Emergency Fund Destroyed. Back to the Side Hustles?

[Divorced w 3]

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

One thing that has become helpful for the retail investor is the advent of active ETFs. ETFs share their entire portfolio daily on their website by law which you can download on excel form. You can go under the hood now on some top tier strategies that high touch wealth management teams, endowments and even governments used to have access to or you’d have to buy a mutual fund at high fees. You can essentially do your research on the back of the managers research and pick out a couple favorites. Not a great move for everyone but it can shorten the curve a lot if you know what to look for.

 

[EyeBRollin]

Roughly speaking, your software engineering job pays $60/hour while working a restaurant pays about $10/hour. If you want more income, software pays better.

Restaurant pays $18-$22 / hour here. But I agree with this point. OP going to burn himself out for a few extra pennies.

 

[Divorced w 3]

Get your life insurance license. Will run you about $500-750 all in but you can work for yourself and the commissions on insurance products is high. It also allows for annuity sales. Next time an older friend complains about not having a pension, lucky for him you can help.

 

[RickTheToad]

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.

Right now, you do what you have to do to survive. When you have options; then you can pick and choose. You do what you feel is right for you, but you ask for advice, and there you go.

 

[jaygreenb]

One thing that has become helpful for the retail investor is the advent of active ETFs. ETFs share their entire portfolio daily on their website by law which you can download on excel form. You can go under the hood now on some top tier strategies that high touch wealth management teams, endowments and even governments used to have access to or you’d have to buy a mutual fund at high fees. You can essentially do your research on the back of the managers research and pick out a couple favorites. Not a great move for everyone but it can shorten the curve a lot if you know what to look for.

The key word in this is CAN which is possible but most people do not have the the aptitude, experience and time to actually pull this off. It takes a huge time commitment and years and years of experience to develop and sort of edge. It is possible though, I have vastly outperformed the market personally but it took a lot of trial and error, thousands of hours and years of experience. I learned a lot of expensive lessons along the way too.

How does your fulltime job not offer dental insurance to cover the tooth? Shouldn't be cosmetic. Anyway's that's besides the point.

Don't listen to BackInTheGame about not paying off the debt. That is the first thing you should prioritize when you don't have your finances in order. Now if you have your finances in order, stable job, savings, etc. You can "manage" your debt but when your finances are out of whack, you need to tackle them head on.

Keep side gig's while maintaining FT job. Suck it up and put in the time. Ditch all extra-curriculars and leisure from dating, eating out, happy hour, etc. Cut them all off to focus on the priority of paying off debt and building up a safety net.

See if you can consolidate debt. Find those short term 6month-12 month interest free credit cards. Transfer your existing debt onto one of those cards to stop the interest from crushing you. Expedite payment on that credit card and when time is running out on that card and you haven't paid it off yet, swap to another interest free card for 6-12 months.

If that is not an option, focus on paying off the debt well above principle payments ASAP.

If you need to move into a cheaper place with room mates, etc. Do it for a year. Lowering rent payments can significantly help.

I did all these things for almost 5 years and paid off $50k in debt to become debt free. It was a really boring/sad 5 years but removing those shackles really changed things for me. It also teaches you responsibility, prioritization, and goal setting which are all equally important in life.

GL.

Good advice. I had roommates all though my 20's until I was 33. It allowed me to save money to start a business at 30 and then also gave me a much longer runway to get my business rolling by keeping my living expenses low. If you want to get out of the rat race check to check lifestyle there really is no avoiding that period of your life where you have to show extreme levels of commitment and sacrifice. If you can do it when you are relatively young you can build that financial base that sets you up for life. If he can get his living expenses down, get rid of a car payment and payoff all consumer debt at his income level he can stack cash pretty quickly.

 

[BackInTheGame78]

There are some members on this site who are far too willing to offer financial advice... The simple answer is that OP has provided far too few details for us to do anything other than speculate, also location and finance go hand in hand.

There is almost always at LEAST 500, if not 1000 dollars a month people can save by changing their buying habits on:

Streaming services/cable bills, phone bills, eating out, coffee stops in the morning before work, etc.

Most people spend money on a lot of frivolous things, and that is almost without exception.

 

[BackInTheGame78]

How does your fulltime job not offer dental insurance to cover the tooth? Shouldn't be cosmetic. Anyway's that's besides the point.

Don't listen to BackInTheGame about not paying off the debt. That is the first thing you should prioritize when you don't have your finances in order. Now if you have your finances in order, stable job, savings, etc. You can "manage" your debt but when your finances are out of whack, you need to tackle them head on.

Keep side gig's while maintaining FT job. Suck it up and put in the time. Ditch all extra-curriculars and leisure from dating, eating out, happy hour, etc. Cut them all off to focus on the priority of paying off debt and building up a safety net.

See if you can consolidate debt. Find those short term 6month-12 month interest free credit cards. Transfer your existing debt onto one of those cards to stop the interest from crushing you. Expedite payment on that credit card and when time is running out on that card and you haven't paid it off yet, swap to another interest free card for 6-12 months.

If that is not an option, focus on paying off the debt well above principle payments ASAP.

If you need to move into a cheaper place with room mates, etc. Do it for a year. Lowering rent payments can significantly help.

I did all these things for almost 5 years and paid off $50k in debt to become debt free. It was a really boring/sad 5 years but removing those shackles really changed things for me. It also teaches you responsibility, prioritization, and goal setting which are all equally important in life.

GL.

Depends on the type of debt. High interest rate things like Credit Card payments, store cards, personal loans, etc. Hell yeah...get rid of those ASAP.

Lower interst debt like a mortgage(under 4%), car loans(under 5%) etc you are a fool for paying that off. Does not make financial sense.

There is nothing wrong with paying off high interest debt, but paying off low interest debt instead of investing that money is a fools errand.

Too many people are working at paying off their 3% interest rate mortgages based on this idiotic advice that Dave Ramsey gives without any context. IMO, you would have to be financially illiterate to pay off a 3% interest rate early instead of investing that into literally anything. Sadly too many people actually are financially illiterate.

 

[jaygreenb]

Depends on the type of debt. High interest rate things like Credit Card payments, store cards, personal loans, etc. Hell yeah...get rid of those ASAP.

Lower interst debt like a mortgage(under 4%), car loans(under 5%) etc you are a fool for paying that off. Does not make financial sense.

There is nothing wrong with paying off high interest debt, but paying off low interest debt instead of investing that money is a fools errand.

Too many people are working at paying off their 3% interest rate mortgages based on this idiotic advice that Dave Ramsey gives without any context. IMO, you would have to be financially illiterate to pay off a 3% interest rate early instead of investing that into literally anything. Sadly too many people actually are financially illiterate.

There is nothing wrong with paying down their debt, no matter the interest rate. Most people need to be saved from themselves when it comes to investing and many do not actually follow a strategy that would outperform or actually invest the money. They will do something like trade sh*tcoins and capitulate at the bottom of a bear market. Most people do not have the skill or discipline to actually use debt productively.

 

[BackInTheGame78]

There is nothing wrong with paying down their debt, no matter the interest rate. Most people need to be saved from themselves when it comes to investing and many do not actually follow a strategy that would outperform or actually invest the money. They will do something like trade sh*tcoins and capitulate at the bottom of a bear market. Most people do not have the skill or discipline to actually use debt productively.

Simply dumping money into a 401K would vastly outperform a 3% interest rate long term.

 

[jaygreenb]

Simply dumping money into a 401K would vastly outperform a 3% interest rate long term.

Again, how many people actually do that and how many people either blow it on lifestyle or some other investment strategy that doesn't work out. In theory it sounds good but most people do not actually execute something that would be net beneficial.

 

[BackInTheGame78]

Again, how many people actually do that and how many people either blow it on lifestyle or some other investment strategy that doesn't work out. In theory it sounds good but most people do not actually execute something that would be net beneficial.

That's not a problem with the process, it's the problem with person executing it.

It would be like saying that someone should just get a GED and drop out of school to work at 16 full time because there is a chance they could fail college and not get a degree.

 

[FlirtLife]

Restaurant pays $18-$22 / hour here. But I agree with this point. OP going to burn himself out for a few extra pennies.

nicsaiz65 mentioned $6000/year and 12 hours/week, which I calculate is $10/hour.

 

[EyeBRollin]

Simply dumping money into a 401K would vastly outperform a 3% interest rate long term.

I don’t think anyone disagrees with the mathematics of it but you are still disregarding risk. Especially as it pertains to cars and bad car loans. IMO a paid off car is a better situation for most than the extra $20,000 in the market.

 

[Mike32ct]

Mortgage payments are typically someone’s largest monthly outlay. Once it’s paid off, you’ve freed up a lot of cash flow to use for other purposes.

I paid off mine a few years ago. Best thing I ever did.

TLDR: Getting rid of debt (irrespective of interest rate) is to improve your available cash flow so you can invest and/or save more later.

 

[jaygreenb]

That's not a problem with the process, it's the problem with person executing it.

It would be like saying that someone should just get a GED and drop out of school to work at 16 full time because there is a chance they could fail college and not get a degree.

You have to be realistic with who is executing, a blanket statement that it is better probably does not apply to 90%+ of the population who will not execute. Where as paid down debt will always be a positive without any negative downside risk. I imagine you consider yourself Savvy, have you always made the optimal investment choices yourself?

To use your example, plenty of people went to college with mountains of debt and a useless degree who end up making less than that dropout following a blue collar career path. College is not always the answer because it worked for some. There is no blanket right or wrong answer and it is nuanced based on the individual.

A bird in hand is worth two in the bush

 

[FlirtLife]

One thing I have been doing right is getting the full employer match when it comes to my 401K. That money comes right off the top of my paycheck, I don't even see it.

I did not know contract workers got 401K matching. I'm glad you do that, and glad BeExcellent mentioned it.

To be fair, I have only had the $120K job for a couple of months lol. As for where the $75K went, it was to vacations and a bunch of sh*t that I couldn't afford.

I should also mention that there are some personal loans in the mix.. I was truly out of control haha. I lump that all together with credit card debt.

That's fair, this job is very new. +50% higher salary means you have a lot more money coming in, even over those few months. If you're tempted to rent a new place, consider delaying that until you've paid off credit card debt and personal loans.

I've noticed other posters discussing investing, which I have deliberately avoided. Investing comes after your personal finances are in order, and is not worth stressing about now. I mentioned paying down debt partly to improve your finances, but also because I suspect it will lower your stress level (which you said is a problem at your new job).

 

[BeExcellent]

Contract workers do NOT get 401K matching. That is for W2 employees who work for a company who offers that benefit. It IS free money however.

My husband maxes his 401K and gets maximum matching. Thats gotten him nearly 100K in 4 years and he does not feel that money shifting into retirement because he's adjusted to the take home pay he gets.

As a long time contractor myself I have taken the higher income and bought income producing assets. I don't get a 401K. But I have tremendous financial discipline and I saved up money and bought places for cash or saved up money and made down payments, took on debt, and created more income. But I took nothing out of those income producing assets and took the extra income to accelerate debt paydown. And I've also enjoyed a nice lifestyle in the present, even though had I been a W2 employee maxing a 401K for 20 years my returns would be probably more on the income side, but you can't touch that money until retirement age with very limited exceptions. You lose CONTROL of those assets. And what if a law changes to allow the government to seize those assets? It has happened already in other countries.....and the seizure case in NY over Trump right now should frighten anyone with any assets irrespective of your political position. Kevin O'Leary has been speaking out about this recently.

Financial discipline is key. True most people don't possess that discipline. But I prefer also to have control insofar as that is possible.

 

[EyeBRollin]

Seizing of assets is not a concern unless one is engaging in fraud or tax evasion.

 

[BackInTheGame78]

I don’t think anyone disagrees with the mathematics of it but you are still disregarding risk. Especially as it pertains to cars and bad car loans. IMO a paid off car is a better situation for most than the extra $20,000 in the market.

This is the broke mindset that many people have when it comes to money which is similar to the scarcity mindset that many men have when it comes to women.

You cannot become financially successful with a broke mindset anymore than you can become successful with women with a scarcity mindset.

If a person wants to have an average life and be averagely financially successful then sure, they could do that.

If they want to be financially wealthy they simply wouldn't.

People don't understand that if they want to change their life they have to change their mindset first. They cannot get to where they want to go using that same mindset that has gotten them to where they currently are and more importantly KEPT them there.

 

[BeExcellent]

Seizing of assets is not a concern unless one is engaging in fraud or tax evasion.

Yes but one must first be fully convicted and be allowed for the appeals process to finish. Watch the Kevin O'Leary interviews. In the criminal courts a killer is only executed after exhausting all appeals. Otherwise we'd be executing killers right after initial conviction and that is not the law or due process in the US. You can disagree with Trump all you like. The case law being established can affect any of us, and that is a very troubling development. It is refusal of due process.

There is also another law that hits this year on all small businesses using an LLC, Corp structure etc. requiring full disclosure of all officers or people with decision power in any company under 5M annual revenue. The law exempts larger companies and offers protection to the very rich (making more than 5M annually) and larger employers and seeks to exploit those trying to build wealth through tax advantaged and asset protective strategies. Under the auspices of sussing out financial crimes. So the Enrons of the US can flourish unimpeded but the little guy (who can't afford to defend himself) gets crushed.

So if you salary yourself a low W2 salary and your company pays you rent or owner distributions, which are entirely legal and more tax advantaged? The feds can start questioning and dictating and seizing. And the law for not filing the paperwork is terribly punitive. Fine of $500 PER DAY not filed and asset seizure. It is an asset grab. And you probably haven't heard of it because it is not well publicized. So the Feds can come down on hard working business owners and seize them into bankruptcy.

The law has already been struck down by a Federal court as being unconstitutional under the 14th amendment (equal protection under the law) but the appeals court simply reinstated it without due process, and holds that ONLY the plantiffs in the case are exempt from compliance while it is litigated.

Every small business person should be very afraid of the current climate of assault on property rights, assets and asset protection.