How I Blew $5,000+/Month in Online Income (And Why You Should Care)

in You

budgetWelcome to the un-official “Personal Finance Week” here at Common Sense Marketing!

Okay, so I have to admit that I wasn’t all that excited about Tuesday’s “How to Save Money on Your Affiliate Marketing Business” post.  For some reason, it didn’t seem to *pop* for me and I didn’t think it was going to do that well in terms of traffic or comments.

And yet, it seems to have struck a chord with a lot of people.  It’s had some really great feedback, and some very thoughtful comments from people who have had the same experiences I have.

I think that’s because saving money and being financially responsible isn’t something that we really talk a lot about when it comes to affiliate marketing.  We should, but sometimes it seems like we’d all prefer to remain blissfully ignorant of the fact that most “gurus” aren’t as well off as they’d like us believe, or that most of the tools and products sold today just won’t come through on their promises of making you rich.

So today I want to talk to you about the other side of the personal finance coin – not just managing your spending, but how to manage the income you do earn from your online businesses responsibly.


The truth is, if you work your butt off and focus on continually improving yourself and your skills, you’re probably going to make some money online at some point.  I can’t say how much you’ll make (and honestly, it’s probably not going to be the hundreds of thousands of dollars each month that IM sales letters promise you), but I can say that there are tons of different ways to make money online and that if you’re diligent about moving forward with your business, you’ll probably run into at least one of them.

And what I can tell you is my own personal story (yes, this is another one of those – “do as I say, not as I do” – kinds of posts).

As most of you know, I started online in 2007 and quickly ran through just about every online business model that’s out there.  Eventually, I started gaining traction with freelance writing and affiliate marketing, and by the middle of 2009, I was earning between $5,000-$6,000/month online.  Certainly not enough to call me “rich”, but combined with the take-home pay from my day job, it was a pretty good living for someone who was just a few years out of college.

But here’s the thing – I have absolutely nothing to show from that time.

After about six months, the writing contract that represented the bulk of my online income ended unexpectedly when the company I was writing for closed up shop, and I wound up selling off many of my affiliate marketing sites to help pay for my wedding and my first home.  But for someone who was earning pretty good money online, I still had:

*Student loans, that should have been paid off with some of that money…

*Credit card debt that I incurred when I was younger and stupider (that *definitely* should have been paid off with that income)…

*Almost no emergency savings to protect myself from abrupt changes in income (like the end of my major writing contract)…

So where did the money go?  I’m honestly not sure.  I know my husband and I went out to eat more, and that we bought more clothing, more groceries and more gifts for others.  But we didn’t travel extensively, we didn’t buy new cars or expensive electronics, and we sure as heck didn’t save any of it.  Our spending rose to match our income levels, but I’m still utterly at a loss as to what we spent it on.

Yes, it’s hugely embarrassing to admit that – to myself, and to all of you who are reading this.  But like the lessons I learned about spending too much on marketing products, I truly believe that having my income reduced drastically and being forced to learn to live within my means was one of the most valuable lessons I’ll ever learn.

Today, my husband and I are on a much more stable financial ground.  We’re still paying off debt (and probably will be for awhile), but now we’ve got some savings tucked away and we’re much more aware of where our money goes each month.  We’ve also got a plan in place for how we’ll handle increases in my online income (here’s a hint – it isn’t buying a bunch of new clothes or electronics… :) )


Now, this is the part of the article where the “Don’t be that guy” lesson happens.

Earning money online is an amazing feeling.  There’s nothing like the thrill you get from seeing that “You’ve Received a Payment!” notice from Paypal in your inbox, or from watching a project you’ve worked your ass off on take off and start to make sales.

But losing that income wasn’t the hardest part of the process for me – knowing that I’d been so irresponsible with such large amounts of money was a thousand times worse.

So excuse me for a second while I go all Suze Orman on you, but you need to have a budget in place and you need to be very clear about how you’ll spend any income you bring in through your affiliate marketing business.

It isn’t enough to say, “Oh, once I start making some money online, I’ll think about tackling my credit cards…” because once that money is finally in your hands, there’s going to be a ton of temptation to spend it on other things.  Decide right now what your financial priorities are, and come up with a concrete plan for how you’ll allocate your internet income towards these goals.

If you’re totally lost when it comes to personal finance, I highly recommend these resources:

*Get Rich Slowly – JD is a personal finance genius, and his site is a wealth of information on how to apply financial principles to real life.  Check it out now!

*The Simple Dollar – Another great resource that’s full of personal finance tips.

* – There are a few sites like this, but I prefer Mint to handle my day-to-day finances.  Basically, it allows you to import transactions from all of your accounts and look at them in one place.  I’m sure that if I had something like this running back in 2009, I would have noticed that I was spending ridiculous amounts of money on things I didn’t need.

If you have any other resources to share, please feel free to leave them in the comments below.  I’d also love to hear whether or not you’ve got a plan in place to manage your internet income responsibly.

Thanks, as always, for reading – I promise we’ll be back to actual marketing advice this weekend :)

Image: RambergMediaImages

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{ 12 comments… read them below or add one }

Alex@Jocuri March 21, 2011 at 1:31 pm

Hello, Sarah,

I don’t know how this happens but you are right about how your expenses expand in order to match your income. I really don’t know how I was surviving when I was a student, I had next to no income but I ate the same kind of food, i lived in the same apartment, had the same type of clothes from the same stores i buy them now, yet now, although I have a considerable bigger income I am spending almost all of it, and I don’t know where the money goes.

I am trying to make a excel or something similar to note my expenses, but this first month is a disaster, because I know I spend way more then what I noted, but I will for sure get to the bottom of this next month.

“Get rich in your sleep schemes” I never bought a ebook or any other kind of marketing ploy that promised riches in a short time, mostly because I know that like Catarina said, it will not be me the one that gets rich, but the one that is selling me that cr*p. I really don’t understand why people still think there are methods that can bring you money while not doing anything to earn them…

Sarah Russell March 22, 2011 at 10:14 pm

Hi Alex!

I was just thinking about this the other day – how in the heck did I survive as a college student?! I mean, sure, there were some student loans, but I had very little income and still managed to get by each month. Still scratching my head on that one…

But good job starting to track your expenses. It takes practice, and you certainly can’t expect to be perfect right off the bat, but you’ll get better the longer you do it.

Good luck to you!

Marlee March 21, 2011 at 1:04 pm

What a great article and AWESOME title. I bet this one gets read a lot.
Thank you for the personal story and practical advice. One of the most difficult things we face and have to learn to manage as business owners is how to spend our money. We can easily get carried away with idea that we’ve tapped an ever-running faucet. Money management is critical to building a sustainable business and living with peace of mind. Thanks for the reminder!

Sarah Russell March 22, 2011 at 10:16 pm

Thanks for reading, Marlee! You’re right that it’s difficult to learn how to manage money as a business owner, but hopefully my mistakes can help someone else avoid the same pitfalls 🙂

Stephanie@girlfriend all inclusive getaways March 21, 2011 at 12:37 pm

This was truly a good post. I try at best not to spend too much on marketing materials. They often do look promising but I try and exercise self control. I think however, with any biz model, there is going to be some sort of financial loss. How much that loss is, depends on the person. Right now I am spending more than I am making but I am hoping things balance out soon.

I will surely take heed to your learning lesson of saving and paying things off when the cash flow starts to come in consistently.

Sarah Russell March 22, 2011 at 10:17 pm

Stephanie – Thanks for reading! I agree that you’re going to have startup expenses with any business, and I definitely don’t want to say that you shouldn’t invest in education (because you should!). The problems only start happening when you’re spending money you don’t actually have, or when you spend mindlessly on things that could be obtained just as easily for free.

Best of luck with your business!!!

Elge Premeau March 20, 2011 at 8:00 pm

So nice to see a voice of reason! Not to put down affiliate marketers but I work with “real” businesses and they fall for the “get rich in your sleep” promises all the time too. If I’ve said it once, I’ve said it a hundred times, “The only ones getting rich in their sleep are the ones making the get rich quick promises.”

I’ve also noticed that there is a class of people out there who just love to collect marketing programs. I didn’t realize I was going down that road too until I was part of a master mind group that spent all their time talking about Frank Kern’s or Alex Mandossian’s latest product. Not that I have anything against either of them, I think they’re both great buys. But at some point you’ve got to stop studying how to make money and get out there and do it!

Sarah Russell March 21, 2011 at 10:25 am

Elge – Soooooooo true 🙂

Honestly, there’s a lot of scammy stuff that goes on in the affiliate marketing world, but I hate that that gives those of us who do build legitimate businesses in the industry a bad name. There are very few people selling “Find out how I made $x,xxx,xxx in 30 minutes” that I trust actually have the income to back up those claims!

And to your second point, I’ve read some pretty darn good courses, but the things I’ve learned from them pale in comparison to what I’ve learned from just getting down to business and figuring things out myself 🙂

Catarina Alexon March 20, 2011 at 1:15 pm

Sarah, I really think affiliate marketing is mainly going to make money for the person who start it. Have never even tried because of that. Also when you make an agreement online, like with the company you were writing for the risks are huge. Especially if the company is in another country with different legislation.

Came across an article somewhere about a guy who joined one of those affiliate marketing companies hoping to make money. He just made a litte. So he instead started blogging about something he really cared about. And woops, he became super popular and started charging for services related to that. Maybe something for you to think about?

Sarah Russell March 21, 2011 at 10:29 am

Catarina – There’s always going to be risk with online businesses, and that’s something I think you just have to get comfortable with. I can’t fault the company I wrote for for going out of business – I can only fault myself for not being better with the money I was making at the time.

And as for affiliate marketing, I believe there’s tons of potential there (especially if you get outside of the typical “how to make money online” niche). I’ve made money as an affiliate marketer, and will do so again in the future with the websites I’m building right now. I might take a look at offering consultation services in the future, but there are lots of issues to consider there as well (time investment, etc).

Thanks for reading!

Sarah Russell March 20, 2011 at 12:58 pm

Hey Sandy – Thanks for reading!

Haha, yeah – the wedding was great and the photos turned well. But now it’s back to reality and responsible spending 🙂

Sandy K March 20, 2011 at 9:16 am

Obviously the lost income is regrettable, but I’ll bet you have some great wedding photos. All kidding aside, good advice for anyone that makes a lot of money early..

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