Saturday, May 05, 2007

Side Income For May - What Should I Do?

When I started this blog many months ago, like most personal finance bloggers, it was so that I could keep myself accountable and also provide myself with a lasting record of how the financial situation in my life changed over time. It is not an easy journey and I realized how frustrated I was with the amount of money I had. It wasn't that I didn't make enough money. That isn't to say I didn't want to make more, I mean, who doesn't? But it simply means that I found myself unable to really feel comfortable about where all of the money was going. It was at that point that there was a bit of a breakdown and things started to change.

Over the past six months, I have made between 300-500 dollars per month of side income. But I think that the key about this money is not that I have made it, but that I have not started counting on it.

So today I just cashed another check for about 160 bucks. This is good because my business money is in good shape and I've already put as much as I wanted to put in for my Roth IRA this year (which I fund using side income), although it is far from maxed out and now I am debating about what to do next. My options are as follows: Prosper, Paypal (interest savings), Stocks (long-term, non-retirement), or Debt.

Part of me wants to put even more money on my debt. Currently I have some high interest debt out there that is at about 8%. And although it is tempting to think that I could put more money into prosper or paypal and make interest, the reality is that paypal is a losing proposition when I have debt at 8%. Because after the taxes on the paypal money, I am making only about 4%. Putting it into prosper loans is more appealing, since I've averaged about 13% return, so far. However, there is the fact that the loans might default and the money is tied up for 3 years. Given those two factors, I think that I will probably start making debt-paydown my top priority for at least 50% of my side income for the rest of this year. The remainder I will likely divvy up between loans and expenses.

1 comment:

Cents You Asked said...

Stick it to the debt. Taking taxes into account, that is like making a garuanteed 11%. That's hard to beat! Congrats on the great side income.