Teach
One of the most enjoyable ways to earn money online is by selling some skill that you are good at.
Can you teach a language or show how to fix a clogged drain? Just pick up a digital camera and shoot yourself doing your thing. Then upload it onto YouTube. Circulate the link to everyone you know and also place it on related forums. Then build a simple specialized website with more such learning videos. Arrange to give access only to viewers who pay a small fee via credit card or PayPal. Place the link to this website on your free YouTube videos.
As your videos gain thousands of hits, your website will be visited by more subscribers and you can begin to earn money. You can also create eBooks on your particular subject and sell them on that website.
Place a lot of related links to similar websites that may be useful to your members. You may think this may take viewers away from your webpage. But subscribers appreciate this kind of honesty and help and they will keep coming back to you.
This way you keep doing what you love, and the world pays you for it. Setting up a webpage or blog free of cost (Blogger.com), monitoring traffic (Sitemeter.com) and creating eBooks (eBook Pro) are easily done by using any of the hundreds of tools available on the Internet.
By working at home, you have the advantage of using your home premises, utilities and fixtures with no extra shop costs. You can set up a small studio to teach an art skill like sculpting or making candles or even simple handmade cards. There are thousands of YouTube videos teaching music and dance.
Find your niche and go for it. It will take a little time to build up your business, but if you do something special, it will spread virally via YouTube and you can then capitalize on your success.