$500 In Extra Income And No Work Required
photo credit: gwdexter
What would you say if you could make $500 in extra income and no work was required? You would want to know what the catch was, right? I know three couples that are facing this very same question and they are measuring the risks and rewards as it will impact the entire family and the current living arrangements. I’m not talking about asking your boss for a raise or even going out and finding an alternative income source. An extra bedroom is all that is needed for the potential $500 in extra passive income. The rental income would be passive as you have already invested in the building. Would you be willing to have a roommate live in your house, condo, or townhouse for an extra $500? You could possibly make more if you had more than 1 bedroom to rent.
How would you spend an extra $500 a month?
1. Mortgage payment. This should be your primary goals. Don’t consider the extra $500 as spending money but as a resource to pay your mortgage. It will also be tempting to spend an additional $500 a month and you might want to setup an auto deduction program from your checking account.
2. Payoff credit card debt. If you are able to make your mortgage payment but are still late or just paying your minimum due, the extra $500 will apply towards CC debt. Maybe your teaser 0% rate from Chase or American Express is set to expire and you don’t know where you are going to get the money to make your minimum payment. Many wonderful articles have been written about the debt snowball effect by Dave Ramsey and basically puts the emphasis on paying off your smallest debt first. The minimum payments will still be paid towards your other debt, but Dave Ramsey suggests paying all additional funds to your smallest debt first. Then once that debt is paid, do the same technique for your second smallest bill. Repeat process until all debts are repaid.
3. Home equity line of credit (HELOC). Maybe you recently renovated your home or added an extra bedroom and have amassed a balance on your home equity line of credit. The extra $500 from a roommate could allow you to repay this debt to the bank more quickly. Maybe you have tapped out your equity, but still have more building plans you would like to accomplish. Having a roommate could help repay the loan and allow you to build your dream home. Find a roommate with carpenter skills and you might save even more money.
4. Private school. Maybe you are not happy with the public schools in your neighborhood or you want to send your children to a private school. In our neighborhood private schools cost $450-$750 a month. Having a roommate could pay for your childrens education.
5. College. Do you have a 529 college savings plan for your children? Would you consider a roommate as an option to build $500 a month towards college for you kids?
Maybe you have a roommate now and are benefiting from the added income. I would be interested to hear how you have utilized the added income. If you are facing financial stress, would you consider having a roommate to save your home from foreclosure?
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Jennifer Said:
It sounds like a good idea initially, but you couldn’t pay me enough to have a stranger live in my house. A relative maybe, but not a stranger! My safety is worth a lot more than $500 a month.
Thanks for the post! Have a great day!
Posted on September 24th, 2008
MoneyGrubbingLawyer Said:
I don’t care if it makes me $5,000 a month, any form of income that prevents me from walking around my own house in my underwear just isn’t worth it.
Posted on September 24th, 2008
Lestat Said:
I agree 100% with MoneyGrubbingLawyer
Posted on September 24th, 2008
Scott Said:
@ Jennifer No amount of money could entice you to get a roommate? I understand safety if very important and renting to a family member would be a good option. Maybe a young adult who is trying to go to school or move out from mom and dad’s house.
@ Money Grubbing Lawyer and Lestat
$5,000 is a large amount of money to pass up. I understand that privacy and freedom in our homes are very valuable, but what if it you were facing foreclosure or eviction? I guess you would move to a cheaper place.
Posted on September 24th, 2008
MoneyGrubbingLawyer Said:
Okay, you’re right- $5k is a lot, and if the offer came along I might seriously consider it.
But for the amount of money that I could realistically expect to receive for a room rental, it’s definitely not worth it. With that said, I’m married and living a white pickett suburban life. If I was single, I’d be much more likely to consider it.
Posted on September 25th, 2008
FruGal Said:
Until recently, we had a friend living in our spare room while she found somewhere to live. She had just arrived in London from Sydney and it took her longer to find an apartment than she expected, so was paying us £100 a week rent while she house hunted. It took her about 8 weeks to finally leave, and I can say that I would never have someone live in our spare room again. It puts too much pressure on home life, and having privacy and is priceless to me. It can be very stressful having someone under your feet all the time.
Posted on September 30th, 2008
Scott Said:
@ MGL I had a friend in college that rented a house and found 4 roommates to offset costs and even made some money. I agree with you that it would be easier if you are single and were more flexible with roommates.
@ FruGal I agree that its hard to put a value on privacy, especially if you aren’t sure how long a friend will be living with you. It’s tough to be firm with a friend when they are going through a tough time, but we also don’t like to be taken advantage of through the living situation.
Posted on September 30th, 2008