Can You Turn Your Biggest Expenses into a Profitable Business?
I dropped daily hints and pictures last week about our new travel project! Did you figure it out?
In case the hints were too cryptic, here’s the easy, direct way to find our new travel blog: Points Family.
How did I end up with a new travel blog? What does it have to do with your biggest expenses? Let’s find a way to turn your biggest expenses into a money maker.
Identify Your Biggest Expenses
We finished reviewing our spending for last year and our top three expenses were interest, taxes, and travel.
There’s nothing earth shattering about housing expenses (including mortgage interest and real estate taxes) at the top. In fact, for most people the top four expenses are: housing, debt expense, taxes and retirement savings.
If your housing expenses are too high, start with 16 Ways to Lower Your Housing Costs.
Back to the travel making it into our top three. We spent a mind blowing $17,000 on travel last year. Granted, this does include all the expenses our family spends on skiing, which is our favorite thing to do. And it does include the cash value of some of our points and miles that could have been cashed out.
The reality for us is that it’s an expense that needs some evaluation. Take a look at your biggest expenses. Are they what you would expect? Are they in line with what you want to spend your money on?
Read More: What Should Your Financial Pie Chart Look Like?
Start a Business?
Evaluate your expenses and determine if there’s an expense that you are spending a disproportionate amount of money on. Is it because you love it? Is there a possibility that the amount you spend is a reflection of how much time and energy you’ve spent becoming very knowledgeable in that topic? I found that was the case with our travel!
Like I do with everything I enjoy, I decided to turn our travel into a business! (My husband tells my kids I’m a serial entrepreneur, I’m not sure if that’s a compliment or a fault!) That reminds me, we are long overdue for an update on how it went Making Money Selling Private Label Products on Amazon.
Does one of your biggest expenses indicate a possible business opportunity?
Taxing Situation
What is equally jarring about the travel category (besides just the amount of spending) is that the other categories are optimized (low rate mortgage and minimized taxes) and tax deductible.
While our travel costs were cut by points and miles the rest of the expenses were paid with fully taxable dollars. That make them cost more just based on our tax bracket!
But before you run off and start a business just to make the expenses tax deductible, don’t forget about the hobby rules! The IRS is going to require you to have a reasonable expectation of earning a profit.
Read More: Is Your Business Really a Hobby in the Eyes of the IRS?
Starting a New Website (and a Case Study)
What is the lowest barrier entry to turn any hobby into a business? I’d argue it’s probably a website, or more specifically, a blog. Of course, I’m biased.
But that’s my plan. Don’t I already have a website? Aren’t we reading this on My Dollar Plan? Of course. However, readers here really want to talk about tax, retirement, investing, saving money and making money. There’s some crossover into travel, and points and miles, but only a small subset.
My Dollar Plan will still focus on making, saving and investing your money. The travel topics moved to Points Family.
The best part is that while I start a new website, we’ll get to talk about the money! Can you make money blogging? Sure, you can make money with a ten year old website, but can you start one now and make it profitable? We’ll use the new travel blog as a case study!
The New Travel Blog
Are you also a travel fan? If you like to travel and are into point and miles, the new Points Family travel blog is live. You’ll see some of the old travel posts including our free tickets to Disney World and our trip to Steamboat.
There will be lots of new stuff too, like how we Visited the Wizarding World of Harry Potter at Universal Studios with Discount Tickets!
What’s Your Biggest Expense?
Have you reviewed where you spent your money last year? Take a look in Quicken or Personal Capital. Take some time to review where you spent your money.
Is it in line with your goals of where you want to spend your money? Are your biggest expenses tax deductible? Can you turn them into a money maker? Would it be possible to make your hobby a business?
And remember, if you have a business, then you can also sign up for Business Credit Cards… we all know how much I love that!
Take Action
Like my entire financial journey, I figured it would be fun to document it here at My Dollar Plan to see if we can create a roadmap for success.
The real goal once you identify your biggest expense is to do something. Write it down. Tell me about it. Start something. Take the first step!
What is one of your biggest expenses and what action will you take?
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