Category Archives: Money

Thinking About Getting A Second Job? Read This First

It is pretty clear that the best way to meet your financial goals or acquire the things you want is to increase income. One way to do that is to get a second job. However, there are lots of disadvantages to getting a second traditional job. Here we’ll discuss some of the pros, cons, and alternatives to getting a second to help you in your decision to increase your income.

Disadvantage Number One

A set schedule. Having to comply with the set schedule that your secondary employer is likely the single largest disadvantage to a second job. They may ask you to work more than you originally signed up for or they may ask you to flex time away from your day job towards them. Even in the event that that the second company can comply with your day job’s schedule, it may end with the result of you working 7 days a week every week, which could leave your physical and mental health lagging.

Disadvantage Number Two

Confusing taxes. One of the nice things about a traditional job is that the employer will draft taxes from each of your paychecks for you rather than you having to pay quarterly or monthly as self-employment would require. However, you should take this tax withholding with a grain of salt – each of your two employers will probably use a calculation to determine your taxes withheld independent to that one job. With that, your total taxes due for your total income could, in certain cases, exceed your withholdings which would leave you with a bill due to the IRS at the end of the year. No one wants that, so if you do go this route, pay attention to the paperwork you fill out on day 1!

What Are Some Alternatives To Getting A Second Job?

Let’s start by looking at your budget. You’ve probably already determined that your bottom line after subtracting expenses from your income is too little, or worse, negative. This is where many people jump straight to trying to increase income though getting a second job. However, you should take a deeper look at your budget. What expenses are present that you could eliminate or decrease? Are you spending too much on entertainment? Too much eating out? Have you shopped around for cheaper car insurance?

While decreasing expenses isn’t doable for everyone, it is often times more scalable and a better long-term fix to your budget sheet problem. Reducing expenses rather than increasing income will leave you with the same amount of free time you currently have rather than dedicating that to a second job. Your stress levels and mental capacity geared towards work will not be negatively impacted as they might be with two jobs.

The alternative that seems to solve the largest number of these pitfalls is to find a job that allows you to work for yourself. This is a bit of an open-ended answer because there are so many possibilities: driving for ridesharing, mowing lawns in your neighborhood, making and selling instructional videos, freelancing a certain skill of yours, and so on. With this option you simply have more freedom. You can choose your own hours, to some extent you can choose what type of work you do, and you can choose your rate of billing. Further, as your personal finances fluctuate you can scale back or scale up as you see fit without having to go though an employer.

Purchases Where You Can Negotiate Pricing To Save Money

Many people are under the misconception that a price set by a seller is the price that must be paid by the buyer. While there are some cases where this may be true (you probably wouldn’t ask your grocery store cashier for a lower price on bananas), there are lots of purchases that you can and should negotiate. Here are some purchases you should pay special attention to:

Furniture

Although furniture purchases are often spread out over time, the contents of one’s home add up to some of the costliest purchases that individuals make. Even big-name retailers are willing to negotiate sales pricing on pieces of furniture. Some good bargaining here could be asking for free delivery, picking clearance items, or even buying more furniture – the store may offer a larger discount if, for example, you purchase a new mattress along with your new living room set.

Property and Rentals

Areas where there is plenty of supply and less demand offer buyers and renters additional negotiation power. Remember in these situations that price alone is not the only thing that you can negotiate. For instance, maybe you’re looking to rent an apartment. Maybe you notice that appliances are old and probably not energy efficient, you could let the landlord know that you’d be willing to pay the going rate if they were to upgrade the appliances. Often times they will! I’ve gotten pretty significant discounts when renting airbnbs just by asking!

Used Technology

Retailers and individual sellers generally don’t like to offer additional discounts on new products, however used items or “open-box” items are a different story. Shopping for phones and laptops at pawn shops, repair shops, or on craigslist give the buyer additional leverage to negotiate a lower sale price. If you notice a seller has many of a certain model available this could be a sign that they’re not selling as many as they’d like- and that they’d let some go for a discount. Additionally, point out any scratches or blemishes that you see and let the seller know that you could live with the defects if the price was lower.

Anything And Everything On Craigslist Or Other Peer-To-Peer Marketplaces

Don’t let the tagline “price is firm” scare you. You should always make an offer lower than the listed price and see how the seller responds. They may accept your offer, meet you in the middle, or reaffirm that that the price is not-negotiable. Decide how much the product is really worth to you and move forward by either making the purchase or moving on and finding something else. It never hurts to ask!

Bonus Tip

An often-overlooked negotiation tactic is method of payment. You should ask the seller what method of payment they would prefer that could get you the most favorable terms. In some cases, this will be the all-powerful C-A-S-H, or in other cases the company may offer incentives to use their in-house financing. The salesperson is more likely to lower the price if you pay in the way that benefits them the most.

Conclusion

One of the reasons often listed by people that choose not to negotiate is that they are afraid the salesperson will be insulted or get angry and refuse to sell to them altogether. Generally speaking, this is not the case. A general rule of thumb that is advised is to always remember that the salesperson really wants to sell you the item in question. There is probably a stop-limit price which they cannot go below, but the list price is almost always well above that limit. Accordingly, you should negotiate final sale price whenever you can to save money!

Saving Early is Better than Saving Often

It has been said that most Americans are just one paycheck away from bankruptcy – Basically, if they miss one month’s salary, they would be unable to recover. The problem is that most people have a mortgage to pay, several credit cards and many small loans. Add in the day to day-to-day expenses of living and you’ll see why there is a problem.

The Light at the End of the Tunnel

It’s not all doom and gloom, however. As long as you understand why the situation can end up getting this bad, you can avoid getting yourself into the same sort of trouble.

In fact, if everyone used this mantra more often, “Save not Spend,” there would be a lot more financially secure people in the world. That’s not to say that you have to become a miser – after all, you work hard for your money, you are entitled to benefit from it – you just don’t want to end up in a few years feeling as though you only work to pay off your debt. By getting ahead of the problem, you’ll be putting yourself in a much better position, as you’ll see in a second.

Compound it All!

To understand why it is so important to start saving money as soon as you are able, it is important to understand the concept of compound interest.

When it comes to simple interest, the interest that you receive is based only on the amount of capital that you originally invest. If that interest is then reinvested with your capital amount, you earn interest on both the capital and the interest added in and the interest is said to be compounded.

Compound interest is easiest to explain in a table – for this exercise, let’s assume that Julie and Sarah are two 25 year olds. Julie contributed $5,000 per year and earned 8% interest per year. She invested for just 10 years, until she was 35 years old. Then, she sat back, relaxed, and let her money do the work for her for the next 30 years while she spent her money on other things.

Sarah waited 10 years to start saving, but to make up for it, invested for the next 30 years, with the same $5,000/year contribution and 8% annual interest. In the end, Sarah contributed a whopping $150,000 while Julie contributed just $50,000. So who had more money at the end of 40 years?

It sounds crazy, but Julie actually outsaved Sarah by a significant margin, despite only investing just a third of what Sarah contributed. The important lesson here? Saving early is even better than saving often! Check out this table to see what happened.

What to Take Away from This

The lesson here is to start saving now – make saving a priority for you. If you do have credit card debt, repay that first as the interest rates charged are a lot higher than the rate that you’d likely receive from investing. Once that is done, your aim should be to get to a point where you are saving around about 10% of your salary. Retirement funding can help you to qualify for tax breaks, allowing you to sock away even more of your money for the future.

Once you get into the habit of saving your money, it will become easier and easier and you won’t miss it. Forget about just having 3 months salary saved, carry on saving for as long as you can so that you can truly start to build wealth, or, at the very least, avoid being forced to work until well after you would like to retire. Do your best to invest as early as you can. You can try and make up for it later by investing more or investing longer, but there’s no replacement for time!