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How to Afford a House – Pitfalls of Increasing Your Income

by Sarah McMurray

How to Afford a House – Pitfalls of Increasing Your Income

If you’re trying to save a house deposit, or trying to convince the bank to give you a mortgage, increasing your income is a no-brainer.

But there are some pitfalls to look out for as you try to grow your income. The map to avoiding these pitfalls is here:

Work from your Phone / Social Marketing “Opportunities”

Also known as multi-level marketing (MLM) companies, the peddlers of these ‘opportunities’ have been selling the dream of getting rich while working part time since the 1940s. Since then, the only people who’ve reliably become rich in this industry have been the shareholders of the companies. Not only are you not likely to increase your income, research indicates that between 73 and 99% of MLM participants actually lose money.

If you still want to give it a go, remember, the numbers tell the story. The “potential income” figures MLMs use in their presentations ignore business expenses. Keep careful track of all your business-related costs, including your personal purchases of the product (the biggest buyers of MLM products are almost always the distributors themselves. If you weren’t a distributor, your spend in this category would likely go down.)

Keep a track of all the time you spend on it as well – once you can work out your hourly rate, you may find you’d be better off working a second, minimum wage job.

Work a Second Job

With this option, you at least know what you will be paid up front. Just be sure you’re not going to end up worse off overall.

Many people spend more when they work longer hours – they have no energy left for home cooking, they let their own admin slip and miss deadlines for bill payments, or they end up saying, “Damn it, I deserve it!” and spending money on a treat rather than for its originally intended purpose.

To do a second job well, keep track of the money, but also keep an eye on your time and energy. If these start running low, you’ll probably compensate by spending more, and you’ll almost certainly damage your health and relationships.

Start a Side Gig

Could be the path to incredible riches.

Could also give you all the downsides of working a second job, with the additional bonus feature of uncertain (and possibly negative) income.

Track your numbers, time and energy levels. This information will tell you which path you are on.

Get a Raise

Win-win for you, right? You get paid more for what you’re already doing.

The downside is, I can almost 100% guarantee that your boss is not spending any time wondering what the heck they could do with that spare $10k a year that they just can’t seem to spend.

Which is not to say that they can’t pay you more. But think of it as a process you’re going to start and keep moving, not a one-off question that you’re going to spring on them tomorrow.

Depending on your exact work, and workplace, there are several different ways to go about asking for a raise. The following process has worked well for several of my salaried clients:

  • Research the current salary range for your job. Knowing what you could be paid elsewhere can help grow your courage and confidence

  • Gather evidence of the value you have brought to the company, or the way your job has evolved, which may mean that your original job description and salary are no longer appropriate. If this is the case, research the current pay range for the work you actually do.

  • Ask for a meeting, and specify that you want to discuss your pay and conditions

  • Present your research. Let the numbers speak for themselves. Do not say that you want a pay rise because you need more money. It’s not a compelling argument. What is compelling is how much you’re worth, or how much it would cost to replace you.

  • Give your boss time to take in the information. Even if they’re fair and reasonable, no one likes getting the news that their costs are going up. They may also be embarrassed and defensive it’s obvious you’re well underpaid. They will have to put new numbers in their budget, and possibly get sign-off from someone else. Schedule a time to have another meeting where they can make their offer to you.

  • If the answer at this meeting is no; or the offer is pitiful; or they keep postponing the follow up meeting, then you have your answer. Begin searching for a new job.

Get a new Job

Switching jobs every 3-4 years is one of the most reliable ways to increase your earnings over your lifetime. When companies have a role to fill, they generally have to pay enough to attract the calibre of applicant that they want.

Just keep track of job-hunting costs, and when considering a new role, don’t forget details like the cost of parking at the new place, whether you would need a new work wardrobe, or have to pay for more childcare.

Be well-informed about typical pay and conditions for the work you are looking for. Try asking for a bit more in terms of money or conditions if you receive an initial offer. This is the easiest time to get those things in place. Worst they can say is “no” and you’re no worse off.

Sell stuff you no longer use

Brilliant if you have stuff to sell, but can be quite time-consuming with photos and descriptions and answering questions. Research what the things you own typically sell for (or if they sell at all). Once you get into a rhythm, turning stuff back into cash can become addictive.

Put the money you make straight into savings, especially if you get paid in cash. Easy to spend it and lose track otherwise.

Bonus – you get an eye for a spotting a bargain when it comes to the stuff you need to buy.

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