Want additional income? Try scavenging!

Question: Can you give suggestions on how to increase my income? I am already relying on overtime pay as if it were part of my basic pay because my employer gives meager salary increases. My spouse is working full-time raising our children and really has no time to assist me in generating additional income for our family.—Desperate breadwinner

Answer: What do the hit cable TV shows “Pawn Stars” and “Pickers” have in common? Apart from being aired on the History Channel, they both live up to the adage that one man’s trash is another man’s treasure.

To put things in perspective, “Pawn Stars” and “Pickers” feature real people who look for value hidden in long-forgotten, banged-up, rusted, dusty and sometimes downright yucky stuff. It’s not an easy job. It’s like mining for gold where you need to dig up tons of rock just to find a few ounces. But it is well worth the effort.

What is so amazing is that the characters in these two shows have developed an eye for finding value beneath the surface. At times, the pawnshop owners and pickers would not even have their valuable finds restored for fear of depreciating the value.

But why would people want to buy old and icky stuff? It’s because these items are sometimes rare, unusual and of high value. It’s nothing but the law of supply and demand at work. Of course, not all rare and unusual items have high value. But leave it to these guys to find out for you.

In the same manner, you can scavenge through your own assets to uncover buried treasure. One way to do so is to construct your own balance sheet or what government employees call the statement of assets, liabilities and net worth (SAL-N). Classify your assets into two categories: earning and non-earning assets.

Examples of earning assets are financial security investments (e.g. stocks, bonds, pooled funds), real estate that is for rent or intended for build/buy and sell, and a business (e.g. sari-sari store, Internet café, express service).

Examples of non-earning assets are your savings accounts (because they earn very low interest), life insurance policy cash value, house and lot, furniture, fixtures, appliances, jewelry, gadgets and vehicles.

These are supposed to be assets that you are using and not making a lot of money on.

Here’s the way to analyze your SAL-N, particularly the asset side.

Firstly, you should look at all of your assets as part of your investment portfolio. These are all funded from the money that you raise, either from your own earnings or through borrowings. In investing, the way to minimize risk is to diversify. Therefore, overly concentrating your funds on either earning or non-earning assets is not advisable.

Although there is no exact rule on how much to allocate to earning or non-earning assets, it is ideal to have more of your portfolio allocated to earning assets as these will help provide a better future for you and your family.

This is why, for employees, we promote “emvesting” (i.e. taking a good portion of employment income and investing it).

Yet even without looking at employment income, you can already work to increase your cash by sifting through your non-earning assets and unlocking their potential. And no, I don’t mean rushing to the pawnshop to pawn your stuff.

Open your eyes and mind to see the value in the long-forgotten, banged-up, rusted, dusty and sometimes downright yucky items in your non-earning assets.

With a little tweaking, you may be able to convert your non-earning assets to earning ones.

Moving excess savings to investment accounts is one of the most common ways to convert your non-earning assets to earning assets. If you have a washing machine that you use only for your family, why not offer to do the laundry for your neighbors? If you have a storage room outside your house, why not fix it up a bit and rent it out? If you have extra clothes, shoes, bags, jewelry and other items, why not sell them? If you have an oven that you are not using, why not make cakes and pastries for sale (provided you have the knack for baking)? If you have high-cost, short-term debt, why not borrow against your insurance policy cash value wherein the interest will likely be much lower and principal payments flexible? You may not earn more but you will surely pay less interest.

There are so many more you can do with your assets to add income without having to ask for a higher salary.  Managing what you have is a lot better.

If you want to know more about effective cash, debt, risk and wealth (CD-RW) management, come and attend the EnRichCD-RW personal finance training scheduled on Oct. 20, 2012. You may also want to ask your employer to integrate personal finance training into your company’s employee benefits. Invite your company’s employee relations manager to attend the EnRichCD-RW personal finance training as well. There are limited free seats allocated for HR. Visit www.personalfinance.ph, e-mail [email protected] or call (632) 216-1541/(632) 359-3094 for more details.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, seasoned investment adviser and best-selling author. Questions about the article may be sent by SMS to 0917-505-0709 or e-mailed to [email protected]. To learn more about the RFP program, visit www.rfp.ph or e-mail [email protected].)