As I have mentioned in earlier posts my income is by no means above average. I make $40k a year and am pretty much able to cover all of my living expenses, investment/retirement accounts, and have a little bit of pocket change left to play with at the end of each month. I currently max out my Roth IRA annual contributions and allot 8% of my gross income to my Government TSP (my 401K plan). Fortunately, since I work for the government I know exactly how much I will be making in one, two, five, and ten years as I am on a career ladder and I know exactly what my annual pay increases will be. I don’t plan to alter my investment account contributions much in the future (maybe a slight increase in my 401K contribution). The way I am investing now even at a meager 40K salary I will have millions waiting for me when I retire, with inflation taken in to account over the next 40 years I will still have plenty of money waiting for me when it comes time to throw in the towel. Like most renters, I hate the idea of throwing away my money in rent every month when I could be investing it in a home that I own. But with me contributing nearly 20% of my gross income in to my retirement accounts I dont have much left at the end of the month to put towards my “Buying a house” fund. There are three quick solutions to this problem…
1) Contribute less to my retirement accounts so I can save more for a house. Not really an option since my younger years are the most important time for me to invest to secure financial freedom in my 60’s
2) Get a job that pays more. Wouldn’t it be nice if life was that easy?! I love the job I have now and I like knowing that I will double my salary in three years with the government. Sure I would be open to jobs that wanted to pay me $70K+ now, but I dont anticipate that happening…its just not realistic, at least right now its not.
3) Get a second job. This is by far the most reasonable way for me to save for a house over the next 5 or so years. Fortunately, I am pretty good at math and science and have discovered most people aren’t. I decided to make my second job be in home tutoring for high school students. I get to make my own hours, charge whatever rates I want, network and meet some rich families (because thats who generally pays for tutoring), and I actually enjoy doing it. I currently charge between $30 to $40 an hour for tutoring. I tutor between 7 to 12 hours per week. That means I basically have an extra $1000 a month that I get to put directly in to my emergency fund and house fund. Its amazing what that money can do when all my expenses are covered by my government salary. I put it in to a high-yield online savings account where i can get between 3%-5% depending on current rates. With my tutoring income, and as I receive my pay grade increases with my job, I will be able to save between $50k and $70k over the next five or so years for a house.
So what about you? Do you wish you had just a little bit more money coming in every month? Why don’t you consider getting a second job? Even if you work at a mall 10 hours a week (two five hour shifts) and make minimum wage thats $3,640(AGI) extra dollars at years end! Go out there and pick up a second job doing something you enjoy once or twice a week and enjoy a couple extra bucks in your pocket each month!
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