The following is a guest post from Martin of Studenomics, where he writes about financial freedom in your 20s without missing a party. For more tips, check out his book, Next Round's On Me.
"He said that I didn't charge enough so he offered me more money because he felt bad for me."
A student of mine actually told me this. He wasn't confident enough to ask for a higher rate so he put out a low offer just to get the gig. He wanted to charge $120 for the two hour gig. The guy offered him $150 since that was his budget for the project. I'm happy for him that he's finding clients now. He's actually struggling to keep up with all of the demand now.
Let's go back a few months...
Trevor was struggling to find any clients. I told him that I had a friend who wanted some video work done (Trevor produces videos). The good news was that he could get some experience. The bad news was that he would only get paid in experience. The friend was only offering $20 and dinner. I told Trevor to take this because this friend has a deep network (he knows lots of cool people).
Trevor and this guy hit it off. They were recording until 4am and cracking jokes (hopefully not about me). This guy even ended up giving Trevor a ride to a presentation an hour away when nobody else was available. Once the video went live, everyone was asking about who created this video.
Suddenly Trevor had a new paid client. The pay would only be $20 a video. The good news was that this guy wanted videos done on a weekly basis. Once again, this client led to more paying clients.
How can this story help you find your first freelancing client?
Don't feel sorry for yourself if nobody's paying you yet.
You haven't established yourself. That's okay. We all start somewhere. Nobody's going to throw money at you just because you put up a business page and ordered a stack of business cards.
You have to offer high quality work for free. Just because you're not getting paid it doesn't mean that you have permission to slack off. You have to prove your worth to the world. You have to build up a portfolio so that we can see what you're capable of.
Would you ever pay someone for anything without seeing at least some proof of their abilities?
Stop worrying about the useless stuff.
Yes, business cards are great. No, you don't need them. You don't need to spend money on printing business cards when you haven't made a penny yet.
You don't need to worry about getting an expensive design for your website either.
You have to find people willing to trust you to take you up on your service.
Too often do I see new freelancers get lost in the world of useless stuff. Focus on becoming the best at the service that you provide and then get the word out. That's all that matters when you're getting going as a freelancer. The world doesn't need another fancy business card.
“Great marketing is all about telling your story in such a way that it compels people to buy what you are selling.” -- Gary Vaynerchuk
Remember that nobody cares about your problems.
We hire freelancers and outsource work to make life easier. We want problems solved. That's all. You do the work and that's that. Nobody wants to hear about your problems. You're now a problem solver. You have to be able to solve every problem that comes your way. Never respond with an excuse.
Promote the hell out of your work.
You need to create some quality work and then promote it.
This can be your highlight reel, your portfolio, a sample of your work, or a happy customer.
You have to get the word out. Let us know about what you're doing and how amazing it is. You're never going to find a paying customer if you keep your best work a secret.
Ask for testimonials and referrals.
Nobody wants you until somebody has you. We all ask a friend before we try anything (from a new place to eat to logos for a website). This is why you need to ask for testimonials and referrals. Testimonials help because the more people who promote your work, the more likely someone else is to pay you.
The two most important steps here in the process are:
Create quality work for free or a low cost to let people know what you have to offer and to build your portfolio.
Ask for testimonials and referrals.
You do this a few times and you'll have no trouble finding clients. We all tell our friends about a great service. The toughest part is getting started. Once you get the ball rolling you're going to be fighting clients off.
That's how you can get started with freelancing and find your first paying client. Good luck to launching your freelancing career.
"Sometimes I forget that people once bought stocks to generate cash. Companies would pay out profits to shareholders and shareholders could use that money, to well, buy stuff they need. It was a good little system. I speak of it in the past tense because many companies stopped paying dividends and instead kept the money to grow profits."
Today, the S&P 500 offers investors a dividend yield of 2.1% - less than half of its historical average. You may be wondering “what happened”?
Why Yields Have Fallen
There are various contributing factors. The primary factor is a change in corporate policy. Share repurchases have dramatically increased. Instead of paying money out to shareholders in the form of dividends, businesses are buying back their own stock.
Don’t get me wrong, share repurchases are beneficial. When you reduce the number of shares outstanding, each share remaining entitles you to a bit more ownership of the business.
Share repurchases are great for managements. That’s because management compensation is often tied to share price increases. Share repurchases help to boost share prices – and trigger incentive packages for management... But they do not put cash into the hands of shareholders.
So that’s what happened.
The good news is, there are still many companies that pay high dividends and increase their dividends every year. This article explains how to invest in these dividend growth stocks to build growing income streams.
Where to Find Dividend Growth Stocks
Dividend growth stocks are companies that:
Are still growing
And paying dividends
Pretty straightforward, right? They pay growing dividends over time. The best dividend growth stocks increase there dividend payments every year.
The amazing benefits of compounding this creates will be discussed a bit later... For now, here are some places you can quickly find dividend growth stocks:
These are all great places to find high quality businesses with long histories of paying rising dividends.
Dividend Aristocrats in particular have done well for investors. They have outperformed the market by over 3 percentage points year over the last decade.
Source: S&P Dividend Aristocrats Factsheet
The real benefit to owning these businesses is how they increase your dividend income over time.
Investing Monthly & Compounding
You don’t have to be rich to start your dividend growth portfolio, you just have to be consistent. It pays to invest monthly.
Imagine you invest $600 a month into different dividend growth stocks. Now imagine that (on average) you are investing in businesses with 3% yields that increase their dividends by 6% a year. You are also reinvesting your dividends back into the market.
These are very reasonable targets when selecting from the lists discussed earlier.
After 1 year, you will have invested $7,200. Your investment will (on average – remember, the market fluctuates) be worth $7,492. That extra $292 is from both growth in the businesses you invested in, and the dividends they pay.
Now if you stopped saving after year 1 and spent the dividends on random expenses you’d get $225 in extra income every year… But you’d get a 6% raise (on average) every year without having to invest any extra money. The next year, you’d get $238, then $253, and so on. Your investment would keep paying you more every year.
That’s because the underlying businesses in which you invested in keep growing and raising their dividends.
That’s what would happen if you only saved one year and then stopped reinvesting your dividends. If you keep saving and reinvesting your dividends, you’d be a millionaire in 30 years – and would be generating over $30,000 a year in passive income that would still be growing every year.
Ideas To Start Your Portfolio
Here’s how you can start your portfolio.
Step 1: Get your budget in order. Start saving, today.
Step 2: Open a discount brokerage
Step 3: Being investing!
You probably have some questions on step 3. There’s 2 ways to do this. The ‘easy way’, and the ‘cost effective way’.
[Editor's Note: I'll give you what I believe is the perfect combination of "easy" and "cost effective" at the end of the article. You don't want to miss it.]
The easy way is investing in an excellent dividend growth ETF. The Dividend Aristocrats ETF (NOBL), the Vanguard Dividend Appreciation ETF (VIG), and the First Trust Value Line Dividend ETF (FVD) are all very good choices.
The downside to all these ETFs is that they have expense ratios – you have to pay every year to invest in them. You also don’t get to select what businesses you want to invest in. The upside is you save a lot of time.
The cost effective way is to select businesses from the 3 lists outlined earlier in this article. I recommend looking for the following:
Businesses you understand well (the Coca-Colas and Procter & Gambles of the world)
Stocks trading below a price-to-earnings ratio of 20 (at most), and preferably under 15
Stocks with long histories of dividend increases every year (I prefer 25+ years)
Stocks with dividend yields above 3%
If you invest in businesses like this every month, over time you will build a well-diversified portfolio of high quality dividend growth stocks trading at fair or better prices.
[Editor's Note: I highly recommend readers look into Motif Investing which is a perfect combination of easy and cost effective for dividend investing. Read my review here.]
According to a CareerBuilder.com survey, in recent years, 20 percent of full-time workers have picked up a second job. Since the economic crisis in 2008, more and more people are seeking side income to avoid falling at the mercy of corporate layoffs. Today, diversifying your income is a good idea even if you do have a full time salary that covers your needs. From greater financial security to a more rounded resume, here are five ways locking down an extra source of cash can go a long way.
1. You’ll build greater financial security
A second study by CareerBuilder.com found that 42 percent of full-time workers usually or always live paycheck to paycheck just to make ends meet, making it difficult to save for the future let alone enjoy the present. Whether you turn your spare room into a B&B or you start a dog sitting business on weekends, earning extra cash off of assets you already have will lift the weight of worrying about every dollar spent and help you save responsibly for your future.
[Editor's Note: I can give you a ton of information on dog sitting having hosted nearly 150 "dog days" (number of dogs times the number of days.]
2. You’ll be more marketable
Building a career is, in essence, incumbent upon the ability to hone a skill that makes you valuable and hopefully indispensable to an employer. Therefore, the more new skills you acquire, the more opportunities you have to be indispensable. And the easiest and most economical way to acquire a new skill is to learn it on the job.
By diving deeper into skills you already have — like learning to use new data analytics software — for a side job, you will be better apt to get a new job (if you are looking) or to bring more to the table at your primary job, which could earn you a promotion. Plus, the balancing act that comes with working multiple gigs will help you prioritize and manage your time better.
3. You’ll save more
People are more likely to save a tax refund than they are to save that same amount of money when they’ve earned it in smaller increments throughout the year’s worth of paychecks. Similarly, money from a side gig — because it’s separate from your standard paycheck — has a better chance at finding its way into retirement savings or other investments. You might find that having a steady stream of income separate from your paycheck helps you to better compartmentalize and commit to your saving strategy or debt pay off.
4. You'll build a better professional network
Getting a freelance writing gig in addition to my full time job ultimately primed me for more writing opportunities, which enabled me to form a full-time freelance career. By maintaining several side jobs at once, I was able to multiply the number of good professional references and contacts in a shorter period of time. Furthermore, many companies like to test out employees on a part-time or freelance basis to make sure they are a good fit before offering them a full-time job. Getting a side job with a company or organization you like or aspire to work at can be a good way to get a job there in the future.
5. You'll make friends and get free perks
A friend of mine wanted to get her yoga teacher training certification. Instead of shelling out $2,000 on a training program, she offered to work the front desk at the studio near her apartment, where she took classes several times a week, in exchange for the certification. I’ve known people who have gotten similar perks from working at running and surf shops as well. Working at a place where people share similar interests can also open you up to a broader network of people who share your interests — a great option if you move to a new city and are looking to make friends.
Overall, having a side gig puts you in better control over your finances. Whether you are saving up for retirement or for a big vacation, the odds are always more in your favor if you have several ways of getting there.
A reader, Ben, sent this as a guest post. I identified with it immediately. I've found that as I improve one area of my life, other areas seem to fall in place. It's one of the main themes at Be Better Now.
We all have that person in our lives we love to hate. They are the ones who have it all. They have the nice house, the beautiful wife and worst of all, they are always smiling. New research is finally indicating what we already know; happy people earn more. Why is it that happy people are not only lucky enough to be happy, they earn more to boot? The reason is that the two go hand in hand. If you want to make more this New Year, try to improve your overall health and happiness, it will have a positive effect on your pocketbook and career as well. These are the six reasons that being happier will help you be more financially successful.
1. You will be more productive
When people are happy, they have much more energy. The reason that depression is called “depression” is because when someone is unhappy, it puts them in a depressive state. That makes everything they do less productive. In fact, a study done at the University of Warwick found that happy people are on the average 12% more productive than those who aren’t happy. Being productive will lead you down the path to more opportunity and better career growth.
2. You will be more optimistic
There is nothing that can tank any career quicker than a “Negative Nelly”. Being negative about your future, financing, and your chances for success, create a self-fulfilling prophecy. Not only do people who are negative not take the chances necessary to excel, when there are opportunities available, but they also don't notice them or take advantage of them. Not feeling in control of their own destiny, negative individuals don’t generally rise to the top.
3. You won’t miss work due to illness
Happier people tend to be more healthy overall. Research at Illinois Wesleyan University found that, on the average, happy people spent 15 days less out sick during the year than those who reported themselves as being “unhappy.” Even more, they lived up to ten years longer than those who were perpetually unhappy. Improve your happiness, improve your health, it really is that easy.
4. You will build better relationships and networks
Any smart businessman knows that being successful is all about networking and business relationships. When someone is happy, they are more likable. That makes others want to be around them. When someone is not fun to be around, they are more likely to be passed up for a promotion, or not invited to hang out on potential networking building opportunities.
Happy people are also more liable to receive better performance reviews and to be viewed favorably by their cohorts and managers. Working better with others, being happy can make you more popular, personally and professionally.
5 You will like yourself more
When you are happy, you are more likely to invest in yourself and believe that you are worthy of good things and praise. Taking care of yourself, happy people are more liable to work out, to take better care of themselves, and to ask for promotions and opportunities believing themselves worthy of them. When you are happier, you are more willing to put yourself, and your own success, above others. That is key to a positive financial future.
6 You will be a part of making things better not worse
We all know that cancer in the office. The employee that is never happy and never has anything positive to say about anyone or anything. It is not helpful to point out a problem unless you are willing to be a part of the solution. If you want to be happier and healthier, it is important not to sit and wallow in what you see wrong, or injustice. Happy people are more willing to work to change those things they don’t agree with or to find resolution instead of finding misery merely talking about it.
If you want excel in your career and your life, it is important to be happy. Your mental status is highly correlated to your physical one. Happy people are not only more wealthy, but they also enjoy a better quality of life and live longer. Instead of worrying about putting in overtime and making yourself miserable, focus on happiness this New Year to create change in your life and your finances.
I've had a lot of challenging years in blogging, but 2015 was my most challenging. Like the other reviews of my financial life, this is going to sound really negative. If you stick with it until the end, you'll see the positive though.
I'll start by getting some of the nasty stuff out the way.
Legally, my LifeVantage/Protandim Statement is all that I can say. There's a reason why bolded the following, "I simply could not afford the cost of defending the lawsuit any further. Because of the personal expense that further litigation would have entailed, and for no other reason, I have reached a settlement with LifeVantage."
Freedom of speech is expensive. It can cost hundreds of thousands of dollars in a legal defense. I learned that wealthy people and companies can dictate individual's freedom of speech simply because of this reality. I'm not sure the creators of the 1st amendment really intended this to be the case with the judicial system, but in my experience that's where we are today.
Imagine if you got in an argument with Lebron James and the way to resolve it was by playing him one-on-one and winning. That path isn't likely to lead to success. That's what I feel like it would be representing myself in an environment that is devoid of anything approaching common sense.
As I was finishing up with that settlement, I got word that I was being sued again.
This time RainSoft is suing me for this article: Is Home Depot’s Water Test from RainSoft a Scam? You can make your own assessment if there is anything in there that would even seem illegal, but I felt like I was simply telling a personal story of what happened when I tried to get purified water when our county alerted us to a possible issue. The additional information I found was as accurate as I could find.
I had communicated with a RainSoft VP soon after I wrote the article and they didn't express any concerns about the content. Eighteen months later they seem to have changed their opinion. The only thing that I can think of that has changed is that Google has decided it is a very good article that people should read when they search for RainSoft. If that's really the reason for the lawsuit (as I suspect), I can understand why they'd be unhappy. I look at it as a Yelp review, that isn't particularly favorable. In this case, I even praised RainSoft's products.
I asked my lawyer what the difference is and he said that typically companies don't sue over bad Yelp reviews. If someone is sued over a bad Yelp review, they typically would simply delete the review and eat at a different restaurant in the future. As a consumer advocate, I feel that I have to meet a higher standard to not delete helpful information. I owe it to readers like you.
Unfortunately, RainSoft didn't attempt to express any concerns to me before filing the lawsuit. That's not what I would I have expected from a responsible company, especially since the lines of communication were already open. In our last conversation, I had told RainSoft that I'd love to help them do better with consumers in the future. My guess is that they saw that this can be effective way to remove undesirable information from the internet. I can understand why they would consider the information undesirable.
The gravamen* of their complaint is that the presentation I received was from an independent distributor and that my article shouldn't have been about RainSoft itself. After I saw a 3-hour specifically-branded RainSoft presentation on an iPad that only covered RainSoft products, I considered it to be about RainSoft. As I did more research, I found that people on the internet generally reviewed RainSoft presentations, not the independent distributors' presentation. I've offered and continue to offer to clarify the RainSoft corporate structure in a way to appease RainSoft, but I haven't gotten their approval to go forward with it. For now it is up to the lawyers and courts to figure it out.
There's a lot more about this that I wish I could write. I can probably write most of them, but I'd want to clear it with my lawyer first and that's a process that I'd like to avoid.
* These are the cool words you learn when you get sued.
Like my previous articles on investing and real estate, there's a happy note to end on. In 2015, I had nearly 2.5 million page views. I don't think I had come close to a million page views in any other year. That's huge, huge growth. It warms my heart that people are coming here to get great information and, if they disagree, can use the comments to help make it better. That's why I continue to respond to just about every reader who leaves a comment.
I expect a major publication to publish a story about my consumer advocacy within the next few weeks. I can't give you much more information, but if you follow the articles here I'll be sure to let you know.
You'd think that with all those page views and all that growth, I'd be printing money. If I were a casual reader seeing all the advertisements and those numbers I'd think that as well. The reality is that advertisers are putting more and more money into other platforms such as Facebook advertising. One telling article that I've read recently is Get Rich or Die Vlogging: The Sad Economics of Internet Fame. That article is about video blogging, but it could be about blogging in general too.
I am making more money than I did in 2014, which is almost like saying that I performed better than the Bengals in a playoff game (sorry Cincinnati, I was rooting for you). That's how bad 2014 was.
I'm trying to diversify my income. My dog sitting business is going well. I've been able to make another $350 a month on average with it thus far. I'm optimistic that will go up with repeat customers. It's more responsibility, a little more work, a lot more fun, and an extra $4000-$5000 a year. That said, the dogs definitely bring some wear and tear with them.
I've got a lot of other ideas to look into in 2016, but I'm going to leave those goals, projections, etc. for another post.
Andrew Heaney, a pitcher for the Angels, recently became the latest athlete to sell a chunk of his future earnings to FanTex. FanTex is paying Heaney $3.34 million in exchange for 10% of Heaney’s future baseball-related income.
Why would Heaney do this? He’s a Major League Baseball player, so surely he’s already unimaginable wealthy, right?
Heaney actually is better off than most players with his amount of Major League service time. When he was drafted (in the first round of the draft), he signed for a $2.6 million signing bonus. The majority of draftees sign for a bonus of $5000 or less.
Minor leaguers make almost nothing – less than minimum wage, according to a pending class action lawsuit. So it’s unlikely that he’s been able to save any of the money he made in salary while in the minors.
$2.6 million is a lot of money, though, so he should be fine, right? Taxes are going to take a huge chunk of that, and even the thriftiest person would have spent some of the money – a new car, a modest house in the suburbs (LA isn't cheap), maybe helping mom and dad pay off their mortgage, and of course, food. I’ll speculate that maybe he has $1.2 million left. Heaney is 24 years old, so he may need to stretch that money 50-60 years. With some fortunate investing, he might be able to do it – or he might end up selling athletic supporters at the sporting goods store when he’s in his sixties. 60 years is a long time to stretch a million dollars.
[Editor's Note: If we apply the theoretical "rule" of 4% we could estimate that 1.2 million would allow him to spend $48,000 a year indefinitely.]
So Heaney decide to hedge in order to avoid his worst case scenario. Was he smart to do it? Let’s look at some factors.
It’s true that baseball contracts are guaranteed – but until a player reaches free agency a team has “control” of a player, which effectively means they can sign him to one year deals at below market rate deals. The deals grow closer to market rate as the player gets closer to free agency. Heaney will be eligible for free agency after the 2021 season, at which point he would be free to sign a multi-year deal with any team. (Note: This is a fairly simplified explanation of how the system works. I’m leaving out details for the sake of clarity.)
There’s one big catch, though. Heaney must be perceived to be a valuable commodity in order to secure a big deal. Heaney is seen as having good potential, but he’s certainly not a lock to become a superstar. It wouldn’t be a shock if he flamed out early either due to injury or poor performance.
A few years ago, Daniel Bard was a hot prospect for the Boston Red Sox. He was their first round draft pick in 2006 and their minor league pitcher of the year in 2008. He pitched as a reliever in the majors for three years (2009-2011) and did well – among other things, striking out ten batters per nine innings pitched. However at the end of 2011, something went wrong. As Wikipedia states, "He finished September 0–4 with a 10.64 ERA... Based on win probability added (WPA), the player most responsible for Boston's collapse was Bard." In 2012, the Red Sox decided to put him in the starting rotation. He didn't get any better than September. His strikeout rate dropped while his ERA swelled. He gave up more homers, he walked people, he hit batters. He was sent to the minors and continued to suck. In 2013, the Red Sox waived their rights to Daniel Bard. Daniel Bard earned roughly three million dollars in the major league.
If he had been able to sell 10% of his future earnings (~ $300,000) to FanTex for $3.34 million, it would have been a great deal for him.
Daniel Bard just suddenly lost his ability to get batters out. This is not particularly uncommon. Rick Ankiel was having a great career when he suddenly developed control problems and quit pitching, later resurfacing as a pretty mediocre outfielder (career earnings: ~ $12 million, almost all of which he earned because he was able to transition to being a hitter – something that most pitchers can’t do).
There’s also the risk of injury. A third of major league pitchers have Tommy John surgery, which replaces the ulnar collateral ligament in the elbow. It’s a tremendously successful surgery that has extended the careers of a great many pitchers. Tremendously successful - some studies claims a 90% success rate – still means that sometimes it doesn’t work. 10% of the time, the pitcher never bounces back to pre-surgery form.
The downside of Heaney’s deal with FanTex is that he might earn huge amounts of money and be selling a 10% share too cheaply. If Heaney turns into the next coming of Clayton Kershaw, there may be a $300 million deal in his future. In that case, he would have sold $30+ million in future earnings for just $3.34 million in 2015 dollars. However, given Heaney’s age (which affects career length), status in the sport, and the fact that most pitchers are in decline by their mid 30s, I’d peg an estimate of Heaney’s career earning at somewhere between $50 and $150 million. In my best case earnings scenario, he’d be selling $15 million in future earnings for $3.34 million.
The $3.34 million from FanTex, after taxes, would probably grow his nest egg to about $3 million. That would allow Heaney to invest pretty conservatively and probably still be able to avoid ever having to work a “real job”. While it’s true that he might end up losing money if he ends up earning $150 million, the fact that he managed to earn $150 million will help sooth the pin.
Essentially, Heaney’s saying that the difference between his current earnings of about $3 million (this includes his signing bonus) and $6.34 million is more important than the difference between $138.34 million ($135 million + $3.34 million from FanTex) and $150 million.
You may have heard the term sharing economy over the last few years. It can mean a lot of different things to different people, but I've come to use as a set-up start-up companies that allow you to rent resources that you aren't currently using to others.
Perhaps one of the most popular examples of that is AirBnb, where people are using a room of their house as a small bed-and-breakfast. The owner gets some money for a room that might not be otherwise used. The visitor gets a room that may be cheaper and have better service than a hotel. It works out awesomely for both parties most of the time.
Today, I'd like to bring up three companies I am personally exploring to make money in the sharing economy:
I've reviewed Dog Vacay before. Essentially, I'd be pet sitting service. Not to make it sound easy, but I have a dog now and while he does require walks and feedings, he isn't a ton of work. (It's a good thing that his reading level is poor because he might not like me talking about this way.) Having a second dog simply would give him a friend, a fresh butt to sniff. It's a win for both dogs.
The next question is, "Is it lucrative?" Well, people pay between $30 and $40 a night on Dog Vacay for overnight care. There's a crazy dog lady that we've used to pet sit for our dog who typically has 6-7 dogs at her house. That's around $200 a day. Dog Vacay will keep their cut and managing that many dogs is a ton of work. However, it's probably an extra $40,000 a year (accounting for vacancies) - not chump change.
I don't see myself hosting anywhere near that many dogs. I'm not ready to be Crazy Dog Guy (though I am crazy when it comes dogs). I certainly won't have them around all the time. However, I can see averaging a dog a day which would be around $1000 a month.
I recently covered this one in detail when I asked should I become an Uber driver? Most of the feedback seems to be that it isn't worth it. It just isn't a good use of time after you factor in wear and tear on the car and gas. However, it's really on the cusp of being worth it and a lot of people suggested it as a good way to make a little extra dough if you were to suddenly become unemployed. I'll keep it in mind as a potential safety net.
Relay Rides is a relatively new car sharing site. You make your car available for others to rent. Obviously this works out best if you happen to have an extra car that you don't need. I happen to be in a such a situation. I've been thinking of selling the car, but for reasons both sentimental and lazy related, I haven't. This could be a good way to keep it, use it when I want, even make some cash on it.
I had actually heard of another car sharing site called Getaround, but that has launched in very few cities. Relay Rides came up in the search for that. Unlike Getaround, Relay Rides seems to be available across the whole United States.
Adding it all up
If I seriously combined a few of these, I bet it would be possible to make around $2000 a month. Uber would be the wildcard as it seems that could make a $50,000 a year salary in some places... I just don't know if I'd want to devote the time for it. Relay Rides doesn't require any of my time, just an existing asset. Dog Vacay requires more time, but dogs can be relatively good at keeping themselves entertained and then resting together. There's the occasional walk that I'd take anyway for my own health. The only incremental time would be feeding them and picking up after that feeding is digested, which is something I'm doing for one dog anyway.
My local news was buzzing about Uber recently coming to town. You've probably heard of Uber by now. It's one of the new car-sharing services where average people turn their car into a taxi and make a little money on the side. It recently got funding at a 18 billion valuation making almost as valuable as Twitter.
I find making money on the side appealing, so I decided to do a little more exploring.
What's it Like to be an Uber Driver?
I've never even been an Uber customer. I have a lot to learn about how things work before I jump into signing up. I decided to see what other drivers and saying.
This GQ article made it sound fairly exciting (and perhaps very annoying). The author made $312 in a week providing 24 rides. I wish he would have broke it down to how many hours he worked, but that's better than a poke in the eye, right?
Closer to home, this article about Uber in Boston gave some very helpful math from the company itself, "uberX drivers in Boston make about $25.93 an hour..." The article points out other important details such as the cost of gas, car maintenance and even tax write-offs. Factoring everything in (including Uber's cut) and the article says, "a $300 shift could ultimately net an UberX driver somewhere in the range of $150."
If that sounds like a lot, the article quotes a driver named Brian:
"'I usually drive between 6 p.m. and 1 a.m.,' Brian told me. On his best nights, he can make 25 to 30 trips, which net him in the area of $200 or $300, not including what it costs him to fill a tank of gas."
"Ibrahim who works full time at a university in the District, finds that turning on his Uber phone for two hours is better use of his time than trying to get home to Fairfax during the evening rush, 'I make some money, and then I can get home in 20 minutes instead of two hours.'"
There's certainly money to be made... at least in some places. Some people are obviously enthusiastic about it. Combine it with some other side hustles and it could be the building block of a 6-figure income. If I had a computer and tethered an Internet connection with my cell phone, I could be working even when I don't have fares.
Why I Shouldn't Become an Uber Driver
Any potential gravy train for me with Uber is going to depend on solving or at least managing a few problems. Here are just a few:
I Have Zero Sense of Direction - I can get lost anywhere... probably even on my own street. Fortunately GPS greatly mitigates this problem. Still, I imagine that riders tend to want their driver to know their way around the area.
Is It Legal? - That seems to depend on the area that you live in. However, every city that I know of regulates taxis and since this is a similar service, it is viewed by many as dodging car service regulations. My personal view is that regulations need to be updated if necessary to allow for this type of service. I could go on for another thousand words on this topic, but it seems like the regulations are simply there to create a moat to protect taxi businesses.
My Car is Typically a Little Messy - My car is typically clean enough for my friends and family to get from point A to point B. It isn't clean enough for a paying customer. On the bright side, this could be the kick in the behind I need to keep my car clean.
Pesky Car Seats - With two kids under two, our backseat has two car seat bases hooked in at all times. They are easy enough to take out and replace, but it would get a little annoying if I were doing it often.
At the end of the day, I don't know whether I'll go down this road or not. I think I could just to see if I like it. It seems like there's little harm in giving it a try.
The one thing that struck me as odd is that parents are interested in having their baby be a model for the status. I wouldn't be interested in that at all. I would want Little Man to be a model because it would mean he could earn income. Why is that important? Two words: Roth IRA.
Contributing to a Roth IRA requires that you have earned income. Since Little Man's current skill set consists of dirtying diapers (which isn't in demand) and looking cute, his avenues for earning income are limited. With him only 72 or 73 years away from retirement, the clock is ticking... best to get started on that Roth IRA now.
I find the whole earned income requirement for the Roth IRA to be so annoying that I started to think of a way around it. For example, imagine a pseudo-money laundering scheme were parents pay a company for placement of the baby pictures on a website... and then the company pays the baby for modeling on the website. The company and the website itself exists only to convert the parent's earned income to earned income for the baby. That earned income can be contributed to a Roth IRA. Sneaky? Cool? Shady? What do you think?
... and why you might not be able to do the same. I'm sorry if I got your hopes up with the title, but I couldn't fit the whole idea in. I'll make it up to you by not giving some abstract generalizations about how to double your income (I hate those), but giving you the concrete steps I took. Be forewarned that you might not be able to duplicate what I've done, but perhaps one or two of the ideas will help you. More than likely you'll chalk some of it up to the happenstance and luck.
It started off when I was at my old company. A co-worker found a list of salaries on a copy machine or a burned CD fell into hands. I didn't really dig into the means that the information was acquired rather than the information itself. I found that I needed about a 30% raise to get what most of my equals at work were making. One could say that was not a very good day. In fact, I found that I made less than 5% more than one particular junior level co-worker - and she only worked 4 days a week!
At this point, you can imagine what I did. I went to ask for a raise. I couldn't say that I know everyone is making less, but I made a very strong case with proof of how I went above my job description - finding and recruiting our new CTO. I also used data from Salary.com that showed that I was being underpaid (way under their 25 percentile range). It didn't matter how good of a case I made, I was told that there wasn't much money, everyone was taking salary cuts, and invited to go look for a new job. As a consolation prize, they gave me a 6% raise leaving me still a far distance behind my co-workers. Alas, at least the raise was something. I had increased my income a small amount. Getting the raise actually made me more angry. It meant that the company could "forget" about me and another raise for probably another year.
It was at this point that my wife, not happy with her own job, decided to apply for a military transfer in San Francisco. It turns out that you can tell the military when and where you want to go if you are a pharmacist rather the other way around. The position she applied for was going to be more responsibility and get her closer to being a high rank officer. However, it was a 1 in a million shot as everyone applies for San Francisco since the military adjusts the housing pay significantly. Much worse, my wife had no experience at this kind of job. As usual, she continues to amaze me and got the job. Combine that with my dissatisfaction at my current job and we were on the move - paid for by Uncle Sam.
It was my search for a job in Silicon Valley where I got the bulk of my income increase. There were no raised eyebrows when I asked for a 40% raise due to the cost of living. In fact it was to be expected as it would put me in the middle of Salary.com's range for my experience. However after a few interviews, I got one offer that came in at onlya 22% raise. Except for the money being a little low (but still more than I made before), the job was exactly what I was looking for. It came with a lot of intangibles that didn't show up in the paycheck. One of them being free lunches, snacks, and dinners. While this saved me money, I can't count this in my increased income.
I had started Lazy Man and Money a few months previous to moving out west, but it was at this point that it occurred to me that there might be money to be made by advertising on blogs. With only a few readers and a total Adsense of something around $5 for 5 months, I decided to go all-in with blogging. I went as far as paying $10 for this domain name and another $20 or so for a years' worth of hosting. I lastly spent $24 to become a Friend of PFBlogs.org. It actually hurt to spend this money, but once I got going this website started to become a business and earn a modest income - less than I'd get if I spent my time at a part time job.
Just recently my company announced a weird perk that I've heard of at only one other company. If you live within 3 miles of the office you'll get some extra money in your paycheck. Happily I already do live within the range, so I'll pocket another small chunk of change. Overall it's going to amount to another 5% bonus. Come October, I will have been at my job for a full year since I started, and I think it will be reasonable to ask for a raise to my base salary. Since I'm not exceptional at my job, I don't know what I'll get, if anything, but I would expect something that's at least around the cost of living increase.
So to review the keys were to a) start off extremely under-paid b) ask for a raise c) move to a locale of high cost of living for a bigger raise d) start a business where you can extra income e) get lucky with a job bonus. I suppose I'm stuck offering you generic advice after all.
I didn't write this to gloat. I wrote it because it seems like most people live each day like the last. I was in the same situation. I just wasn't making significant progress towards my financial goals. What can you learn from all this? Start thinking about ways you can make more money. Really get obsessed with it just a little bit. Then implement something.
Aerosmith sums this up well in their song, Get a Grip:
Same old same old every day
if things don't change you're just gonna rot
Cause if you do what you've always done
you'll always get what you always got
Uh could that be nothin'
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