This is a guest post by Dusty from Chasing The Bull. Please check out his blog and subscribe to his RSS Feed.
When I first began to gain control over my financial destiny, analyzing my monthly budget was a humbling experience. I quickly learned that personal finance experts, such as Dave Ramsey, suggest spending no more than 25% of your take home pay on your mortgage. Unfortunately, my wife and I had already purchased our dream home which eats up about 40% of my monthly take home.
I needed a way to either decrease my monthly payment or increase my monthly income. As the current real estate market in our area is terrible, I opted to increase my income. I did not, however, want to get another job. Spending time away from my friends and family is not something that I am willing to sacrifice. Luckily, I learned about the power of passive income.
In October of 2008, I began writing articles for a few revenue-sharing websites, such as eHow and Today dot com. While these sites will not make you rich overnight, they can provide additional income to help pay a few bills.
On average, it takes me about 30 minutes to create an article. Through the end of January, I have written 85 articles, which equates to about 42 1/2 hours of work. These articles earn approximately $50 a month and should continue to produce the same income indefinitely, which makes them truly passive streams of income.
For the sake of the following examples, please assume a 30-year mortgage of $200,000, fixed at 6%. Adjust these numbers to your personal situation as needed.
My wife and I have elected not to spend this money each month on ourselves, but to send these passive earnings as an additional payment to our mortgage company.
By paying an additional $50 per month towards the mortgage principle, we will save $27,880 in interest AND knock off 3 years from our loan. When you increase these numbers, the savings become even more exciting. An additional $100 per month will save us $49,139 in interest and knock off 5 years and 5 months from our loan. I hope to get to this level within a few months.
It is my experience that most people who write for eHow have set a goal of earning $1,000 per month from eHow alone. If you were to apply that amount to your mortgage principle each month, you would save $164,269 and knock off 19 years and 10 months from your loan. As you can see, with a little hard work and a lot of dedication, creating passive streams of income can be extremely worth while!
How much money could you save with a little effort? How much is 30 minutes a day worth to you?
Related posts:
- How to Make Over $400 per Hour in Passive Income
- How I Saved Over $70,000 on my Mortgage
- Solar & Wind Power: Create a Renewable Income Stream & Save on Bills
- Create Easy Passive Income by Saving Money
- 11 Ways to Spend $100 in Monthly Passive Income
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I want to get started in eHow but I don’t seem to have the ideas I need to get going, where do you get the ideas on what to write about?
You’re combining to very powerful tools of personal finance: passive income streams and compound interest. Usually compound interest is described in terms of interest being earned on interest from investments. In your example you’re using compound interest backwards to save more and more money over the life of your mortgage. Any way you can pay extra principal on your mortgage is wonderful.
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Great post, you’ve got me inspired, and that is hard to do as I drink about four energy drinks a day! Bravo!
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Wow. That is great, $27,000 makes a big different when you add if up over a long period of time. Thanks for sharing.
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Fantastic post! I personally have gotten started with E-How, and am glad I did. I am averaging 3 posts per week to date, starting last week
Ahhhh…if only I could post 85 per month. But I have to be realistic, and stick with 3 per week for this year. As I get practice, I hope to do more posts per week. It’s a great incentive to write, when I read how much it will be able to save me!
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Putting your passive income to work to pay off debt and save money on interest means you are paid twice. When you look at it that way, the earnings are even more than they seem at first. I am also using my passive income streams to pay off debt — and I’ve cut years off the snowball and who knows how much in interest this way.
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