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Emergency Fund Destroyed. Back to the Side Hustles?

nicksaiz65

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Kind of in a vulnerable spot right now and need some help with my finances.

I previously had put myself into a really bad financial spot. Running up credit card debt, buying a bunch of stuff that I couldn't afford. I eventually realized how dumb this was, and put together a plan to start working myself out of this situation. On top of being a fulltime software developer, I was working in a restaurant part-time(this generated an extra $6000 post-tax total.) I was able to reduce my credit card debt, get a car for transportation, and build up a decent little emergency fund. I also switched to a new tech job that pays me more. Once I felt comfortable enough, I quit the side gigs to focus on my main tech job.

However, lately, I've been running into back-to-back emergencies. To give a couple examples: I cracked my back tooth and had to get it pulled, the tire on my car popped, the list goes on. I also know that my car will need some repairs in the future. These emergencies have essentially decimated my emergency fund. It's too close for comfort to being empty.

A lot of the margin in my budget is taken up by these frigging loans so it will take a bit to rebuild my emergency fund. However, this is worrying: one or two more of these emergencies, and I won't be able to cover them in cash. I would have to take out a loan to cover them, and because my credit is not great right now(working on improving that) it would be high-interest debt too, which makes it sting even more. I don't want to end up in a vicious cycle where every time an emergency comes up, I have to go into more debt for it.

I'm almost considering going back to moonlighting like I was before: working two restaurant shifts a week would generate an extra ~$600 a month that would go straight in my savings. This really helped me out of a tight spot before. This would help protect me from the inevitable future emergencies that are going to come up.

But, it's possible that these two nights could take away from my demanding tech job a bit. That's not good. (It also makes it slightly more difficult to date...)

So while I'm rebuilding my emergency fund: what should I do about if/when an emergency comes up? Should I accept the moonlighting side job 2 days a week even though it could potentially hurt me in my tech job? It definitely would be better to have 100% of my time going towards the tech job, to make it less overwhelming, but I'm also not a fan of taking on high interest debt. Or, should I just take the loans on the chin when stuff comes up during the rebuilding of my emergency fund, and clean up the debt later, leaving me with 100% of my time?

I'm just not sure tbh, some second opinions on this one would be nice.
 

BillyPilgrim

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Focus on your nutrient intake to maximize your energy level, this will optimize your options.
 

jaygreenb

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Cut out all unnecessary spending for a month or two, including dating. Do an Instacart, uber, rest job or whatever else pays with schedule flexibility until you build your fund back up. Be disciplined for a period of time of time and knock it out. If you can, keep the ball rolling and knock out all your debt especially anything consumer related or at a high rate. Dating will always be there.
 

Money & Muscle

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You've already trimmed all the fat off your spending, I assume?
 

FlirtLife

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You are considering putting your full-time software engineering job ($120,000/year) at risk by taking up a part-time job ($6,000/year) in a restaurant?

I notice you didn't mention regular expenses at all. What are your top five expenses over the course of a year?
(For example: rent, student loans, car payments, expensive hobbies)
 

BackInTheGame78

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I am willing to bet you have a decent amount of expenses that are not necessary that you could save quite a bit on by cutting out.

List your average monthly expenses for the following:

  1. Cable TV/Streaming services
  2. Eating out/Uber eats/Door dash
  3. Energy drinks/coffees bought outside house
  4. Alcohol/Bar tabs
  5. Cellphone bill
 

RickTheToad

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Kind of in a vulnerable spot right now and need some help with my finances.

I previously had put myself into a really bad financial spot. Running up credit card debt, buying a bunch of stuff that I couldn't afford. I eventually realized how dumb this was, and put together a plan to start working myself out of this situation. On top of being a fulltime software developer, I was working in a restaurant part-time(this generated an extra $6000 post-tax total.) I was able to reduce my credit card debt, get a car for transportation, and build up a decent little emergency fund. I also switched to a new tech job that pays me more. Once I felt comfortable enough, I quit the side gigs to focus on my main tech job.

However, lately, I've been running into back-to-back emergencies. To give a couple examples: I cracked my back tooth and had to get it pulled, the tire on my car popped, the list goes on. I also know that my car will need some repairs in the future. These emergencies have essentially decimated my emergency fund. It's too close for comfort to being empty.

A lot of the margin in my budget is taken up by these frigging loans so it will take a bit to rebuild my emergency fund. However, this is worrying: one or two more of these emergencies, and I won't be able to cover them in cash. I would have to take out a loan to cover them, and because my credit is not great right now(working on improving that) it would be high-interest debt too, which makes it sting even more. I don't want to end up in a vicious cycle where every time an emergency comes up, I have to go into more debt for it.

I'm almost considering going back to moonlighting like I was before: working two restaurant shifts a week would generate an extra ~$600 a month that would go straight in my savings. This really helped me out of a tight spot before. This would help protect me from the inevitable future emergencies that are going to come up.

But, it's possible that these two nights could take away from my demanding tech job a bit. That's not good. (It also makes it slightly more difficult to date...)

So while I'm rebuilding my emergency fund: what should I do about if/when an emergency comes up? Should I accept the moonlighting side job 2 days a week even though it could potentially hurt me in my tech job? It definitely would be better to have 100% of my time going towards the tech job, to make it less overwhelming, but I'm also not a fan of taking on high interest debt. Or, should I just take the loans on the chin when stuff comes up during the rebuilding of my emergency fund, and clean up the debt later, leaving me with 100% of my time?

I'm just not sure tbh, some second opinions on this one would be nice.
1. Get medical insurance. It's 30-40 bucks a month (deltadental.com)
2. Get a reliable Japanese early 2000's vehicle for around 4k and sell your current vehicle. You can get a 2005 Toyota Camry, around 100k in miles for around $3500 (autotrader.com). These cars, as long as they are taken care of, can last past 400k. Always get it inspected by a private mechanic.
3. You need to start doing the snowball effect. Largest debt first (since the highest amount of interest paid), and then pay it off. You may have to go into some debt for the car, but it would be worth it.
4. Side hustles, uber, deliver pizzas, instacart, lyft, etc. There are promos online where Uber and Lyft will give you money to sign-up.


You need to think outside the box and get to work. If you program or design sh!t on the computer, start offering work as a freelancer on Fiverr and Upwork.
 

BackInTheGame78

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1. Get medical insurance. It's 30-40 bucks a month (deltadental.com)
2. Get a reliable Japanese early 2000's vehicle for around 4k and sell your current vehicle. You can get a 2005 Toyota Camry, around 100k in miles for around $3500 (autotrader.com). These cars, as long as they are taken care of, can last past 400k. Always get it inspected by a private mechanic.
3. You need to start doing the snowball effect. Largest debt first (since the highest amount of interest paid), and then pay it off. You may have to go into some debt for the car, but it would be worth it.
4. Side hustles, uber, deliver pizzas, instacart, lyft, etc. There are promos online where Uber and Lyft will give you money to sign-up.


You need to think outside the box and get to work. If you program or design sh!t on the computer, start offering work as a freelancer on Fiverr and Upwork.
I don't agree with debt pay off necessarily.

It depends on the interest rate. If you have an interest rate under 8%, take the extra money you are putting towards that and invest it in a 401K, which likely is taking advantage of a company match if some sort as well.

The law of Fungibility of Money states that all dollars are equal...whether you save a dollar or earn an extra dollar they are the same.

Saving 5% interest by paying something off early ends up losing money versus investing in something that pays 8-12% interest historically long-term and that's not even taking into account company matches that are basically free money.

The compound interest generated with these earlier investments over time will dwarf any amount of money you think you are saving now by paying something off early.

Dave Ramsey needs to go to math class more, he likely failed.
 

Divorced w 3

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I don't agree with debt pay off necessarily.

It depends on the interest rate. If you have an interest rate under 8%, take the extra money you are putting towards that and invest it in a 401K, which likely is taking advantage of a company match if some sort as well.

The law of Fungibility of Money states that all dollars are equal...whether you save a dollar or earn an extra dollar they are the same.

Saving 5% interest by paying something off early ends up losing money versus investing in something that pays 8-12% interest historically long-term and that's not even taking into account company matches that are basically free money.

The compound interest generated with these earlier investments over time will dwarf any amount of money you think you are saving now by paying something off early.

Dave Ramsey needs to go to math class more, he likely failed.
The rich are the only people that can do this, while you are technically correct. The reason it doesn’t work for the average is because there is an assumption of cash or liquidity somewhere. OP doesn’t have liquidity so he will have to break this plan at some point.
 

jaygreenb

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I don't agree with debt pay off necessarily.

It depends on the interest rate. If you have an interest rate under 8%, take the extra money you are putting towards that and invest it in a 401K, which likely is taking advantage of a company match if some sort as well.

The law of Fungibility of Money states that all dollars are equal...whether you save a dollar or earn an extra dollar they are the same.

Saving 5% interest by paying something off early ends up losing money versus investing in something that pays 8-12% interest historically long-term and that's not even taking into account company matches that are basically free money.

The compound interest generated with these earlier investments over time will dwarf any amount of money you think you are saving now by paying something off early.

Dave Ramsey needs to go to math class more, he likely failed.
Unless he has a previous long term locked in rate, he is getting no where close to 5% on debt currently. If he doesn't have stellar credit going to be well over I0. In some sort of company match, roth/retirement or other tax avoidance/deferment structure would agree. Outside of that the return needs to be substantially higher to justify the risk of avoiding a basically risk free return on paying off the debt and also factoring the tax on any gains or income. In your example, 8% interest payments after tax going to knock that down to 5-6%, in that case no reason to take on the risk for a I-2% spread. Personally would have to be much higher for myself to consider
 

BackInTheGame78

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The rich are the only people that can do this, while you are technically correct. The reason it doesn’t work for the average is because there is an assumption of cash or liquidity somewhere. OP doesn’t have liquidity so he will have to break this plan at some point.
Where would he get the liquidity to roll money into paying off debt? It would come from the same place.
 

BackInTheGame78

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Unless he has a previous long term locked in rate, he is getting no where close to 5% on debt currently. If he doesn't have stellar credit going to be well over I0. In some sort of company match, roth/retirement or other tax avoidance/deferment structure would agree. Outside of that the return needs to be substantially higher to justify the risk of avoiding a basically risk free return on paying off the debt and also factoring the tax on any gains or income. In your example, 8% interest payments after tax going to knock that down to 5-6%, in that case no reason to take on the risk for a I-2% spread. Personally would have to be much higher for myself to consider
It would be far higher than 1-2% when factoring in compound interest and company matches.
 

Divorced w 3

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Where would he get the liquidity to roll money into paying off debt? It would come from the same place.
We must be talking past each other. If you’re just making ends meet and you’re directing your free money into debt payments, then to change that strategy would have to mean less money into debt, so the strategy doesn’t work well
 

BackInTheGame78

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We must be talking past each other. If you’re just making ends meet and you’re directing your free money into debt payments, then to change that strategy would have to mean less money into debt, so the strategy doesn’t work well
The original statement I was talking about was to "snowball" money into debt payments, meaning taking free money and paying that towards debt to pay it down quicker.

That is not simply making ends meet that means you are taking free money and putting it toward debt.
 

RickTheToad

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I don't agree with debt pay off necessarily.

It depends on the interest rate. If you have an interest rate under 8%, take the extra money you are putting towards that and invest it in a 401K, which likely is taking advantage of a company match if some sort as well.

The law of Fungibility of Money states that all dollars are equal...whether you save a dollar or earn an extra dollar they are the same.

Saving 5% interest by paying something off early ends up losing money versus investing in something that pays 8-12% interest historically long-term and that's not even taking into account company matches that are basically free money.

The compound interest generated with these earlier investments over time will dwarf any amount of money you think you are saving now by paying something off early.

Dave Ramsey needs to go to math class more, he likely failed.
Wrong again. There is no guarantee that the market will return 8-12%. There IS a guarantee that a person's debt will continue to grow at whatever interest rate they have. Has nothing to do with Ramsey; this is just common sense. You also forget, interest debt is compounded daily too.
 

BackInTheGame78

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Wrong again. There is no guarantee that the market will return 8-12%. There IS a guarantee that a person's debt will continue to grow at whatever interest rate they have. Has nothing to do with Ramsey; this is just common sense. You also forget, interest debt is compounded daily too.
There is never a guarantee but considering it has performed at a pretty steady rate for a long period of time it's probably a good bet it will.

If you are that risk adverse maybe you should just keep all your money under your mattress so nobody can take it.
 

EyeBRollin

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I don't agree with debt pay off necessarily.

It depends on the interest rate. If you have an interest rate under 8%, take the extra money you are putting towards that and invest it in a 401K, which likely is taking advantage of a company match if some sort as well.

The law of Fungibility of Money states that all dollars are equal...whether you save a dollar or earn an extra dollar they are the same.

Saving 5% interest by paying something off early ends up losing money versus investing in something that pays 8-12% interest historically long-term and that's not even taking into account company matches that are basically free money.

The compound interest generated with these earlier investments over time will dwarf any amount of money you think you are saving now by paying something off early.

Dave Ramsey needs to go to math class more, he likely failed.
Dave Ramsey is correct on this one. The two components missed on this strategy are risk and psychology. We know what the math says. There’s risk of investments not panning out, risk of emergencies, unexpected expenses, anything. Psychology here is also important. Paying off small debts is akin to small wins. They motivate further debt pay off goals. Paying off 10 loans of $5,000 “feels” better than paying off one loan of $50,000, or investing $50,000 in the market.
 

jaygreenb

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It would be far higher than 1-2% when factoring in compound interest and company matches.
I said " In some sort of company match, roth/retirement or other tax avoidance/deferment structure would agree." then I used your specific example of " something that pays 8-12% interest ". You are not earning 8-I2% interest in a non retirement account without paying tax or carrying some degree of risk. Essentially it would be an individual is trying to use leverage on their life to get outsized gains, vast majority have no business doing this and adds a layer of risk without enough upside to warrant it.
 

RickTheToad

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Dave Ramsey is correct on this one. The two components missed on this strategy are risk and psychology. We know what the math says. There’s risk of investments not panning out, risk of emergencies, unexpected expenses, anything. Psychology here is also important. Paying off small debts is akin to small wins. They motivate further debt pay off goals. Paying off 10 loans of $5,000 “feels” better than paying off one loan of $50,000, or investing $50,000 in the market.
Whatever you say dude.
 

BackInTheGame78

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I said " In some sort of company match, roth/retirement or other tax avoidance/deferment structure would agree." then I used your specific example of " something that pays 8-12% interest ". You are not earning 8-I2% interest in a non retirement account without paying tax or carrying some degree of risk. Essentially it would be an individual is trying to use leverage on their life to get outsized gains, vast majority have no business doing this and adds a layer of risk without enough upside to warrant it.
The "average" return of the stock market over the last century is 10% per year. Literally there are mutual funds that are returning nearly double that for a decade, and some returning 17+% over the last 20 years.

Some probably even more than that.

So there isn't that much risk, let alone an outsized one at that.
 
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