Eve, from HomeBizBlogger.com wrote an article that interested me, and I offered to help her out based on her article and some minor additional information.  You can get up to speed on the article here.

Eve has been gracious enough to provide some personal income information so that I could do a more complete “If I were in your shoes I would…”  All recommendations I make here are based on limited info, and as such the advice given here is more general.

So, how much should Eve reinvest in the blog?  Should they consider debt consolidation loans?  What do they need to do to afford a home?

Let’s get to it.

  1. Income- For the household is roughly $2,220 a month, a very livable sum indeed, (actually around what my household brings in now too)
  2. Goals- Some clear ones include: Growing the blogs; Getting out of debt; Purchasing a home.
  3. Expenses- $10 a month for the blog.  Other typical household expenses. $1600 credit card debt.
  4. Other assets- 3 revenue-earning blogs.  Time.  Flexibility.

Let’s break those goals down bit by bit.

Growing the blogs (No financial obligations)- I’m assuming that Eve is going to continue to blog whether or not she devotes some percentage of the blog profits to advertise her blogs more.  If she is making $300 a month on blogging, she’s making $10 a day in revenue from people clicking on her on-site advertisements, and paid reviews she may do for certain companies as a one time thing.  If I could live off of the other $1920 a month (with room to spare) then I would reinvest all of the profit from the blogs into two key areas: Content Generation (hire a blogger to post) and Additional Blogs with maybe a small amount going to an advertisement on other sites in my niches.

Growing the blogs (Small financial obligations)- Where I’m guessing Eve will fall.  The $1920 a month doesn’t stretch too far, some blog income is needed to make purchases for the household.  $15-$200 monthly minimum debt payments (credit card & auto loans).  I would still use as much extra as I could.

Growing the blogs (Debt problems)- Owing more than 1 month’s income on a credit card, or a combined payoff of all debts (except student loans and mortgages) of $12,000+.  In this situation, the blog profit needs to go to paying off debts, and if possible, a second or third job needs to be found for a short time.  The blog will not shrink if you keep posting regularly, and discuss interesting topics.

This leads wonderfully into…

Getting rid of debt. You can start by Bringing your Net Worth to Zero,  Living frugally, and find unique ways to save money.  The money that you saved is for paying off debts.  I prefer paying the lowest balance debts off first, but paying the highest interest ones first will save you more money in the long run.  We know Eve has a $1600 credit card that needs to be paid off, for some interesting blog content it might be cool to track the card that blogging paid off.


Home Ownership- A lofty goal for someone in a lot of debt.  When it comes to home loans, banks have very strict lending practices.  A good rule of thumb is to either find a home where the monthly payment will be the same as your current rental. (If rent is cheap, 3x your annual pretax income) Play around with This Calculator to get a rough idea of what you can afford.  Using my rent payment as a measure, I can afford an $82,000 home.  This doesn’t buy me much where I live right now, and considering the additional costs of a home (furniture, maintenance, etc) it would be a bad idea for me to make a home purchase right now.  In Eve’s case, home ownership should come after debt repayment, and increasing the blog revenue.

So, to sum up what is arguably my longest post EVER!  Here’s what I would do:

  1. Take care of debts.
  2. Grow the blogs!
  3. Save a 10% down-payment and then buy a home that is affordable and livable.

Want me to break down your finances in a “Here’s what I would do” just post a comment, newcomers encouraged!