But hobbies are expensive — costing time and money we usually do not have.
Let me show you how I finance my obsessions — and how you can too.
The most concise definition of happiness came to me through Tim Ferriss. He said satisfaction is “to love, be loved, and never stop learning.” I’ve thought long and hard about that and it’s pretty close.
I won’t tackle the ‘love’ part, but let’s discuss “always be learning.”
Do you spend hours reading, studying, practicing, and learning every nuance of a new hobby, all without pay?
Not only will you do it for free, but usually you’ll pay a lot money for the privilege.
Have you ever wondered why you will you spend so much time and money on a hobby, yet dread going to the job you are paid for?
It’s intriguing that 8:00 — 5:00, Monday through Friday, can feel like hard time at San Quintin, yet the weekend passes without you noticing the clock.
The only difference between the two is that the learning curve has flattened in your job, yet remains steep in your hobby. Once you master a skill the learning curve levels and it becomes factory work.
In other words, if you want to be happy, add a new challenge to your life — Keep your learning curve steep.
How do you pay for it?
Sounds good, but hobbies are expensive, leaving people trapped serving time at their “prison sentence” leaving little for their passions.
You can change that by turning your hobby into a business.
Whether you create a full scale business, or a hobby labeled as a business, depends on your goals and ambitions, but you will benefit from either and help to legally fund your hobby.
The first step is to legitimately turn your passion into a business. Anything you are interested in can become a business. Here is a sample list.
- Scuba diving
- Martial arts
The list is endless. Think outside of the box; how can you profit, or try to profit from your hobby?
Can you get paid to teach someone how to do your hobby? Can you write a book, magazine articles, or blog about your experiences and sell advertising on your blog. Are there associated products you can create, manufacture or sell?
A quick case study
Suppose Janet loves to travel and scuba dive at exotic locations. That doesn’t come cheap. To support her hobby she creates a blog and fills it with amazing underwater photos from her exotic dives. On her blog she shares about her travel experiences and offers detailed helpful information about the places she travels to other travelers.
She buys advertisements sending visitors to her website. She writes a manual about the best places to dive and sells that from her site. She could take it a step further and teach diving lessons or take people on paid dive excursions. Again, her options are limited only by her time and interest.
I just made up that case study. If it does not sound vaguely familiar, than we need to connect on Facebook. This is one of a million ways to monetize your hobbies and earn real income from your hobby.
The tax benefits alone may allow you to pursue your obsession while it is financed by the IRS.
What if you legitimately try to earn income from your business, but you lose money every year? If you spend a ton of money on travel, for example, it would take a lot of advertising revenue from your little blog to offset the costs and turn a profit.
If you honestly attempt to run a business for profit, you can deduct all of your expenses from your side business against income from your real job.
This may dramatically reduce your taxable income and put money in your pocket. For this to be legal, you must really try to make a profit and there are several factors the IRS uses to determine this. Check with your tax professional for your unique situation, but some indicators the IRS uses are:
- Do you maintain proper business books and accounting
- The amount of time invested in the venture
- History of income or losses with respect to the activity.
Early losses are to be expected in a new business, but eventually the IRS expects to see a profit or it will be deemed a hobby. In fact, if the business doesn’t make a profit in 3 out of 5 years the IRS will decide your business is a hobby.
But even if your business is deemed a hobby, that is not bad. You can still offset any hobby income from your hobby expenses. You just won’t be able to take additional losses against income from your day job.
I know all this tax stuff can get dry and confusing. This is a very basic overview of tax law related to your hobbies.
Don’t worry about the details just yet.
For now, just ask yourself, how you can turn your passions into tax deductible, income generating events.
You will be happier and your life will be more fulfilled the more time you spend on your passions because your learning curve will always be steep.
*** Photo: I took this photo on the Island of Cozumel while taking a scuba instructor class AND working on my underwater photography hobby.
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