A friend of mine lost his job due to some downsizing at the retail apparel company he’s worked at for the past six years. Lucky for him, he got a decent severance worth six months of his salary. But, what if you get no severance? What if the income you had been expecting month in and month out suddenly goes to zero? Worse yet, what if you already spent that future income already….
For some in the online world, we will experience this drastic reduction in income at some point in time thanks to a Google Panda update or a Google Pagerank update which might negatively affect our traffic and our private advertising business. Remember, Google’s job is to make as much money for its employees and shareholders as possible.
Of course they want to make their Search product the best it can be. Just don’t be naive to think they don’t have quarterly revenue and profit estimates to hit, and that they aren’t in it for the money. If they don’t hit their targets, billions of dollars in value will be lost. They are a publicly traded company after all, and their stock is an immediate reflection of value. Private money that goes in your pocket is less money that goes in their pocket.
WE ARE DIFFERENT, YOU AND ME
The good thing about the personal finance and lifestyle community is that a large majority of us are already building different income streams or really don’t need that much to survive. We’re a little different from the average folk and in a very good way. How many people do you know work 10 hours a day and then goes home and works online from 10pm to 1am? How many folks are able to retire super early and go live abroad without a care in the world? We’re different, and I’m proud of who we are.
Online advertisement income is a nice bonus, but money from our sites is very secondary to the community we’ve built around our respective sites as well as the freedom to express ourselves freely. It is the freedom of speech, where nobody, not even God or Google can tell you what you can and cannot say.
We’ve written time and time again about the neccessity to diversify income since counting on just online income, real estate income, dividend income, and job income is not enough at times.
“Creating An Income Stream To Grow Bigger Dreams” by Jeff at Sustainable Life Blog.
“Diversify Your Traffic” by Eric at Narrow Bridge.
“Income Crushed And Thousands Of Dollars Lost” by Sunil at Extra Money Blog.
“Why You Can’t Blog Full-Time” by Sandy at Yes I Am Cheap.
“Quit Your Job And Die Alone” by yours truly.
Please have a read and really soak in the importance of income diversification and how hard it is to rely on just one stream, in this case online income, to survive.
WHAT WOULD YOU DO IF A MAJOR INCOME SOURCE WENT TO ZERO?
If my online advertisement income went to zero, I would be disappointed, but nothing would happen to my lifestyle as online income is just a nice bonus. Sure, the bonuses can get quite large, but I’ll be alright if it disappears. Instead, I’ll focus on my day job income, investment income, rental income, and online business income (non advertisement).
If my day job income went to zero and my online advertisement income went to zero, I would focus on my investment income, rental income, and online business income. I’ll also start teaching tennis for $30-60 an hour while fueling myself with some delicious 80 cent ramen noodle packs!
If I could no longer swing the racket due to a severe injury, and my rental properties get demolished thanks to an earthquake, and the stock markets go to zero on top of a disappearance in day job income and online income, I might have to soak in all the tips I provided on how to find a Facebook millionaire sugar mama! I would work out everyday for a couple of hours to make sure I can attract the lovely ladies at the Facebook bus stop with my pecs and pythons.
And if all hell breaks loose, and no sexy Facebooker wants to take care of me, I’ll be a little depressed, but I’ll get over it because I’ll start drawing from my aggressive savings I built up over the years.
Right here, I’ve gone through multiple lines of defense and I haven’t even talked about government unemployment insurance benefits and food stamps yet! The girl whom I met in the hot tub a year ago, for example, is still getting $1,800 in unemployment benefits and she just told me she’s planning a two month trip to S. America!
THERE’S ALWAYS LIVING AT HOME WITH THE PARENTS
In the year 2012, living at home with the ‘rents is like online dating, no big deal. In-depth articles have been written on how to get girls and how to get boys if you live at home with the parents. I even know a married 30+ year olds still living at home with one set of parents and they are lawyers. Who doesn’t love free rent and mom’s meatloaf?
Heck, many of our parents have homes nicer than we could ever afford thanks to the multi-decade bull run in housing. How many of us age 35 and under can afford a 4-5 bedroom house in a nice neighborhood equal to what our parents have? I bet a minority of us.
FIGHT FOR YOURSELF AND DO NOT SURRENDER!
Whenever you hear of a friend or acquantance lose their job, or an online friend get slapped around by “The Monopoly”, try and help them out and remember to not forget about income diversification. It’s nice to think once our various income streams are built, we can “set it and forget it“. The fact of the matter is, nothing is dependable 100% of the time.
Depend on yourself to make things happen and keep on building those various income streams. Use the disappointment as fire to figure out new avenues. We live in the free world, where we have more safety nets than a Tsukiji fisherman. Sooner or later, one of our major income sources will take a hit. When it does, we’ll be ready!
See how you stack up with other people’s net worth.
Regards,
Sam
Photo: Laundry In The Slums of Mumbai. If you’ve never visited India, please make it a point to go. What feels tough in developed countries like the US, Europe, Canada etc, would be considered a luxury there. Things could be much, much worse for us. SD.
Updated for 2015
Diversification, no matter what, is important. Anyone who’s lost a job before can tell you that. I’m always on the look out for new and exciting ways to improve myself, my content, and my site so that I can make the most of any new avenues that might show up.
I think you, more than many others online are hope that everything will be alright. You quit your job despite what’s going with your site. You’re doing things to survive and showing us others can too.
And if you need to get a job, then you’ll get one. The point is, you took that leap of faith, no matter what happens.
You never know unless you try, right?
I am a full time engineer and my priority is to ensure that my job is safe. everything else i do online is extra streams of income. But if I lost my job, then I would promptly look for another job (as an engineer) and apply for unemployment benefits. This along with my small revenue from online and emergency savings should help me get by long enough to land me another job.
Sounds like a rational thing to do Charles. As an engineer, I’m sure your skills are in higher demand than average too.
A lot of that is great stuff. I totally agree about multiple streams of income.
Ironically, my main business went from great to almost nothing in the past 2 months. I don’t live in the States anymore and don’t get unemployment and have a family of 4. So it’s not that easy to start doing things while taking care of kids.
I work as much as I can to build the other business, but get limited. I am doing what I can not to touch my savings, but sometimes you need to, to invest in a new venture.
Oh no, sorry to hear about your main revenue stream Marina. What happened? Is there any way to slowly get it back?
Im trying to figure out what is happening. ALso, really want to focus on investing more than anything else and am embracing this free time, to some extent, in going for the other businesses I’ve wanted to start for ages!!!!
Sam,
Worst case, I end up back in the job market. It’s not the end of the world. I have enough savings for nearly a year assuming I don’t make a dime, and hopefully mobile is just as much in demand then as it is now (I really don’t think the trend is stopping anytime soon).
The downside is that I have no diversified income, but that’s why I took this leap. I was 100% reliant on my job before, and unfortunately I became 100% reliant on the blog, but this will be a good push to continue branching out.
Storms don’t last forever.
The mobile app business and demand for mobile app engineers should continue to grow aggressively! I have huge faith in you Kevin. You have skills many of us don’t, and I know you will be able to leverage those skills and your blog for independent success!
I second what Sam said – you’ll survive and probably thrive. :)
I’m also adding P2P lending to the mix. We all need to diversify as much as we can. Right now I don’t need online income, but it would hurt more if I don’t have a day job. The first thing I would do is to cut back on spending a bit. This should cover any shortfall. We have enough saving that a small shortfall won’t hurt us much.
Joe, when are you making your move? Don’t tell me my prediction I left in the post on GRS on your site is right……..
Eighteen months ago I would have been screwed if I lost my main source of income. Now having paid off all my debts, saved some money,and refrained from lifestyle inflation I would be ok. That peace is invaluable.
Still need to work on diversifying income streams.
Isn’t it interesting that with no debt, comes less stress and a much lower income hurdle to survive? Congrats on being on the right track!
Your photo caption was at least as good as the rest of the post. Well said.
I’m getting ready to rent out my first rental property, which will be in an upcoming series of posts. Exciting!
Good luck! Hope you don’t have a heart attack in the process!
Have a look at my Real Estate section on Financial Samurai. I have tons of articles there on raising the rent, finding good tenants, etc if you need any tips. And also, getting wealthy on real estate too! It’s an adventure, but you’ll be glad you owned property 10 years later.
I’ve always thought that the link between risk and return was weak at best, but there is something to be said about why websites sell for 1-2 multiples and multi-nationals sell for earnings multiples of 15.
There’s something to be said for the speed at which you can create wealth, but also for the certainty. When it comes to a margin of safety, online income (in most cases) simply doesn’t offer it.
That is a very good point….. why do websites/blogs trade for such low 1-2 year revenue multiples. Over dependence indeed that could one day vanish with Google’s slight of hand.
Sam, Lacking an emergency fund was recently quoted as one of the biggest stressors and I totally understand. There are always emergencies. Seems like today lots of folks are coming home to roost!! Why not use mom and dad’s home as a way to super save?
No shame in living with Bank of Mom & Dad as I say! Many folks do, and a great way to supercharge one’s savings, or just survive if they have to. No parent won’t take their child back.
I’m working to create multiple streams of income and diversify the current income that I do have. It would suck if one dropped out at this moment but I’m sure I would find a way to come back.
Very nicely said and so true. When one goes south I wait and nurture the other. I am working on creating several more sources of income all due to the great knowledge I find on here.
I think being able to catch people when they fall, and prop them back up again is one of the most important attributes of the Yakezie Network. It’s something we are most proud of. Let’s say for some reason you lost your photo business and became a Member. You better believe that I, along with many others will send you as many referrals as possible from the friends and family we have in NYC!
We can only do so much day to day, but if a Member falls, many of us rush to their aide. I’ve seen it so many times over these past two years it is awesome!
Oh that I know. It’s a shame when people question that but I guess you can’t please everyone. Aside from some money I have made on here I have made friends and learned really important things about finances. And even though I am not a member yet I feel so much love from the Yakezie community that I almost don’t realize I am not.
Wake up call I am not diversified, but that has a reason, I came here just 6 years back and haven’t accumulated enough saving yet. There’s some blog income but that too got hit by the monopoly.
Definitely a wake up call that is better NOW than later when we don’t have time or are close to retirement!
I am trying to work on diverse streams of income while still in school, this way I will be able to take a job I really love and not the first one that throws me the best paycheck.
You got a lot of backup plans and I really envy that. We all hope that even the first “crisis” – job loss – doesn’t happen before you are ready. But you got so many things to fall back on and with the added time I am sure you would be able to add even more income to those streams.
I was a poor student once, so I understand your situation. The great thing for you is that you are reading PF blogs and such, to make sure you start off on the right track. Many are not so lucky.
Over time, you will develop tons of income streams. Just got to give it a while and be consistent.
Sam, I have few income sources — I own hotels and I also work in IT. I am also building online business(Hotel internet marketing and mobile marketing). And, I am way frugal in my lifestyle. So, I don’t worry at all if I lose one stream of income or another.
Sounds good to me. The real question is, when do you hang it up and retire? You mention your daughter going to Berkeley right?
Yes, I have one daughter at Berkeley and another at NYU. I am going to reduce my liabilities to nothing in next five years so that I can do whatever I want at that point.
We have been working hard on devirsity of income and in this respect there is something to be said about coupledom. We have four streams at the moment: our monthly incomes from day jobs (2); some consultancy on both sides; rent and finally The Money Principle is starting to make a bit (nothing to get excited about but it is starting). We still have a long way to go but are much more financially settled than four years ago. Oh, and if all this income goes I have land and may even learn what to do with it :).
Nice! And you can always plant fruits and vegetables on your land to prevent yourself from starving if your really need to! :)
I love to plant things. Perhaps it’s b/c when I was a boy, I planted 10 mango trees and now I see them as humungous trees that bear so much fruit now!
It happened to us. The worse thing was we lost both our jobs AT THE SAME TIME. We were almost penniless as we were merely living on a hand-to-mouth basis. I went back to my online writing jobs. Fortunately, I was able to get some clients enough to feed us for the next payout. It went on for another two to three months until my husband took some clients for face painting, photography, and graphic arts design. We are now back on track and saving up to prevent another similar situation.
Charlene,
I’m so sorry for your streak of bad luck. You guys are not alone. I get weekly emails about planned mass layoffs. The large companies are going through a shift in strategy and they’re not done yet.
I think it’s wonderful that you and your husband have managed to turn things around.
Great job getting back on track! I remember you writing this story about both of you getting laid off at the same time. That must have been frightening, however, by having each others backs, I’m sure that helped a lot.
Maybe you can share your story sometime on FS? I plan on putting together a reader series about how life is like being unemployed and on unemployment. The goal is to slay misconceptions, provide hope, and provide guidance as well.
Great reminders Sam. We all must strive to widen our base so we won’t be as threatened when the wind blows.
Thanks for mentioning my old post Sam. This is surely a timely topic. It is a good reminder to focus on our solid and reliable careers even as we work on other projects.
I love your thinking! I wish I had a better line of defense, right now my job (selfemployed/fam company) is all I have. My parents have their rental and my father’s other work to fall back on. I have ONE thing, if it goes… everything goes. It’s not a good feeling… This post is great reminder and encouragement to build my savings and keep going because last night all I could think of was that I’m just a hamster running the wheel and what’s the point?
It’s definitely been a nice wake up call -back to reality I go and focusing more than ever on affiliate income and SE traffic. That’s where sustainable money is online. I’m also saving up for my first rental property. Diversification is so important…especially these days of uncertainty.
Im trying to lower expenses, as well as create new revenue streams by making products and selling them!
I’ve been fortunate in the fact that I’ve never lost a major income stream. Granted, I’m young but I’ve never been fired from a job and I try to control my destiny as much as possible by making myself as a valuable asset to a company (although I’ll concede that that’s just a figment of my imagination).
I love this point though and I plan to build multiple income streams over the course of time. I can’t wait to get out of debt and focus on more important things such as this.
As an advisor, we also coach our clients to have multiple income streams in retirement! Hopefully sources such as social security and pensions will be there but you never know. Having income diversification now and in retirement is a very important thing in my book.
Jason, what was the article regarding losing $70,000 you wrote again? Was that a job change you were talking about? I forget. Looks like your site has done well since the publishing of this post. Congrats!
When I first started my career, I spent some money to acquire some soccer coaching licenses. I was a former college soccer player, so I knew soccer wasn’t going to leave the blood anytime soon. I looked as it a way to give back to the game that gave so much to me. After it was all said and done, it turned into a pretty nice source of income. Work the regular job till 4ish. Head over to coach a team till 7. Have the whole night to relax or work on different deals. If my career wouldn’t have turned out, then I had started to build a nice coaching resume and had certification to get paid to supplement any losses. Luckily the career continued to bloom! :)
I’m constantly trying to diversify my income streams. If one stalls out for a while, another one is there to take it’s place. I work my butt off most of the time, but at least I don’t worry much about losing all of my income at one time since I don’t put myself in that position. Now I just have to work on being completely federal-debt free! Ask me later about this one…
Multiple income streams is almost required in this scary world. I started investing in rental property, it was done on the side and raised it to a self sustaining entity. I added a fast food restaurant, studio catering and ultimately consulting before I sold out. In retirement, I will have Social Security, pension, IRA, Roth IRA and blogging income to start. I will build additional income streams from this platform.
My advertising income is actually quite small compared to my income for writing and virtual assistant work. We are working hard to pay down debt so we will need less money every month. I am also looking for more ways to diversify income by finding other genres in which to write. Great post, and I love the multiple layers of protection you have built for yourself with your many income streams.
I was almost laid off at a prior job but jumped to a new job before that happened. There were all kinds of signs that the company was in trouble so I started looking aggressively for a new job and I was fortunate I got out when I did. I would hate to lose my current job but I think I’ve been pretty diligent with my savings and have a few other income streams that I could make do until I figured out what I should do in my next chapter.
[…] income streams and some changes in risks and opportunities of late. A recent article at Yakezie (What Would You Do if a Major Income Source Went to Zero) made me think about this some more. On the “real” job front, things seem to be […]
I was laid off in August due to downsizing. It was quite a shock to say the least. We learned to live on less and have discovered that we can do with less income. Due to my parents age and health, I have ventured into eBay to supplement my income for now. When things settle down with my parents *hospitalizations and emergencies, etc.) I will definitely seek full time employment.
Sorry to hear about this Lisa. Hopefully things are looking better now?
Wow. What a sobering article. Not bad, just sobering. I had a major career change starting in 2007, and as I look at 2008, I wonder how we paid the bills and had food on the table.
I think regardless of where our income comes from we have to be adaptable to new circumstances or situations. If we are unable to adapt, we’ll have problems. We have to have an honest assessment of current reality and we have to adapt to it. Other opportunities to prosper will come along, but if we cannot adapt, we’ll have major problems.
We definitely do have the ability to adapt, no matter what the situation. It’s the human spirit. As I no longer have w2 income, my cash flow has dropped immensely since my retirement. However, I’m still the same happy person as always. More freedom and time make up for lost money.
In September, I will have no guaranteed income for the first time since I finished my Bachelor’s Degree, and that is a little bit scary, especially in this financial climate. But I am very hopeful for the future and believe that it will not be a problem. The planning has already begun on how I am going to support myself, and one of the first things I realized is that I need to start building as many different income sources as possible. Very timely post FS!
How are things going for you now as I revisit this post in December, 2012?
Excellent message as always!
My main income stream is my Job. If I would lose and there aren’t enough vacancies I would focus a lot more on my website. That was the primary reason I have started it.
Yeah… up until very recently 99% of my income is from my day gig. Although not short-term reliable, it looks like investment income is starting to get into double digits percentage-wise. That’s mostly market movement and dividends, but we have a little in rental income. Online is just getting moving. But still – way to reliant on the day gig – at least for now. Awesome post.
Cool. Yeah, it just takes time to develop those other sources. The key is to just start. 10 years from now, you’ll have lots of slices of pie to eat from!
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I never faced this problem, but with this post wakes me up that I should plan in case any major source of income is lost. Thanks for the post
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