Ryan Ermey: Whether you're trying to make ends meet or just want a little extra walking around money, you could probably use a SideHusl. Today's interview with sidehusl.com editor Kathy Kristof should get you on track to earning cash on the side, whether you're a skilled worker or just someone willing to walk a few dogs or rent out your house. On today's show, Sandy highlights tax breaks for caregivers in honor of Mother's Day, and we talk dividend stocks and student loans in a new game of financial fact or fiction. That's all ahead on this episode of Your Money's Worth. Stick around.
- Episode Length: 00:30:16
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Ryan Ermey: Welcome to Your Money's Worth. I'm Kiplinger's associate editor, Ryan Ermey, joined by …
Sandy Block: Excuse me-
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Ryan Ermey: ... senior editor Sandy Block. Sandy, how are you?
Sandy Block: I'm good. Not promoted but still good.
Ryan Ermey: How about that? I'm going to mess it up at least five more times as we get going here.
Ryan Ermey: So, today is the last episode that we're going to record before Mother's Day, and we had thought about doing something like how to score deals on flowers, or something like that, but honestly, those don't exist, so we're going for a little bit more substantive Mother's Day related advice.
Sandy Block: That's right. And first a little story about my mother. When she started out as a newspaper editor in the small town where I grew up, there were actually two newspapers, and her male counterpart was paid more than she was even though he didn't have as much education or experience, was nowhere near as smart as she was, and when she inquired about it, they said, "Well, he's a man and he has to raise a family."
Ryan Ermey: Geez.
Sandy Block: So, now, if you did that these days I think you would probably get hauled into court, but the fact of the matter is that there is still a gap between what women make and what men make, and there's all kinds of theories as to why that is, but a big one is caregiving. Women are still responsible for the bulk of taking care of not only children, but aging parents, and that often causes them to step out of the workforce and leads to overall lower earnings over time.
Sandy Block: So what I thought I'd talk about today are some tax breaks. I mean, dads need to step up, right?
Ryan Ermey: No doubt.
Sandy Block: Dads need to help out. Everyone needs to help out. We need better choices for child care, but in the meantime, there are things that families can do to lower at least the financial burden on women and perhaps help narrow the wage gap.
Ryan Ermey: So, I think most parents are aware that they can claim a child tax credit.
Sandy Block: Right. There's a child tax credit worth up to $2,000 per child, and we've talked about that in other podcasts. What you may not know is that you can also claim a credit up to $500 for other dependents, and most likely that might be an elderly parent that lives with you. Now there are some rules about this. Basically you have to be responsible for almost all of the parent's care and finances.
Ryan Ermey: Sure.
Sandy Block: But it is a $500 credit, and again, a credit is a dollar for dollar reduction in your taxes, so if you are taking care of an elderly parent, particularly if that person is living with you, you want to check that out and see if that's a tax break that you could take advantage of.
Sandy Block: If you're a single mom, or dad, but we're talking about moms today.
Ryan Ermey: Happy Mother's Day.
Sandy Block: If you're a single mom and you pay more than half of household expenses, consider whether you can qualify to file as head of household when you file your tax returns versus filing as single. This gives you a larger standard deduction, a lower taxable income, so most likely you'll get a larger refund, again. You need the money, right?
Ryan Ermey: Right. So, you've also mentioned that caregiving comes with an enormously high cost and it could be a deterrent for some people from going back to work. But you say that there's some sort of cost benefit analysis that you have to do.
Sandy Block: Right. I think one thing that happens is some women in particular don't go back to work because they look at the high cost of childcare and they think, "It's just cheaper for me to stay home." And I understand that analysis, but in the long term, that can hurt your retirement savings, it can hurt how much you're going to get in Social Security, particularly if your marriage doesn't last. There's a high rate of poverty among divorced women because they stepped out of the workforce and they can't rely on their ex’s income when they retire. So, I think it's helpful to look at ways that you can stay in the workforce and there are tax breaks for childcare. Depending on your income, you might qualify for the child and dependent care tax credit which covers up to $3,000 in childcare expenses for children under 13.
Sandy Block: Another one that we like and we write a lot about is, if your company offers it, it's a flexible spending account for dependent care. This works like a health care flexible spending account. You put that money into a pre-tax account and then you can use it to pay all kinds of expenses for a nanny, pre-school. You can even use it to spend money to pay for summer day camp which, as I understand it, could be quite expensive.
Ryan Ermey: Oh, yeah.
Sandy Block: So, look into these options. The final one I want to mention is something we also write about a lot, particularly around tax time, which is a spousal IRA. Ordinarily you have to have a job with earned income to contribute to an individual retirement account, but if you're married and you are the stay-at-home spouse and your spouse has earned income, he or she can basically contribute to your IRA.
Ryan Ermey: I see.
Sandy Block: It's your... even though, even if your spouse puts the money in, it's your account. It's your IRA.
Ryan Ermey: It's individual in IRA.
Sandy Block: Yes, that's right. So no matter what happens to the marriage or anything else, that's your account. And this year, if you're under 50, you can put up to $6,000 in an IRA, up to $7,000 if you're 50 or older, so again, this helps. I mean, it's a small thing but it helps close the retirement gap for people, usually women, who take time out from the workforce to care for people.
Ryan Ermey: So you're saying, doing that might be actually pointing it out for the flowers.
Sandy Block: Well, I say, I think you're still on the hook for brunch, dads. I don't think mom is going to say, "Oh, I got a spousal IRA, I don't need anything else this year." I think, you know, a plant would be nice but a spousal IRA will last much longer.
Ryan Ermey: Nothing says, "I care," quite like money.
Ryan Ermey: Up next, Kathy Kristof gives you smart strategies for earning cash on the side. Stay tuned.
Ryan Ermey: All right. We're back and we are here with Kathy Kristof, she's formerly a beloved columnist for Kiplinger's magazine and now the editor and founder of sidehusl.com, that's S-I-D-E-H-U-S-L, which, a link that we'll have in the show notes.
Ryan Ermey: Kathy, thank you so much for coming on.
Kathy Kristof: Well, thank you so much for having me.
Ryan Ermey: So, how can people get started looking for side gigs? I see that your site really is a place where people can look at a lot of the different platforms that are offered out there for people looking for side work, and how do you go about assigning ratings to those platforms?
Kathy Kristof: Oh, gosh, the ratings are . . . We take a whole bunch of different things into account. What we try and do is really empathize with the SideHusl, the freelancer, and say, "Okay, what are all the factors that are going to make this good or bad for you?" So, obviously, high on that list is how much you're going to earn. Also whether there are costs involved in earning that money, and so is your net pay decent? What are your working conditions like? Do you have to put yourself or your assets at risk? Are you given complete flexibility over your schedule or is somebody actually dictating the terms, dictating the dress code, all those things. So, all the things that would make any job or any way to make money, good or bad. That's what we factor in to our Husl$cores.
Kathy Kristof: And so, they are subjective but we think that they're very reasonable. And in fact, in many of our reviews, we explain, "Hey, you know, this SideHusl gets a 4 because we got that the net pay was high enough and working conditions were good enough, that it makes up for the fact that they actually are going to schedule you," or something. You know, whatever the deal may be.
Ryan Ermey: Right.
Sandy Block: So, Kathy, looking at all these different SideHusls that are on your site, can you give us an idea of which ones tend to be the most lucrative, and perhaps more importantly, what kinds don't live up to the hype?
Kathy Kristof: Oh, gosh, yeah. So, that's the thing that you see with our Husl$core. So, we have more than 300 online platforms that allow you to make money, rated on the site, and the ones with 4 and 5 Husl$cores we think are really good. The ones with 1 and 2 Husl$cores, we think you should avoid at all cost.
Ryan Ermey: Okay.
Kathy Kristof: The risk, so far, outweigh the rewards. I'll give you an example of one of the ones that I felt really strongly that we needed to warn people away from.
Sandy Block: Okay.
Ryan Ermey: All right.
Kathy Kristof: It's a company called HyreCar, and it's H-Y-R-E-C-A-R, and what they say you can do is rent your spare vehicle to Uber and Lyft drivers, right?
Ryan Ermey: Sure.
Kathy Kristof: They make a big deal of saying that they have insurance and so everything is fine, and that your car is going to rent out a lot. And that part is true. You can definitely rent out your car regularly if you're willing to do this, but what they don't tell you is their insurance policy is so full of holes that, if this Uber/Lyft driver gets in an accident when say, they're going to the grocery store for themselves, or whatever, driving on the way to a gig they're not actually involved in it, it doesn't cover you at all. And so people have actually lost their $20,000 car because they signed up for this website that pays them $24 a day, or something.
Sandy Block: Oh, my gosh.
Kathy Kristof: And that's just horrifying, right?
Sandy Block: Yeah. Yeah. That's... ugh.
Kathy Kristof: These are the sorts of things that, again, unless you do what we're doing, which is really taking a careful journalistic look at the terms and conditions and all of the factors that are involved, I mean, we read not only the terms and conditions, but the insurance policy that they're providing, too.
Ryan Ermey: Right. Of course.
Kathy Kristof: Who actually knew. Oh, well, here's what's in it. That's kind of horrifying. People should know.
Ryan Ermey: So, if you have the kind of gig, or let's say you're a photographer and you do weddings or, you know, someone who's gigging with a lot of different people working as a freelancer, beyond looking at the scores in your site which I'm sure are tremendously helpful, how do you go about vetting someone to make sure that they're legit?
Kathy Kristof: Yeah. Well, I'll tell you part of our process, and it is time-consuming but it's worth it if you don't want to get taken, and so, the first thing is, every site has terms and conditions.
Ryan Ermey: Right.
Kathy Kristof: And so, they're long, boring, legal documents but they usually are going to spell out the things that should make you nervous, and everyone is a little bit different, but some of them, for instance, will tell you, "Oh, we reserve the right to kick you off the platform at any point." And, what was the one I was just reading the other day, where it said, "All of the pay that's earned through our site actually belongs to our site."
Ryan Ermey: Oh, geez.
Kathy Kristof: Yeah. “And so, if we pay you before we decide to confiscate your earnings, well, cool for you." There's no guarantee that you actually get that pay. And it's right there in black and white, and because these guys call these independent contractor positions rather than employee positions, they are not obligated to follow any sort of like the law. There's no minimum wage, there's no overtime, there's none of that stuff. And so, what you're governed by is that contract that's in the terms and conditions. And so, like you said, even though it's time-consuming, if we don't rate a site and you're thinking about working there, you can email me at kathykristof@sidehusl.com and I'll try and put it on our list to review, but other than that, I mean, that terms and conditions document is the most important thing for you to read.
Kathy Kristof: We also look for reviews on a zillion different sites. Better Business Bureau, Sitejabber, Glassdoor, Indeed, ConsumerAffairs.com, complaints bureaus, just all of those places because we want to look for signs that... the trouble spots that we see in terms and conditions are actually affecting people in real life, and almost always, if a site has been in business for a while, you will start to see those complaints.
Kathy Kristof: If you see nothing, that also is a warning sign because a lot of time it means that the company is whitewashing its Google presence, and so that should just be another little warning sign for you.
Sandy Block: Well, Kathy, you've given some really good advice on what to be wary of, but I'm curious about what are some of the characteristics of the SideHusls that get 4 stars on your site. What are some of the things that sort of make them stand out.
Kathy Kristof: Oh, there's so many fun, good ones. There really are. I mean, we rate everything, and then some of our staff, including me, will try some of them just to make sure that they actually live up to their billing, and so I signed up for something called Giggster, and Giggster is G-I-G-G-S-T-E-R, and what they do is, it's a site where you can rent out your house, or portion of your house, but instead of renting it out to tourists, you rent it out to filmmakers and photographers and people who want to do special events. Right?
Ryan Ermey: Oh, cool. Yeah.
Kathy Kristof: And so, in one day, my house earned $1,455 after commission, and it was just such a fun day because it was just a 10-hour day where they bring in all these people and they're taking photographs for an advertisement, and they're on there, and there are three other sites that do almost identical things, really. Again, great way to make a lot of money in a very short period of time. So, renting your house by the hour, Peer Space, Giggster, thisopenspace, Splacer, they're all great sites to sign up for.
Kathy Kristof: There's some in every category that are fabulous, and yes, 33 different work categories as well as different rent categories and different sell categories, but on the work category, it kind of depends on, obviously, what you are good at.
Ryan Ermey: Right.
Kathy Kristof: If you're into art, I love these print-on-demand sites. What they do is, you have a drawing or even a saying that is original to you, you can upload it to this site and they will put your art on coffee cups and iPhone covers and T-shirts and whatever else, and you get a royalty on everything that sells.
Ryan Ermey: That's great.
Kathy Kristof: That's kind of fun.
Ryan Ermey: I bought one of those for my mom one year. I can't remember what site it was, but someone had put up a design that says, "Grace changes everything," and my mother's name is Grace.
Sandy Block: Aww.
Ryan Ermey: So, she got the Grace [changes everything].
Sandy Block: You are such a good... Ryan is the best gifter. So you know.
Kathy Kristof: He is. So, that, under art, I think is a kick, and we have it under selling art. They're simple like animal care and walking dogs for... Rover and Wag, or watching dogs for Rover and Wag can be a really lucrative SideHusl. It's not difficult. You can do it on your lunch hour, you know, very simple to sign up and accomplish.
Kathy Kristof: One of my favorites and I think it's just because I'm weird and I don't probably watch Magnum, P.I. is called Trustify, and you get paid $30 or $40 an hour to be a private detective.
Ryan Ermey: Hey.
Sandy Block: Oh, wow!
Kathy Kristof: That's fun. Now, it's obviously, you have a better chance of getting a gig if you're a former law enforcement officer-
Sandy Block: But a journalist I think would be a good fit for that.
Kathy Kristof: Oh, absolutely. So, if you have wide computer research skills, some of the jobs are specifically online research and that qualifies as private detective, right? So, I mean, that one's really fun. Oh, there is... If you're a cosmetologist, there are a couple where, the site beGlammed is the best that we found, and they have you go out to people's houses and do their hair and makeup for special events, like weddings and showers and television appearances. And that pays between $30 and $90 an hour, which is not half-bad, right?
Ryan Ermey: So, on any of these platforms, how can people go about marketing themselves to make sure that they don't get lost in the shuffle?
Kathy Kristof: On some of the platforms, especially some of the really broad ones that I try and find you, and it's like Upwork or remote where they have this kind of broad mandate, they'll find almost anybody a job, right? Those, by and large, I just don't recommend, and one of the reasons why is it's extremely difficult to differentiate yourself from the millions of other freelancers and freelancers from other countries where the cost of living is so low that they don't mind getting a dollar to do a job that's going to take them three hours, and somebody here, of course, is going to go, "Okay, that makes absolutely no sense."
Kathy Kristof: But if you look at the platforms that specialize in what you want to do, so if you, say, want to write for a living, look specifically at the ones that specialize in that, and there's a couple of them that are really great, and there's one called ProBlogger that basically is more of a bulletin board for providing jobs, so there's no... you don't have to pay anything to be on it and you just go and search whenever you feel like it.
Kathy Kristof: The Washington Post has a talent network where you can sign up and, if you're in the right areas, they will find you work. I contently, I leisure write for pay for corporate websites, and they pay decently. There's a screening process but once you've passed their screening process, you really don't have to compete with every human being on the planet. You are just competing with a very small group of people who have the same expertise as you, and that's really the key, is, specialize, specialize, specialize, and stick to your niche, and your chance of finding work is much better and the chance of finding well-paying work is dramatically better.
Ryan Ermey: Well, there you have it. And that's something that we all need these days.
Sandy Block: We all need work, yeah.
Ryan Ermey: So, Kathy, we want to thank you again for coming on. If you want to learn more about SideHusls, make sure to check out the website, sidehusl.com, S-I-D-E-H-U-S-L. Kathy, thank you again.
Kathy Kristof: Thank you so much. It was really fun.
Ryan Ermey: Is it a fact that bankruptcy can get you of paying your student loans? Or is it fiction? Find out after the break.
Ryan Ermey: We are back, and before we go, Sandy and I wanted to play yet another edition of financial fact or fiction, and I'm going to go first, and my statement is, "To help increase your wealth over time you should focus on investing in dividend-paying stocks." What do you think?
Sandy Block: I don't know, Ryan. Dividend paying stocks are pretty boring.
Ryan Ermey: They are boring, and we tend to think of dividend paying stocks as a source of cash income for retirees.
Sandy Block: It's grandpa money.
Ryan Ermey: Exactly right. But, this is, in fact, a fact, because they are an important part of building a portfolio that will compound in value over time. And so I'm going to spit some numbers out here.
Sandy Block: Uh-oh, math.
Ryan Ermey: Yeah. Or magic, right? So, from 1930 until the end of 2017, dividend reinvestment contributed 42% on average to the total return-
Sandy Block: Whoa!
Ryan Ermey: . . of the standard employers 500 stock index, which, as you remember, is an index that is a proxy for the broad stock market. And not only that but according to our friends at Reality Shares, which is a dividend focused ETF provider, from 1972 through March 2018, funds that raised their dividends posted a 9.8% average annualized return compared to a 2.6 return for companies that didn't pay dividends at all.
Ryan Ermey: So, it's a big deal having this dividend in the mix because not only can it boost your returns when stocks are headed up, but it can almost provide a floor to keep them from sinking too much. It's like a little bit of ballast. What's more, reinvesting dividends regularly amounts to a form of dollar cost averaging in your portfolio, which is something that we've talked about.
Ryan Ermey: If you invest at regular intervals, which you do if you have dividend stocks because stocks pay dividends at regular intervals, either monthly or quarterly or whatever, it automatically ensures that you're buying low and selling high because you're constantly putting money into these holdings.
Ryan Ermey: So, if you're thinking about bolstering your dividend paying stock holdings, we like the T. Rowe Price dividend growth fund, which is a member of the Kip 25, the fund focuses on firms that increase their dividends over time, which as we've just mentioned, is a big driver of returns.
Ryan Ermey: We'd also encourage you to take a look at the Kiplinger Dividend 15 which is our list of our favorite dividend paying stocks, so, we kind of break that down into three different sections. We have stocks that have raised their dividends for decades on end, that's 3M, Emerson Electric, Procter & Gamble, all of those have over 60 years of annual dividend hikes under their belts.
Ryan Ermey: Companies that are quickly hiking their dividends make up another sleeve of that portfolio, if you will. That includes AbbVie, Home Depot, Lockheed Martin, I mean these are big companies. These are companies that have raised their dividends for multiple years and have done so at a fast rate, or a robust rate, and that we continue to think that they're going to do that going forward.
Ryan Ermey: And then stocks with very high dividend yields round the group out, and those include companies such as Blackstone and Enterprise Products Partners.
Ryan Ermey: So, the message is, bolster your dividend holdings if you want long-term gains in your stock portfolio.
Sandy Block: There you go.
Ryan Ermey: What have you got for us?
Sandy Block: Okay. Here's my fact or fiction. If you can't repay your student loans, you can discharge them in bankruptcy.
Ryan Ermey: This means that if I go bankrupt, I can be forgiven for my student loans? Is that what you're saying?
Sandy Block: You can get rid of them.
Ryan Ermey: That seems... I mean, I hope it's true, but it seems unlikely.
Sandy Block: It's not true. Student loans occupy a different place in the bankruptcy world than just about everything else, including credit cards and car loans, all those things you can get discharged in bankruptcy. I mean, you have to go through the process, but most debts can be discharged in bankruptcy.
Sandy Block: Student loans cannot. This dates back to the '70s when Congress was concerned that they thought that too many people were walking away from government provided student loans.
Ryan Ermey: Right.
Sandy Block: So they created a new standard, a new bankruptcy standard, that says that you have to prove undue hardship to get out from under your student loans in bankruptcy, and that standard has proven so difficult that there've been stories about bankruptcy judges who said, "I really, really want to give you a break, borrower, obviously you're desperate and sad, but the law does not allow me to do it." It's just nearly impossible to get rid, and that's why you're hearing stories about people retiring with student loans and having their Social Security benefits garnished, because they have been unable, they're literally taking these debts to their graves.
Sandy Block: And it's not just federal student loans. The standard also applies to private student loans, which are issued by private lenders, have higher interest rates, fewer relief provisions. So, the takeaway here is, particularly people are going to be graduating in the next few weeks, they usually get six months before they have to start making payments. Take these payments very, very seriously because it is very hard to get out from under your student loans.
Sandy Block: What isn't hard, but not enough people do it, is coming up with a payment plan that you can afford. So what you need to do is get right on this and figure out who you owe to, what your payments are, what your options are, and we'll put all the links in the show notes for these provisions. So, maybe, although it's becoming really hard and you might even qualify for forgiveness if you work in public service, but getting your loans discharged in bankruptcy is not an option for the vast majority of borrowers, and that makes it just that much more important that you stay on top of your student loans.
Ryan Ermey: Yeah. Like you said, we'll have the options for you in the show notes, and so, go ahead and check those out.
Ryan Ermey: That's it for this episode of Your Money's Worth. For show notes and more great Kiplinger content on the topics we discussed on today's show, visit kiplinger.com/links/podcasts. You can stay connected with us on Twitter, Facebook or by emailing us at podcast@kiplinger.com. If you like the show, please remember to rate, review and subscribe to Your Money's Worth wherever you get your podcasts. Thanks for listening.
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