Archives

ModestMoney.com Top Finance Blogs

Binaryoptionrobotinfo.com is the best resource for binary trading.
Tbinarybrokers

Should I List My Home on Airbnb?

airbnbIn the past few months, I’ve noticed a number of my friends listing rooms in their home or their entire home on Airbnb.  Much of this has to do with the fact that we live in the Washington, DC area, and this week, there are a lot of visitors coming in from out of town for Inauguration related activities.  Hotels in the area can be very expensive, so this seems like a great way to provide reasonably priced accommodations while making a bit of money.

But is it worth it to you?  What does it take to be an Airbnb host?

First off, it helps if you live in an area people want to visit.  Sure, people visit just about every town around the world, coming in to visit family or friends who may not have room to host them.  But certain places are much more likely to have successful Airbnb rentals.  Do you live in or near a big city?  Do you live in a vacation destination?  Those are all very helpful things in determining whether or not your Airbnb will be booked.

Next, make sure it’s legal.  If you live in an apartment or condo building, even if you own your condo, you may not be allowed to lease out your space per the building rules. Finally, check your local laws.  A search on Google showed me that technically, in my county, rentals of less than 30 days are illegal.  Are there still places in my area that are listed as available to rent?  Yes.  I’m not sure how that works out, but the last thing I want to do is rent out my space and then have to cancel last minute or pay a penalty for renting my space.

So you think you’ve got the permissions you need and you live in a good area.  What next?  Figure out what you’re renting!  Do you have an extra bedroom in your home you’re willing to share with guests?  Do you travel for work and have the opportunity to rent out your entire home while you’re gone?  Both of these options have plusses and minuses.  Obviously, if you’re renting a room, you have the ability to be around and make sure that your guests aren’t getting into trouble.  Renting a room is also much cheaper, so you might have more takers.  That said, you’ll also be making less money and you’ll be sharing your space with a stranger.

Renting your whole house is probably more profitable.  But are you ready to open up your home to strangers?  Airbnb does have some good policies in place to protect you if something goes wrong (which you should read in full before making your decision), but you still need to remember to lock up all of your valuables.  And if you have pets, what are you going to do with them while your guests are there?  Plenty of people rent out their homes with pets (typically cats) present in the house.  (Personally, I’d be too worried about something happening to one of my cats.  Not purposeful injury, of course, but something like the cat slipping unnoticed out the door.)

You also need to be ready to help out your guests if they need anything.  You know how if something goes wrong in a hotel, you can call the front desk and they will come fix what you need?  That’s a necessity for Airbnb too.  So if you’re renting while out of town, you’ll need to have a friend on call to help out.

You also need to be sure that your place is in good condition for your guests.  That means you need to clean!  You can charge a cleaning fee as part of your rental agreement, but you do have to provide a clean, safe space for your guests.

Finally, don’t forget about the tax implications.  No, good old Uncle Sam isn’t going to let you just rent out your home and not pay any taxes on the income.  Be aware of your responsibilities when it comes to both federal and state taxes.

Still not sure?  Take a look at Airbnb.  See what’s available to rent in your area.  Check out what your neighbors are charging and decide if it’s worth it to you.  Personally, I’m much too paranoid to open up my home to strangers, but I’m happy to stay in Airbnbs when I travel, and I’ve never had any issue with my hosts.

Dealing with a Pay Cut

pay-cutThis week, some bad news started circulating at my job.  There’s a slight possibility we’re all facing a pay cut in the next year or so.  And not a small pay cut – probably around 20%.  Now, this may or may not happen. But it’s got everyone thinking.  What will we do if this pay cut actually happens.

Losing 20% of your income is a pretty big hit.  Of course, it’s better than unemployment, so I can’t complain too much.  That said, I will have to figure out how to handle my finances.  I would love to say “Oh, I put much more than that away in savings every month, so I will just save a bit less.”  How wonderful that would be.

I can’t even say that my emergency fund will cover me for two reasons.  Number one, an emergency fund is designed to be a temporary solution.  It covers you in case of a period of temporary unemployment or in case of emergencies.  Not if your job starts paying you less.  And number two, my emergency fund took a huge hit last year with my house repairs, and I’ve just started rebuilding it.

So let’s review my options.  The obvious solution appears to be getting a new job or picking up a second job.  Both of those will be challenging options, however, as my employer’s pretty darn large in this area, so everyone will be looking at those possibilities.  Doesn’t mean I can’t try, but it may not be the most likely option.

I could also try to pick up more freelance writing work.  It’s not huge, but it would be something to do.  I’ve also got skills such that I could tutor or give music lessons, but again, with lots of smart and talented people in the area taking pay cuts, that might not be the best way to go.

The clear winner is going to be to cut expenses.  I admit, it’s time for me to take a hard look at my budget again and trim the fat, regardless of my future pay.  Some of my budget categories are creeping up again and I should take a good hard look at where my money really is going.  The area where I seem to be struggling right now is dining out.  Life was so busy in November and December, so this month, I’ve already been out to eat three times with different friends.  It’s totally worth it to catch up, but I should maybe try to spread out those opportunities, or at least choose slightly less expensive places.  Not that we were going for the most expensive places, of course, but perhaps going for sandwiches instead of a big meal would be a better plan.

One big easy cut would be my lawn care service.  It’s my big splurge and I know it.  But I loathe doing lawn work and so it’s worth it to me to have less spending money and more free time on the weekends.  That said, I could very easily drop that from my expenses and suck it up and just do my own lawn work.

There are also expenses in my budget that I don’t want to cut, but if it comes down to it, I certainly could.  I definitely don’t need a Hulu subscription.  It’s what replaces my cable TV, and it’s not that pricey, but if I have to start truly counting my pennies, that can go.  I suppose technically, my entire internet subscription could go.  I’m pretty sure I would cut just about everything else before I cut that though!  Oh how reliant we become on technology.  I’m absolutely old enough to remember the days without the internet – and yet I sometimes wonder how we did things without it.

I could also really cut my grocery budget, which is something I’m currently working on and will likely write about sometime over the next few months.

Of course, none of these get me to a complete replacement of 20% of my income. So there would have to be some very serious consideration of where my money is going and where it really absolutely needs to go.

Let’s hope that I don’t have to make these decisions.  But it’s definitely a good experiment and it’s never bad to try to save a bit more as I wait to see what’s going to happen.

Is a Gym Membership Worth It?

is-a-gym-membershipworth-the-costHappy New Year!  And with the new year comes the annual New Year’s Resolutions.  We all do it.  This year, I’m going to be better than I was before.  It’s as if flipping the calendar is a personal reset and we’re able to start anew.

One of the more popular New Year’s Resolutions is getting healthy, and with that frequently comes gym memberships.  Pretty much every gym out there is currently having some sort of New Year’s sale.  Sign up for cheap!  Get those resolutions started!

But is a gym membership worth it?

Well, it depends.  Will you use it?

One major way that gyms keep costs down for their members is through annual memberships that don’t get used.  That’s right, they actually expect people to sign up for a one year contract, use the gym for a month or two, and then never come back.  Or at least rarely come back.  And some of those gym memberships are pricey!

However, you know me.  I’m a triathlete.  I workout 5-6 times a week.  So you know I’m not here to strictly talk you out of getting a gym membership.  I just want you to calculate the cost.

First, you have to take a look at the cost of the gym and what you’re going to get out of it.  I talked to two friends who use two very different gyms.  I visited the gym with each of them.

Friend A goes to a super fancy gym with all sorts of included classes, indoor and outdoor pools, steam rooms, all sorts of cardio and weight machines, saunas, etc.  This place is nice.  It also costs $120 a month for an annual membership.  A is committed to working out, joined the gym 6 months ago, and has been going at least four times a week.  It’s definitely been worth it for her.  Thankfully, I live just far enough from this gym to not make it even a possibility for me.  Because let me tell you, that place is nice.

Friend B goes to a bare bones gym.  It is significantly less fancy.  No pool.  Lots of cardio machines, lots of weight machines, and that’s about it.  It’s simple, but it’s clean and nice enough.  However, it costs $10 a month.  B also doesn’t have any sort of annual commitment.  She pays $10 a month and can cancel whenever she wants.  B knows she’s not going to use the gym a lot, but wanted a treadmill to use while its too cold to run outside.  She says she wants to try using the weight machines too, but just isn’t sure she’s going to do it.  She plans to get there 1-2 times a week.

Now, looking at the math, A is clearly still paying more per visit to the gym, but she’s getting a lot out of that membership.  B is getting a pretty good deal, and the fact that she isn’t locked into a membership is pretty huge.  That said, since the cost is only $10, it’s probably pretty easy to say “Oh, well, I didn’t use the gym this month, but it was only $10, so it’s not a big deal.  I’ll go next month.”  And suddenly it’s the end of the year and you haven’t seen the inside of the gym since February.

These are two extremes on the gym membership spectrum.  Sure, there are memberships that are more expensive, and maybe there are cheaper memberships too.  Your average is probably in the $50-$60 range.  But again.  Will you go?

You don’t need a gym membership to get fit.  Weather permitting, you can walk and run outside.  (Some people will tell you the weather doesn’t matter.  I am not one of those people.)  You can get some dumbbells and lift at home.  There are plenty of great programs available online, either for free or for a reasonable cost.  You can find all sorts of workout videos online.  You can look to see who might be selling an old bike or treadmill or other piece of exercise equipment and try those out.  (Note that the reason used fitness equipment is easy to find is the same reason that gym attendance peters out early in the year – people think they’re going to get fit and then give up.  So be smart if you make the purchase.)

What about me?  What do I do?  When I lived in my apartment, I had a gym membership.  I loved running, and knew that the gym was the only place I was going to be able to run indoors in the winter.  Did I use it enough to make it worth it?  Certainly not.  So when I bought my house just under 6 years ago, I cancelled the gym membership and bought a treadmill.  And for me, it was worth it.  6 years later, I’m still on the treadmill at least twice a week, usually more in the winter.  I also own a bike, a bike trainer, and hand weights.  Obviously, I don’t have a pool, so I pay $5 per visit at the local community pool.  It’s not at all fancy, but it works for me.

2017 Financial Resolutions

financial-resolutions2017 is on the horizon, and with the new year comes New Year’s Resolutions.  It seems like most people say that in the new year, they want to lose weight or save money.  And those are both great ideas, but without a plan, you just set yourself up for failure.  So let’s make that New Year’s Financial Resolution and figure out how to increase our bottom line by the end of 2017.

Analyze Spending

Maybe the idea of trying to cut back is a bit too daunting.  You feel like you’re already doing everything you can.  You can’t imagine cutting back any more.  Well, let’s make sure that’s true.  Take a look at where your money is going.  You can even pick one category.  How much are you spending on dining out?  Groceries?  Food in general?  Maybe you’d like to look at your entertainment expenses.  If you have historical data in the form of a budget, that’s awesome.  You can start right now.  If you don’t, make January the month where you write everything down.  Where is every dollar going?  If you haven’t been tracking this, you might be surprised where you spot some very easy places to cut back.  Every so often, I step away from my budget and when I come back, I’m shocked to see how much I’m spending on discretionary items that I don’t really need.

Look at Your Bills

What bills are you paying every month?  Every year?  Are you paying too much?  A few years ago, I cut my cable tv subscription, because I realized I wasn’t using it.  I replaced it with an Amazon Prime account and a Hulu subscription (I already had Netflix).  This is still much cheaper than what I paid for cable tv.  If you’re not ready to cut cable, consider cutting back on movie channels.  Don’t have any movie channels?  Call the cable company and see if there are any promos going on.  Even a $10 discount on your bill will save you $120 a year.

Make a Budget

I’ve talked quite a bit about budgeting.  But no matter how much money you have to spend, you really should consider a budget.  You might be surprised how easy it is to spend money when you start using a budget.  And it doesn’t have to be hard!  You can simply use a spreadsheet in Microsoft Excel or Google Sheets, or you can use a program to help automate, like Quicken, YNAB, Mint, or many others.

Retirement Savings

Are you thinking about the future?  Do you have a retirement account?  If you don’t have any retirement savings, look into opening a Roth IRA.  If you have a 401k account through your employer?  Are you contributing to the account?  If your employer has any sort of a match, you should absolutely be contributing as much as you can to maximize that match.  For example, if your employer matches up to a 5% contribution, you should be contributing the full 5% if you can.  Why?  It’s free money!  You essentially double your money just in the contribution.  Yes, your investments could drop, but the odds of them dropping by 50% is pretty slim.  So look at increasing this number.

Charitable Donation Deductions

If you itemize your tax returns, you can take a deduction for each charitable contribution that you make (provided that you have a receipt).  This doesn’t have to be money contributions.  This also counts for items taken to Goodwill.  I use Its Deductible to help me value and track the physical items that I donate to Goodwill throughout the year.  Sure, it’s not a huge deduction, but it does keep a bit of money in my pocket and it’s a great way to do something good for someone else.  Plus when I donate physical things, I’m also cleaning out my house, which is a great feeling.

Take on a Financial Challenge

If you missed it, last week I talked about challenging yourself to save a dollar a day.  Sure, it’s only $365 by the end of the year.  But that $365 can be used for a lot of different things or it could even be invested for the future!

Decluttering and Making Money on eBay

make-money-with-ebayI don’t know about you, but at the holidays, I start to realize just how much stuff I have.  Maybe it’s because I’m going into little-used closets to pull out holiday decorations and coming across things I never use.  Maybe it’s because Christmas means gifting, and when gifts come in, you have to find a place for them.  Maybe it’s simply because the weather outside is frightful, so I’m inside a lot, staring at the things I own.  Either way, at this time of year, I always get the urge to get rid of stuff.  And since it’s the holidays and I always overspend on gifts, I’m also thinking about how I can bring in a bit of extra money.  This year, I started listing items on eBay to bring in a bit of extra cash.

First off, I need to explain my theory of things.  In general, if I own something and am getting no use out of it, it is worth $0.  Now, that’s not actually an accurate estimate of its value, but it’s my starting point.  Let’s say I have a brand new pair of shoes that I bought and then never wore, and for this estimate, let’s say I paid $80 for those shoes.  When I bought the shoes, they may have been worth $80 to me, but I’m not using them, so they don’t have any value to me.  So I decide to sell them.  If I wanted to recoup my cost, I would sell them for $80.  But are they worth $80 to someone else?  If a store is still selling them for $80, why would they buy from me, an unknown seller?  So if I want to sell those shoes, I have to decide how much I want to sell them for.  Even if I sold them for $20, that’s more cash than I had before.  Yes, it’s a $60 loss on the shoes.  But what value do they have if I’m just storing them on a shelf in the closet?

What I have learned is that if I want to sell on eBay, the key is to decide the lowest amount I’m willing to accept and start the bidding at that price.  If the item has value to people, they will bid it up.

In my shoe example, I had a pair of running shoes I bought, then never wore because I discovered the style didn’t work well for me.  I bought them on sale, and they were now no longer made.  So I put them on eBay with a starting bid of $19.99.  They were ultimately purchased for around $100.  So if something has value, people will bid it up and you will make money.

But this isn’t the normal situation for eBay.  Don’t expect to make money over your purchase price.  Remember, if you aren’t using it, what value does it really have to you?  The theory when you’re trying to declutter and make money on eBay is that you want to clear out your stuff and bring in a bit of cash.

Another example: I received a 2017 planner in a subscription box.  I already had a 2017 planner, so I didn’t need another one.  This planner retails for $25.  I had paid for it as part of the subscription box (though not full price), but since I wasn’t going to use it, it had no value to me.  I listed it on eBay for $5.  It sold for $13.  So someone gets a discounted planner, and I end up with $13 (minus fees) that I didn’t have before.

What can you list on eBay?  Just about anything!  People are buying and selling all sorts of things.  I’ve sold book lots (usually a bunch of books in a series), clothing with the tags, collectibles that I was no longer interested in, among many other things.  Make sure that you take good pictures of your items.  Cell phone pics are absolutely fine, but make sure that your lighting is good and that people can clearly see the item that you are selling.

Currently, listing an item on eBay is free.  You don’t pay anything until the item sells, and then your payment is based on the sale price.  So why not give it a shot?  You don’t have anything to lose, and those sales start to add up.