Emergency Fund Destroyed. Back to the Side Hustles?

[nicksaiz65]

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

How are you tracking this? Chronometer, I believe the tool is called?

 

[nicksaiz65]

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.

Out of all the side hustles, if I start doing this again, I'd rather just work the restaurant job. I find it enjoyable, and I don't want to put a ton of miles on my car by driving Uber or Lyft. I'd like to think that 2 shifts a week(12 hours of my time) wouldn't be too much to interfere with the programming job.

 

[nicksaiz65]

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

Everything with the exception of dating-expenses and energy drinks, I've cut out. For example, minimal streaming apps and I've greatly minimized eating out.

 

[nicksaiz65]

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)

I've done something like this before, but it was extremely exhausting to say the least. I'm hoping that 2 shifts a week(12 hours) wouldn't take away from my main job.

Sure, ranking my fixed expenses:

1.) Rent
2.) Car Payment
3.) Credit Card Bills
4.) Student Loans
5.) Energy Drinks (this literally has it's own category)

Most of this is going towards debt. I'm definitely not paycheck to paycheck, but I worry that emergencies may come up faster than I save for them. I don't want any more debt so I can snowball/avalanche it away. That's why I was considering going back to the moonlighting like I used to.

 

[nicksaiz65]

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

Sure! This is probably where things are going to start to fall apart lol.

1.) I don't really use streaming services except for a few. I've greatly cut down on these subscriptions because they were killing me in the past.
Hulu: $15/ month
ACloudGuru(for studying): $15/ month
Spotify: $10/ month
Walmart+: $15/month

$55/ month

2.) DoorDash is gone. Too expensive. It was killing me in the past. I've greatly reduced eating out, we can say ~$100/month.

3.) Aaand here is where it's going to start breaking down. I calculated it and my energy drink bill is literally $200-220 a month. The issue is I l can't function without the caffeine. Maybe I need to switch to coffee.

4.) And this breaks down too, I will admit that I do spend a lot on alcohol. That is probably $160 per month.

5.) Easy, $50 per month for my cell service.

 

[jaygreenb]

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.

You said interest, that is different than a return. Interest is treated as taxable income. In hindsight it is always easy to pick the top performers but reality is most are not going too. We would all be rich otherwise. You also are not going to be able to take on debt today at a percentage rate that would even remotely make sense to bank on a I0% stock return. Stellar credit is 8%+ at best.

 

[nicksaiz65]

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.

Uber Driver Sign Up Bonus: Updated for 2024

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therideshareguy.com

Lyft Driver Promo Code // Up To $2,500 Sign-on Bonus [2024]

New Lyft drivers are eligible for a huge sign-up bonus worth up to $2,500 when they use a Lyft driver promo code during the signup process.

gigworker.com

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 had a miserable time finding a car that I could buy in cash in the past, though I never tried Autotrader. I will look at that.

I'd prefer to have a regular ass(side) job over Uber, but that is just my personal preference. I'm totally not against the side hustle, I was working two jobs for months in the past to get myself into a better position. I guess taking 2 shifts a week again and very strictly managing my time wouldn't hurt... I'm just on the fence about it. I haven't had a side job in the last month, and it has been very nice to go "all in" on my primary job. Though long term, the issue is probably time management.

 

[nicksaiz65]

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

The issue is that most of the interest rates on these debts suck. This is partially due to my credit, partially due to the credit cards(which are always 20%+.) Even the student loans are above 5%(Sallie Mae.)

I know that Ramsey says debt snowball, but in this case I am going to need to avalanche these debts.

 

[Divorced w 3]

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

The Nasdaq is compounding at about 12% annually. With that said, the cost of consumer debt is almost always higher and you should attack the highest balance first.

 

[EyeBRollin]

The issue is that most of the interest rates on these debts suck. This is partially due to my credit, partially due to the credit cards(which are always 20%+.) Even the student loans are above 5%(Sallie Mae.)

I know that Ramsey says debt snowball, but in this case I am going to need to avalanche these debts.

Do whatever works for you to pay that **** off. There is more than one way to skin a cat!

 

[Divorced w 3]

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.

understood but at that point, he’s got no money to invest, because if you’re snowballing then you have debt costs that are above any realistic return you would expect. If you’re talking about retirement accounts with match and even factoring in tax shelter status it doesn’t help his main issue which is liquidity. One car accident and he’s probably even worse than where he started

when the rich do this they’re borrowing at prime plus a spread and investing and writing off the interest from the debt. Not the same

 

[EyeBRollin]

The Nasdaq is compounding at about 12% annually. With that said, the cost of consumer debt is almost always higher and you should attack the highest balance first.

Looks like the competing schools of thought in this thread are:

-pay the largest balance first
-pay the smallest balance first
-pay the balance with the highest interest first
-pay only the balances with interest > than returns in the market (8-12%), pay the minimum on the others while investing the difference

Did I miss anything?

 

[Divorced w 3]

Looks like the competing schools of thought in this thread are:

-pay the largest balance first
-pay the smallest balance first
-pay the balance with the highest interest first
-pay only the balances with interest > than returns in the market (8-12%), pay the minimum on the others while investing the difference

Did I miss anything?

you got it all but don’t forget to be practical. Let’s say you buy QQQ and keep your savings in there. You need to make it work on a tax adjusted basis, it cannot simply be looked at apples to apples. Debt is paid on the individual level with post tax dollars almost always. There are exceptions.

 

[nicksaiz65]

understood but at that point, he’s got no money to invest, because if you’re snowballing then you have debt costs that are above any realistic return you would expect. If you’re talking about retirement accounts with match and even factoring in tax shelter status it doesn’t help his main issue which is liquidity. One car accident and he’s probably even worse than where he started

when the rich do this they’re borrowing at prime plus a spread and investing and writing off the interest from the debt. Not the same

This is the main thing that got me into that horrible situation originally. Not saving up money, spending more than I made, and then boom car wreck. Everything came crashing down.

I’ve recovered a good bit since then at least. I’ve also taken measures to ensure that a car wreck can’t ruin me anymore(liability, collision, comprehensive, and gap insurance.)

 

[jaygreenb]

The Nasdaq is compounding at about 12% annually. With that said, the cost of consumer debt is almost always higher and you should attack the highest balance first.

Historical stock market returns are I0%. Anyone can cherry pick indexes, sectors,funds, time periods to make a case they want to make but certainly wouldn't bank on them. You also aren't getting debt much cheaper than I0% if at all. Point being, it makes zero sense to keep debt at these rates to play the market. Es[ecailly someone with minimal experience

 

[Divorced w 3]

Historical stock market returns are I0%. Anyone can cherry pick indexes, sectors,funds, time periods to make a case they want to make but certainly wouldn't bank on them. You also aren't getting debt much cheaper than I0% if at all. Point being, it makes zero sense to keep debt at these rates to play the market. Es[ecailly someone with minimal experience

Right but you’re missing that as an historical average there are multiple businesses in those indexes that are making much more than 10% annually, coupled with others that did worse.

Consumer debt is crippling because unless you owned a couple of star performers you still aren’t beating the 20% average on todays credit card or maybe 5% lower installment loan.

 

[jaygreenb]

Right but you’re missing that as an historical average there are multiple businesses in those indexes that are making much more than 10% annually, coupled with others that did worse.

Consumer debt is crippling because unless you owned a couple of star performers you still aren’t beating the 20% average on todays credit card or maybe 5% lower installment loan.

That makes my point though, most pros can't beat an index fund over an extended period of time. I0% over a 20yr period, even those are atrocious odds. The average retail investor who tries to pick stocks and time markets get smoked and is then left with a mountain of debt. Would bet far less than 5% of retail traders beat an index fund over time which is what they would have to do to beat that I0% avg return

Mutual Funds That Consistently Beat the Market? Not One of 2,132. (Published 2022)

No actively managed stock or bond funds outperformed the market convincingly and regularly over the last five years. Index funds have generally been better.

www.nytimes.com

 

[BackInTheGame78]

The issue is that most of the interest rates on these debts suck. This is partially due to my credit, partially due to the credit cards(which are always 20%+.) Even the student loans are above 5%(Sallie Mae.)

I know that Ramsey says debt snowball, but in this case I am going to need to avalanche these debts.

Yeah, credit card debt is a no no...I learned it the hard way just like you are in my 20s.

Currently carry no credit card balances...I charge everything on my Prime card for free Amazon Points each month and pay it off every month.

Once you pay them off, either don't use them or only use it for points and pay it off every month.

Another easy way to get extra money is by looking for banks that offer you bonuses for opening checking accounts...usually they are between 200-400 each. I take advantage of 5 or 6 of these a year and it usually pretty much pays for vacations.

Sometimes I will do savings accounts and credit cards too depending on

Historical stock market returns are I0%. Anyone can cherry pick indexes, sectors,funds, time periods to make a case they want to make but certainly wouldn't bank on them. You also aren't getting debt much cheaper than I0% if at all. Point being, it makes zero sense to keep debt at these rates to play the market. Es[ecailly someone with minimal experience

I'm talking mainly about people with mortgages under 4%, car loans under 5% and other low cost debt, like those store cards that are no interest for 18-24 months.

There are people who are paying those off early and it doesn't make sense.

High interest debt? Yeah of course...that goes without saying to get rid of that ASAP.

 

[BackInTheGame78]

You said interest, that is different than a return. Interest is treated as taxable income. In hindsight it is always easy to pick the top performers but reality is most are not going too. We would all be rich otherwise. You also are not going to be able to take on debt today at a percentage rate that would even remotely make sense to bank on a I0% stock return. Stellar credit is 8%+ at best.

Yeah I know these days that would be tough...

All my interest rates are under 5% since those were all either taken out or refinanced during the low interest days. For someone who just took these out over the last 2 years that would be different.

I also look to use those bonus offers for opening checking, savings and credit cards as a tool to increase revenue and make about 1500-2500 a year from those as well. Then close the bank accounts once they pay out the bonuses.

 

[Divorced w 3]

Yeah I know these days that would be tough...

All my interest rates are under 5% since those were all either taken out or refinanced during the low interest days. For someone who just took these out over the last 2 years that would be different.

I also look to use those bonus offers for opening checking, savings and credit cards as a tool to increase revenue and make about 1500-2500 a year from those as well. Then close the bank accounts once they pay out the bonuses.

We will be talking about that interest rate period to our kids like our parents spoke to us about 20% interest paying time deposits.