Emergency Fund Destroyed. Back to the Side Hustles?

[CAPSLOCK BANDIT]

There are some members on this site who are far too willing to offer financial advice... The simple answer is that OP has provided far too few details for us to do anything other than speculate, also location and finance go hand in hand.

 

[nicksaiz65]

There are some members on this site who are far too willing to offer financial advice... The simple answer is that OP has provided far too few details for us to do anything other than speculate, also location and finance go hand in hand.

What would you like to know?

 

[nicksaiz65]

Also, after sleeping on it and looking at my budget again, I've decided that it's better/more efficient to put all of my time towards the software job so that I can really excel at it. Even with the debt, I feel that I can grow my savings faster than life can drain them by generating emergencies. We can re-evaluate where I'm at in 6 months.

After I kill some of the debt, my very next financial goal needs to be saving up my first $10,000, or even $12,000. That way, I wouldn't feel so much pressure from these emergencies, and it would be easier for me to pursue the rest of my financial goals. I'll throw that in a HYSA and then keep moving on from there.

$10-12K should be enough to handle basically any emergency, yeah?

 

[Stephen89]

Id focus on reducing your debt and minimizing your expenses.

 

[FlirtLife]

Also, after sleeping on it and looking at my budget again, I've decided that it's better/more efficient to put all of my time towards the software job so that I can really excel at it. Even with the debt, I feel that I can grow my savings faster than life can drain them by generating emergencies. We can re-evaluate where I'm at in 6 months.

Roughly speaking, your software engineering job pays $60/hour while working a restaurant pays about $10/hour. If you want more income, software pays better. Your other thread titled High Paying Job Drains all my Time suggests you don't have an extra 12 hours/week to spend in a restaurant. You should be worried about burning out quickly by working too much. Your second job could leave you tired and performing worse in your software job, and cause you to lose that when your contract is renewed. I wouldn't risk $120,000/year to make an extra $6,000/year.

 

[nicksaiz65]

Roughly speaking, your software engineering job pays $60/hour while working a restaurant pays about $10/hour. If you want more income, software pays better. Your other thread titled High Paying Job Drains all my Time suggests you don't have an extra 12 hours/week to spend in a restaurant. You should be worried about burning out quickly by working too much. Your second job could leave you tired and performing worse in your software job, and cause you to lose that when your contract is renewed. I wouldn't risk $120,000/year to make an extra $6,000/year.

Yes, I think you’re right. If I have all of my time and resources going towards this software job, I’m sure I can perform well at it.

I’m putting away money into my emergency savings and paying down on my debt each month. I’m hoping it will grow faster than the rate at which life throws emergencies at me. If some huge emergency comes up that is greater than my savings, I’ll just have to take out a loan until I can get my first $10K. I don’t like that, but at least with a software income I’ll be able to clean this mess up because I have a big shovel.

To be totally honest, I’m feeling pretty close to burning out already, but I can at least make it to 3 years lol. I’m highly considering taking a 2-week staycation once my contract is renewed.

This post is phrased very well. When you put it like that, I see that you’re totally correct.

 

[FlirtLife]

Sure, ranking my fixed expenses:

1.) Rent
2.) Car Payment
3.) Credit Card Bills
4.) Student Loans
5.) Energy Drinks (this literally has it's own category)

Most of this is going towards debt. I'm definitely not paycheck to paycheck, but I worry that emergencies may come up faster than I save for them.

A year or so ago you earned $75,000/year and now you earn $120,000/year - but you still have no savings. I'd suggest searching for how you spent that extra $45,000/year.

Priority should be paying credit cards down to zero, since they charge the highest interest rates.

If a sudden expense comes up and you can't afford it, you will pay credit card rates for that expense. That's the most important function of an emergency fund - to avoid going into credit card debt. I'd make that $12,000 emergency fund (from another post) your second priority.

That list doesn't have amounts, and you can keep those private. Did you upgrade your apartment and car when you got the much better paying job? Those upgrades can keep your spending high, so that may be worth considering next time you rent an apartment or buy a car. But for now, you're likely stuck paying those amounts.

 

[Mike32ct]

Also, after sleeping on it and looking at my budget again, I've decided that it's better/more efficient to put all of my time towards the software job so that I can really excel at it. Even with the debt, I feel that I can grow my savings faster than life can drain them by generating emergencies. We can re-evaluate where I'm at in 6 months.

After I kill some of the debt, my very next financial goal needs to be saving up my first $10,000, or even $12,000. That way, I wouldn't feel so much pressure from these emergencies, and it would be easier for me to pursue the rest of my financial goals. I'll throw that in a HYSA and then keep moving on from there.

$10-12K should be enough to handle basically any emergency, yeah?

10 or 12 grand is a pretty decent starter (or re-starter) emergency fund.

 

[BeExcellent]

There are a couple of very savvy financially successful posters offering advice in this thread.

I do not carry high interest consumer debt. I went to a cash basis net 30 life decades ago after going through the same debt fiasco in my 20s. I carry one charge card and pay it off every 30 days. Next I focus on mortgage debt pay down on rentals. High interest debt or personal loans are something that are very dangerous but they have a purpose if you are extremely disciplined. I used to have a business line of credit at 9.75%. I used it to buy real estate assets but only when I knew there was a high liklihood I could pay it off on an accelerated basis (within 6 months). I also did short term bank loans (consumer loans) to buy property.

Now I look pretty smart, as my properties are mostly paid off and I have zero consumer debt outside a car loan.

For OP I'd cut out more of the streaming services, cut out 80% of the alcohol, switch to coffee except for a $30 energy drink budget, and work hard at the job.

Doing those things will get you $200/month you can bank. Meanwhile if you are not already, max your 401K match at work. That takes advantage of free money and will build you a nest egg over time. Give yourself a cash amount each month for entertainment ($250 or so). When it's spent, that's a hard stop.

Steel yourself to financial discipline. Life will always have emergencies. Take as much as you can from your paycheck and up your emergency fund.

I vote for pay off your smallest balance first on the consumer debt. That triumph will feel positive. Then you take the funds that had been going toward balance A, and apply to balance B. That way you accelerate (snowball) subsequent debt accounts and dig yourself out.

Then apply that debt payoff money to liquid savings.

Self discipline is they key to success. Get the consumer debt monkey off your back. That is your highest priority.

 

[FlirtLife]

I’m putting away money into my emergency savings and paying down on my debt each month. I’m hoping it will grow faster than the rate at which life throws emergencies at me. If some huge emergency comes up that is greater than my savings, I’ll just have to take out a loan until I can get my first $10K.

I hope you mean paying down credit cards. Your student loan debt is less important than getting that first $10k in an emergency fund. Without an emergency fund, you'll be back paying credit card rates when the next emergency hits.

If you're interested in reading about personal finance, "I Will Teach You To Be Rich" is a solid choice. I read it years ago, and it helped me think more about optimizing savings and cash. It's a top seller on Amazon right now, in the personal finance category.

 

[Divorced w 3]

What would you like to know?

Don’t tell him anything. You’ve given us plenty to help answer what you’re looking for.

 

[CAPSLOCK BANDIT]

What would you like to know?

Well for starters, your 5 year plan? "Not being broke" is not sufficient direction, you need to be able to look past that to the reality you want to work towards.

I could give you all sorts of advice, but if I don't understand who you are, the choices you are making and why won't make sense to me.

You want to plan alongside capability and will, which makes this whole process 10x easier rather than just doing what everyone else does... The plan has to be full of meaning to you, since you'll be the one perpetuating it.

I mean, if your giving financial advice and talking strictly numbers, your only getting maybe half the picture here.

 

[nicksaiz65]

A year or so ago you earned $75,000/year and now you earn $120,000/year - but you still have no savings. I'd suggest searching for how you spent that extra $45,000/year.

Priority should be paying credit cards down to zero, since they charge the highest interest rates.

If a sudden expense comes up and you can't afford it, you will pay credit card rates for that expense. That's the most important function of an emergency fund - to avoid going into credit card debt. I'd make that $12,000 emergency fund (from another post) your second priority.

That list doesn't have amounts, and you can keep those private. Did you upgrade your apartment and car when you got the much better paying job? Those upgrades can keep your spending high, so that may be worth considering next time you rent an apartment or buy a car. But for now, you're likely stuck paying those amounts.

To be fair, I have only had the $120K job for a couple of months lol. As for where the $75K went, it was to vacations and a bunch of sh*t that I couldn't afford.

I should also mention that there are some personal loans in the mix.. I was truly out of control haha. I lump that all together with credit card debt.

And yes, I did buy a car once I got my new job. However, I was in a REALLY bad situation before that because I totaled my old cash car. I'm still working on pulling myself up. Rent has stayed the same.

This situation definitely can be overcome. Every time I look at the numbers, I want to run out and get a side job. But I have to think about the time investment like you said:

Even if I just worked 2 nights a week, that's 8 times a month. Throughout April, May, and June, that's 24 nights. What if I put all that time towards studying frameworks or working on my code? 24 full evenings of code over 3 months would make a SIGNIFICANT, night and day impact/difference on my performance at my main job.

I'm a musician on the side, and when you put the math like that, I'd argue that I need to stop accepting any new weddings or gigs since my plate is already very full. Anything that takes away from my main job that is paying me $60/hour just has to go.

 

[nicksaiz65]

There are a couple of very savvy financially successful posters offering advice in this thread.

I do not carry high interest consumer debt. I went to a cash basis net 30 life decades ago after going through the same debt fiasco in my 20s. I carry one charge card and pay it off every 30 days. Next I focus on mortgage debt pay down on rentals. High interest debt or personal loans are something that are very dangerous but they have a purpose if you are extremely disciplined. I used to have a business line of credit at 9.75%. I used it to buy real estate assets but only when I knew there was a high liklihood I could pay it off on an accelerated basis (within 6 months). I also did short term bank loans (consumer loans) to buy property.

Now I look pretty smart, as my properties are mostly paid off and I have zero consumer debt outside a car loan.

For OP I'd cut out more of the streaming services, cut out 80% of the alcohol, switch to coffee except for a $30 energy drink budget, and work hard at the job.

Doing those things will get you $200/month you can bank. Meanwhile if you are not already, max your 401K match at work. That takes advantage of free money and will build you a nest egg over time. Give yourself a cash amount each month for entertainment ($250 or so). When it's spent, that's a hard stop.

Steel yourself to financial discipline. Life will always have emergencies. Take as much as you can from your paycheck and up your emergency fund.

I vote for pay off your smallest balance first on the consumer debt. That triumph will feel positive. Then you take the funds that had been going toward balance A, and apply to balance B. That way you accelerate (snowball) subsequent debt accounts and dig yourself out.

Then apply that debt payoff money to liquid savings.

Self discipline is they key to success. Get the consumer debt monkey off your back. That is your highest priority.

Can I keep my ACloudGuru? I do have interest in getting another certification lol. Spotify does have to stay too because otherwise I won't be able to be productive. I can cut Hulu though.

I can reduce the alcohol. Honestly, not spamming energy drinks like I have been will make a significant difference in my finances. It'd be the equivalent of working a side job one day per week.

One thing I have been doing right is getting the full employer match when it comes to my 401K. That money comes right off the top of my paycheck, I don't even see it.

 

[nicksaiz65]

I hope you mean paying down credit cards. Your student loan debt is less important than getting that first $10k in an emergency fund. Without an emergency fund, you'll be back paying credit card rates when the next emergency hits.

If you're interested in reading about personal finance, "I Will Teach You To Be Rich" is a solid choice. I read it years ago, and it helped me think more about optimizing savings and cash. It's a top seller on Amazon right now, in the personal finance category.

Definitely not worried about the student loans. Although they are not the best interest rate since they're private, they pale in comparison to the credit cards and personal loans.

I think the credit cards take precedence over the personal loans too, since they are the main thing dragging my credit score down.

I actually read that a while back. It was AFTER I racked up the debt though haha.

 

[Millard Fillmore]

Always pay off your debts first. Only exception I can think of is a mortgage, where you will build equity.

Otherwise, credit card debts and bank loans should be paid off as quickly as possible. Even if you are trying to maintain six months' emergency funds. High interest debt is an emergency. (If you have 5k saved and 5k credit card debt you in fact have nothing - if you pay off today.) Better to have a CC with $0 balance for emergencies and live debt free.

 

[nicksaiz65]

Always pay off your debts first. Only exception I can think of is a mortgage, where you will build equity.

Otherwise, credit card debts and bank loans should be paid off as quickly as possible. Even if you are trying to maintain six months' emergency funds. High interest debt is an emergency. (If you have 5k saved and 5k credit card debt you in fact have nothing - if you pay off today.) Better to have a CC with $0 balance for emergencies and live debt free.

Yeah, other than the basic starter emergency fund of $1K, sounds like the credit cards need to be the very first thing to go. Not only is having them around wrecking my credit, but when the next emergency comes up I can always just put it back on the credit card like you were saying.

 

[AAAgent]

How does your fulltime job not offer dental insurance to cover the tooth? Shouldn't be cosmetic. Anyway's that's besides the point.

Don't listen to BackInTheGame about not paying off the debt. That is the first thing you should prioritize when you don't have your finances in order. Now if you have your finances in order, stable job, savings, etc. You can "manage" your debt but when your finances are out of whack, you need to tackle them head on.

Keep side gig's while maintaining FT job. Suck it up and put in the time. Ditch all extra-curriculars and leisure from dating, eating out, happy hour, etc. Cut them all off to focus on the priority of paying off debt and building up a safety net.

See if you can consolidate debt. Find those short term 6month-12 month interest free credit cards. Transfer your existing debt onto one of those cards to stop the interest from crushing you. Expedite payment on that credit card and when time is running out on that card and you haven't paid it off yet, swap to another interest free card for 6-12 months.

If that is not an option, focus on paying off the debt well above principle payments ASAP.

If you need to move into a cheaper place with room mates, etc. Do it for a year. Lowering rent payments can significantly help.

I did all these things for almost 5 years and paid off $50k in debt to become debt free. It was a really boring/sad 5 years but removing those shackles really changed things for me. It also teaches you responsibility, prioritization, and goal setting which are all equally important in life.

GL.

 

[Millard Fillmore]

If you need to move into a cheaper place with room mates, etc. Do it for a year. Lowering rent payments can significantly help.

I did all these things for almost 5 years and paid off $50k in debt to become debt free. It was a really boring/sad 5 years but removing those shackles really changed things for me. It also teaches you responsibility, prioritization, and goal setting which are all equally important in life.

GL.

Excellent advice, esp. the last part. Housing is usually the single biggest expense for anyone. I did the same thing - moved in with a roommate in a not-trendy neighborhood. Sucked it up and in the end it wasn't so bad. I had almost as much personal debt as you (plus some student loan payments) but each month I was able to buy back my freedom a bit more.

To this day when things are up and down financially I can at least remind myself that I don't owe the banking fatcats shyt.

 

[Divorced w 3]

That makes my point though, most pros can't beat an index fund over an extended period of time. I0% over a 20yr period, even those are atrocious odds. The average retail investor who tries to pick stocks and time markets get smoked and is then left with a mountain of debt. Would bet far less than 5% of retail traders beat an index fund over time which is what they would have to do to beat that I0% avg return

Mutual Funds That Consistently Beat the Market? Not One of 2,132. (Published 2022)

No actively managed stock or bond funds outperformed the market convincingly and regularly over the last five years. Index funds have generally been better.

www.nytimes.com

One thing that has become helpful for the retail investor is the advent of active ETFs. ETFs share their entire portfolio daily on their website by law which you can download on excel form. You can go under the hood now on some top tier strategies that high touch wealth management teams, endowments and even governments used to have access to or you’d have to buy a mutual fund at high fees. You can essentially do your research on the back of the managers research and pick out a couple favorites. Not a great move for everyone but it can shorten the curve a lot if you know what to look for.