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Why You Should Always Have Side-Income: Finance Friday with Rachael

The BiggerPockets Money Podcast
38 min read
Why You Should Always Have Side-Income: Finance Friday with Rachael

Side businesses can be a fantastic way to boost your savings and investing rates, especially if you’re making a low salary! Rachael works in the insurance industry and is keen on getting a promotion soon, due to her recently acquired license. She loves her work and wants to stay with her company as long as she can, but she also wants to increase her income so she can save more for her retirement, her college funds, and pay off some student debt.

Rachael has always been an artist and uses this talent to grow her small businesses. She hosts “painting parties” where she leads a group of people through painting a beautiful picture. She also has some designs that she sells over printing websites so people can buy them as mugs, mousepads, tee-shirts, and more.

She does have a few things to cut out of her life, such as a very expensive mobile phone bill for her and her sons, as well as a love for eating out. Mindy and Scott’s advice is to start tracking expenses as soon as possible and get rid of her delivery app membership right away!

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Mindy:
Welcome to the BiggerPockets Money Podcast, show number 190, finance Friday edition, where we interview Rachael and talk about getting started a little bit later, side hustles and cutting expenses.

Rachael:
I’ve been looking into real estate for quite some time, and I wanted to do some real estate investing, but I do realize what you’re saying matters. First, you have to have that cash. You have to have that buildup first before you start trying to take out more loans and more debt.

Mindy:
Hello. Hello. Hello. My name is Mindy Jensen and with me, as always, is my always on the ball co-host, Scott Trench.

Scott:
You’re always on a roll with these, Mindy. Thank you so much. So rounding out these intros. [crosstalk 00:00:48].

Mindy:
Rounding out is a better one.

Scott:
All right.

Mindy:
Scott and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story, because we truly believe that financial independence is available for everyone no matter when or where you’re starting.

Scott:
That’s right. Whether you want to retire early and travel the world, going to make big time investments in assets like real estate, start your own business, or simply build a stronger financial foundation, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.

Mindy:
Scott, I am super excited to talk to Rachael today. She is getting started a little bit later in life, example of somebody who has a lot of wins within really close grasp.

Scott:
Yeah. Well, I just want to say I think that there’s a lot of people who are in the same position as Rachael, who would have a down and out mindset about things, right? She’s single mom, she’s got an income below $40,000 a year, with some of those things. No. What I think is awesome about Rachael is that she is excited, optimistic. She is invigorated by this stuff. She’s reading books on financial independence. The frameworks are coming together, and she knows she can achieve it because she can. I think it’s going to be really exciting to watch her journey over the next couple of years because of that mindset.
Then the tools like the discipline adherence to the budget itself, tracking the spending and just continuing to keep the snowball going, I think she’s going to be really successful. I bet you that one or more of her great ideas inside businesses begins to flourish in the next couple of years here as well.

Mindy:
Scott, I think you’re correct. And if they don’t, if all of the side hustle she has going on right now doesn’t pan out, I know that she is going to go out and find one that will, and I’m super excited for her journey. But before we bring her in, let’s read that thing that our lawyer makes us read at the beginning of every episode, which is, the contents of this podcast are informational in nature and are not legal or tax advice. Neither Scott, nor I, nor BiggerPockets is engaged in the provision of legal tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal tax and financial implications of any financial decision you contemplate.
Scott, let’s go give her some financial decisions to contemplate. Rachael and her fiancé share three children among them. She’s 42, hoping to reach five by age 50, but she is getting a bit of a later start on her journey to financial independence. Rachael, welcome to the show today. I’m super excited to have you with us, and I’m excited to dive into your finances and see what suggestions we can make to help you further yourself down the path towards financial independence.

Rachael:
Thank you, Mindy. I appreciate it. I look forward to sharing with all of you.

Mindy:
So let’s jump right into it. Let’s start to build a balance sheet. Let’s look at what is coming in and what is going out.

Rachael:
So I have an annual salary of $36,461. Now, I don’t know whether you include my fiancé in the household income or not because he does contribute to the expenses. We pay half.

Mindy:
Well, let’s look at that then. Are you planning on combining finances with your fiancé once you get married?

Rachael:
Yes.

Mindy:
Okay. Scott, would you include those then?

Scott:
I think… Well, let’s zoom out here. Because that’s unclear, I think that that gives us a very good first step or potential first piece of homework, which is to potentially have a money date with your fiancé and map that out and understand, “Hey, where do we want to get to? How do we want to handle this on a go-forward basis? What’s the plan there? Do we have a couple of easy timeline steps, five minutes a week to combine those or not once we get married?” Those types of things. We have a podcast for that that might come back.
As far as recommendations, my recommendation, if you intend to combine them, I wouldn’t combine them until you’re actually married, until that event takes place, and I would look at it separately. A way to compute that in your head would be, “Hey, if the housing expense is $1,000 and the fiancé is contributing 500 of that, then your housing spend is 500. That would be a way to think about it in the meantime while separate.

Rachael:
Okay, thank you. Yeah. So I do paint on the side. I do have a full-time job in the insurance industry as an enrollment specialist, and I’m going after an account manager position. I just passed my health and life insurance exam in Pennsylvania. So I’m on my way for that. The company I worked for paid for the licensing exam, so I think I have a pretty good shot.
But I do paint on the side. I’ve been painting for quite a while, and I do sell some of my artwork. Not on a consistent basis, and I’ve kind of struggled with that on the marketing side. I just did my first painting party for a friend’s daughter for her 11th birthday. I was paid for that as well. So that’s another little extra income stream that I want to start up, because once I posted that on my social media, I had another friend who said, “Hey, I see you’re doing painting parties. I have someone who needs one.” So the word of mouth is starting to get around.

Scott:
How many hours is your work right now?

Rachael:
40 hours a week.

Scott:
40 hours? Okay.

Rachael:
Yeah, I’m not required to do any overtime, which is actually helpful with working on any side hustles if I want. It’s a standard 8:30 to 5:00 job weekly. I have weekends off.

Mindy:
How much do you get for a painting party?

Rachael:
Well, I set my initial rate at $30 per student per hour, because I looked it up online and they said that that’s the standard, like 30 to 60 is the standard. So I did set it at that rate. It was a friend of mine from college who asked me because she follows my artwork, and her daughter is very creative as well. So she’s like, “Oh, could you do this for her birthday?” I said, “Well, I’ve never done it before, but I’ll let you know how much it’ll be.” And she said she’s previously done a party with another friend who only charged $20. I didn’t back down when she said that, because first of all, the other person had over 100 people. So $20 times 100 is a little different than $30 times two.

Mindy:
Yes. So that’s very interesting. I like that idea. That’s the where you come to class and the person teaches you how to paint a picture and everybody gets to take a picture home. Okay. So $30, does that include… I know we’re getting off track, Scott, sorry. But does $30 include all the things, so I just show up? Or do I bring a canvas, and paint, and paint brushes, and all of that to the thing as well?

Rachael:
Well, in this case, because it was a friend of mine, we actually met up and she came shopping with me, and she paid for her supplies ahead of time. Of course, any supplies I needed. I didn’t need very much, I already have everything here, and she didn’t really need that much either. It was just two girls. They just needed a canvas each. They already had most of their supplies already because her daughter’s already creative. So I didn’t have to pay anything for supplies out of that $30.

Mindy:
Okay. So I think there’s some opportunities there, and I’m excited to discuss those in a little bit, but let’s continue with the income, and expenses, and debts. Let’s see, I think that’s… Is that it on the income, the salary, and then the painting? That sounded rude. I didn’t mean that to be rude. Is that it?

Rachael:
Oh, no, no, not at all. That’s a lot, actually, when you’re a single mom. I do have some different things in the pot that I haven’t gotten do as much as I’d like. I have a blog that I have maybe a few articles on. I did sign up for an affiliate marketing thing for art. So I could make articles about art supplies and included their link, but I haven’t done it yet because I’m doing everything else. So it’s like you only have so much time in the day.
I did sell a couple of my products on Redbubble, which is print on demand. That’s another avenue I’ve been looking into. I had a really good Etsy shop going for a little while, but I’ve gotten away from that. But I would like to get back into that as well and incorporate the print-on-demand aspect into the Etsy shop as well. Anything that I can automate is great. Set it and forget it. That’s the way I look at it.

Mindy:
Okay, I have a lot of options.

Scott:
What do you expect between all of those things to bring home on an annual basis?

Rachael:
Well, the thought is… From all of the investment books I’ve read over the years, the idea is to get your passive income to hopefully surpass your full-time income. I’m nowhere near that, but I know there’s hope because I’ve seen it, I’ve listened to the podcasts, I’ve read the blogs, read the success stories. Considering I don’t make a very high salary, I think I’m actually in a very good position to be able to do that, even though I am later in the game, a little older.
So I have a little bit of hope from that standpoint. I think it actually would be harder for me if I were making 60 grand, 100 grand a year, trying to get out of the corporate world and basically have the golden handcuffs.

Scott:
Tell me if I’m way off on this, but what I’m piecing together here is that you’re making it work with the job and the expenses, and that kind of stuff. You have a lot of ideas and a lot of creativity. It’s right outside your grasp, and automating a couple of these things with that. You’re not short on ideas or optimism, or abilities, or those types of things, but that maybe what we could help with today is boiling all this down away from a series of tactics, like the Etsy shop, the painting parties, that kind of stuff, and into a strategy to get you there that can’t help, but churn out wedding results year after year with this. Does that sound like what you’re trying to do?

Rachael:
That sounds exactly like what I need.

Scott:
Awesome. So that’s where I want to get at. Let’s start with this. I’ll just jump right into it and jump way ahead of myself here on this. My belief, and we’ll find more information here, is that your annual income is going to be somewhere in the ballpark of $40,000 a year, $36,000 plus a few thousand dollars from these other activities. In a general sense, is that about right?

Rachael:
Yeah.

Scott:
Then what I think we need to do is we need to make sure that your expenses are significantly less than that, is that you’re able to save on a regular basis, and that each one of these ideas adds to the snowball. So if you save a few hundred bucks a month, “Hey, now when I layer in a painting party twice a month on Saturdays, that’s going to snowball me another $400, which goes straight into the bottom line, which then gets reinvested. Then I layer in an Etsy shop, which produces 200 bucks a month, 300 bucks a month, or 4,000 one month, and none the other 11 months because there’s some event there. Whatever it is, that gets layered into the snowball. I’m doing all these things one by one.”
That’s where I want to zoom out from these ideas that you have that are great. Start with the foundation of this, what’s the income and expenses? How do we get a consistent snowball going from the fundamentals, and then come up with a strategy to attack these ideas one by one, quarter after quarter over two and a half years? And get some wins in there that just drive your position forward. Makes sense?

Rachael:
That makes sense.

Scott:
So, how much are you spending per month on a regular basis?

Rachael:
Looks like I’m spending around just over $2,500 a month.

Scott:
Great. So in a month where you don’t have any extra income, are you saving about $300? Is that right?

Rachael:
Yeah.

Scott:
Okay. Can you walk us through your assets and debts? How much cash do you have, investments, liabilities, debts, and those types of things do you have?

Rachael:
Okay. I save in my 401k at work. I just recently increased it to 5% because I found out that I was leaving money on the table. I currently have-

Scott:
[crosstalk 00:14:41] the match.

Rachael:
Yeah, for the match. Exactly. I thought it was 100% at 3%. I misunderstood. Apparently, they just had a meeting about this and everyone, all of a sudden, was pushing up their matching to 5% because they realized the same thing I did, that we weren’t getting all of our money.

Scott:
Yeah, good.

Rachael:
So I currently have almost $3,500 in there. You would think I’d have a lot more money saved at this age, but from my previous marriage, I cashed out my entire retirement to try to right-side up our finances before finding out that I should have held onto it, and gone bankrupt instead. So we went bankrupt after I had already liquidated my entire retirement.

Scott:
Yeah. Tangent there. Just for folks listening, great point here. Thank you for sharing that because it’s a learning opportunity for some other folks who are calling in or listening with this. But I think what you’re saying is that if you had left the money into the retirement account, filed bankruptcy, there’s a good chance that those funds are not touched in the event that something like that happens, or there’s other things. So it’s a very rare set of circumstances where it’s a good idea to take money out of those retirement accounts. Thank you for sharing that.

Rachael:
You’re welcome. Yeah, my lawyer at the time specifically said, he’s like, “Oh, I wish you would’ve come to me sooner because that money would have been protected in the bankruptcy.” So yeah, lesson learned there.

Scott:
Well, let’s keep going. Yeah.

Rachael:
All right. So I do save money for both of my sons for their 529 college savings plan. Unfortunately, I don’t know exactly how much I have in there because I can’t get into the account right now. I’m working on that, but I have, I would say, about $1,500 to $2,000. I save about like $50 per pay right now, nothing massive. I have an HSA account for my medical expenses, and that actually has… the company just let us know that they are contributing a certain match to the HSA. So that’s great because I do have regular medical expenses that I will have for the rest of my life. So that’s very helpful.
Then I have some random accounts, like a Merrill Lynch account leftover from that previous retirement account that I liquidated. I have like $300 left there, and then like $200 left in some random credit union account I had from a previous job, it was like $200. Then I did start up a Robinhood account, and then I switched after the GameStop debacle. So I switched to Fidelity.

Scott:
So you’re a stock investor?

Rachael:
I found out afterwards, Mindy, that you like Fidelity.

Mindy:
I love Fidelity.

Rachael:
That was random. That was pretty cool, when I found out afterwards. I’m like, “Oh, okay. Yeah, that works.” That has about $850 in it right now. But when GameStop goes big, this is all irrelevant, right?

Scott:
That’s right. The whole plan is just put it all into GameStop. Yeah.

Rachael:
It is.

Scott:
How much cash do you have in your savings or checking?

Rachael:
I have about almost $700 in my checking currently, and savings, I have $200.

Scott:
Okay. So you’ve got about $1,000 in cash.

Rachael:
Yeah.

Scott:
Okay. Walk us through your debts.

Rachael:
Okay. So I recently purchased my house in December 2020, so I do have a mortgage. It’s over $83,000. The mortgage payment is very reasonable. It’s $607.94 a month. The utilities come to about $280 a month. My paying internet $120 a month.

Scott:
How long ago did you buy the house?

Rachael:
December 2020.

Scott:
Okay. Did that use up a lot of your cash?

Rachael:
It did. Yeah. Actually, my ex and I sold our marital home and split the proceeds, and I used most of that money to first pay off my car. So I have paid for car right now.

Scott:
Excellent.

Rachael:
Then I paid off some other debts, and then built up my credit score, and then applied for a mortgage to get a house. So I had to work on a few things to get to where I am now.

Scott:
We don’t need to go through your utilities now, but do you have any other debts besides the mortgage?

Rachael:
Yeah. I have student loan debt.

Scott:
How much is the student loan debt?

Rachael:
It’s not bad considering other people’s, but it’s still $23,000 that I should’ve gotten rid of a long time ago.

Scott:
Okay. Now, my belief is… It’s great that your housing expense is so low, even relative to your income with that. That’s a great payment there at 607 a month with that. Do you feel like most months you are in fact saving $300 in cash? Like that’s moving into your bank account on an average basis?

Rachael:
No.

Scott:
Is that something that you should be able to do on paper, but it just isn’t happening, or is it-

Rachael:
Yes.

Scott:
Okay, great. What do you think… Without going into great detail on your budget yet, we might do this, what do you think you could save? Without going crazy, still having some fun and that kind of stuff, and having a sustainable approach, what do you think you could save if you didn’t get any extra income whatsoever per month?

Rachael:
Just looking at my other expenses, I can tell you right now, my biggest problem is eating out. Me and my fiancé, my kids too, we are an eating-out family. For me, it’s the convenience because I don’t get home till six o’clock at night. I have all these other things I’m working on, as you can tell. So it’s just like, that’s my biggest expense, is eating out. The only other major entertainment expenses that I have is books and art supplies. So I love buying both. So sometimes I buy a little too many books. I buy so many books, I can’t read them all, but yeah, those are my main issues.

Scott:
Okay. My belief is that the short term… And we should spend some time on this in a moment, is figuring out a way to get to a place where, month after month, you’re saving at least $300 in cash per month. Because I think the biggest red flag for me for your situation is the lack of emergency reserve. You’re spending 2,400 a month, but you only got $1,000 in the bank. So that makes it very difficult to search for a better job, that makes it very difficult to buy the art supplies to try a slightly bigger version of your idea on the side. That’s just limiting a lot of your creativity and options. What I think is really encouraging about your situation is that lots of people are like, “Oh, I’m too busy to try things on the side.”
You’re a single mom with a full-time job, and you’re like, “I got tons of ideas to try and lots of optimism about that.” So I think that is awesome. We got to put you in a position, as quickly as possible, to have a little bit more freedom and wiggle room to try some of those things and go after that. I think that requires just basic discipline on the tracking of your spending and budgeting to make sure that every month you’re winning, even if you don’t get an extra income.

Rachael:
Yeah. That’s a very good point.

Scott:
So I guess, how do you think we begin knocking out the eating out problem? Not the eating out problem, the eating out budget. How do we knock that down? What’s a reasonable number there? How do we put in place a system where it just spits out that as the inevitable outcome, rather than forcing you to be disciplined every day?

Rachael:
Yeah, exactly. Need to automate it. I would say one of the things that works for me is tracking. If I set up a system or a process, I tend to stick to it. For instance, I started Weight Watchers at the beginning of the year, and I use their app. I have lost almost 13 pounds already. It’s just by tracking and doing their points. Exactly. Thank you.

Scott:
I think there’s so much overlap between weight loss and finance that it’s a analogy in a lot of ways for this kind of stuff.

Rachael:
Yeah. So I think if I can have some sort of app or some sort of process that I can follow… and not make it, like you said, such like, “Oh, I have to be so disciplined,” but make it more like a game. Because that’s how I feel about the Weight Watchers thing. It’s like, “Oh, okay. I know I’m going to go out to eat tonight, so I’m going to make sure I cut back a little earlier in the day, not eat as much.” So just make it a game. That usually works for me.

Mindy:
I got this. I am the same way. Once I get started, it is a game, and now I have to win. The only person I’m competing against is myself. So I have to do it lower, lower, lower. My friends, the Waffles on Wednesday, wrote an article called Make Your Own Mobile Expense Tracking App in 30 minutes. What it boils down to is a Google form that you put onto your phone right on the very first page of your phone apps, and you punch it every time you are on the go, you’re spending money, you fill that out. Hit enter, it goes into your spreadsheet. I’m assuming you love spreadsheets just like the rest of us.
Then it starts to become a game. “Oh, I have to enter into my phone how much I spent? I don’t really need that today. I don’t really need that. I only need half of this. I’m going to put this stuff back.” It starts to become a game. So I’m going to send you a link to this. I’m going to include it in the show notes as well. That is super helpful.
What I love so much about this is it’s customized. So my expenses are not the same as your expenses. It doesn’t matter. You make this and you make it with all of your expenses. You can add and subtract very easily. It’s super easy. Mr. Wow walks you through every step to get it so that you can use it very easily. I love that. People have heard me say that all the time, I love that particular article and that app. So I think that’ll be big for you. That’ll be really helpful for you.

Scott:
There are tons of folks who have the same need, right? Like, “I need to make it a game that it’s trackable and all that kind of stuff.” So there’s what Mindy just referenced about Waffles on Wednesday, there’s the EveryDollar app from Dave Ramsey. You need a budget. There’s Personal Capital, there’s mint.com. There’s an old fashioned Excel spreadsheet or equivalent you can get on your phone. So I think it’s… Pick one of those. Do a little bit of research. Maybe spend an hour in the next week or two and pick one. Research the one that you think is the most likely one to stick to, and just start using that every month.
The budgeting process is a process. You’re not going to get it right the first time and be addicted immediately in month one. But over three months, you should be getting pretty good and figuring out what works. A lot of people are like, “Oh, I’m going to make a budget, and there’s going to be one meal out next month.”

Rachael:
Right, exactly.

Scott:
If you’re used to eating 30 times in a month, that’s not going to work. That’s not a realistic expectation for you to have. So it’s just setting a realistic expectation and getting that budget there. One thing I want to point out is, and feel free to let me know if we don’t want to go into too much here, but I see that you have a DoorDash pass in here.

Rachael:
I told you. We’re hardcore. We have two DoorDash passes in our household.

Scott:
My advice would be to cancel one or both of those, because what the DoorDash pass is doing is it’s saying, “Hey, every time you order, it’s cheaper because you’re paying the fee.” So that just encourages to order that much more. Like, no, feel the pain every time with that, if that’s your biggest problem.

Rachael:
Yeah. That DoorDash pass, it’s the gateway drug.

Scott:
Look, it’s COVID, a lot of people are doing that, but that would be like one of those symbolic things, I think, that could have a big impact. A small line item for you, but it could have a big impact in your monthly budget because you’re like, “Oh, that’s right. It’s more expensive because I canceled it, because I shouldn’t be doing that.” It’s just a little bit more painful each time to do that rather than make the food at home, if that’s the goal, is to cut that down somewhat.

Rachael:
I like that a lot.

Scott:
But yeah. I think I’d focus there. I think that’s the number one thing you can do in the very short run here, but that’s not very exciting. So we need to paint a bigger vision for what’s going to happen in two years for this. Why this is such an important step is because if you can do this and you save three, four, five, $600 a month, within a few months, you’re going to have several thousand dollars in the bank and a much better emergency reserve position from that.
Then we’re going to have to turn attention. I think if you’re looking to become financially free or build a financial position in a big way over the next couple of years, you’re going to have to address the elephant in the room on the other end of this, which is income. So can you tell me a little bit about your moving to the account manager role? What’s something on the baseline… not the exciting side project stuff, but the baseline stuff that’s bringing home the bacon right now that you’re working on?

Rachael:
Okay. So I just recently passed the Pennsylvania Life and Health Insurance exam. The company I’m working for, it’s an insurance brokerage. They’re a national company. They paid for me to take the exam. So it was on my goals with them when they asked me what I wanted to do. I said I wanted to get my license and become an account manager. Because in my past, I took the exam twice, once in my 20s, once in my 30s, and now. The first two times, the companies that I tried to work for, I didn’t feel they prepared me in any way, shape, or form on how to do the job. It was just basically throwing me to the wolves. So this time around, I actually feel like I’m in a position where… I’m in a company that will train you.
They train you very well. So I have a very good chance of increasing my income. I did ask how much of a bump in pay I would get when I first start, they did tell me because I would be an entry-level account manager, I’d only make two or $3 more than I make now per hour, but it’s somewhere to start. I can always look around if need be. I mean, I would hate to leave the company because they’re great, but obviously, if I have bigger goals that they can’t help me with, then I’ll have to look around.

Scott:
$2 an hour is 400 a month. Well, 40 times 160, it’s 320 a month, right? So 40 hour work weeks in four weeks. That’s no joke with that. That’s a good thing there. As you do that, again, this compounds. So if you can keep your budget in place and keep that spending at a certain target threshold, when you get that raise or that extra couple of bucks an hour, that’s going to all drop through against the bucket, and your savings aren’t going to be 300 or 400 a month. It’s going to be six or $700 a month that are going in there. Then if that happens again in a year, you’re going to get that again.
If you have side income, that gets stacked on top of it, but it all comes down to keeping that floor from moving, to spend on that side of things, which is why that’s, I think, such a key starting point for all of this. Okay. When do you think that will transpire, you’ll actually get the two or $3 an hour raise?

Rachael:
No one has talked to me about it yet, because we’re waiting for the State to send the license back because everything was sent in by the company. I was told that takes a couple of weeks, at least, to come back from the state. So I would say if I were to ballpark it, at least maybe two, three months tops.

Scott:
Okay. So, great. We have that in there. Are there any other… Is this what you want to be doing? What does the track for the career look like for this for the next three years?

Rachael:
Yeah, I plan to stay in this career. I think it’s a very fulfilling. I’m a weirdo, I enjoy what I do. I kind of fell into it, but I enjoy it. I also enjoy my art and doing that on the side. I love looking into passive income streams. I’ve been reading about real estate, for example, and of course, I listen to the BiggerPockets Real Estate Podcast as well. I just got one of the books from the recent podcasts, Passive Income, Aggressive Retirement by Rachel Richards. So I’m reading that for some more ideas. I’m looking into possibly looking at royalty incomes streams.
I’ve been looking into real estate for quite some time and I wanted to do some real estate investing, but I do realize what you’re saying matters. First, you have to have that cash. You have to have that buildup first before you start trying to take out more loans and more debt.

Scott:
Yeah, you need your monthly cash flow to be consistent, predictable, and you are in command of it, and it is piling up in your bank account. You need that to be sustained for a little bit of time so there’s actually a pile up in your bank account.

Rachael:
Right.

Scott:
I think that’s the position of financial strength from which to approach all of these avenues of investing all at once from that. You could plop some cash down into something, and you’ll be in a stronger financial position to take a more serious crack at these businesses. So let’s come up with a framework for that, right? So every couple of months, this number is going to expand from 300 to 600, to 900, to 1200 as some of these things start to come together, right? That’s the amount you’ll save that will come up. Maybe you find ways to cut some expenses, maybe you find ways to… you get that raise and some of these things work out.
So as that piles up, what do we do with it, is the question. We have our index fund investments. That’s something that you could think about, is just putting a few chips into the table, into the index funds every month, 100, 200, 300 bucks, whatever that is. There’s setting aside money for real estate investing. Sounds like your house is less than $100,000 in cost. Is that right?

Rachael:
That’s right.

Scott:
So you’re in an area that… That is incomprehensible to me and Mindy, from Denver where that is. Where are you located?

Rachael:
I’m in Pittsburgh, Pennsylvania, and the real estate market here is on fire.

Scott:
If you can save 600, $700 a month, you could probably buy real estate, which is one to two years of savings, which is a pretty attainable situation, I think, there. But I do think you’re probably still about a year out from having the financial position, at least, for making a down payment on that next rental property, unless some things change with that and you get a couple of wins here on the finance front.
So what I think I would suggest instead is this concept of your side hustles, which you light up and love talking about, have a lot of promising stuff with. So how do we put together a formula that works there? Well, how about this? I’ll try this one on and see if you like this. Nine out of 10 businesses fail, right?

Rachael:
Right.

Scott:
So what does that mean? To me, that says try 10 businesses.

Rachael:
That’s right.

Scott:
So if you can take your ideas and really give them a good concentrated try, like you say, “Which of these is the best idea? Which one is? I’m going to try that for the next 90 days. I’m going to get some sort of goal setting thing.” Like The 12 Week Year is a good book for that, or the 90 day Intention Journal, if you’d like BiggerPockets… whatever, we’ll send you one if you’d like that.

Rachael:
Yay.

Scott:
But if you say, “Hey, for 90 days, I’m going to have three things. I’m going to keep my budget on track, I’m going to project manage my boss to make sure that nothing gets lost in the loopholes with my state certification for this thing, so that comes about sooner. Then I’m going to, every week, take three concrete actions to making this business idea come into reality in a really low cost to start up the way with that and see if I can make progress there ignoring the rest of them.” At the end of 90 days, either you’re going to say, “This is worth continuing, and I’m going to reup for another 90 days, or I’m going to quit and kill it because that’s one of the nine business ideas that’s going to fail, and move on to idea number two with that.” If you do that for two and a half years, you’re probably going to hit a winner because one out of 10 businesses does reasonably well. What do you think about that?

Rachael:
I love that idea. Actually, I already know which one I want to focus on for the first 90 days.

Mindy:
Which one?

Rachael:
The painting, the painting workshops, because it’s already a proven concept. I mean, you have these painting with a twist franchises and everything. The thing is, my friend who asked me to do it, I assumed we were going to be meeting in person. She’s like, “Well, I can’t do that because I don’t know how the other mom feels about it for her daughter, so let’s do it online.” I’m like, “Yes.”
So it’s a very easy thing to do. It’s something I enjoy immensely. So I won’t feel like, “Oh, this is something I’m just doing for money.” Because that matters a lot to me, the things that I work on, I have to have some sort of passion towards it or for it, and not just, “Oh, I’m just doing it for money.”
I think that’s such a good idea to work towards because you’re helping other people, you’re teaching other people. The more people you help, they tell other people, and so on. So I think it can be exponential, whereas as much as I love my own art… And I will toot my own horn, buying art is a little bit different. It’s a very personal experience, and it’s not quite as… it’s harder to build something like that where you’re trying to sell paintings constantly.

Scott:
I love it. I think that that makes perfect sense with it. It sounded earlier that you might be chasing four rabbits with four different business ideas, the Etsy and all that kind of stuff.

Rachael:
I was.

Scott:
You might be able to catch all four rabbits over the next two, three years, but you can’t do them simultaneously while working your full-time job and implementing your budget all at once. So that’s where I think… I want to caution you that now is not a good time to be investing in your business financially in any meaningful way. Buy materials for the students when they’ve paid you. After they’ve paid you upfront, you go to the store and use part of that to buy the proceeds. That can be a good thing, of course, but now’s not a good time to be investing in the business because your financial position needs to be strengthened from the foundational work with that.
So if I’m thinking about it, the first goal is, I think, really getting that budget on track. The second goal is taking the sure bet. I’m sure that if you are proactive, there’s a chance to potentially speed up the project management of getting that raise with the certification from the state. I sense that you’re not in control of that right now, but there are some things that you might be able to be in control of if you’re asking about it or making it a point in your one-on-ones with your boss or whatever it is.

Rachael:
Yeah. Oh, they’re well aware too. They congratulated me in the last Zoom meeting, so I think I’m on the radar.

Mindy:
Oh, that’s fantastic.

Scott:
Awesome.

Mindy:
So I have a few suggestions. Scott has kind of been like, “Oh, I’m just going to say everything today.”

Scott:
Sorry, Mindy.

Mindy:
I have some suggestions too. This isn’t the Scott show, it’s the Scott and Mindy show. With regards to the $300 that you would like to put into savings, my suggestion is, first check that comes in, put $300 into savings, off the top. You don’t even get it in your regular account to spend. Then go about your day. Make all the payments that you were supposed to make. At the end of the month, if you need to pull $20 out, you still have $280 there. Whereas if it’s sitting in your account… And I know this from personal experience, I’m not trying to make you feel bad. I know that it’s just a dollar and it’s just $5, and, “Oh, I can do this. Oh, I’m not thinking about it because there’s money in the account.” But if it’s not there in the first place, you have a better opportunity to have it stay in your emergency fund or your savings account when you put it there first. So I would suggest that as one of the first changes that you make going forward.
Another thing is to track your spending. I’ve sent you an email with the link to that Waffles on Wednesday spending tracker. The reason that I like that so much is because it’s customizable. You sent us your expenses, and you have a lot of things detailed out. So you can make all of these categories yourself that are personal to you. It makes it easier to categorize it when you’re going through things at the end of the month.
You said something about potentially looking around to see if you could make more money. Do you have any specific length of time that you are required to work for your current company once you get your certification?

Rachael:
I believe it’s at least a year if they’re paying for your insurance license. If not, I think if you leave before that, you have to pay them back, which it’s not… I could pay them back if I had to.

Mindy:
What if you don’t have to?

Rachael:
But the point is, it’s a great company. I think it makes more sense for me to stay on for at least that amount of time to get the training that I need.

Mindy:
I think so too.

Rachael:
Because I’ve never been an account manager before, and I have that opportunity to get that experience if and when I move on.

Mindy:
I would recommend staying, learning all you can, and having an open dialogue with your manager, “Hey, what is your ideal account manager? What should I be hoping to accomplish every day, every week, every month, every quarter?” Then make a plan to accomplish those things and keep track of your accomplishments. We spoke with Erin about uncomfortable money conversations to have with your friends, with your spouse, with your boss. That was on episode 169. One of the things she said in that episode, that I thought was so helpful, is, “I keep an email folder, and I categorize these emails. I file them into these folders, great job, or kudos to me, or whatever you call it.” So every time a client sends you a letter that says, “Hey, thank you so much, you were so helpful,” you put it in there. Because when it’s-

Rachael:
Yeah, I have a praise folder on my Outlook.

Mindy:
Praise folder, yes. Perfect. Because when it’s time to ask for a raise, I don’t know about you, but my mind’s like, “I’ve done nothing.” Having those there, “Oh, I have 76 emails from clients that are happy with how I helped them.” Guess what? My boss about to get 76 emails forwarded to him detailing how great I am so he knows it’s not just me thinking this, it’s other people thinking it too. So I would have that, and really work at getting yourself as qualified as you can for that raise.
Then hop on Glassdoor and LinkedIn and start seeing what do experienced account managers make? Because maybe your company is saying you can have $2 an hour more, and every other company is paying $15 an hour more. It makes sense to move. But if everybody else is paying $3 an hour more, then you go into your company and say, “Hey, these are all the goals you wanted me to meet. These are all the things I did. Here’s all of these praise letters. I want a raise, I want $3 an hour. That’s the going rate,” or however it shakes out.
Let’s see. The emergency fund, I agree with everything that Scott said. There’s no need to rehash that. I do want to talk about some of these side hustles, because you said some things that are, I think, maybe not things you should focus on right now and others that I think would be really easy to run in the background, which is the best kind of side hustle. You said you did Redbubble print on demand. Principles can be huge. You set it… That is literally a set it and forget it. You take the time to design it beautifully, upload it, and bam, you’re done. How long does it take you to design a printable?

Rachael:
They’re actually not necessarily printables but me putting my artwork or designs on products, like putting my artwork like this piece behind me on a t-shirt, on a mug. So I actually did a watercolor of one of the popular areas in Pittsburgh called Lawrenceville, because I lived there for a little while. It was like a watercolor of the row houses, and I put that on a mug, and I sold a couple of those. It was pretty cool because I’m like, “That’s the way I need to go.”

Mindy:
Okay. Existing artwork only, start to finish, how long does it take you to take the picture, upload the picture, create the thing and set it and forget it on Redbubble? How long does that take you to do?

Rachael:
Are you talking from creating the artwork or just from uploading?

Mindy:
You’ve got a pile of artwork in the back of you, so five minutes, 30 minutes?

Rachael:
Yeah. Like five, 10 minutes max, depending on-

Mindy:
I want you, every day, to upload one picture. Don’t just leave it on a mug, you can put it on a t-shirt, on a bag, on a mouse pad, on all the things. Put them on all the things. Let anybody buy it however they want it. Put it up there and let it go. Do you have an Instagram for that artwork?

Rachael:
I just started a new business Instagram for my art, because I was throwing everything all together on one Instagram for my personal and business. So now it’s rachaelcaskeyart. That’s R-A-C-H-A-E-L.

Scott:
[crosstalk 00:47:02] right now. I will link to that in the show notes.

Rachael:
People always get Rachael spelled wrong for me.

Mindy:
Then I would get the Rachael Caskey spelled incorrectly as well, spell it the way that everybody else does too, because then you can capitalize on that as well.

Rachael:
That’s a good point.

Scott:
Which one is it? Is it your art one?

Rachael:
Yeah.

Mindy:
I would do one picture that’s already completed. I wouldn’t start making new art, but any artwork that you already have done, do one a day, or do two a day, or sit down and just batch it out. But nobody is going to email you out of the blue and say, “Hey, do you have a girl with a crown and blue hair?” But they’ll find it if that’s what they’re looking for on Redbubble. That is a really easy, “It’s already done, I just need to dot the I’s and cross the T’s and finish that project.” So I would love to see that. What were you selling on your Etsy shop?

Rachael:
Well, I started an Etsy shop years ago when I was just working on invitations and making paper crafts basically, before I started really getting into painting full-time. My shop is in transition because, A, it’s still named after my company, the Paper Crafters Nook. I don’t papercraft anymore. I feel like it would be confusing to throw my artwork on an Etsy shop called Paper Crafters Nook.

Mindy:
I agree.

Rachael:
So that’s a whole other issue because my company is called Rachael Caskey Enterprises, LLC. It’s a DBA as the Paper Crafters Nook. I never got that changed, but that’s the only sales license I have in Pennsylvania.

Mindy:
So this is going to be more effort. I thought maybe there was some sort of principles involved in the Etsy shop as well. So that one I would put on the back burner. I would focus on the budgeting, and little bits. Because if you cut out all the things the very first month, month two, you’re going to add it all back and more. Just like when you go on a crash diet and you lose a bunch of weight, the next month, it’s not sustainable, and you add it all back plus 10 pounds. That is how yo-yo dieting works, that’s how yo-yo budgeting works as well.
So let’s look at this. You say you have two DoorDash passes. I like Scott’s idea, get rid of them both.

Rachael:
It might be harder to convince my fiancé, but I’ll see what I can do. One of them, he’s paying for it.

Mindy:
Then let’s get rid of yours. Let’s also look at not the total budget amount for eating out, but how frequently are you eating out? Is it every Friday? That’s okay. Is it every Friday, Saturday, Sunday? Is it every single day for breakfast? Look at where you are eating out. Look into meal planning, which can be hugely helpful to just have something.
I don’t know why it’s so daunting to get up and be like, “Oh, I have to make lunch. I’ll just go someplace.” Well, making lunch at home, if you think about it, you’ve got all the stuff there to find something to make versus, “I’ll just go out.” It takes like 20 minutes to go out and get it and bring it back to your office, or, I guess, if you use DoorDash. I don’t use DoorDash very much, so I don’t know.

Scott:
It takes no time.

Rachael:
It takes no time.

Mindy:
That’s the worst, it takes no time. I’m so behind the times, but yeah, so get rid of the DoorDash pass. Focus on, “This week, instead of getting breakfast out, I am going to make breakfast every single day, or I’m going to shop on Sunday so that I have all the preparations for every lunch that I’m normally eating out. I’m going to have it at home, and I’m going to cut up the vegetables on Sunday so it’s easier to put it all together. Or make sure I have everything so I’m not, ‘Oh, I want that one thing. I’m just going to order out out instead.'”
Make it really easy for you to eat in, and see how much you can cut out without feeling like you’re giving up everything that you like. Some of the other things that I see in your expenses are a higher cell phone bill.

Rachael:
Yeah. I pay for both of my sons.

Mindy:
Okay. Do they have jobs?

Rachael:
No.

Mindy:
Okay.

Rachael:
They’re 12 and 14.

Mindy:
Oh, for some reason, I thought they were older, like 16.

Rachael:
No. Mm-mm (negative).

Mindy:
Okay. So paying for them, you have a family plan. I’m wondering if you have opportunities to use something like Mint Mobile.

Rachael:
I don’t know what that is.

Mindy:
Oh, wow.

Scott:
They are a sponsor for our show, by the way, because we like them.

Mindy:
They are a sponsor of the show. They also are my mobile provider. Is that how you say that? They’re my mobile provider. They offer a discounted rate. I think it’s $15 a month. So I will send you information about that as well. It is mintmobile.com/bpmoney. I’ve got an email that I’m taking notes, and I’m going to send this to you when I’m done.

Rachael:
Thank you.

Scott:
Well, I think the root thing here is, there’s going to be stuff like that in every line item in your budget and there’s going to be… and I would just zero base everything. Even the stuff you think is completely fixed that you can’t change, go in there and be like, “Is it? Can I change that? Can I change…” Because yeah, maybe if you have an unlimited data plan, the Mint Mobile is going to be a little bit less data or whatever, but maybe that’s new difference in your life. If you don’t like it, you can always go back, but you might as well try it for a couple of months and see what you can get out of there.
If that’s saving you 200 bucks a month, good gosh, that’s going to make everything else that much easier. You can bump a portion of that back into your eating out budget and still come out way ahead. So I would just recommend going through everything in the budget line by line like that, and looking for little wins on a ruthless basis. Sorry, companies, we’re going to be cutting these out, starting with DoorDash.

Mindy:
Yeah. I would say that J. Money wrote in Budgets are Sexy, challenge everything. Call up your insurance company and ask them if you can get a lower rate. Can you raise your deductible? Once you have an emergency fund in place, can you raise your deductible for a lower monthly payment or a lower every six months payment? With regards to the phone plan, I want to make sure that you’re not locked into a plan for like two years or whatever, and you just started it last month so there would be a huge cancellation fee. Make sure you don’t have a huge cancellation fee on that phone before you get it all set up, or before you walk away.

Rachael:
Two of my devices, my phone and my younger son’s phone, are up to be… because they were leased and they’re now at the point where I could purchase them if I wanted to or not. So I haven’t made a decision or done anything yet. So this is perfect timing.

Mindy:
Yeah, I would definitely look into see if you can cut that. I mean, even if you’re cutting two phones, that’s going to be huge. But yeah, definitely make a calm decision. Calmly prepare to act aggressively. Scott has been saying a lot lately.
Rachael, I think you have a lot of things to think about, a lot of things to look into your budget. I think once you start really tracking every single dollar, you are going to be shocked at how easy it is to come up with that $300 to put into your bank account. Then if $300 is easy, next month put in 400, and see if you need to pull anything back.
What did Barb say? Save so much that it hurts, especially if you’re just putting it into your emergency fund. That’s easy to pull back out if you need to, or your savings account. “Oh, I need an extra $20,” that makes it easy, but I didn’t know I could save $300. You can do it if you start in the beginning. I’m so excited for what’s going to happen to you in the next few months, and I definitely want to talk to you maybe at the end of summer and see how you have progressed and see where you’re at then. Because I think that you have a lot of opportunities ahead.

Rachael:
Definitely. Thanks so much, guys.

Mindy:
Okay. That was Rachael. I am so excited for her journey, Scott. I know that one of those side hustles she has is going to take off. I love the painting idea, and a zoom paint? Can you imagine? I mean, you probably can’t. What is it? You’re either cerebral or artistic, and you are extremely cerebral.

Scott:
I’m very artistic, Mindy. What are you talking about? I’m very insulted.

Mindy:
I’ve seen your art, and you’re really, really, really awesome in a lot of things. I would not-

Scott:
You’re really cerebral, Scott.

Mindy:
… quit your day job. Scott, if you were going to quit your day job to sell your art, I would not recommend that, if this was the-

Scott:
You know who’s artistic? Your daughters. They are wonderfully artistic. I have got several pieces of art around the office here.

Mindy:
Dephany loves you and loves to make art for you. But I think that Rachael has a lot of opportunity. I think that when we talk to her, I’m really, really hoping that at the end of the summer, we can bring her back in and have her be like, “Yup, I lopped off this much money from my spending and I didn’t miss it at all. Now I’ve got this much in my savings account. I’ve got a fully funded emergency fund. I got the raise at work, and I’m doing so much better.” I really have huge hopes for her, huge expectations. So, Rachael, don’t let me down, gal.
If you would like us to look into your finances, we would love an opportunity to poke around and see where we can make suggestions in your life as well. Please apply at biggerpockets.com/financereview. If you’d like to be a guest on the Monday episode, please apply at biggerpockets.com/guest.
From episode 190 of the BiggerPockets Money Podcast, here’s Scott Trench, and I am Mindy Jensen, saying, come back when you can’t stay so long. Oh, wait, I don’t want to say that to people. Oh, that’s not very nice. I have this list of like see you later, alligators and all of that. I want you to stay so long.

Scott:
They are sticking with it. You just read it. That’s like Mindy’s Ron Burgundy moment. She just reads whatever’s on the paper.

Mindy:
Come back, and you can stay even longer.

Scott:
I’m Ron Burgundy.

Mindy:
I don’t want you to leave. I want you to be with us forever. Thank you for listening. Have a lovely day.

 

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In This Episode We Cover

  • Why side-income streams are so important when building wealth
  • Combining or keeping finances separate when in a marriage
  • Why you shouldn’t liquidate your retirement savings before a divorce
  • Cutting down eating out and making it easier to eat at home
  • Saving on mobile service by going with a prepaid service
  • And So Much More!

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.