So when I look at my income and realize how little of it is "on the side", I feel a little left out. Just like in high school, I never got the invite to the party, and don't know what to do with myself after five on a Friday night.
Besides feeling a little left out, I am happy to not be hustling. The one exception to this is our rental income, which hardly counts since we're paying a property manager 8% to do all the work for us. Seeing how we just collect checks every month, the rentals look and act a lot more like our paper investments, like mutual funds, than a side hustle.
Still, once I get comfortable with our lack of income diversification, I no longer feel the urge to get a side hustle going.
One big reason is taxes. Despite our best efforts to shield our precious income from Uncle Sam, we're still in the 25% marginal tax bracket. Meaning that any new income we make from a side source (a second job, starting a business, or Mrs. Done by Forty gaining full time employment) will all be taxed at least 25%, and that's for just federal income taxes. Social Security, Medicare, and state taxes will be in addition to that.
The roughly 35%+ total tax rate we'd pay is too high for me to get that excited about putting in another ten or twenty hours a week after I clock out from my normal gig. (I suppose I could just view all our income as taxed at our effective rate, but I find it more accurate to view our optional income to be taxed at the 'top' marginal rate.)
When we add in the fact that additional income will almost certainly pay less than my normal 9-5, it's just not worth it to me. When our true take home would be in the minimum wage range, why bother?
This makes me seem like a rich asshole, I know. A better way to say it is that I'd rather have that time to spend with my wife and my friends than to earn, literally, a few extra dollars for an hour of work.
Suffice it to say that the dreaded second job that might pay $10 to $15 an hour pre-tax is probably off the table.
(Though in my younger days I might have enjoyed being an Uber driver and just cruising around town, listening to Phish cassettes and chatting away with a stranger all afternoon. Back then, I'd have thought it was crazy that someone would pay me to drive a car and hang out with nice people all day. These days, it'd be NPR on the stereo, and that formerly interesting stranger is just some annoying jackass tapping on his cell phone and giving directions from the backseat.)
If hourly jobs aren't going to cut it, the remaining side hustle is the sleek side business. The one that brings career fulfillment, and turns my passion into something that makes money, too.
Being risk averse, the side business does not inherently appeal to me. For one, a lot of new businesses fail. While there's conflicting information on just how many fail, the Bureau of Labor Statistics seems like a good a source as any. They estimate only half of new businesses survive the first five years, and only a third survive ten years. For optimists, those are encouraging numbers. For a risk averse ninny like me, I see a lot of money and effort being invested into something that has a coin flip's chance of even existing five years from now, let alone making sufficient profits.
But suppose I got comfortable taking that risk: the obvious side hustle is writing. The blog has a decent number of readers these days, and could make money, or so I hear. So why not monetize the blog? I could write some sponsored posts, put up some ads, and even write for other sites.
I tried something vaguely similar years ago, when I tried to turn something I really loved (literature) into a job (teaching English in secondary school). I got my BA, earned my teaching credential, and gave it a go.
The results sucked. The thing I naturally liked doing, reading literature and talking about it, ceased to be enjoyable at all when I turned it into a job. Go figure: forcing young adults to analyze and over-analyze literature day after day somehow took the shine off the apple. I learned what Joss Whedon sings about so beautifully: art doesn't have the same appeal when you make it your job to pick, pick, pick it apart.
After the teaching debacle, I stopped reading fiction altogether. These days I only read non-fiction, because if I pick up a novel, I have a hard time turning off the internal analysis. Instead of just curling up in a chair and enjoying a story, I find myself thinking about the themes the author is trying to weave, and wonder what this or that symbol means, and, sheesh, that metaphor seems a little on the nose, doesn't it? After a few chapters, I put the novel down. It's not fun anymore.
Lord knows I don't want to turn writing into that sort of thing. Right now, I honestly have no insight into the writing process at all. I open up a new page, start typing, and it all just comes. I like that I don't know how it works. And I like that, in the end, I've created something. Incessant consumer that I am, writing is the only thing I produce.
The best part of all is you guys: the people who bother to read and comment here. It's a conversation I don't get anywhere else in my life: being challenged and affirmed, and talking about things I wouldn't dare discuss with most friends and family. Do I want to risk changing all that that, with deadlines, clients to keep happy, and sponsors paying me to write a positive review? Who knows what impact the money will have?
Every few months, I think these sort of things over. In a blog about personal finances and early retirement, it seems reasonable to make some money off the thing. Lots of bloggers who are far better than me do exactly this. They are not selling out: they seem happy writing, even while they make an income from it. Maybe I'd love writing more if I made it my career. Maybe I'm scared of trying and failing.
That last bit is certainly true: I am scared. Being risk averse, I'm way more scared of turning this thing I like doing into something I hate doing, than I am tempted by a few extra dollars. Because I can always make more money. I'm not entirely sure I could make myself love writing the same way again, after the dreaded j-o-b gets its mitts on it.
**Photo is from Kevin N.Murphy at Flickr Creative Commons.
Oh man, sounds like we're two peas in a pod. :) That whole thing about diminutive returns is what gets me. I'd rather have my time. I suppose I'm in a similar boat as you though, because I actually do have a side-hustle, I just don't count it (I also have a rental property) in my definition of hustling.
ReplyDeleteI had this post in the works and then, when I saw yours, thought I ought to delay the post and rethink it so it wasn't too much of a rip off! :)
DeleteYour tax rate point resonated with me. I want to really consider my true takehome, a la Your Money or Your Life, before I embark on 'making more'
Money's good, but it's no substitute for time.
Great minds, eh? You didn't need to delay on my account though!
DeleteTaxes kills us as the higher earners. And I don't mind being a higher earner, but being in the 2nd highest taxed province in Canada means I'm losing close to 40% of my money. It's a lesson I've learned quite well from my tale of rental income.
Great minds indeed!
DeleteYou can probably tell from my posts that I'm a liberal. But on the subject of taxation, the Conservatives have a point.
If you tax beyond a certain point, you discourage your best and brightest (man, I sound cocky) from producing more. As we're showing, high earners simply don't think it's worth it.
Even worse, you often see a form of spousal discrimination happening in some households. If you have a very high earner paired with a somewhat lower earner, the lower earning spouse may simply choose not to have a career (esp. when you factor in the costs of child care, commuting, etc.). Combined with the tax issue above, lower earning spouses may result in a negative take home pay. This of course may correlate with other forms of discrimination (gender, race, etc.) -- reinforcing the lower pay that some spouses are already suffering under.
Yup. I don't see any point in side hustling. I'd much rather spend my free time with friends, my boyfriend, learning, exercising, and enjoying life. I feel like I've won the money game in a way, saving 80% of my high income in my twenties, and I'd rather figure out how to enjoy life with the money that I am spending and the free time that I do have.
ReplyDeleteHell yeah you've won the money game, leigh. You were one of the first bloggers I saw getting crazy high savings rates.
DeleteFor people already achieving that goal, extra income really becomes a world of diminishing returns very quickly. Does busting your ass to go rom 80% to 82% make any sort of sense?
Timely post for me. I've just started publishing my thoughts online after years of thinking about it. The first question people ask is if I'm getting paid to do it and they get a puzzled look when I say, no, it's actually costing me a little bit each month :) I think the natural thought is that everyone is making money online if they have a site, otherwise why would you do it?
ReplyDeleteI do it because I think I've got something to say that I think could help people out. I don't have sponsors or ads. But I also think that if you wanted to, it could be done in such a way that is in line with your values. It becomes very obvious when someone posts something that seems forced or out of place. But I'm not offended by someone keeping Google adsense on the sidebar or a link for something that a trusted blogger finds value in.
I guess you need to be in a position to be able to say NO when you want to, and that could be hard if you were relying on the income. Being a great saver and still in the 25% bracket gives you that leverage.
That's just a fantastic name: Danny Morebucks. I'm always jealous when other bloggers have better names. :) And it looks like we might be neighbors: I'm in South Scottsdale.
DeleteThe power to say "no" is a great way to put it, too. A lot hinges on our ability to turn down good options for something better.
There's probably a post idea in there.
We are definitely neighbors! I work in South Scottsdale right around the bar district. We'll have to get lunch sometime.
DeleteSounds great! I'm at donebyforty at gmail dot com.
DeleteI'm always excited to earn extra money but often times the amount of time I spend on it is not worth, especially when you take into account the taxes. My mind doesn't think that way...I'm sure I've worked for less than minimum wage too. As for the blog, I wouldn't mind making some cash from it but wouldn't want to alienate my readers either. I think I would consider a side hustle more if I didn't have a kid or was single...I spent many hours unproductively back then. Nowadays, I'd prefer to do other things with my 5 to 9. As for your rental property...I guess it's a good thing it's not really a side hustle. It works best when it stays a passive investment.
ReplyDeleteYeah, things will really change once we have kids. I think they become your permanent unpaid side hustle, right? ;)
DeleteAs always, you and I seem to be on the same page, Andrew. Make 'enough' and then start valuing time more than money.
Our rentals aren't always passive, unfortunately. I noticed one of my tenants' payments was late last month, and hadn't received any emails explaining why, or what was being done about it. Once that happens, I start sending angry emails to my property manager explaining why it's their job to handle problems and to communicate status to me. :)
I ran a food blog for a rate of $.32 an hour; it was fun until my husband started complaining. Since then he's tried to convince me to drop all money making hobbies, but I'm an ENTJ, so I pretty much try to monetize everything.
ReplyDeleteENTJ! We may all be working for you some day. :) (ENTP here.)
DeleteAt least your food blog has a positive return. I'm losing money every time I write here.
And since I'm paying for the opportunity, I must be having fun! :)
Haha! I think the whole ENTJs are the bosses thing is overblown, but the clear path to the money trait is not.
DeleteSince I already paid for the opportunity to write with the food blog (Or was paid since I did come out ahead after one year), I decided it was a waste of hosting fees if it wasn't used for something, hence the finance blog.
If I like writing about money enough, I'll definitely grow the blog for monetization, but then I will have to think about writing for an audience rather than just randomly typing stuff that pops into my head.
I think you might have hit on the part that I really like about the blog: I get to write about whatever I think it interesting that day. With a goal of monetization, things need to be more organized...goals to be met.
DeleteGood point about the sunk costs of the hosting working to your advantage. Sunk cost fallacy helps us out sometimes. :)
Aside from my blog, which I really enjoy despite making income from it (doesn't feel like work), all my side hustles are because I HAVE to at this point if I want to keep freelancing (and I'm barely hanging on as it is). So I envy you! I remember the days of coming home from my 9-5 and doing whatever I wanted, and not even blinking if I wanted to do something like go to Starbucks or a movie. Don't feel guilty about it! :) Enjoy!
ReplyDeleteI was hoping you'd reply, Tonya! I know side hustles are a different ball of wax when they're a main income source (or THE income source). My amateur opinion is that entrepreneurial side-hustling is way, way harder than a typical office job. We have it easy.
DeleteOn the other hand, you have multiple income streams and we don't, so we're at risk of a much harder 'fall' if we lose our biggest income source.
This really resonates with me DB40. I've been riding the ups and downs of considering trying to make money 'on the side', but it's so hard to justify the extra time required - especially with a child as Andrew mentioned. And now that I've just accepted a new job and a pretty decent step-up in salary, it just shifts the balance away from any side-hustle.
ReplyDeleteI definitely enjoy working on the blog at my own pace, without any pressure to make money, and I suspect it could become less enjoyable by turning it into a 'side hustle' as you fear it might. It's rewarding enough to be allowed to create something and put it out for the world to see, and hopefully add some value in some small way.
If you're only 6 years away from early retirement the extra few dollars really doesn't seem that important anyway. Perhaps once you hit that goal you'll have a greater desire to do something different?
Congrats again on the increased income, Jason. I think that plays a big role: the more you make, the less each additional potential dollar sounds appealing. There's probably a psychological bias at play there since your 'last' dollar doesn't buy any more or less than your first one.
DeleteWho knows how early retirement might affect this. On one hand, my income will drop through the floor, so a side gig might have immense appeal. On the other, we'll be FI...so maybe all income pursuits will seem silly. I'm particularly excited to see what kind of employment I pursue at that point.
I totally get where you're coming from - and personally, I think that a "side gig" that requires a lot of work is just not worth the time and effort. I mean, if you can make an initial investment of time and energy that will continue to pay off down the road as a passive income stream, that's one thing. But signing up for something that will take more time away from you just doesn't make sense in my book!
ReplyDeleteI hear you, EcoCatLady. Once I add in the risk inherent with a business (namely, that you can work a lot and have nothing to show for it), I don't feel the urge to make it happen. Time's precious enough as it is.
DeleteI've gone through different phases with respect to how much I desire a side hustle. I'm sure if I never got involved with the PF blogosphere I would never have considered it a possible virtue! However, as I am stuck between full-time jobs right now, I'm pretty happy that I have a side (main) hustle.
ReplyDeleteI'm also trying to start a business right now doing something I really enjoy, and I hope that it doesn't turn on me as you've described in this post! It's certainly possible. So far there has been a lot of less-pleasant, somewhat unexpected work, but I still enjoy the main thing that drew me to this business.
Hey Emily! It's so good to see a comment from you.
DeleteI can definitely appreciate how income diversification helps when between full time gigs. That's very likely to happen to us at some point, and that's when our strategy will show its warts.
As for turning something you enjoy into a business, just because I'm too frightened to try it again doesn't mean it won't work out beautifully for you. Fate favors the brave like you...not ninnies like me. :)
I really loved this post. I randomly clicked through to this blog via Twitter and I'm so glad that I did.
ReplyDeleteI don't hear this side of the conversation that often and I think that's a shame because more people should be deliberate about how they invest their time and energy (whether it's in a side hustle or something else).
I read so many people talk about the 4 years of working 6pm to midnight after their corporate day jobs, never seeing their kids, marriages almost crumbling while they cranked out their side hustle into a successful business making them 4 or 5K a month and all I think is "was it worth it?".
For people who don't have the entrepreneurial drive, who don't have to turn their passion into a business to survive, or are just not that interested, then being able to simply enjoy the things you like seems perfect.
I'm someone who feels extreme (completely irrational) guilt for doing things I don't think has measurable worth. Does this make me money? Make me smarter? Make me better? If I get on that train too long I end up burnout and filled with more worry. I envy your ability to just write and not have it burdened by outside factors (or internal craziness).
Of course, you may have the opportunity or desire to profit from your writing and I think as long as make the joy of writing your main priority, you won't taint it.
Thanks for the kind words, Megan!
DeleteI'm a little surprised about how many commenters are agreeing with the idea of not hustling, given its popularity in the PF community.
For me, I'd much rather have the time and the current relationship with my hobbies than the money. But that's a perspective of someone who feels he has 'enough'. I don't begrudge anyone who decides they'd want to trade more time for money.
I'm a virtual assistant and budding freelance writer. I really like the idea of making money from what I enjoy doing because if I don't like it, I just won't do it. (Which means I'm broke if my job isn't doing something I care about).
DeleteSo I'd consider myself someone whose bouncing around side hustle ideas all the time. But I think the reason people are positively responding to your article is b/c the side hustle thing can be exhausting!
You've had foresight to not pursue it right now and I think a lot of people wish they had done the same.
I hear you on the exhaustion of a side hustle. Just thinking about it makes me tired. But I'm old, at least in blogger years (34!)...so a lot of things make me feel exhausted. Once I thought about signing up for a marathon and woke up two days later.
DeleteWe're in a similar boat to you, though we do consider the rental a bit of a side hustle. We figure that Mr PoP "earns" about $50/hr spent doing lawncare/handyman stuff on top of a healthy rental income after "paying" him. But it's not really the same.
ReplyDeleteAs for monetizing the blog and other side hustles it really does change the equation when you're looking at giving 40% of every marginal dollar earned to the IRS.
For now, we're pretty sure there will be plenty of time for side hustles in FI when our marginal tax rate will be MUCH LOWER. In the meantime, we'll just focus on doing our jobs well and relaxing and decompressing (well, and renovating our house) in our down time.
I totally hear you on the side hustles in FI, Mrs. Pop. When the income is basically tax free, I definitely might be tempted to earn a bit more.
DeleteFor now, I don't see it being a good value.
Side hustles aren't for everyone, nor do they make sense in every situation. I started my blog with the intent to make the income from it offset our student loans. I've accomplished that, but now I'd like to make more to pay for our home renovations. I'm sure down the road side hustling will become less attractive to me, but for now it really does help me financially in a very real, material way. Another thing I've recognized for years is that I feel like I was made to be an entrepreneur. My job is basically the opposite of that (corporate finance for a huge company). I LOVE the perks of my job but I realize my income is essentially capped, plus even if I increase my income I'm still trading time for money. The reason I side hustle is the *hope* that I can sell the business for a material amount of money some day. Which is why I'm in the planning stages of my second business.
ReplyDeleteBut yes, the side hustle has it's downsides. For now, for me, it has more upside than downside.
For those who have a natural attraction to the entrepreneurial, the side hustle is probably a no brainer. And 'flipping' the business down the line at least has an end point, where you're no longer trading time for money.
DeleteI hope I didn't come off as criticizing side hustles broadly. Just for my situation.
No it didn't seem like you were criticizing it, and it's important to always go over pros and cons of things. One thing I've noticed in the pf blogosphere is sometimes there are topics/ideas that are almost universally pushed by bloggers. The side hustle is one of those things. Quitting your job to blog is another. I'd throw credit card churning out there as well. It's good to hear people who disagree with these "universal" beliefs, or who don't believe it applies to their situation.
DeleteRight on. I know what you mean about the sacred cows.
DeleteI wrote a post a while back about how there's evidence that credit card churning likely increases the spending of frugal/responsible credit card users. People didn't like that.
I don't even want a side hustle. I think people just want one because it sounds cool :) For me, I want time. And a side hustle would distract from that. Plus, with as time-crunched as I am now, any attempt at turning a passion into money would quickly turn into a stressor. Maybe some day I'll have a hustle, but not in the foreseeable future!
ReplyDeleteHey Mrs. SSC. For those already pulled thin re: time, the hustle has to have a huge payoff to be worth it.
DeleteThe rub is that most side hustles don't immediately have the huge payoff.
I share many of your sentiments. I enjoy writing and the blog is a way for me to type out strings of words for fun. The small amount of money that I make from it is very nice, but it isn't my motivation. I too fear that if I really tried to turn it into a full-time job, I'd start to hate it. I honestly think I'm much happier having the balance of my day job and then my hobby blog on the side. Plus for us, the homestead will be like one big side hustle :)
ReplyDeleteHobby blog! Great term there, Mrs. Frugalwoods, and it perfectly describes the kind of writing I want to keep. Hobbies are inherently fun.
DeleteThe homestead is probably the hardest hustle out there, but one with a ton of non-monetary upsides. Like being a badass.
I can relate. My goal is to work less, not more, and we would face the same tax conundrum that you do. I understand the benefits of real estate investing, but my husband and I have no interest or time for it... we spin our wheels sometimes just trying to maintain our primary residence. I look at it this way -- one of my jobs right now is to foster those interests that will become my full time job when I'm done with paid employment (gardening, reading, running, yoga...among other things). There's negative marginal value to working more hours of the day.
ReplyDeleteSo many good concepts in there, Christy. Negative marginal value is a great way of putting it.
DeleteOur main goal is to get more of our hours back, and right quick, too. I'm willing to shell out 40 hours for a while, but that's going to be my limit unless you're going to pay me big bucks for the extra 20 that I'll have to devote for a hustle.
Agreed on the real estate: the more houses we get, the more we like mutual funds. :)
I really relate to this post. If you read enough PF blogs on a regular basis, you start to think that a side hustle is the norm and something is wrong if you're not striving to make money and monetize your blog at some point. Like you, I enjoy sharing my thoughts and having a "conversation" with others. In real life, I don't get the opportunity to talk about money that much!
ReplyDeleteMy goal is to maximize my income so that I can retire comfortably but it's very important that I get time for myself and family.
I don't judge monetized blogs but I often lose interest once a PF blogger becomes too big. I used to read some of the "big" bloggers before they sold it or monetized it. Those blogs start to lose their individual "voice" and it's no different reading their blog than reading money magazine. I tend to skip over sponsored posts, too. Even if the blogger genuinely uses/loves a product, it's rarely worth a post. I've scheduled a post about stuff I would endorse but it's more tongue in cheek.
Thanks for your thoughts on the sponsored post. I feel the same way: like it's weird to be reading it, and I usually just skip it.
DeleteA blog losing its voice (often from losing its author) is another weird thing. I typically don't read for the content so much as the author. Having an assistant write all the posts changes that dynamic dramatically, obviously.
On the other hand, there are plenty of monetized blogs that I still read and I think the common thread is that the writer maintains his voice. I can easily skip over a product review. It's harder to get halfway through a post before realizing that, hey, who is writing this?
Like many comments above I was recently hit with a "I should be making money doing this" which unfortunately hit me all it once in a tornado like feeling of questions in my head with blogging and freelancing. I received some great advice and was able to clear my head. It's posts like this that make you appreciate the process and the mindset of those who blog and freelance.
ReplyDeleteHi Steven. The decision, I think, is particular hard for those of us who write about finances. Did you decide to monetize, or to keep it non-commercial?
DeleteSo along the way I have added an affiliate or two, then subtracted those affiliates because I made little to nothing, currently I could subtract everything and I don't think it would make much difference. I currently have Google Adsense, to collect the daily pennies, but I would say I'm far from monetizing the website.
DeleteRight on. If you find a way to make the big bucks off of it, please share! (The knowledge, not the money.)
DeleteI have the same problem when I calculate hourly rates. It's why I don't look for freelance writing. I simply spend too much time to make the pay worthwhile. Even if I didn't have health problems, it just wouldn't make sense.
ReplyDeleteGreat point, Abigail. There are a ton of uncompensated hours inherently built into any business.
DeleteSimilar to the preface in Your Money or Your Life, determining your true hourly rate is daunting, and likely tells you a very different story than one was expecting.
I do have a side hustle, but now that I read this I'm like "wow! maybe I need to quit my part-time job". I don't think I'll give up my freelancing business, but I should probably really consider quitting my weekend job as I'm almost paying more in taxes, gas to drive there, and food since I work weird shifts, than I make from it...
ReplyDeleteI hear you, Kayla. The second job is easier to turn down, as the taxes usually put it into the minimum wage (or less) range. A business is different, especially if you are drawn to being an entrepreneur. I'm not, mostly because I can't spell the word correctly half the time.
DeleteKnow what you mean about side hustle. My side hustle efforts account for 0.3% of my income. Starting to think they may not be worth it . . .
ReplyDeleteWhoa, that's a titled ratio. Yeah, unless it's also taking up less than 1% of your time, it's a tricky tradeoff.
DeleteI'm a little late in replying here, but I definitely don't think side hustles are for everyone. Back when I was still working in an office, I came home, worked on my blog, and that was it. The blog in and of itself was time consuming enough. While earning more money appealed to me, my free time and sanity still mattered, too.
ReplyDeleteAnd now that I've turned a few side gigs into my full-time job? It's crazy. I won't lie at all, and I don't sugarcoat it to anyone who asks, either. There are many days I'm jealous that my fiance can come home and do whatever he wants, while I sit and work. That's my own doing, of course, but if you're not careful, earning more can definitely get out of hand.
However, I've struggled with earning more for a long time (taxes were never a concern), so I like to think the sacrifices I'm making now are worth it. I hope to grow into a more stable position where I'm comfortable with my salary, can cut other work out, and finally have some free time. =)
I'm glad there are others here who agree with you. I always felt very alone before making the jump to self-employment, like I was "lazy" or wasn't motivated enough to get ahead. But there's really something to be said for being able to enjoy life. For some people, that might mean working, but for most, it's relaxing!
Just came across this blog. Looks like we share a lot of similar ideals when it comes to finance. This world of blogging is all new to me. I've always wanted another outlet outside of my 9-5. I started a blog two days ago and it has been so great to get my thoughts out there. If you have any advice for me I would greatly appreciate it. There seems to be so many aspects of setting up a site, collaborating with others, developing content, etc. that it's a bit overwhelming. But I'm looking forward to embarking on this blogging journey.
ReplyDeleteBest regards,
Dane