempt to sell things but rather offer them information, free reports, and tidbits of news and advice. That way they will be more likely to purchase it as something you recommend to them, not just as something you are selling.

Key points to remember about email:

The sending of unsolicited email is forbidden by law and can involve severe penalties for violators. It is governed by the federal Can Spam Law.

You should only send email to a person when they have "opted-in" to receive it. When you collect a person's email address, be sure that you explain how you intend to use their email. Include a privacy policy on your web site and place a link to it next to your email collection box.

Due to the large amount of spam email, it is getting harder to get legitimate commercial email delivered into people's inbox. Specialty software and service firms have emerged to help business manage their email programs and ensure that their emails are not blocked as spam.

Although it takes time and effort to maintain and grow, a mailing list can end up being the most powerful tool in your internet marketing arsenal.

How to Find the Best Web Hosting

Whether it's for your business or your blog, web hosting is a critical requirement of any website. Web hosting is the service that stores the files and content that make up your web site so that are accessible from any computer around the world. A good web hosting service will make sure you website is secure from hackers and works quickly and reliably for your visitors.

There are two kinds of hosting, dedicated server hosting, where an entire computer is used for the files and content of a single web site, and shared server hosting that allows multiple website owners to share a server for storage. Generally shared hosting is much less expensive and usually suitable for small businesses and blog sites. For small personal websites free hosting is also an option. This is generally advertising supported, but will not be suitable for any type of commercial website.

Finding the right setup for you can be tricky. Here are some tips to help you find your way to the right web hosting situation for your needs:

1. Reliability: It is important to choose a host that provides reliable services. Nearly all web hosting companies will advertise 99% uptime for your site, so that can't be your main indicator of reliability. Do a little research and find a reputable review site and look into the hosting companies ratings.
2. Features: The main factor in deciding which service to use should be the tools and features provided by the web host. If you need to host a forum or blogging software or ecommerce cart, find an offer that provides exactly what you need. Many sites will offer unlimited bandwidth and unlimited storage, but this isn't as good a deal as you might think. Most of the limits on bandwidth and storage are more than enough for all but the largest of websites.
3. Customer Support: Again, a good place to go for customer service ratings is a review site, but this is one area that it is best to investigate yourself. Customer service is as important as anything in choosing a web host, so make sure your hosting service offers 24/7 phone support.
4. Know your future needs. It is a good idea to have a good understanding of what features and services you will need in the future so that you can get the best deal on the services you will need. It can be a hassle to switch hosting services once you are set up.

Web hosting is an extremely competitive business and hosts are constantly trying to sweeten their deals to bring in more users. Use this to your advantage! Shopping around and getting the best deal for you will give you the best experience possible and make sure your website runs smoothly.

One of the best places to find a great web hosting solution is a company called StartLogic.

StartLogic is a leading provider of Web-hosting solutions and services for small and large businesses. StartLogic delivers innovative products and state-of-the-art technologies that meet the ever-changing requirements many different types of customers. It is extremely easy to find the best package for you quickly setup with their service .

How to Get a Business Loan

Small businesses are the economic lifeblood of this country, and the majority of them began with help in the form of a small business loan. Very few small business owners have the funds available privately to start or expand their enterprise, so most are forced to seek out loans to move their vision forward.

But there are some things that everyone should know before applying for a small business loan. It's always important to know what the bank or lending institution is looking for, what factors go into their decision to either grant or reject your loan. By playing to these factors, you can better your chances of securing that money for your business.

What is your personal story? Firstly, the bank will want to know about you. Your credit history, experience and education will all be factors preliminarily considered in the process of your application. These things speak to who you are as a business person, your credibility for running your own business.

What is your Business Plan? The meat of your proposal will be in your Business Plan. This is an outline you will present to the bank detailing your business idea while providing answers to the questions that the bank has.

How much are you applying for? This figure should be all-encompassing. It should include costs for startup and overhead as well as operations costs like payroll and inventory. It is very important to you and the bank that this number be as accurate as possible.

Where is this money going? Again, accuracy and detail are important here. Your business plan should have a detailed breakdown of how much is going where and for what.

When can you repay your loan? This is the question that anyone, from the bank to your wealthy relative will want an answer for. Be professional. Use financial statements and cash-flow projections to illustrate how your business will generate profit and be a good investment for the bank.

Plug in Points to See How Your Financing Will Pay Off

One of the most innovative financial markets is the home mortgage loan sector. And, when you toss points into the mix it adds convolution to an already complicated process. Most buyers don't understand the concept of points and hesitate to ask or go to the trouble to learn about the process. They become overwhelmed and can be at the mercy of whatever the lender offers.

It's actually quite simple. Points are fees paid to a lender for a loan. The points are usually linked to interest rates with the more points you pay for, the lower the interest rate. You can view them as pre-paid fees. It's sort of pay now with points or pay later with interest.

If you have the cash on hand to pay points and you still can't decide if you should pay them to get a lower interest rate ask yourself what you would do with the money if not spent on points. If you're buying a home you probably have many needs for the extra money but don't be short-sighted. Invest for the long term.

Most lenders typically charge one point for the loan origination fee and additional points on loans that have interest rates under the current market rate. The lender gets some money up front in exchange for a lower interest rate. It's a win situation for both parties. You can check the newspaper or the Internet for current rates and points being offered and their combinations, which are many and negotiable.

Some points will reduce the interest rate and some won't. Discount points are based on how much money you borrow. One point equals 1% of the loan. For example, 1% of $100,000 would be $1,000. You can expect a reduction of about one quarter percent for each point paid. Paying points does not reduce the amount borrowed but how much you'll be paying back. So, paying points depends on a lot of factors.

If you don't have the cash to pay points then it's a moot point. (No pun intended). The main thing to consider is how long you plan to keep your home. In other words, will you keep the home past the break-even point? That's when your accumulated monthly savings exceed what you've paid in points to get the interest rate down.

Paying points is probably a good investment if you plan to keep the home five years or more. Points can be considered an investment when it continuously yields a savings the longer you stay in the home.

A chart can be prepared to show you the options and when the break-even point occurs. Ask the lender to quote points in dollar amounts so you can easily see how much you're spending.

It's thought the point system is used only in the United States. That's probably a plus for the creators of our financial system which enables more families to purchase a home who otherwise would not qualify. Get the point?

Owning a Franchise is Easy

Becoming franchise owner can be a great way for an aspiring entrepreneur to become a successful business owner.

Franchises provide pre-packaged solutions to many of the problems that plague independent entrepreneurs. With a franchise you can start with a product that has a proven record of success, as well as marketing campaigns and business procedures that have been proven over the long run.

Nearly a third of all independent businesses fail because they cannot find solutions to problems in areas like operations, marketing, accounting or distribution. With a franchise, the solutions to many of these issues have been refined down to a science, saving you the headache of creating your own solutions to these complex business issues. These procedures work as a safety net for someone opening a business, allowing them to focus on making money and being successful in their market.

Here are some tips for making a successful entrance into the franchise arena:

Know your limits: One of the first steps is to take stock of your finances. Decide what you are willing to spend on opening this business. Even franchises have costs associated with start up like any business, but they are far less than starting a business on your own. Be aware of your credit rating in case you need a loan to help with startup costs, and if you're partnering with someone in the venture, know their limits as well.

Know your market: Take time to think about the franchise that would be most effective for your market. Make sure there is an established client base for your product in your area before you commit to the brand. Often times the franchise company will provide you with research and consultations.

Use your resources: Franchise companies typically provide access to people who can help you get started; from lawyers and CPA's to real estate agents, landlords and business consultants. Take advantage of these resources and get as much information and help as you can to make your opening a smooth process.

As usual, a big decision like this should always be thoroughly researched. There are guides and other resources to help you make an informed decision and provide you with useful information about any franchise you may be interested in. Do your homework and the process will be much easier. In an economy that is full of peril and at a time where failure is the norm for many American businesses, franchising offers you all the opportunity of owning your own business while minimizing the risk to you.

A special loan for homeowners who are age 62 or older, reverse mortgages were first established by the Housing and Community Development Act of 1987, as part of the U.S. Department of Housing and Urban Development (HUD).

What is a Reverse Mortgage?

A reverse mortgage is a loan borrowed against your property's value and does not have to be repaid at a predetermined date. The loan continues (without any payment from you) as long as you:

• Live in the home as your primary residence.
• Make necessary home repairs.
• Pay your property taxes.

In short, a reverse mortgage is a loan in reverse, where the lender or bank pays you, enabling you to turn the value of your property (single family home, condos and manufactured homes , etc.) into cash. You or your estate will pay the money back plus interest when you permanently move out of your home.

In addition to using a reverse mortgage on your current home, you now also have the option of using a reverse mortgage to finance the purchase of a new home. If you are considering moving, we can help you learn more about Reverse Mortgage for Purchase. You can also try our Downsizing Calculator to see how a reverse mortgage for purchase might help in your situation.

Important notes

• With a reverse mortgage, you always retain title and own your home. The bank or lender does not own your property. You continue to own and hold title to your home.
• You don't have to have your home paid off to qualify. With a reverse mortgage, there are no income or credit criteria, like there are with refinancing a home mortgage, or taking out home equity lines.
• When you move out of your house, the maximum amount that you will owe is the current market value of the house. If the amount advanced plus accrued interest is less than that value, then that is all you will pay. The last step of our Reverse Mortgage Cash Calculator will show you the entire picture of your reverse mortgage and home value. You can also adjust home appreciation rates in the calculator to reflect trends in your part of the country. Even if the money you have received has exceeded the value of your home, the insurance premium protects you from paying more than the current market value of the home. This protection is guaranteed by the Federal Housing Administration (FHA) and paid by you and other reverse mortgage borrowers.

Loan Amount
Your reverse mortgage cash amounts will be determined by the following factors:

• The appraised value of your home - or the maximum lending limit. Since you are borrowing against the property, your home's appraisal is a critical part of the process.
• Your age: a higher age will allow you to access a higher loan amount.
• The current interest rate, and whether you select a monthly or annual rate feature.
• The federally insured home equity conversion loans offered through HUD will have a lower lending limit than those offered by private reverse mortgage lenders, such as Financial Freedom or Metlife.

How you get your reverse mortgage money

Reverse mortgages enable you to turn the value of your home into cash to fund your retirement. Reverse mortgages can be custom tailored to your needs. Our Reverse Mortgage Cash Calculator allows you to do that in the privacy of your own home without the hassle and intrusion of meeting in person with a broker, before you're really ready.

You can take reverse mortgage cash out of your property

• In a single lump sum upfront amount. *
• As a regular monthly cash advance.
• Held in reserve as a credit line account that lets you customize when and how much is paid to you - changing over time as your needs change.
• As a combination of these three payment methods (not applicable for fixed rate loans).

* The only distribution option for fixed rate loans.

Reverse Mortgage Costs

All mortgages have costs, but since the lender makes payments to you, the cost structure of a reverse mortgage is slightly different than with a forward mortgage. However, the cost categories are the same: interest rate, closing costs (similar to regular mortgages), and lender servicing costs.

Keep your Customers by Offering a Wi-Fi Hotspot

Giving your customers access to an Internet connection with unbelievable speed can increase the attractiveness of your business to your target audience. For instance, someone wanting to stay at a Bed and Breakfast would much prefer to settle in at one advertising a WiFi connection than one without Internet access.

In today's world, people conduct business or simply stay in touch even while they're on vacation and without high-speed Internet access, they're doomed to miss out on important communications.

B&Bs aren't the only ones jumping onto the WiFi bandwagon. Other small business owners are realizing the importance of catering to their customers' needs, such as the owners and operators of campgrounds, independent bookstores, apartment buildings, family-owned restaurants, and coffee houses.

It's not just travelers looking for a WiFi connecting spot. Many local residents like to make sure a business carries this feature so that they can get out of the house and relax with access to a high speed Internet connection.

The cost of setting up your own WiFi hot spot is minimal, but it goes a long way in fostering the relationship you want to develop with your customers. It's one must-have aspect many people check on before committing to visit a certain establishment.

If you want to stay competitive with other businesses in the community, set up your own WiFi hot spot and offer it s an added incentive for people to visit your place of business.

The first thing you do is invest in some equipment, which will include a Broadband connection and credit card processing in case you want to offer your WiFi services at a fee, as some businesses do to deter squatters from taking up space all day in their place of business.

Buy some hotspot equipment for less than $300 and install it according to the directions. You want to choose an option that delivers good technical support for your customers, in case you don't want to be responsible for troubleshooting yourself.

Small business owners have the choice to buy and install the WiFi equipment and system themselves or hire someone to do it for them, such as a hotspot specialist or management service. Regardless of which installation method you choose, make sure it's running effectively before you advertise it to the public. Then sit back and watch as the loyalty to your business grow exponentially.