Personal Finance Goals

How To Make An Extra $500/Month Renting A Room In Your Home

This post may contain affiliate links. Please read my disclosure for more info.

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Money. 

It's a weird thing. Some people can't get their hands on it while others seems to have crap tons of the stuff just lying around. 

I was in the first camp when I realized it was time to start paying off my student loans. I wasn't exactly living paycheck to paycheck. I had enough money to pay for my bills and save a tiny amount (like $100). It was pretty clear that if I wanted to get out of debt I'd have to do something drastic. 

I thought about the usual ideas of starting a blog, becoming a freelancer or even babysitting. When I thought about what it'd take for me to get there, the ideas became much less appetizing.

I honestly wasn't interested in cutting time with my daughter or losing sleep to work extra hours. I spent so much time freelancing and working on campus while I was in grad school that I averaged 3 hours of a night. During that time, the only time I spent with my daughter was when she'd read me bedtime stories before I passed out because I was almost always running on fumes. No amount of money could entice me to go back there again. 

I wanted to somehow bring in more money without changing my lifestyle

 Out of the blue, as I was contemplating what seemed like my inevitable return to freelancing and #TeamNoSleep, one of my best friends called me with an offer I couldn't refuse. Her grandfather was visiting for a few months and needed a place to stay... and he'd pay $500/month.

Like magic, the room my daughter was living in for free (that cheapskate didn't even pay for her own groceries!) was now earning me $500.

For each of those months, I was able to double my student loan payments. 

 

Why This Works

Making money isn't the only tool in your arsenal. You just need to create  a gap between how much you make and how much you spent each month. 

Let me break this down for you: 

Earnings - Expenses = $$ Available

That means you can increase your earnings or decrease your expenses to have extra month at the end of the month. (Or you could be super gangster and do both!)

I was never too broke to pay off my student loan debt.

In fact, I was making more than enough money to get out of student loan debt within a few years. I didn't see it because I was spending $1600 for rent, $150 for car insurance, $100 for gas, $75 for internet, $70 for gas and electric and $500 on my student loans - there's no surprise there was nothing left over to make even higher payments.

When grandpa moved in with me, he lowered my living expenses by paying a portion of my rent. 

This meant that the gap between what I was making and what I was spending increased dramatically - without having to lift a finger. 

 

How You Can Do It, Too

If you're trying to get out of student loan debt like I was or simply trying to save more money, renting out a room in your home is a great option to lower your living expenses and increase how much you keep in your pocket at the end of the month. Here's how you can get started:

 

Research before setting your pricing

When my friend called me up, I'd never thought about renting my "extra" room out to anyone. So pricing was nowhere near my radar. Also, this was one of my best friends so it felt more like letting an uncle stay with me for a while. She threw out the $500 number and I happily agreed. 

Before you open your home to someone, though, you should definitely think about what it'll cost you to rent this room to them. If you plan on getting a monthly renter, take a look on Craigslist and see what other people near you are charging for similar rooms. If you want to rent your room nightly to travelers, you can check Airbnb.

 

Advertise your listing

While I didn't have to advertise my listing, I've definitely rented before. I would start with advertising to friends and family. Simply let them know you have a room for rent and ask if they know anyone. You'd be surprised with what you can find within your network just by asking. 

Then there are the online options. If you're looking for a long term renter, you can post your listing to Craigslist. For a nightly renter, you can post your available room on Airbnb. 

 

Clean + Furnish The Room

Grandpa ended up renting out my daughter's room. This made the most sense because my room was big enough for my daughter and I to share and my bed was larger (it would've been pretty awkward to share her full-sized bed for a few months). We took all of her clothes and toys out of the room in preparation for grandpa's arrival.

You'll want to have basic furnishings (a bed, dresser, night stand and a work desk) in the room whether you're doing a long or short term rental. I don't even consider an Airbnb for night if it doesn't have a place where I can pull out my laptop and rock out a blog post or two.

 

Set Rules & Boundaries

Once grandpa came in, I showed him where things were. I showed him to the bathroom, his room, the living room and where everything was in the kitchen. I told him what time I get ready for work and what time my daughter gets ready for school. (I grew up with four sisters and one bathroom so I know the value of having a system when you're sharing a bathroom.) I also talked to him about what time we go to bed and wake up so he knows when to expect more noise then usual (and when to keep his noise levels down). 

By telling your new roomie what to expect when living with you, there are no surprises at all. You might even be surprised at how much their respect your sleep, alone time and that fast-paced bathroom time in the morning. 

 

But what about my privacy?

For the first time ever, my daughter and I would be living with a man. While we'd grown accustomed to walking from the bathroom to our room in a towel, we'd get fully dressed in the bathroom before coming out. I also opened my room 24/7 to my daughter. Both of these were changes I was happy to make because I could see the reason I was doing it and the pros far outweighed the cons.

You'll have to decide what's important to you. In renting out your room you are opening your home to someone else. This, without a doubt, takes a way some of your privacy. There will always be someone if your home. They will hear you through the walls (and you'll hear them sometimes). 

The best way I've found to keep this in perspective is to put a picture of your end goal somewhere where you can see it every day. I created a vision board to remind me of my student loan payoff goals. There was never a day that went by where I didn't remember why I opened my home, why I gave up my privacy and why I'm happy to do it again. 

Side Note: If you want to create a vision board, my FREE Big Vision Checklist will walk you through my step by step process to make one. Click here to download it!

 

I've never done this before. How Do I keep My sanity?

Three key things will help you keep your sanity: 

  1. Don't sweat the small stuff.

  2. Pick your battles.

  3. Automate, when possible.

Every morning, grandpa would wake up and sit quietly until I came to turn that computer on. I once tried to show him how to do it - and after 2 minutes of frustration clicking around all the apps on the screen, he threw his hands up and said "can you just put it on for me?"

That's what it was. 

Every morning before work, crusty-eyed or rushing out the door, I would have to stop to put the computer on for grandpa (the entire time he called it a TV). Then every night I would have to turn it off. 

Though it was slightly annoying at first, it became our new way of doing things. Each morning, I'd walk into his room, say good morning and turn on "the TV." Sometimes we talked about what was happening on Aljazeera. We has conversations about the president. We started to bond.

Don't take everything personally and don't make a big deal out of the tiny details. Just enjoy the cash flow.

Want To Start Planning Your Vision Board Party? 

  1. Download the FREE vision board party planning checklist.

  2. Craft your inspiring vision board workshop talk with our FREE High Impact Storytelling Journal Prompts

  3. Plan, promote & host your first (or next) professional & profitable vision board workshop with our signature course, Sold Out Vision Board Parties.

How This 28-year-old Increased Her Net Worth By $20,984 in 13 months

This post may contain affiliate links. Please read my disclosure for more info.

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In June of 2016, I got my first real job. That meant that for the first time ever I actually had some money to pay my debts. Before that, my strategy was sticking my head in the sand and pretending that the pile of debt didn't exist. I'll be the first to admit that it wasn't exactly the best strategy.

By that time in my life I had moved into my mother's basement where my daughter and I shared a room that only had an inflatable bed and my computer desk - so I was in no place to care about debt payoff strategies. 

Flash forward two years later.

I finally landed a job where I'd have enough money coming in to cover my expenses AND pay off my debts. 

Like many Americans, I'm now paying for the mistakes I made earlier on in life. 

I decided to start reporting my net worth because I know I am not unique in my story. Many of us in our late twenties are paying for the mistakes of our vulnerable and naive teen selves so there's a ton we can learn from each other. 

There are three main reasons I'm sharing my money story:

  1. I want you to know that no matter how messed up your situation is, you can get out of debt.

  2. I want to track my own personal net worth over time.

  3. I want to share my unique story in how I'm getting my life together (and one day I will)

Let's get started, shall we? 

 

What is Net Worth? 

I was not born (or raised) with a huge understanding of money and what it's meant for (other than buying stuff) so I didn't really understand what net worth meant in practical terms until about two years ago. 

Basically its what you own (your cash, investments, home, etc.) minus what you owe (credit card, student loan debt, etc). 

 

What's Included? What's Not?

Tracking net worth can be a bit tricky because people can include (or not include) whatever they want so no two net worth statements will be the same.

 

What's included here:

  • Money That Pays My Bills - This is money that comes in... and then goes right back out. It's used to pay rent, phone bill, Netflix and other miscellaneous debts.

  • Savings Account - I put a small percentage of each paycheck into a savings account.

  • Investment Accounts - My 401K through my job and a few robo-advisors.

  • Debts - The only debt I have left is my student loans.

 

What's not:

  • Money that's not doing anything productive for my net worth - I have three additional accounts that I put a small percentage of each paycheck into: travel savings, weekly household/grocery spending, and personal fun money. This is money that is meant to be spent on enjoying life now and plays no part in my future plans - so I choose not to include it in my net worth.

  • Cars - Some people choose to include the value of their car(s) into their net worth statements. There are two main reasons I don't do this: (1) I don't think your car is an asset in by any means (2) don't own a car because it's a money pit (and these days I'm more inclined to keep my money in my pocket).

  • Homes/Rental Properties - Unlike cars I believe homes/rental properties can be a great way to contribute to your future financial freedom. While I don't have any now, I hope to start adding this to these income reports by 2021.

 

How Much Money Do I Make? 

Now I know it's totally taboo to talk about how much money I make but screw that. I'm going to be 100% open and honest about my income with you because I believe the more we talk about our money stories, the more other people can learn from it. 

I can attribute my total money makeover to one person... Wendy. 

Wendy is a super badass (and that is literally the only way to describe her.) I met her through an ex-boyfriend and was immediately in awe of her badassity. She went to an ivy league for school, was making $90K+ at some bank, running marathons, had a booming social life AND somehow she was also the treasurer of the Young Dems Chapter. #BadAss

I had no idea how long it took Wendy to accomplish all that, but I knew one thing. When I grew up, I wanted to be Wendy. 

At 25 years old, I was making $20K/year, working 3 jobs as a babysitter, waitress and freelancer. (I was so exhausted on a regular basis that I once fell asleep at a full blown rave in the room reserved for people who can't hold their alcohol.)

On top of that, every dollar that came in went right back out. A lot of my friends were struggling so I simply thought that it was normal. I thought that no one really "made money" until they were older. I figured I'd make money one day in my forties after I gained experience, after I'd paid my dues. I was OK with my life.

Then I learned Wendy and I were the same age. 

The second I learned that my world shattered. The story I'd told myself to be comfortable with my struggle was no longer true. My age was not the reason I wasn't making money - instead it was my own limited mindset that was holding me back.

From that moment, my mind opened up to the fact that I, too, could get one of those high paying jobs. I went back to school, got a master's in marketing analytics and landed a job as a marketing analyst. 

My total annual income now is $69K. 

I love telling people how much I make because I know my story can inspire someone the way Wendy inspired me. 

 

Cash Money

Here's the money that goes into my checking and savings accounts. It fluctuates over time because all the money that goes into my account gets immediately shifted to pay bills and student loans.

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My biggest downfall when it comes to my cash money (and why it's impossible for me to keep money in that account) is that I struggle with properly budgeting. Every month, when I inevitably pay too much out (on student loans or elsewhere) I just pull the money out of my savings, dump it into my checking and use it for more bills. 

In the future, I plan on moving my emergency savings to a different account to create a barrier between my savings and my checking. However, I don't plan on doing that until after my student loans are paid off. I believe this is the best move for me because the earnings on savings accounts is around .01% (or whatever) while the interest I pay on my student loans is 6% and my credit score is far too low to refinance at a lower rate. That means the most productive place for my money is in paying off these student loans.

Downside (for now) is I don't really have an emergency fund.  I'm OK with this because I do have a health savings account and great health insurance to cover me if I have a medical emergency. Also, I do not have a car or own a home so I don't have any physical property to worry about. 

 

Investments

The only investments I have (for now) are the pre-tax retirement account I have through my job and a few robo-advisors investment accounts where I stash some after tax income. 

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Acorns

Acorns is an investment app that helps you invest tiny amounts of money at a time (so it's perfect for investors on a budget). For every purchase you make, Acorns rounds your purchase amount to the next dollar and invests the change. 

My favorite thing about Acorns is if you happen to want to pull your money out of that account for an emergency  you totally can! However, it takes about 7 days to get the money back into your account so you're not likely to reach for that money for any immediate need. That's great because it can sit and grow a little at a time. 

 

Betterment

Betterment is another online investment company that helps you invest small amounts of money. I am currently putting $50/month into Betterment and watching what happens over time. 

 

401K

I started to funnel money into my 401K the moment I got my first real job. I was super excited to start putting money towards my retirement. I finally felt like an adult.

I started off putting in 6% of my paycheck (because the company matches at 6%) and I set my account to automatically increase by 3% every year. Right now, I'm up to 12% of my income going into 401K before tax.  

 

Loans

The only debt I'm going to talk about here is my student loans.

Before I started my current job, I had so many debt collectors calling me that I couldn't wait to get rid of them. I had unpaid phone bills, car insurance payments, credit cards that had gone to collections, unpaid medical bills and about $4K that I'm paying back to friends and family that helped keep me afloat when I was at my worst. 

I spent the first 6 months at my job paying off all of my small debts and by December 2016 I was ready to start paying off my student loans. 

This report starts at the beginning of that journey.

 

Student Loans

I have a HATE ONLY relationship with my student loans (and I totally have a right to).

Side note: I'm going to hop on my soap box for a second to say what the United States does to students is CRAZY! At the age of 18 when you can't even RENT A CAR you're saddled with tens to hundreds of thousands in student loan debt. If you're a first generation college student like I was then you didn't have anyone to tell you about the important of choosing schools wisely or the impact of student loans on the rest of your life. Instead, you're way too busy celebrating your future success because you think degree=high paying job. #FalseAdvertising

Just for fun, let's take a look at the moment I started to include my student loans into my Net Worth.

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You see that GIANT dip right around December 2016?

Yup. That's what student loans will do to you. (Take notes, teens!)

Clearly, I hate my student loans so it shouldn't surprise you one bit that I decided in January 2017 that I'm going to pay off all $42K of my student loan debt in two years

I've done some pretty interesting things to get there: 

I sold my car.

I rented out my second bedroom to my friend's grandfather visiting from Africa.

I (voluntarily) moved out of my apartment to live with my aunt in New Jersey.

I started to look for more opportunities to make money on the site through:

I have paid off $12,913 in student loan debt payments so far. 

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Going forward, I'm putting a lot more time an energy into creating new products for the blog and performing high at work as well because it's promotion time!!! #WishMeLuck

Any additional income will go towards student loan debt payments. 

 

Net Worth

My total net worth is currently -16,604.93 (reminder: this is including student loan debt).

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This is a huge accomplishment I have increased my net worth by $20,984 (about 1/3 of my pretax income) in just 13 months!

 

The Visuals

My money story is tracked in Personal Capital. That's where I got all of these cool visuals showing where my money is coming in and going out for this post. It's an amazing free website where you can track your net worth, budget and plan for retirement. Sign up for Personal Capital here

 

Tracking my net worth is my way of reflecting on my money habits and thinking about different ways to improve them.

What are you doing to improve your net worth?

Want To Start Planning Your Vision Board Party? 

  1. Download the FREE vision board party planning checklist.

  2. Craft your inspiring vision board workshop talk with our FREE High Impact Storytelling Journal Prompts

  3. Plan, promote & host your first (or next) professional & profitable vision board workshop with our signature course, Sold Out Vision Board Parties.


About the author

Cyrene is a fun and accomplished workshop facilitator, learning and development guru and Human Resources professional. Being at the helm of Thrive Lounge has been a long-time dream. Through vision board workshops she plans to accomplish two-way learning. Sharing her vast years of knowledge to motivate and encourage others; while simultaneously getting the reward of great energy, ideas and questions to ponder back from each group. A super win-win. Please join our Thrive Lounge community so you too can benefit!