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Never take financial advice from the credit reporting agencies!
I got this e-mail about "seven ways to make money fast!" from Experian of all places, and it cracked me up, as borrowing money isn't "making money" nor is couponing. The article, by the way, is poorly formatted, as it doesn't number these seven things. Why is most of this bad advice? Let's parse it out:
1. Look for Temporary Work: When I was needing cash while in college, I took on part-time jobs, delivering pizzas, tutoring calculus, and working at United Parcel. Only the latter was really profitable (at $8 an hour, nearly what I was making at Carrier). Delivering Pizzas really was just selling your car to Dominos, one pizza at a time. You are not so much making money as converting the wear and tear of your car into cash. I suspect Uber and Lyft would be about the same.
The problem with this idea is that if you have a full-time job already, you may be fired outright if they find out you are "moonlighting" at another job. Also, the long hours at a second job may reduce your work performance at your main job. If you are falling asleep at work, odds are, you won't get that promotion.
This isn't horrible advice, but not very helpful for most people.
2. Try to Limit Overspending: I am not sure what this even means - "overspending" - how is that different from plain old spending? Again, this is good advice, but not a means of making money, but cutting overhead. As I noted before, however, money you save by cutting overhead, does put more money into your checking account, and cutting expenses, unlike income, isn't taxed.
3. Take Inventory of What You Can Sell: This isn't bad advice, either, for the most part. But it has its limits. When I started this blog, I started selling off "stuff" as a way of raising money. It cleaned out a lot of closets and raised some cash. But it wasn't until I sold off the "sacred cows" that I really made any real dollars - and mostly by eliminating the maintenance and overhead costs of owning cars and boats and whatnot.
4. Reduce Your Monthly Bills: Again, cutting monthly expenses is akin to getting a huge raise in pay. Your "disposable" or "discretionary" income may be only 10% of your overall income. If you make $100,000 a year, maybe $10,000 of that is discretionary. If you can cut your bills by $1000 a year, that is akin to a 10% increase in pay - or will feel like it. The bonus is, that additional $1000 in your wallet isn't taxed. They key, of course, is to save that money so it earns more money for you. Cutting your car insurance by $100 so you can buy a new dress isn't saving a goddamn penny.
But of course, you should be asking yourself, if you could cut your monthly bills before, why weren't you doing it? The big savings in cutting monthly expenses happens over time. So if you save $10 a month on something, it only amounts to big savings when compounded over a decade. Get started now, and always be on the lookout for lower cost alternatives.
5. Check for Credit Card Rewards: Oh, now I see where we're going. Experian whores for the credit industry, and if you go on their site, they have all these helpful tips on which kicky new credit card you should get! The problem with this advice is that if you are desperately in need of extra cash, odds are, you are in some sort of debt problem or heading toward one.
Rewards cards can be a deadly trap. You can't spend your way to wealth, and the "rewards" from even the best cards amount to $50 to $100 a month for the average middle-class person who uses that card religiously for all bills and payments. The problem is, of course, that if you don't pay off the balance every damn month, you wipe out those rewards with interest payments, which snowball out of control. The credit card companies are counting on you doing this, which is why they bait the trap with rewards cheese.
I pay off my credit card balance daily, so that bomb is continually being disarmed. I've already lost a limb or two to the credit card companies, so I know how it works. Today, I can play the rewards game. Back in the day? When I started this blog? It would have been financial suicide. When you are totally debt-free, consider a rewards card. But by then you will not be looking to "make money fast" because you already will have it.
If you are desperate for cash and have a debt problem, more debt isn't the answer. Cut back on spending and use a debit card or pay cash even - anything to discipline yourself and get that credit card balance down and paid off.
6. Other Ways to Get Money: Now they go really off the rails. The first few things were stuff I covered in this blog. Helpful, perhaps, but not going to change your life. The big change occurs when you stop buying into the debt culture and stop thinking of borrowing money as an answer to your problems. Borrowed money has to be paid back, with interest. If you are desperate for cash, a loan is a life-ring made of lead - sure to drown you.
The "other ways" they talk about include personal loans (to pay off other debts!) which have staggeringly high interest rates. They also talk about lending clubs, which I talked about before. The key thing here, of course, is those "other debts" you are hoping to roll over into an lower-rate loan are likely credit card debts - at 25% interest. So you see how Experian is working for the debt industry - by persuading you to take on more and more debt as an "answer" to your problems.
0% rollover credit cards I also covered before. Yes, they can work and I have used them. But they usually charge a 4% fee (there's your interest right there) and you have to be religious about making payments so that the entire balance is paid off before the due date and you make no new charges. Most people are weak - they are counting on that. They are sure that you will look at this new source of credit as a means of buying that new barbecue at Lowe's or whatever other unnecessary piece of crap you don't need in life.
Cash advances on your credit card? Financial suicide! Most have 16% interest rates or more. You might as well go to a loan shark.
7. Work on Your Credit to Leverage it for the Future: This is just a bunch of bland platitudes about paying your bills on time and whatnot. Good advice? Of course. So was my Dad's advice to "save your money!" which was nice, but not very specific. If you are the kind of person who needs to "make money fast!" these sort of platitudes are not very helpful. Odds are, you're already late on some bills and your credit is less-than-stellar.
If you follow the "advice" from Experian and take out personal loans and cash-advances, odds are, you'll end up worse off than before, with even more debt.
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So what is the answer? There are no easy answers. You have to make big sacrifices, and what comprises "big" depends on your station in life. For me, it was selling off toys and a vacation home. For others, it may mean selling the hobby car or Harley - the "sacred cows". For still others, it may mean getting a roommate (and not starting something with them so they move out). For many more, it may mean giving up smoking pot, or alcohol, or other drugs (so much financial misery is related to alcohol and drug abuse).
Cutting coupons? Sure, that may save a buck or two - or waste it, if you buy things you don't need just to get a "bargain" - as friends of mine actually do!
No, what you actually have to do is rethink your entire life, and what your station in life is. Money problems often don't "just happen" but happen because we expect a lifestyle that is greater than what we can afford - and an entire industry is set up to facilitate this kind of thinking. Send out for a pizza, and put it on a credit card! $20 isn't a lot, is it? (it is enough to make four of those pizzas at home, a the very least). Credit card debt creeps up over time, until one day, it "suddenly" becomes a crises.
Many pundits report that medical debt is the largest cause of bankruptcy in this country, and no doubt that is true - people declare bankruptcy to get out from onerous debts they can never repay (sorry, student loan borrowers, not for you!). But credit card debts and other personal debts are often just as onerous, but most middle-class people don't want to declare bankruptcy to get out from under them, as they are not insolvent - yet. So they endure this pain of perpetual debt, handing over a huge chunk of their income to the banks in the form of interest payments - for a lifetime.
The key is, of course, they did this willingly, even though they will claim later on it was the bank's fault.
Maybe that is the real answer right there - owning up to our own malfeasance. Once you stop blaming others for your problems. you can address them - and eventually solve them!
