Side Jobs To Make Extra Money: Pizza Delivery Driver?

Being frugal is popular again, as is making some money on the side. Yesterday, I saw what I thought was the perfect definition of “recession”. It was a current generation red Audi S4… with a Papa Johns sign on top. I wasn’t quick enough to snap a picture, but here is my artist’s rendering:

Is there any way that such a job could even cover the depreciation on this $50,000 car? I’ve worked as a restaurant cashier, host, and even drive-thru window person, but have never done pizza delivery. But my friends have, so I asked them for their experiences. I also found a few interesting discussions online about the job here and here. In fact, pizza delivery even has its own Wikipedia entry. Let’s take a peek into the lifestyle of a “food transportation engineer”…

The Pay
The compensation varies, but a ballpark number seems to be minimum hourly wage + ~$0.75 per delivery to cover car expenses + tips. You pay for your own gas. Some places can pay under minimum wage by treating you as a waitperson since you technically get tips. Other places will pay car expenses per mile. If your pizza parlor charges a delivery fee, you will probably get a cut but your tips will probably go down as well. A rough average for tips is about $2 per delivery (10-15%). However, tips can be hit and miss, and can also depend on things like the day of the week and neighborhood. Surprise! Many ex-drivers say that residents of upscale neighborhoods are the worst tippers.

Back of the envelope calculation: A busy 6 hour night shift at $7 an hour plus 6-10 deliveries/hour x $2 tip per delivery is about $115-$165 gross. (I’m leaving out the per delivery charge because it supposedly offsets car costs, though most drivers say it doesn’t cover all of it.)

(Aside: It’s funny how all my friends will probably remember their big tips until the end of time. I still remember my $20 tip from working as a parking attendant almost 10 years ago.)

Pros
Pie shops are always looking for delivery people, and the entry requirement is a car and a valid driver’s license. You can work flexible hours, including evenings and weekends in addition to your day job. You can also quit whenever you want.

Cons
Lots of short, stop ‘n go trips will kill your car and cut into your profit. Most people have beater cars, which is why the Audi was also surprising. Factor in the cost of more frequent oil changes, higher mileage bringing your car value down, replacing tires more often, and higher overall maintenance from wear and tear. Note that your personal car insurance might not cover accidents that occur while working. Also, gas prices aren’t getting any cheaper!

Drivers-sales workers, which includes taxi drivers and pizza delivery workers, are the 4th most dangerous job category in America, right up there with fishermen, timber workers, and construction laborers.

You are often expected to help out around the restaurant in between deliveries, including things like taking orders, food packaging, garbage disposal, and other tasks.

The Fringe Benefits
For some reason, pot and pizza seem to mix very well – from the managers to the workers to the people buying the pizza. I’ll leave it at that. And although illegal as well, taking in much of your income in unreported cash tips can be very tempting for tax evasion. Oh and of course… free pizza!

Nine Traits Of The Middle-Class Millionaire

Russ Alan Prince, author of The Middle-Class Millionaire, has been trying to understand a new sub-class of Americans called the “working rich”. Prince defines them as those with net worths between $1 million and $10 million, but who still work for a living. After conducting a survey of both middle-class millionaires and those just plain “middle class” (defined as having income of $50,000 to $80,000 and net worth under $1 million), he distilled these differences into 9 traits for Forbes. Apparently, middle-class millionaires:

  1. Work Longer. The average middle-class millionaire puts 70 hours a week into the job. They take 12 vacation days a year, seven fewer than the average middle-class worker.
  2. Value Networking. More than 60% say knowing “many, many people” is very important in achieving financial success.
  3. Take Risks. Over 90% of middle-class millionaires admit to having made a major career or business decision that had a bad outcome.
  4. Avoid Vanilla Corporate Jobs. Over 80% own their own business or a have a stake in a partnership.
  5. Do It For The Money. 74% say that choosing a career “for its potential financial rewards” is very important to achieving success.
  6. Don’t See Themselves As Rich. Fully one-third of those worth $1 million to $10 million think of themselves as middle class (the other two-thirds consider themselves upper middle class). Meanwhile, 21% of middle-class people (making $50,000 to $80,000 annually) call themselves members of the upper middle class.
  7. Put Family First Over Community. The values the mass affluent place the most importance on are ethics, responsibilities to loved ones, parenthood and children’s education.
  8. Pay For Help. Half of them have hired personal or career coaches.
  9. Put Family First In Vacation. Over 60% of middle-class millionaires say that spending time with family is an important component of a vacation. By contrast, only 28% of middle-class workers think so.

Overall, there are some interesting differences. But I personally don’t see these as a “how-to” template – There’s no way I’m consistently working 70 hours a week – the whole point of being smart with money for me is to work less. Also, I feel like some information is missing. Are working millionaires older than average? Being a working millionaire at 30 is a lot different than at 60.

What Are We Saving For, Anyways? Our Life Goals and Retirement Plans

I’ve talked about this in bit and pieces under the Goals category, but I thought I should organize our life goals into one post. Hopefully, this will outline our priorities and shed some light on why we choose to do the things we do.

First, I’d like offer what I am afraid people think our life goals are:

Incorrect Goals

  1. Find the highest paying job possible. Work long hours, but tolerate it for the money.
  2. Live a very spartan lifestyle, with minimal luxuries and worrying about money constantly.
  3. At age 65, abruptly stop working so hard, finally relax and begin enjoying our life. Hopefully live long enough to enjoy this period.

In fact, that’s not what we want at all:

Actual Goal #1 – Finding A Job That Fits
If your going to spend almost 50% of every weekday doing something, shouldn’t you enjoy it? Sure, even great jobs have their challenges – bureaucracy, boring meetings, office politics, the occasional annoying co-worker. But finding a job where you don’t dread getting out of bed in the morning was a huge priority for me. It took a few different degree programs, a couple of resignations, some stressful interviews, and several rejections, but we are definitely making progress in finding work that is challenging, enjoyable, and reasonably well-compensated.

I would also add that having a simple lifestyle initially allowed us to take some risks in order to get where we are now.

Actual Goal #2 – Less Work, More Life
[Read more...]

Framework For Thinking Through Personal Finance

(Warning: The following post is very stream-of-consciousness and written on very little sleep.)

While doodling today (I doodle a lot) I started thinking about money and how it such an overwhelming issue at times. I read so much advice from so many different directions, my head starts to spin. I ended up drawing this:

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Basically, the idea is that if you want more money, you should focus in on one of these three areas:

Spend Less
Either through buying less goods and services, or by finding a lower price for the same goods and services, one can spend less money each month. Much of this is psychological, as most of what we buy are “wants” and not “needs”. Long-time habits and deeply ingrained notions may need to be broken. Priorities need to be consciously decided. However, there comes a point where it is simply not possible to spend any less.

Invest Better
With the money that is saved, one would want to make it grow as much as possible. Here, I am focusing more on passive investments like stocks, mutual funds, bonds, or gold. There are many competing theories as to whether skill is a factor in picking stocks. Personally, I believe that the markets are mainly efficient, and that “beating the market” is exceedingly unlikely. All that can be done is to maximize your risk/reward ratio. Therefore, there is also a maximum value on how “well” we can invest.

Earn More
This is done via work, either through being an employee, or starting your own business and becoming the employer. Ways to advance in your career include more education, better interpersonal skills, or otherwise achieving positive results and getting promoted. Other more individual ventures include real estate investing, building a business with employees, or creative works that produce “passive income”. These come with additional risk of losing money, but also offer added upside.

Priorities and Diminishing Returns
I feel that the first two, Spending Less, and Investing Better, should be the first to be addressed. If very little attention has been paid to these two areas, a lot of progress can be made. Of course, it can probably be a lifelong process to make sure these things continue to be taken care of. Lots of energy can be spent trying to optimize both (!). However, at some point, I think there will be diminishing returns. When you start considering about whether you should flush the toilet every time you use it in order to save water, perhaps it’s time to focus on other things. :D Similarly, there is only so much I can make from maximizing bank interest and picking a optimum asset allocation. Of course, if you reach a happy place already, you don’t even need to Earn More.

In a way, I think Spending Less and Investing Better are appropriately located at the base of the triangle. After building a good foundation, you can start taking some risks in the Earning More area. I think for most people this is the hardest part. It can be very hard to increase one’s salary if they feel they are stuck in their current career. Maybe they are comfortable already. Taking classes, switching jobs, it can be very stressful. On the other hand, it is also the one with limitless boundaries.

I know I already discuss these things on a daily basis, but I think it can also be good to methodically examine one’s progress in each of these areas every so often.

How Prestigious Is Your Job?

US News has an article on The Most (and Least) Prestigious Careers using data from a Harris Interactive poll:

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The article notes that the least prestigious jobs tend to be higher paying than many of the more prestigious jobs. I did find it amusing that “real estate agent” was on the bottom of the list, even below “actor” and “accountant”. Are people grouchy about their house value dropping or what?

Personally I don’t really place prestige very high on my list of important factors in choosing a job… I usually just tell most people I do “stuff with computers” and they just nod and move onto something else. But here’s a good time give a shout-out to my friend Tom who just graduated from Fire(fighter) Academy!

Life Updates: Moving, New Jobs, New Housing, And Clutter

Whew! I’ve slept in seven different beds so far in the last two weeks, not including airport lounges. How about some updates?

The Big Move. Sadly, we no longer in Oregon. We are leaving a great city, great food (tachos and microbrews!) and even greater friends. Luckily, we managed to secure a very generous relocation package from our employer, complete with full-service movers that packed almost everything for us, from the dishes to the furniture. The bad news is that we had a lot less incentive to properly shed ourselves of all our clutter, and instead it’s coming with us. :( I’m keeping our exact location vague for privacy reasons, but I’ve hinted before that it has a high cost-of-living and is near the Pacific Ocean.

New Digs. We are actually going to be staying in a relative’s extra rooms for now. We have been living out of suitcases for a while now and it has actually been nice, so the plan is to keep living as such for as long as we can. If we don’t find any acceptable houses to buy, we will then start to look for another house to rent. Our biggest problem currently is trying to convince our relatives to accept money from us!

New Jobs. Soon after we arrive we will be starting our new jobs. Again I won’t name our employers, as sharing detailed financial information anonymously online is one thing, but sharing them with co-workers is another. I will reveal that we will now both be making six-figure incomes, and they are in categories listed in my six-figure salary survey results. Accordingly, you will be seeing a boost in our monthly net worth changes.

I’m 29 years old now. I know the number shouldn’t matter, but I’m sort of happy that all these things have happened before I turned 30. We are not millionaires or anything spectacular, but we are settling down somewhere for the long haul, surrounded by family, gainfully employed, and moving forward. What more could one ask for?

Suze Orman: Tips For Getting Paid What You’re Worth

While traveling today I was reading in a local newspaper an article by Suze Orman (couldn’t find it online) about how to close the wage gap between men and women. The tips to getting a higher salary were equally applicable to everyone, so I took some quick notes:

Don’t expect them to recognize you automatically. Seriously, you may think you are on the same page as your boss, but if you don’t talk about it specifically, you may be terribly disappointed. I’ve seen lots of coworkers come out of their performance reviews in shock.

Make goals and document your accomplishments. Everything is driven by numbers these days. Work with your boss to identify goals, and then record the steps you took to reach them, and which ones you accomplished. Your boss will likely need to justify any raise to his/her boss as well, and concrete reasons help. I think this is critical.

Argue your case, and don’t be afraid to ask for a future commitment. If you don’t get what you want even after stating your case, discuss reasons why they refused, and ask “what would it take next time” to get what you feel you deserve. Get a commitment that if you reach certain benchmarks, then you will get that 10% raise or whatever.

Be prepared to quit. Sometimes you just can’t see eye-to-eye with a company. While it is often easier to find a new position while still at your current one, having a healthy emergency fund can also give you the flexibility to avoid settling for another dead-end job.

As I’m going back to being a W-2 worker again soon, I’ll definitely keep these tips in mind.

Father’s Day Thoughts: What Are You Working For?

I don’t mean to be a downer on this holiday, but I still want to point out the results from CareerBuilder.com’s 2007 annual Father’s Day survey of full-time working fathers:

  • 27% of working dads say they spend more than 50 hours a week on work and nearly 1 out of 10 (8%) spend more than 60 hours.
  • 38% of them would take a pay-cut to spend more time with their kids, if given the choice.
  • 25% of working dads spend less than one hour with their kids each day. 42% spend less than two hours each day.

It’s sad that some fathers wish they could cut back on hours but can’t.

My father worked long hours to provide financial stability for our family, and I will always appreciate that. I learned from him to respect hard work and the importance of really finding your own passion. However, I was bitter about what I felt was being put on the back burner to his career pursuits for many years, and that experience has always shaped my career outlook.

While it sometimes it may seem like I’m solely focused on making money, I’ve actually made an additional rule for myself: I can work crazy hours now, but when I’m a father, I’m not working more than 40 hours a week no matter what. My actual goal is to work less than 20. Hopefully I can properly share how I am closing in on this goal in the next few years by developing the right skills and and keeping the consumerism down.

Will You Make More Money Than Your Parents? Does It Matter?

Both the Wall Street Journal and CNN Money recently ran articles about a new study that concluded that American men in their 30s are earning less than their father’s generation after adjusting for inflation.

In 2004, the median income for a man in his 30s, a good predictor of his lifetime earnings, was $35,010, the study says, 12% less than for men in their 30s in 1974 — their fathers’ generation — adjusted for inflation. A decade ago, median income for men in their 30s was $32,901, 5% higher than 30 years earlier. Ms. Sawhill said she isn’t sure why men’s wages have stagnated. “It seems there’s been some slowdown in economic growth, it’s possible that the movement of women into the labor force has affected male earnings, and it’s possible that men are not working as hard as they used to.”

“The expectation that each generation will do better than their parents has become a fundamental part of what we call ‘The American Dream,’” said Morton. “But this new analysis suggests this bedrock belief may be shifting under our feet.”

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The problem with statistics like this are that they really don’t tell us anything. Maybe more men are staying at home to take care of the kids, or are otherwise choosing to earn less money to balance work and life. Maybe the government’s method of measuring inflation is inaccurate. Maybe it’s due partially to globalization. Maybe it’s simply supply and demand – families as a whole are making more to dual-income households. Maybe the blue-collar jobs don’t pay as well as they used to. Maybe a 30-year old these days is more likely to have spent an extra 5 years “finding themselves”. Don’t people get married a lot later these days versus 1974? Ten different people could read these articles and come up with ten different reasons for the income decrease based on their own personal beliefs and experiences.

As for me, I don’t really get why it even matters what my father earned? Poor, rich, whatever, all we can do is see what challenges exist now, and work to meet them head on. Even if we earned 50% more than our father’s generation, I don’t see how that would change my behavior. It just creates excuses and distractions. Am I missing something?

My Favorite Commencement Speech

It’s graduation time again, and I’ve heard more than my share of cheesy commencement speeches in my life. But here is one by Steve Jobs that I really enjoyed.

Here is the text of the speech as well, but Jobs is a good speaker so I’d recommend listening to it. Here’s the Cliff’s Notes summary:

You have to trust that the dots will somehow connect in your future. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma ? which is living with the results of other people’s thinking. Stay Hungry. Stay Foolish.

Weird fact about me: Even before hearing this speech, I would think about my mortality in order to keep things in perspective during stressful times. It really helps to strip away the fluff, and helps you do scary things like change career directions or ask that pretty girl or boy down the hall out :D

Hello Six Figures! My Inexperienced Thoughts On Careers

Even though this blog is about money, and the source of most people’s money is from their jobs, I don’t really talk about careers that much. One reason for this is because I’m not experienced at the corporate game. I’ve never reached the point in the corporate ladder where I got to boss around others. Why listen to me?

Another reason is that I believe one’s salary is not necessarily related to how smart they are, or even how hard they work. Some people are lucky, in that they love to do something that already makes a lot of money. Maybe they love investment banking, and all the numbers, long hours, and competition that goes with it. Others have tougher decisions. Maybe you like working with under-served populations and being a social worker. However, you’ll also have to accept that living in a penthouse loft with a view is unlikely to happen. I’d love to be the newest host on Globe Trekker, but I don’t think I have the talent for it. I think striking a good balance between these three factors is critical to a happy life:

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However, once you do decide on a career path, learn everything you can. This could be via an apprenticeship, graduate school, or on-the-job training. Don’t just sit around and wait for things to happen for you. People making a six figure salary have one thing in common: specialized, in-demand skills. (I bet “people skills” count too.)

Also, I’ve noticed that with couples you can take the balance thing one step further. For example, if one person is happy with a stable professional 9-5 job, that might provide enough stability for the other person to pursue riskier activities like starting their own business or switching careers. Otherwise, the person by themselves may not chose to take that risk, for fear of loss of the sole paycheck or losing group healthcare benefits.

Finally, it’s not what you make, it’s what you keep. Of course, it’s also a lot easier to keep more if you make more. On that note, when late summer comes around, don’t be surprised if our net worth charts show some even bigger increases. :D We both now have full-time jobs lined up and both of us have the potential to earn annualized incomes in the six-figures. Unfortunately, we are also moving an area with a cost-of-living that is over 30% higher than where we are now, and housing costs that are 300% higher. So I’m not entirely ecstatic. Looking at houses online is even depressing :(

Six Figure Salary Survey Results: Who’s Making $100k?

Two weeks ago I asked people with six-figure salaries to share their stories. There was a great response, and I wanted to both summarize and add to the discussion some more.

$100,000 Isn’t That Much… Is It?
Many people expressed that $100,000 is simply not very much money anymore, especially in certain urban areas like the San Francisco Bay Area. I went out to find some numbers to back this up.

Initially, I quoted a study that stated that only about 5% of individuals in the United States made more than $100,000. But if you take into account entire households instead, 16% of them nationwide earn over $100,000. However, in the San Francisco Bay Area almost twice as many households (31%) made that much. Here is a graph from Wikipedia that compares the income distribution among Bay Area households to the national level.

Income Distribution

Having almost a third of households over the $100k mark would definitely skew perceptions. This is supported by the CNN Cost of Living Calculator, which says that earning $100,000 in Atlanta is comparable to earning $172,000 in San Francisco. Put another way, earning $100,000 in San Francisco is comparable to earning $58,000 in Atlanta.

That’s a bigger difference than I thought. Still, remember that the 16% and 31% figures are household figures. Also, the majority of the people that I know who work in San Francisco don’t own houses there. In the end, while making $100,000 as an individual may not be considered “rich” in certain areas, there is still no way it can be considered “poor”.

Who’s Making Six Figures?
Based on the completely unscientific comments, I made a chart showing the the breakdown of six-figure earners by job description. The categories were all very general, and some were very tough to pigeonhole. For example, what is a self-employed software project manager? Tech? Small Biz? Management?

Pie Chart

What does this chart show? Really, not much with regards to specific professions. My two takeaways were that (1) there is a very wide variety of jobs that can make a healthy salary, and (2) you need a useful skillset and effort. Nobody responded that they simply moved papers back and forth, or that they coasted into their position. Everyone needed some combination of talent, passion, ingenuity, education, and hard work to get to where they are now.

Who Cares?
Really, this is not to suggest that making $100,000, or $200,000, or whatever, should the primary goal for anybody. As with many things, it is about balance. Many folks noted that they used to make more money, but now make less but are happier overall. Others noted the high debt levels and long education (and thus missed salary) that come with certain professional careers.

Also, we didn’t focus on the total compensation package, including health insurance, stock options, pension benefits, or other perks. I know plenty of lower-paid state workers that have enough years under their belts to get both guaranteed pensions and health insurance during their entire retirement. Think of how much that will be worth! This was mainly an exercise in curiosity, and I’m glad I did it.

Finally, it’s not how much you earn, but how much you keep.