Afford Anything - PSA Thursday - Here's a simple framework for deciding how to earn extra income

Episode Date: August 20, 2020

Millions of people are in financial limbo now that the $600 supplemental federal unemployment benefit has expired. The new $300 supplemental benefit is slooowly getting approved by FEMA, state-by-state, through an excruciatingly snail-like process, and you might not have time to wait. This episode will help you take action. We cover how to think about the ways in which you can earn extra income and decide which path is best for you. For more information, check out our guide at https://affordanything.com/extraincome Learn more about your ad choices. Visit podcastchoices.com/adchoices

Welcome to PSA Thursday, an occasional weekly-ish bonus segment of the Afford Anything podcast in which we talk about how to manage money, work, and life in the midst of a pandemic. If you are a new listener to the Afford Anything podcast and you're not familiar with PSA Thursday, here's what you need to know. Number one, these are stripped down bare bones episodes. There's no production value, no intro music, no outro music. We intentionally keep it ad-free. And each one of these episodes not only tends to be shorter than our normal shows, but also focuses on one specific topic. So in the past, for example, previous PSA Thursday episodes have talked about the CARES Act and the way that it impacts student loans. How should you rethink your student loan repayment strategy in the context of the CARES Act, which passed at the start of the pandemic. That was one of our episodes.

We did another episode on how to stay safe as the nation reopens when you're going out and about, when you're using public restrooms, when you're going back to the gym for the first time in months. How do you keep yourself safe? We did an episode about that. We did an episode about the PPP benefits, the Paycheck Protection Program, and offered additional alternatives for entrepreneurs who are looking for an infusion of money so that they can keep their small business going. So all of that is covered in previous PSA Thursday episodes. So you can find all of it at afford anything.com slash PSA Thursday.

Today, we are going to talk about a framework for earning extra income. This issue, the need to make extra income, is particularly timely right now because the $600 enhanced unemployment benefit has ended. So for those of you who are collecting unemployment, or if you have friends, family, neighbors who are collecting unemployment, then as you know, from March through late July, those unemployment benefits were supplemented by an additional $600 per week. Now, this $600 per week was a supplemental benefit on top of normal. unemployment, also sometimes referred to as an enhanced benefit, as of late July, that $600

enhanced benefit has ended. Now, according to a memo from FEMA, the Federal Emergency Management Agency, there will be a $300 enhanced weekly unemployment benefit that will be available, but it will not be available until late August. As of August 19th, FEMA is in the process of approving states for the enhanced federal unemployment insurance benefit. Now, where this gets a little confusing is that each state gets approved, if they do get approved, they get approved on a different date. And so the date in which those benefits go out depends on when the state gets approved. Also, most states are being approved for 300, but there are a few states, including Montana and

North Carolina, that are approved for 400 due to state matching contributions. Now, all of this is according to Forbes as of August 18th, and things are changing very rapidly. so check the news for the latest. But that is background as to why the topic of how to earn extra income is particularly important at this moment. Because many people who are collecting unemployment are currently going through a period of time in which right now, they might be in between benefit supplements. The $600 supplemental benefit ended in July, the $300 or $400 new benefit if it applies to your state, will not get sent out to most people until three weeks after FEMA approves your state.

And so for a lot of people, there's this gap of a month, two months, an unknown period of time in which they're not getting these enhanced benefits. And they could use that money to buy groceries and pay rent or cover their mortgage. So if you or someone you know is in that boat, or if for any reason you want to earn extra income, that is what today's PSA is going to be about. And I'd like to start at a high level by breaking this down in terms of a framework for thinking about the type of extra income that you want to earn. Because there are three forms that this could take. There are opportunities that are typically one-time opportunities or limited time opportunities.

They're one-off deals that give you an immediate quick hit of cash. That's one form of earning extra income. A second form of earning extra income is gig work. or side jobs, things that don't require a long lead time, you can start earning money almost immediately, but there's a ceiling on how much you can earn and you are fundamentally trading time for dollars. But if you need money quickly, that is another opportunity that gets money in the door fast. So that's the second type of income. And then the third type is building some type of scalable, sustainable business, something that has

theoretically unlimited profit potential, something that could scale into being your full-time job eventually, but that may require weeks or months or even years of building a brand new business from scratch and getting it off the ground. And so if you think about these three categories, one being quick cash, the second being gig work, and the third being scalable, sustainable businesses, these categories differ along two variables. One is speed, like how soon do you you want or need this extra cash? And the other is profit potential. How much upside potential are you looking for? And there is a trade-off between the two. You can think of this as a teeter-totter. The opportunities that put cash in your pocket quickly tend to have limited upside. And the opportunities

with the potential for big returns in a few years may not deliver those returns for a few years. And so before you start pursuing opportunities for making extra money, pause for a moment to think about the tradeoff between speed versus upside and where along that spectrum you want to be. A few questions that you can ask yourself. Number one, do you need cash quickly? Are you hurting right now or can you afford to wait? Number two, how many hours do you want to devote to earning more money? Is this something that if you've got a little extra time, maybe an hour a week or something, you'd like to do the thing that's, you'd like to do the thing that's. easy or is this something where you really feel like you can invest a bunch of hours into it

sustainably? Number three, ask yourself, are you looking for one-off opportunities or one-time opportunities that have little to no commitment? Or do you want something? Are you ready for something that requires the long haul? Number four, ask yourself, how much flexibility do you want? Because each of these is going to have different implications for the amount of flexibility that it will give you. I mean, sure, you can make your own hours for all of them, but those hours will be constrained by some outside factors. Like, for example, if you chose to pursue gig economy type stuff, your hours are largely constrained by demand. And depending on the type of gig work that you do, like pet sitting, you may need to work around other people's schedules as well. By comparison, pursuing some one-time, like, quick hit of cash opportunity, there's no commitment.

There's tons of flexibility. but by its very nature, it's a one-time thing. It's not going to bring you a stream of ongoing or residual income. So how much flexibility do you want and what trade-offs are you willing to make in order to have it? That's another question to ask yourself. And then finally, ask yourself, do you have an eventual dream or goal of building something that has the potential to replace your 9 to 5 salary? Would you like to create some type of source of supplemental income that could eventually

enable you to quit your job because if that is what you want, then you're going to be pursuing something much bigger than gig economy work or one-time quick hit of cash opportunities. You're going to be building something for the long run, and that is a fundamentally different headspace than doing something for 15 minutes that's going to get you a one-time hit of an extra 25 bucks. So ask yourself those questions and decide where along this space you want to be. And what we've done is we have put together a list of different opportunities that fit each of those categories. This is at afford anything.com slash extra income and it's a dynamic list that we are going to continually update. So check it now and continue to check back because as more opportunities,

particularly the one-time opportunities and the gig economy stuff, like as more special deals and opportunities and things like that come forward, we will continually update that. The third piece of it, the building a long-term scalable, sustainable business, that's less of something that gets updated frequently and more of an evergreen, like how to build a business. But the first two,

one-time quick hit of cash opportunities and gig platforms that have not yet become oversaturated and have not yet turned into a race to the bottom in terms of pricing, those are the two areas that tend to be more timely, and those are the two areas where I expect the page will be updated the most. So again, all of that is available at afford anything.com slash extra income. And if you subscribe to the show notes for the podcast,

we will email this to you directly as well. Zooming out, the big picture takeaway from this PSA Thursday is that as you think about making more money, recognize the inherent trade-off between speed and scale. That's number one. Number two, recognize that there is, when we talk about side hustles, that's such a broad umbrella word. It's so all-encompassing. There's a huge distinction between leveraging an existing platform, which is fundamentally what gig work is. With gig work, you're getting plugged into a system that already exists. You don't need to build something from scratch. So if you sign up as an Uber or Lyft driver or if you walk dogs through Rover, you're getting plugged into a platform and plugged into a system. and the benefit to that is that you can start earning money immediately, and the benefit is also that it's very flexible, and it doesn't require a long-term commitment.

So those are the benefits to it, but the drawback is that you're fundamentally trading hours for dollars, and there's only so far that you can take it. By contrast, if you were to go in either direction of that, if you were to go into the direction of something that is faster, then sure, you can make an extra $250 for half an hour of your time. We have one of those offers listed on afford anything.com slash extra income right now. But it's a limited time offer and it expires and it's only a one-time deal.

It's not going to give you a recurring stream of income and that's the drawback of it. It's one and done. So it's good for people who need immediate cash, but it's not sustainable in the long run. By contrast, if you were to go on the other side of gig economy work and you were to try to build your own platform from scratch, so you're not leveraging an existing platform, you're building your own thing, you're starting your own business, you're becoming a freelancer or a consultant or a graphic designer or you are starting some type of product or service-based business where you have your own website and you market yourself to potential clients or customers. I mean, it takes a lot longer to get that going. It's not ideal for somebody who needs cash this week.

But if you have the luxury of not being in that boat, if you have the luxury of being able to take some time to build something on the side that's going to have bigger up, side potential and be more sustainable and more scalable, then that's the path that you want to take. So when you talk about side hustles, remember that this is a massive umbrella word that could mean a lot of different things and that does mean different things to different people. And so with this framework in mind, think about what type of side hustle you want based on that combination of your goals and your current circumstances. So that is the takeaway for today's PSA Thursday, which is a framework for thinking about various opportunities to make extra income and a framework for deciding which of those opportunities are worth pursuing and which are not.

Thank you so much for tuning in. Again, we have a bunch of opportunities listed at afford anything.com slash extra income. I strongly encourage you to go there. We have one opportunity that's on there that expires tomorrow, Friday the 21st. So head there today if you're listening to this on Thursday. And if not, if you're listening to this on any time after the day that this episode is released, definitely go back there because this is a dynamic page. We're going to keep updating it.

We're going to keep listing those one-time limited time opportunities. We're going to keep listing gig platforms that have limited time bonus sign-up offers. Sometimes Lyft or Uber has, I remember at one point they had like a $1,000 sign-up bonus. This was a few years ago. Lyft had that when they were looking for new drivers. So anytime that one of those platforms has a big bonus or something, we'll list that on that page. And then we'll also link to a lot of resources for more in-depth learning for anyone who wants to learn how to build a more scalable, sustainable enterprise that isn't probably going to make money right away, but might make money in six months or eight months or a year. That is today's PSA Thursday.

Thank you so much for tuning in. Again, these PSA Thursdays are bonus segments that come out. as needed to talk about one very specific topic related to the pandemic, specifically how to manage your money, your work, and your life in the context of the very unique circumstances of this year. So thank you again for tuning in. My name is Paula Pant. This is the Afford Anything podcast, and I'll catch you in the next episode.