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What Do You Do With Your 'Side Hustle' Cash?

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  • #16
    Travel mostly. Let go of some of my spending guilt and let us have a night out to dinner. I don't keep my side hustle money too separate from the rest of my money and I'm not an avid budgeter. Side $$ is also inconsistent. I'm a privately employed corporate event planner but do social events on the side - sometimes weddings, graduations, retirements, anniversaries, etc all of which can be full blown planning gigs all the way down to sometimes just bartending in someone's basement. It's a lot of fun but I keep it minimal so I don't burn out. Maybe take 5-6 events/year which comes out to around $5k extra. Sometimes I take jobs doing virtual assisting or developing online marketing materials. Usually that's with a purpose (ie need a new car, need a bigger downpayment, have a trip coming up, etc).

    With my rental properties which net about $25k/year, the money goes toward re-investing.

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    • #17
      Originally posted by amastewa93 View Post

      Is there no minimum requirement to open an IRA? I've got a credit union account where I can open one - but I seem to recall there being a minimum (which we could easily save with the extra cash coming in).

      We are going to focus on paying off debt outside of starting to pad retirement savings (because we are both essentially self-employed an IRA would help us both a bit tax-wise, which is a plus).
      I would open an IRA with Fidelity, vanguard or Schwab. You won’t be able to invest your money at the credit union (I could be wrong)

      If you invest in ETFs then the minimum required to invest is the price of one share.

      otherwise the money can sit within a “cash account/money market” within your IRA.

      Note that only a traditional IRA is tax deductible.

      you may qualify for the savers credit if that still exists in the tax system.

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      • #18
        Originally posted by Jluke View Post

        I would open an IRA with Fidelity, vanguard or Schwab. You won’t be able to invest your money at the credit union (I could be wrong)

        If you invest in ETFs then the minimum required to invest is the price of one share.

        otherwise the money can sit within a “cash account/money market” within your IRA.

        Note that only a traditional IRA is tax deductible.

        you may qualify for the savers credit if that still exists in the tax system.
        Coastal Federal Credit Union (where I have an account) gave me some information and said I would be able to invest the money. They also have money market accounts, if that's something I'm interested in down the road. They've provided a lot of great information, but I'll definitely check into the others you've mentioned here before making a decision.

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        • #19
          Originally posted by james.hendrickson View Post
          Amanda - good for you for starting early on this. The sooner you take control of your finances, the better off you'll be. This applies to investing especially, but its also the case for debt reduction.

          If you're investing, you'll need time for the investments to compound, so starting early buys you more time. After a certain period of time and depending on the investment and how well you manage the process, you should start to see very strong returns. Here is a nice chart from author David Bach's website. It shows you how much you need to save, by age, to reach a million dollar retirement portfolio. The main point here is that starting early gives you an advantage.



          Source: David Bach.

          This can also apply equally well to debt reduction, the sooner you get your debts paid off, the more time and mental space you'll have to accomplish other goals. Debt payoff has the wonderful effect of improving your credit, improving your mental well being...and it gives you more choices and more freedom.



          Thanks for this additional information! The chart is super helpful. We will definitely be focusing on getting the debt paid off, but I think not opening a retirement account right now would be a mistake. My husband is a few years older and doesn't have anything put away for our "golden years" yet because he's always been self-employed.

          Thanks for the words of encouragement

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          • #20
            Originally posted by amastewa93 View Post

            Coastal Federal Credit Union (where I have an account) gave me some information and said I would be able to invest the money. They also have money market accounts, if that's something I'm interested in down the road. They've provided a lot of great information, but I'll definitely check into the others you've mentioned here before making a decision.
            I'd be cautious about using a bank/credit union for investing (to the point of avoiding it completely). Most of the time, they'll tend to steer you toward banking products, and what actual investments they have tend to be high-cost (1-1.5% expenses or higher), and their investment options tend to be pretty poor in quality and variety. Per-trade transaction fees (if they charge them) are also typically higher than a normal investment house. I made all of those mistakes when I first started, until I saw the light and moved everything over to Vanguard. ....FWIW....
            "Praestantia per minutus" ... "Acta non verba"

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            • #21
              Originally posted by kork13 View Post

              I'd be cautious about using a bank/credit union for investing (to the point of avoiding it completely). Most of the time, they'll tend to steer you toward banking products, and what actual investments they have tend to be high-cost (1-1.5% expenses or higher), and their investment options tend to be pretty poor in quality and variety. Per-trade transaction fees (if they charge them) are also typically higher than a normal investment house. I made all of those mistakes when I first started, until I saw the light and moved everything over to Vanguard. ....FWIW....
              I agree completely. Your local bank/credit union might be fine for your checking account and consumer loans like a car but that's about it. Interest rates on savings products are usually abysmal. Investment offerings are usually downright awful with limited choices and high fees and expenses.
              Steve

              * Despite the high cost of living, it remains very popular.
              * Why should I pay for my daughter's education when she already knows everything?
              * There are no shortcuts to anywhere worth going.

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              • #22
                Right now I put the money for our every day expenses, as we just immigrated and the income is still low. We don't want to get into debt, so everything we earn must go into setting up our new life. We also save money for emergencies and then invest a little in my website design business.
                Personal Finance Blog | Dojo's PF Musings

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                • #23
                  Originally posted by dojo View Post
                  Right now I put the money for our every day expenses, as we just immigrated and the income is still low. We don't want to get into debt, so everything we earn must go into setting up our new life. We also save money for emergencies and then invest a little in my website design business.
                  Dojo - where did you emigrate from?
                  james.c.hendrickson@gmail.com
                  202.468.6043

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