Cutting Spending can only go so far until you just need to make more money!
The #BecauseMoney crew are back at it... In this episode Sandi Martin and I talk about making extra money with "The King of the Side Gig" Robb Engen. I promise 32 minutes of glory. Need I say more?
Jackson: And the Hangout is on-air. Hello everybody, and welcome to the Because Money podcast. I'm Jackson Middleton, joined by Robb Engen and Sandi Martin.
It's been a long time since we've broadcasted. And you know what, that's okay because life happens. So here we are again, we're back. We're changing things up a little bit. We're not going to be doing live participation during the show using the hashtag #BecauseMoney, but if you would like to talk about anything that we talk about in this episode, or you get all fired up and you hate something that Sandi says, then you know what, let's talk about that in the Google+ community.
We've got the Because Money podcast, the Canadian Finance Community. We've got that there. We'll be posting this show there, so if you've got any conversation; if you love something Robb says, let him know in that Hangout and we'll go from there.
But yeah, no live interaction. Enjoy the show. We talk about money, and bad money, good money, Canadian money. What we like about money; what we don't like about money. So here we go.
Today we're talking about extra money. How do you make more money beyond your regular job. And Robb, seeing as though he has 43 different jobs, he's going to take it away. So Robb, on to you.
Robb: Well thanks Jackson and it's good to be back here chatting with you guys. I wanted to talk about earning extra money. And you know, oftentimes personal finance; you know, you read the personal finance books and all the blogs. And they all focus on ways to save money, and I find that you can only cut your expenses so far, where you’re not really enjoying life. You know, when you start rinsing out your Ziploc bags and whatever, get everything down to the bare bones. You know to not enjoy life so much anymore.
So I want to focus more on ways to earn extra money and what that's all about. And I'll tell you a little bit about how I do that, and you guys can chime in as well because you're all running different gigs as well. I just find that when I started blogging, the idea was yeah I've heard that you could earn a few extra bucks on the side, and so that's how it started—when my mom and I started Boomer & Echo. We started earning $100 a month or $200 a month. And you look at that and you think, "Hey you know what, that's paying my heating bill" or "that's paying for my utilities," and it certainly feels a lot better than trying to cut $200 out of your budget a month.
So that built up to a pretty substantial side business where all of a sudden it wasn't just my heating bill or my utility bill, but it was now paying my mortgage, and that sort of thing too.
And so, you know, earning extra money kind of came a little bit out of necessity. We had our first child and had to make that decision of will my wife go back to work. Will we find childcare or will she stay home and look after the kids, and for how long.
And so we did a little bit of that math and just figured out that it just wasn't worthwhile—at least at this point—to do that. So how do we replace the $20K-$30K a year as a second income, because now you're living on one. And so I had started the blog not to think I could earn $30K a year, but you have to start somewhere.
And so over time all that has led to other gigs. You know, I write for the Toronto Star and have other side businesses. Now I offer financial planning services as well, so all that has kind of morphed into a pretty decent kind of second income.
So that's where I'm at, but you know, I hear tons of other stories from people who run other things. It's not just about writing a blog. People have all kinds of skills, whether that's photography or contract work, handyman kind of work, or lawn care, snow removal, contract cleaning, you name it. There's all kinds of potential out there to run a business outside of your normal day job.
And so I kind of want to throw it out to you two and ask what do you think about that? Is that a worthwhile task to start looking at your free time and saying, you know, instead of sitting here watching TV for eight hours at night when I get home—or whatever the case may be—can you put a little bit of your skill to work and start earning a couple different income streams?
Sandi: Oh, let me jump in. I mean, of course. When you focus just on—and we talked about a lot—when you're focused just on reducing your expenses, there's really kind of a bottom limit where you kind of have to stop. [laughs] Like recycling toilet paper. I don't know, whatever the worst, gross thing you can think of is. [laughs]
So of course, not only do you want to talk about reducing expenses, you want to talk about increasing your income. So it's a side hustle, or it's actually increasing your skills, or it's trying to find a different job, or whatever that is. I have nothing against increasing your income, and I have nothing against mindfully using otherwise completely useless time in your life; binge watching Homeland. [laughs]
Jackson: Robb's watching Homeland, everybody. We're not sure why, but he binge watches Homeland. There's so many other good shows out there to watch, and he's picking the Homeland. Maybe because it's on NetFlix or something.
Robb: Yeah, that was it.
Sandi: But it makes sense. I mean, mindfully using your time is the same thing as mindfully using your money, right? Time and money to me are the two big tools that we have to accomplish things with. So if you have extra time or you can make extra time. And it's worth it to you, given what you're giving up, then of course go and make some income.
My thing is always that my dad is an executive coach, so a lot of the things that I end up, the phrases that I use are his. I'm just going to like pretend that there's a little "my dad said this" because I didn't come up with it. So he always said that you have to be really clear about the stuff that you will say yes to, because otherwise you're going to say yes to everything.
So some opportunity comes up that, you know, you've started this sort of side business and it's going really well, and that's fantastic. At some point you have to assess where your boundaries are, because I know we were just things before we went on air. If I had to work full-tilt every hour of every day, parenting, wifing—whatever that is—housecleaning, doing my job, and then doing a side income, and I really didn't get a break for whatever length of time, I would be a crazy person. And it's not worth it to me to do that.
My availability is this big, and if I add something to it, I have to take something away. So that something better be really worthwhile.
Jackson: Well, and that's kind of my story on that, Sandi, because I hear exactly what you're saying. When I got into mortgages, I just found that my job being self employed, I wasn't restricted to the government job hourly wage. I was basically able to work as hard and as long as I wanted, and I just got used to doing that.
I was working the six days a week, you know sometimes up to 12-14 hours a day. Why? I loved what I was doing. I was good at it, and it was a lot of fun, so I just worked. I worked hard. And what happened is when you're a single guy that's easy, when you're married, okay yeah it's still doable. I mean I'm still self-employed. I'm working kind of from home.
You add kids into the mix, what happens is your lifestyle gets used to the high spend and you can't pull back. So I would caution anybody who's looking to add extra spend to their wallet, don't get used to that lifestyle or you're going to get used to working that hard, and you'll burn out.
And case in point is exactly what I did. Now it wasn't extra jobs, it was just my job, but pulling it back is way harder, and I wish that I would've learned to live within my limits first and then gone out for a little bit more. But that part that you're talking about, Robb, has to be controlled.
Robb: Yeah, and I like how you talked about the increasing spending. Like doing this to increase spending, and that's something we're really conscious about. Like not getting your lifestyle carried away because you're bringing in some extra money every month. And then use that wisely to further your financial goals.
So now it can act as a bit of an emergency fund in case something goes awry, or it can help me get to my financial independence day sooner, or whatever the case may be. It can further those goals along. And so as long as you're not just kind of keeping up with Joneses, like with yourself, and that extra money that you're earning then, then I think you'll be okay.
Jackson: And I think the problem that some people have is if they've got a full-time job and they're going to add the extra job, you know is kind of like it almost because they're thinking about doing it, and they're thinking about executing it, it's almost like, "Oh well, my reward will be I need this equipment or I need this investment, so I'll just take out a loan at the start." And you get into debt because you've got this grandiose plan of extra working, but then you're just working to pay off your debt.
I’ve done that several times. I mean, man I started a social media consultancy business and well, my computers are too small and I need big monitors. So I go out and I buy. But it's the mindset you can get into and you don't even know you're doing it until you realize what that's not that smart. You know, you're watching something like Shark Tank and they're all talking about never start a business in debt, and then it's like "Oh yeah, it's actually good advice."
I know we've talked about that before, but just don't assume that because you're willing to work the extra hours that you should probably go into debt for it. Work a year and then pay for what you want with the money you've made.
Robb: And on the time side, taking up that extra however many hours of free time. In my case it was like I said, we just had a baby and once she got onto like a normal sleep routine. I hesitate to say it was at the six-week mark because that's you guys will reach across and hit me. It was pretty early, so then come the summertime we're kind of stuck in our own home because you've got your kid sleeping, so you can't really go out or do anything. And there's nothing on TV in the summer and whatever, so I started writing articles. So that's kind of how that happened. So now our kids go to bed at a decent time, and I imagine as they get older and get busier. We're starting to feel that now as they get into different activities, that evening time is getting sucked away.
So I’ve got to start to prioritize. Maybe it's early mornings I'm writing, or sometimes on the weekends, but it started out in kind of a perfect place where I had this free time in the evenings. But I was at home, so what do I do with it. What's a home-based business? Well there's blogging and writing.
Sandi: So what you do though, for the most part, I mean if you have to communicate with anybody you can do it by email. If it's really urgent, I mean it's easy to send a quick email during business hours. You don't have people calling you. You don't have to be sort of available for that. So I wonder how—and obviously that is just me naval-gazing, because I can't really wrap my head around it.
I know people that run kind of a side cleaning business. Well they can't take—they shouldn't—be taking calls for that at their place of business where they do their 9-to-5 stuff. So how do you manage that? Is yours a special case? How do you manage working your normal time and then doing this stuff too?
Robb: Well, when I moved over to the University where I work now, you know, now I’m on kind of government hours. So I go in at 8:30 and I'm done at 4:30; whereas, when I was working in the hotel industry before I started these second jobs, it was a lot more demanding. There was more travel, I was working 60-plus hours a week. And we oftentimes on weekends there is no real set schedule, so whenever the hotel was busy I was kind of there.
Now I've got that pace more controlled, where I live five minutes away from work. I can be home by 4:45, so I’ve got that free time and I use it kind in the morning before I go to work, and then in the evening after the kids go to bed. And that's what I kind of consider my second income stream hours or whatnot.
Certainly, I mean people aren't calling me during work hours, but I do obviously get emails or respond to comments or whatever. So I'll put up my hand and admit to that. It happens, but you bring up an interesting point about other types of jobs where you have to be either physically present or answering phone calls or whatever. That would make it a challenge if you're doing that in conjunction with a day job.
Sandi: How disciplined do you have to be? Like how stringent are your rules around when you're working and when you're not? Can it creep? You know how there's spending and lifestyle creep, is there a second income and second job creep?
Robb: Yeah, I mean there is. I kind of mentioned that earlier, as our kids get a little bit older and busier now, I don't want to be, you know, answering blog emails and working on articles when my kids are still around or I've got to take them to baseball, or whatever. So I don't want to be doing that.
So I do make rules, and one of them is that I'm the first one up, and I'm up for at least an hour before anyone else gets out of bed. So I use that time to do my promotion or to do a bit research or writing, and that sort of thing.
Writing for The Star, that's when I do a lot of trying to source out other contacts. Because they're working in Eastern Canada, typically, so I'm able to contact them at 6:30 my time. You know, they're just getting started out there and so I'm able to connect there.
So it is about prioritizing and trying not to let it creep. And sometimes it does, but for the most part, I try to keep my family time as sacred as I can.
Jackson: Let me jump in here. Robb, let's say somebody's watching this and they've got a full-time job and they're considering adding a second job or kind of starting their own small business on the side, what advice would you give to that person about how to structure the business? Because I know that a lot of people would start the business and then just not have any idea about taxes or anything like that, or to do that. What have you found successful in that kind of area?
Robb: Don't do what I do, I guess. We just kind of jumped in with both feet and just started doing it, and when we started earning some income then we kind of worried about that at that time. You know, when you mentioned like feeling the need to have the bigger computer and the business cards and all that, I'd kind of forego all that. I wouldn't worry about that so much.
When I'm talking about earning second incomes, I'm typically talking about kind of a freelance work, not a I'm working for four hours in the evening stocking shelves or something like that. So it's taking on a job, say it's a web design or something like that, where you can have a client, you can see the project through in your spare time. And then you'll understand how that looks and feels and how that fits into your schedule.
And then you can kind of build that business around that. One example I use is when we started the financial planning side of it, is we really had no idea what we were doing or what kind of response we would get, and so what did that look and feel like when I already have a full-time job, and other blog and writing commitments? Well, it looked like I could probably take on one or two clients a month. And for the most part that's kind of how it's been working. I get other inquiries and whatnot, but one to two clients a month, that feels right and that feels like I'm not infringing on any other part of what I do with my regular job or writing.
I think you just kind of have to feel it out for yourself and see what's comfortable, and kind of avoid—like you said—avoid those extravagant or the extra frivolous purchases that you don't really need, that might be kind of cool but maybe you can get away with just kind of bootstrapping it for a while.
Sandi: What would it take to make you drop something?
Robb: Now I'm at the point where it's kind of weighing the time versus money aspect of it. Where, you know, is this, and the enjoyment of it too, obviously. I enjoy doing the financial planning. I can see myself doing that more than doing writings per se, so I think if that became more stable as in the enquiries were a little more stable and I could guarantee that I'd be getting two clients a month, then I'd consider dropping say a writing gig or a blog or something like that.
That's the trouble with the freelancing is that it's not as stable and as much as it's weird the blogging income has actually been pretty stable for the last couple years, so it's the money I know I can count on. And certainly writing for The Star. I mean, I get paid to write there, so I get paid for as much as I produce. So it's hard to turn down those opportunities versus something where you're kind of dipping your toes in, but you don't really know what you're going expect. So we don't really know what that return is going to be.
But I could probably tell you that I'm tapped out right now. [laughs] I’ve reached kind of "this is enough", so we'll see. If another opportunity came up, I would definitely have to look at dropping something else.
Sandi: I suppose though… Sorry Jackson, I have to ask this question. I suppose though that what you're doing is building potential kind of early retirement streams of income, right? Like if you got to a point where you felt like you had hit or were close to hitting your financial independence day, if we can borrow John Chevreau's nomenclature, then I guess it gives you the option to say okay I've tried all these other things. I enjoy these two. They make enough that I can leave my job and my cushy hours and my pension. [laughs]
Robb: Why would I do that?
Sandi: But if you did, if you ever got close enough that you could start thinking about I want my lifestyle now. I suppose that those give you that opportunity.
Robb: So that's the idea. I mean, going back to the main point, what's the point of earning extra income and whatnot. Again, when I go back to the hotel. I work there 60 hours a week, it was right before the financial crisis, and it hit the hospitality industry really hard. We went through three years of wage freezes, not knowing where your revenue was declining, not knowing how you're going to turn that around.
So three years of wage freeze and then you just have a baby and you're going to go have a maternity leave or EI for a year, and then have to decide whether you're going to have daycare expenses or stay at home full time, and so you've got big decisions now. So I moved over to the university, and it was for more money, but then heck now, the university's under budget pressures and has been under wage freeze for two years now.
So again, that's why I say, like we talk about Gen Y and coming into the workplace, these cushy jobs now where you say you get the job and you get a guaranteed 4-5% raise every year, it's not happening. You know, you're getting temporary work, you're not getting that continuing full-time position, so you're not getting pensionable service if you're in a job that offers that. So you know, you almost need this entrepreneurial mindset, I think, to develop something else; some other marketable skill that you can do on the side, because you just don't know. Gone are these careers were you can last 30 years and then retire at 55 or 60 with a full pension. It's just not going to happen.
Jackson: Yeah, and I'm going to throw this out there. There's something else to watch out for is there's the amount of work that you're doing, but it's also kind of over-saturating yourself with a certain type of work. Like I moved in from brokering into more of a full-time social media marketing. I mean, my position's the VP in sales and marketing. So when I freelance. I kind of tend to freelance in that type area.
So I’ve moved over and started doing this full-time and I've actually let go of some of my contracts because I feel it's been distracting me from my full time job. I'm not spending enough time in my job. I don't have those boundaries, and I want to make sure that when I'm working for First Foundation, I'm giving them my 100%.
So it's not just a simple—I guess what I'm saying is I’ve had to ongoing evaluation of what I'm doing, what it looks like. I mean, it's funny that we say it's like freelancing extra jobs. That's always been my job. Like that's all I’ve ever done is pick up work, you know. Whether it be sales, whether it be house flipping, "Oh that looks shiny. I'll take that."
So for me, I'm always kind of moving up the property ladder, or whatever, and sometimes it bites you and sometimes you're successful. But what I've found very good recently is to really refocus and just really sit in one place, and do a really exceptional job at what I'm doing, and I'm actually loving it. Not saying I'm not going to freelance anymore, but I mean you just have to understand yourself well enough to know.
I mean, there's no use taking on an extra job if that's all you're going to think about, if it's going to wreck what you doing in the day.
Robb: Yeah, and the financial planning gig is a perfect example of kind of getting… I don't think as much as I've started other blogs and whatnot, I don't think I could write any more about personal finance outside of what I'm doing now. And so taking on another writing assignment doesn't really interest me. That's why I like the financial planning aspect of it. While it's still in that stream, it’s has a different feel to it. It's not a chore of, "Oh, I have to put out some content this week," I'm actually helping someone with a problem.
So that's been that's been fun, and I think I would get a lot of burnout from writing. Tom Drake, who runs a Canadian finance blog, he actually offers a service to other bloggers and I should probably take him up on this one day is that blogging or website work you need kind of a bit of the back end expertise of dealing with all your different plugins and the design of the site and how it's running, and that sort of thing. And so he offers a service where he'll partner with your business. He'll take care of all of that on the back end and he's streamlined that somewhat through owning multiple blogs. And then you can just focus on writing, if that's what you like.
So here's another example of someone who's found kind of a need. You've got all these bloggers, but they're burning out because they just can't handle all the back-end stuff. And so he'll take care of that for you because he's figured out a process to do it.
I mean, there's so many different examples of ways to do this, where you can either do it from home or you leverage some other assets that you have. I mean, I'm working with a contractor who's doing our basement and he's got a roofing company, and then he's got the contracting company's doing all kinds of side gigs outside of the normal contracted job that he's got with one of the home builders here.
You know, just countless examples of ways you can kind of broaden your income streams.
Sandi: I would like to broaden my income stream by choosing what other people watch on Netflix. [laughs]
Robb: Now how would that work, Sandi?
Sandi: I would just control your television for you. [laughs]
Robb: I don't think I would pay you for that.
Sandi: Be prepared for Dr. Who. [laughs] Done.
Robb: So one example in the housing industry is that, you know, obviously houses are becoming super-expensive in a lot of areas. So people that are maybe stretching a little bit to buy their home in Vancouver or Toronto or Calgary. You know, the old rent out your basement. What do you guys think of that strategy, as far as an income streaming? You're not doing anything more. It’s kind of more that passive income, but passive in the sense that someone's in your home [laughs] and how comfortable you feel about that.
So I was going to lead into Sean Cooper. I think he writes on Million Dollar Journey. I met him at the personal finance blogging conference in Toronto. Here's a 29-year-old guy who bought a home in Toronto and he lives in the basement and rents out the whole top floor to a family for I think about $1,500 a month. So he's going to pay off his home in 5 years or something like that that. He'll be mortgage-free by 31.
And then he says, "And then I'll live my life" and go to Europe and do all those things. But he's focusing on becoming financially independent as early as possible and live as frugally as possible, and then he's going to go wild. So what do you guys think about that?
Sandi: I think, obviously, the earlier you start the "easier" that can be. If you always had that focus, or you don't wake up and have three children and a mortgage, then that would be a little bit easier. I think what I really admire is just everything about that piece. Everything that he said about himself, he was so focused on what was important to him.
So it wasn't just, "Oh, I'm going to start a second job" or "Oh, I'm going to rent out my house." It wasn't just kind of a half-hearted idea, or everybody else is doing it, or it's a good idea. This is why, this what I'm going to do, this is the length of time I'm going to do it in.
Robb: Yeah, if you've got a purpose.
Sandi: And this is a benefit to me. Yeah, I really admired him for that. And again, I want to go back to you. Your purpose might be I know what best quality of my life is, and it has to have this balance of time to myself, because I'm an introvert. And being able to whatever—spent time with my family. So that means that the kind of income that I can make is limited either to this amount because that the kind of job I can manage, or this because that's just sort of side income that I can get.
I think you have to be really realistic about your own abilities and what makes you the happiest; not in the frivolous sense, but in the fulfilled sense.
Robb: Well, and that kind of brings back to this whole "do what you love, find your passion, and do that for your work." Well that doesn't necessarily need to be your full-time job, right? You can do these types of things. Like I said, I’m getting this fulfillment out of the financial planning that I certainly don't get in my day job.
You know, in the hospitality industry I might have had aspirations to become a CEO of a small hospitality group, or something like that. But then you look at the life of a CEO and you know the travel and the work, and all the stuff that goes into it, and the divorce rate and whatever. And you think okay well maybe that's not where I want to be. And so you can find these passions that are over and above what you actually just need to do to make a living.
To me, that's where I’ve kind found that niche, and I'm happy doing it. For others that might be finding that full-time job that is their passion, but I just have to say keep an open mind to other possibilities in doing stuff on the side.
Jackson: Yeah, as for renting out your basement or renting out part of your house, you know it totally depends on the person. I've got a friend who she currently owns a homebuilder. They built about a hundred homes in Regina. I did a Hangout with her and we talked about her journey, and at 22 years old her grandma had been in real estate for 20 years and helped her get into the first house, on two conditions: one that the rent out the basement, and two that they don't get comfortable.
So every year they would start a new build, and would rent out the basement, and as a young married couple 21-22 years old, they just basically kept going through properties, building some equity, and that's what they used. And now they've got a huge house. They got home building company they kind of worked into it.
And they worked hard, and that worked for them, and she said, "You know, the basement's just a whole bunch useless space. It’s going to store boxes." But if my wife and I were to rent out the basement, my wife's the kind of person who would hate to inconvenience anybody. So I think her quality of life from tiptoeing across the floor just wouldn't be worth it. There's no amount of money that would be worth her always feeling trapped in the house.
I mean, you've got to know yourself, and you've got to just be honest with it. But yeah, I think if you can rent out your basement and you're not worried about waking people up and you're not those kind of people who are going to be freaking out because somebody's coming home at two in the morning, then yeah, it seems like wasted space.
Now whether or not I trust renters, that's a whole different game.
Robb: At least you're there though. At least you're in the home.
Jackson: To me that would be different. You'd probably want find somebody that you know, that you can kind of get along with; there's some rapport there. But I mean, I've got a house that's been sitting on the market for close to four months now, vacant, and I'm going to have to put a renter in there. This is one of the scariest things I've ever done because man, I don't know, I just don't trust renters. So we'll see how that goes. But I just want to cover my costs. This isn't a money thing. This is a how about we don't sink me anymore.
Sandi: Well I was going to borrow a phrase from Paula Pant, who writes Afford Anything. I think it goes, "If we talk about time and money being assets," she always says, "You can afford anything. You just can't afford everything." I think if you apply it to both time and money, at some point you're going to find a balance. As long as you know both of those things, right?
Robb: Yeah, and you know when we had Robb Carrick on here and we were talking about Gen Y and problems there. But I don't think it just stems to that. We were talking about seniors, or people working later in life and not retiring at 65. They're going to have to work until they're 70, so I really think that people need to think entrepreneurally, think about other marketable skills that they have outside of a traditional day job.
Maybe it's renting your basement. That's not a marketable skill, but it's something that can bring in extra bucks. You know, developing some other kind of talent you can do. But that, like Sandi said earlier, that you could see yourself doing when you reach your financial independence. Because gone are the retirement days where you're just going to sit around on a beach or sit around at home. People are more active, they're living longer. But you want to find something to do and get back in your community or help out in a consulting capacity, or whatever.
So I think if people start to think more like that and get out of this traditional mindset of, "I'm going to get my union job and I'm going to go to work for 30 years and then retire," that's probably not going to happen anymore, and so I just encourage people to kind of think with that open mind about entrepreneurship, and using a marketable skill to get themselves further ahead and so they don't have to work until they're 75.
Sandi: End with that. [laughs]
Jackson: I think with that, we're done. We actually had a viewer. We didn't even publish anywhere, but somebody was watching the whole time. So hello, whoever you are. Thanks for watching.
But now, we're out of here. Good-bye.