Forbes had an interesting cover story recently called “Airbnb and the Unstoppable Rise of the Share Economy“. “Share economy” refers to the idea of renting out extra rooms, cars, tools, and pretty much everything else, and we have to admit it’s a much catchier phrase than the “renting your stuff out economy”.

We were aware of the existence of airbnb.com, which lets people turn their dwellings into hotels and rent out extra rooms, but we were not aware of all the other sites mentioned in the article, nor had it occurred to us that it’s possible to make thousands of dollars per month doing this. For example:

On paper, Frederic Larson is just one data point in five years of U.S. government statistics showing underemployment in dozens of industries and stagnant income growth across the board. The 63-year-old photographer with two children in college was downsized by the San Francisco Chronicle in 2009. He now spends his time teaching at Academy of Art University with occasional lecturing gigs in Hawaii. A far cry from the salary, benefits and company car he used to have.

But Larson is also a data point in an economic revolution that is quietly turning millions of people into part-time entrepreneurs, and disrupting old notions about consumption and ownership. Twelve days per month Larson rents his Marin County home on website Airbnb for $100 a night, of which he nets $97. Four nights a week he transforms his Prius into a de facto taxi via the ride-sharing service Lyft, pocketing another $100 a night in the process.

It isn’t glamorous–on nights that he rents out his house, he removes himself to one room that he’s cordoned off, and he showers at the gym–but in leveraging his hard assets into seamless income streams, he’s generating $3,000 a month. “I’ve got a product, which is what I share: my Prius and my house,” says Larson. “Those are my two sources of income.” He’s now looking at websites that can let him rent out some of his camera equipment.

So it’s not necessarily easy money, but it’s money, and if you’re out of work that’s a good thing. Here’s another success story:

Dylan Rogers, a 27-year-old sales executive in Chicago, began renting out his BMW 6 series on RelayRides because he wasn’t using it as much as he intended. Now that he’s making $1,000 per month from it–well above what it costs to finance and maintain–he recently bought a Jeep and plans to add a Charger specifically to rent out, with the goal of netting $40,000 a year for his three-car fleet. “I want vehicles that are useful for the marketplace,” he says. Is he an entrepreneurial individual, or a small car rental company? Either way, there’s nothing to stop him from using the tools of the share economy to create the next Hertz.

And another:

Sabrina Hernandez, 23, used to work at Starbucks, but she isn’t going back after averaging $1,200 a month this fall hosting strangers’ dogs in her apartment through website DogVacay. “It’s so much more rewarding than working in a customer-service setting.”

And it’s not just rooms and cars you can rent out:

While Airbnb is the best-known example of this phenomenon (to most casual observers, it’s the only example), over the past four years at least 100 companies have sprouted up to offer owners a tiny income stream out of dozens of types of physical assets, without needing to buy anything themselves. “The sharing economy is a real trend. I don’t think this is some small blip,” says Joe Kraus, a general partner at Google Ventures who has backed two car-sharing sites, RelayRides and Sidecar. “People really are looking at this for economic, environmental and lifestyle reasons. By making this access as convenient as ownership, companies are seeing a major shift.”

The sharing concept has created markets out of things that wouldn’t have been considered monetizable assets before. A few dozen square feet in a driveway can now produce income via Parking Panda. A pooch-friendly room in your house is suddenly a pet penthouse via DogVacay. On Rentoid, an outdoorsy type with a newborn who suddenly notices her camping tent never gets used can rent it out at $10 a day to a city slicker who’d otherwise have to buy one. On SnapGoods, a drill lying fallow in a garage can become a $10-a-day income source from a homeowner who just needs to put up some quick drywall. On Liquid, an unused bicycle becomes a way for a traveler to cheaply get around while visiting town for $20 a day.

How big is this phenomenon? “FORBES estimates the revenue flowing through the share economy directly into people’s wallets will surpass $3.5 billion this year, with growth exceeding 25%.”

It’s a pretty interesting article, the whole thing’s here if you want to take a look.

Amex is currently offering $250 to people who are approved for the Blue Cash Preferred card, aka the one with 6% back on groceries. This is the highest bonus we can recall seeing for this card, so if you’ve been considering it, now would be a good time to pull the trigger.

If you obtain this card and you use it for nothing but groceries for a year and hit the $6,000 cap on the 6% rewards, you come out $535 ahead even after paying the $75 annual fee. Note that you can always downgrade to the no-fee Blue Cash Everyday card if you eventually decide the annual fee isn’t worth it.

To get the offer, visit this site and enter your information (no SSN needed) and the offer should pop up.

(H/T: SlickDeals)

Happy weekend everybody! Here are a few things to keep you busy…

• Don’t forget about the Citi Preferred Card and its 5% on gas / grocery / drugstore purchases. Yours truly dug up a new link after the old one expired. It’s technically an old link that Citi has forgotten about, so make sure you take a screen shot before you apply.
• Chase has a 70,000 point offer on its Marriott card (the regular offer is 50,000). Chase has so many great cards right now that this one probably isn’t worth your time, but if you’re a Marriott brand loyalist, have an interest in a particular Marriott hotel, or have already taken up Chase on all the other card offers, then go for it. (H/T: MMS)
• This isn’t a particularly useful deal, but it is an interesting and potentially rewarding glitch on Amex’s part: apparently Amex is randomly awarding triple reward points on certain purchases from Amazon, Best Buy, and Paypal. Here’s the original Flyertalk thread if you want more info.
• There’s a new book out called “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry.” It sounds like a promising premise, and here’s some of the review from My Money Blog:

The problem with our money gurus. Personal finance itself is very simple. Spend less, earn more, invest for the long-term. It’s also boring. Therefore, you need people with charisma, salesmanship, and usually a gimmick to draw people in. Suze Orman is new-agey “people first, then money”. Kiyosaki and his fictional Rich Dad is “buy assets, not liabilities”. Bach is “automatic savings + latte factor”. Ramsey is “pay cash, debt is evil”. The book investigates and indeed bashes each of these gurus. The most important point to remember is that these people got rich by selling you books on how to be rich, not by actually getting rich themselves first! Dave Ramsey declared bankruptcy before becoming a money guru, even though now he tells people to not be a deadbeat and pay their bills.

• Do S&P and Moody’s deserve the death penalty? Barry Ritholtz thinks so–here’s what the “Bailout Nation” author had to say:

…Let me simplify this for you: In an ultra low rate environment, Fixed income managers were under tremendous pressure to find yield. Their  solution was to buy paper that was rated investment grade by the major credit ratings agencies EVEN THOUGH THEY KNEW OR SHOULD HAVE KNOWN IT WAS NOT. The agencies rated junk paper as AAA not because they believed it, but because they were paid to do so.

Had they not engaged in this sort of fraud, an enormous amount of securitizations of junk paper COULD NOT HAVE HAPPENED. There was no market for non-investment grade subprime paper.  That many less CMOs means that many less RMBS means that many less junk mortgages underwritten.

I do not want to excuse the bad purchase decisions made by the buyers of this junk — they clearly violated one of the first rules of investments: Know what you own. However, the complexity of these products required they use third party analysts and agencies to facilitate the purchase decision. That is why the bad pourchases is merely lousy investing but the payola-like ratings are actual fraud.

It started with the Greenspan Fed, but the next group in our Calvacade of Blame are the rating agencies.

If Arthur Anderson received the ultimate penalty for their part in the Enron and other fraud, I see no reason why Moody’s and S&P don’t suffer the same fate — plus criminal prosecution for senior management.

Its time to re-establish the rule of law in this country.

A reader writes:

Thanks to your advice, my wife and I now have enough United miles for a free trip to Hawaii. (We each got the 55,000 United miles from the Chase United Mileage Plus card.) Now, though, we’re wondering what we might do to amass enough hotel points so that we don’t have to pay for that, either. We have some time — probably a year or two — but our schedules are not that flexible, and we’d probably have to travel in peak season, in the summer, so the hotels will probably jack up the points needed. What do you recommend — Hilton? Starwood? Something else? Is it realistic to expect that we could earn enough points to cover our hotel stays?

As in all matters of travel-hacking and bank-outsmarting, the answer is: it depends.

There are a few different ways to go at this. If you don’t mind changing hotels every few days, it’s fairly simple to string together a bunch of free nights from various rewards cards without having to worry about having to accumulate a lot of points. The Citi Hilton Reserve gives you two free weekend nights when you get the card, and one free weekend night each anniversary. So if you and your wife both have this card, there’s 2-4 nights accounted for. The Chase Priority Club card gives you a free night each anniversary (plus 60,000 points when you join), so there’s two more. And the Chase Hyatt card gives you two free nights upon joining plus a free night every anniversary, so there’s another 2-4.

The free night certificates from the cards mentioned above will cover just about any hotel within the respective chains, so if you go this way, your goal should be to stay in the best hotels you can, since the free nights are not being paid for with points or cash. It’s the same costs regardless of whether your hotel room goes for $99 or $399.

The other way to go is to try to amass enough points to stay in one hotel your whole trip for a more relaxing stay. One of the best ways to do this via credit cards is with the Club Carlson credit cards, but unfortunately for you Club Carlson does not have a presence in Hawaii. French Polynesia yes, but not Hawaii, go figure. Fortunately, you can still accumulate a bunch of Hilton points in a hurry. The following cards give bonuses of 40-70,000 HHonors points upon sign-up:

• Amex Hilton HHonors (40,000)
• Amex Hilton HHonors Surpass (60,000)
• Bank of America Hawaiian Airlines (35,000 miles –> 70,000 HHonors)
• Bank of Hawaii Hawaiian Airlines (35,000 miles –> 70,000 HHonors)
• Citi Hilton (40,000)

So between you and your wife, there are several hundred thousand HHonors points there for the taking. Combine that with the Citi Hilton Reserve’s free nights mentioned above and the Amex/Gold discounts for reward redemption (The Points Guy has a good rundown of how these work). And don’t forget that the Reserve grants you automatic gold status (as does the Surpass for the first year you have it), which gets you free breakfast as well as access to the executive lounge, both of which can help cut down your food costs, which can be high in Hawaii.

Another option is Starwood. If you and your wife both get the Starwood Amex in the personal as well as the business version, you’ll find yourself with 100,000 Starwood points, which should be enough to set you up for a while.

Aloha,

PFD

MACROECONOMICS IS BORING: …Which is why we’re showing you this very clear chart courtesy of John Mauldin:

This graph shows the result of our nation’s monetary policy the last several years. What’s happening is that interest income (from boring old savings accounts), represented by the red line, is way down. Dividend income (from totally exciting equity and bond markets which), represented by the blue line, is at record highs. Our monetary policy has the effect–and mind you, this is intentional–of hurting the most conservative investors and rewarding people who load up on riskier financial assets. If macroeconomics were more accessible to the general population, people would be outraged, but it’s not, so they’re not.

We don’t know how this will end, but given the fed’s track record over the last decade and a half, there’s a good chance it will end badly.