The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: caracarn on February 26, 2020, 09:56:49 AM
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I have been thinking about giving services like Postmates, DoorDash and GrubHub a try to earn a few hundred extra dollars a month in the evenings and perhaps weekends. Anybody tried this and willing to share their thoughts? Anyone else thinking about it? I like the fact that unlike Lyft or Uber you do not have the insurance issues and others in your car and all the inconvenience/problems that can entail.
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So $97 in 6.7 hours of work over the last two days, which works out to $14.41/hour. Better than I can make with other "no experience necessary" jobs that might be plentiful. I did a couple of the deliveries to and from work and with the added value of how being able to report mileage, including driver to first delivery and home for last delivery might have found a way to turn my office commute into a tax savings.
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Very interesting. I have been thinking about this for some time. Did you use DoorDash? Did you have an option to choose which orders you pick up? What's the are coverage radius? Can you set your location boundaries or does the app decide?
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So much learning I can share in just two days. Will make sure to include your questions and can give a lot more detail if anyone wants. Also at this point I have built a spreadsheet that calculates my hourly rate for each "shift" but also overall and will use that to compare the three services once I can operate in all of them so i can determine which is the most lucrative.
So the basics:
- Yes, I am currently doing DoorDash, as they are the only one that lets you get started without waiting for stuff to arrive or for you to go through some sort of training.
As soon as I can delve into Postmates and GrubHub, I will. - You do get to accept and offer, decline, or if you do not respond in a period of time (in my area it is 45 seconds, but I saw in the help in some places it is 90) it goes to someone else. The issue is one metric is your acceptance rate and it can be a problem as I will explain later.
- I an not sure what you mean on coverage radius
- The area is divided into service areas. You select the service area you work in, but that also is a bit ephemeral as I will explain.
- A delivery may make you change service areas. This is pretty common in my short experience. So I would pick up in one zone but deliver in another, suddenly finding my next order outside of the zone I though I was in. This creates a lot of dynamics to consider. I am a middle aged white male, and many of my deliveries or pickups were in some areas that a college aged female might not be comfortable in. In fact some of them, I was not comfortable in. I have not operated past 9 PM, but as my wife said when I shared this might be a good option for our 20 year old daughter who is struggling to find money for her car repairs, so said she'd not be comfortable with her in some of the locations I ended up in. You can mitigate that by being very careful what you select, but that has adverse impacts of metrics that DoorDash measures you on which you will learn about below. It also can change you peak pay and therefore earning level substantially, again more details on how that works below.
- App is actually quite well designed and easy to use, but you do need a solid level of organization. I actually ended up not delivering a drink with an order because I got things mixed up. So far, not a problem, but this may come back to haunt me.
- Can contact customer via text or phone and this is done through a masking interface that does not expose the actual phone to you or them so not privacy dangers I can see there
- DoorDash offers something called Peak Pay which can be worked, and as a Mustachian this is actually very intersting to me as it plays right to our optimization love. My earnings are certainly juiced because of deliberate choices I made to learn to play the game to the best advantage I could.
- You can get alerts when not working. So for example I currently have left these on, and it will notify me when peak pay is available in areas I have scheduled in. Just got an alert over my lunch hour as I write this that I can get $2 peak pay right now if I head out and deliver.
- You can schedule a "dash" (think of this as a shift you work) in the future. So for example I have scheduled 5:30 - 7:30 AM Saturday morning in one service area and 6 - 7 AM Sunday morning in the service area I live in. Scheduling gives you priority for orders when you do a dash (though not sure that helps as I have yet to work a schedule and I have not had much trouble getting orders, but if there is zero break between them then it might do it, but I cannot talk about this with personal evidence until after this weekend). Schedules are not available whenever, each service area only had a certain amount and if can differ and can change. So for example the Sunday morning schedule is the only time available all Sunday in my service area, but other service areas can have 6-12 time blocks. Soem blocks are large (I have seen 4PM - 1AM (next day)) or as small as 30 minutes. For example the zone I am working Saturday morning has 4 - 4:30 AM before the one I choose, and then 11 AM - 12PM next, plus many others.
- The did a great job of what would be known as "gamefication" which appeals to the game player in me. Each delivery seems like a quest does in the games we play.
When I complete that quest, I am served up another. Also the peak pay draws "players" to an area to mazimize their earnings. Peak Pay for a single order for me last night was $9, meaning I got a $9 add-on to the standard rate of the order so it boosted that delivery to $13.50, This is what I refer to about optimizing the process. At times I drive to the next service area over if it has peak pay and the one I am in does not. So you are doing cost/benefit mental math all the time, which can be fun for some or irritating for others. I think Mustachians will find this appealing, because it falls right in line with our optimization strategies. How can we maximize the benefit we are getting? - The earning rate is low enough that it appears the taxable income on any of these endeavors will be very, very low. For example on my $97 of earnings, I have $93.13 in mileage (162 miles), so my taxable income is less than $4 right now. This can once again be Mustachian maximized. I did a dash (shift) last night from 5 - 8 and did it from work. My first pick up was less than a mile away, and because I was working at my delivery business, my drive home after my shift can be included in those miles, so even though I was 30 miles from home, effectively going by my office on the way home, my trip home was tax deductible, so if you can work in a pickup each way (what I did both ways that day, delivering in the morning on the way in and after work before heading home) you are suddenly turning in the miles you drive to a from your job into something that benefits you rather than just costs you. Might be worth MMM taking a peak at this method as perhaps a way to lower the cost of clown car ownership.
- There were times I was driving around for 10 minutes without an order, so it is not perfect. Again, will see if I notice any difference with a schedule.
- I did have one order last night at a Chipotle where I truly waited 40 minutes for them to make the order. My entire time for that delivery was 1 hour and 3 minutes, which made my earning $9.52/hour, so very poor with what I had seen. My best dash so far was $19.50/hour. So you do need to learn the local area, much like a cabbie. There were 20+ drivers waiting for orders when I walked in and the place was very, very slow. Some drivers cancelled their orders (something all services penalize you for up to and including banishment from the system) and went on. It was my last order of the night so I choose to stick with it.
- That led to another flaw in the process. While I was stuck waiting for said burrito order, the app sent me 3-4 other orders that were nearby (the app will help you maximize. Next point below for more). I intentionally did not hit Decline as I did not want to impact my acceptance rate and I let them time out. However, it appears that did not help, because my acceptance rate is now 78%, down from the 100% I had until then. So this means you really have to be careful thinking you can choose which orders you pick up because it does seem there is no way to not get dinged for not accepting an order. According to the site, this metric getting too low can accept you ability to get orders (I assume the algorithm will prioritize drivers with a higher acceptance rating to get the order first and on a busy night that can mean a long time between an order coming your way). In my area, as others, there are some places where I would not feel safe driving into, especially late at night, so you can decline orders to avoid that with the mentioned consequences.
- On my morning run it, I received one order and in seconds got another offer asking if I wanted to add it to my route. It was at the same IHOP so I did that, and that was the one where I hit the $19.50/hour as I was not making two pickups and two deliveries, but one pickup and two deliveries so it took less time. This was a nice feature, but it has a dark side as noted above.
- All of this resulted in me working longer than I intended. Some of the reasons were positive (I was having fun, the game feeling of "I'll just do one more!", etc.) but they can be negative (now that I know my acceptance rate was hammered I might have accepted those additional orders while stuck at Chipotle and added 30-60 minutes to my night just to avoid a bad outcome).
- At this point, with the very small sample size, it appears that 30 minutes for an order is about what things are working out to. So I can plan for 2 orders an hour. This should factor heavily into your decision on if this works for you or not. While my local service area (the one I live in and would prefer to work in for convenience) does not have much or high peak pay, I have 3 others within 10-20 miles away that regularly seem to have a level ranging from $3-$9. Since the base rate is $3-$5 for a delivery, working all your dashes in non-peak pay times or areas can easily cut your earnings in half or more. On my 11 deliveries, 8 had a peak pay booster which totaled $36 on top of my $45 base pay. Adding in $16 of tips from 4 of those orders means that over 50% of my pay was tips or peak pay. It is also crucial to note that it does not appear that tips are popular. The service does say customers can add them later or at the time of the order. 0 customers added a tip later. All 4 of the tips were in the initial order. You will get an alert if a customer adds a tip later.
- The threshold for retention is pretty hard to reach. If you have more than 1 delivery issue reported by a customer in your last 100 orders your account can be deactivated so you need to maintain a 99% rating there to avoid a problem. Also your customer rating needs to be 4.2 out of 5 to avoid the same potential for review.
The system does not share how many reviews you have just your score. At this point my only rating is a 1, likely from the customer who I forgot to deliver the drink to.
Or... I suppose I could have had more ratings all of which are a 1, but no way to tell. I assume it is the former because I had no rating until that happened on my 6th delivery and the number has not changed since then, even though I think I have upped my customer service game as I learned to operate the customer contact interface on my second day. This allowed me, for example, to keep the person with the terrible Chipotle order updated as I waited for 40 minutes and they knew what was happening, or that likely would have been another terrible rating. Perhaps it was, there is no way to tell. At this time I have not been norified that I am under review because of my rating and perhaps, like in many organizations, those metrics are there to offer a way to remove problem children, but that unless it gets really bad drivers escape notice. I'm hoping they at least will give me a chance to get to 100 or more deliveries before they even look at that. The sad reality is that people do not take time to provide ratings very often unless they are mad, and since I did not know how to contact customers on that first day, I could not even have apologized, though once you complete the order the ability to contact them is gone and I did not notice the oversight until I was delivering my second order and realized the drink went with the first one I had done. So this one hangs over me already like a sad spectre over my shoulder. The published quality metrics are something I have already failed at just 6 deliveries in and will work to make up, but my hope lies in not being noticed, so in this way it works like many minimum wage or other jobs.
So overall, my assessment is that this is a great opportunity for a job you can apply to on the internet and have zero experience and begin working at in less than a day and make around $30K/year full time. In that regard, from a Mustachian perspective, I have learned in two days that these types of jobs offer a wonderful safety net in FIRE where you can jump in an supplement any shortfalls quite easily. My target right now was $100/week to get me a bit over $5K a year that I can add to my stash. In two short days I am three dollars away from that goal with less than a full days work, so my next challenge is making it fit in my life. The two nights I went out are not something I normally will do as it impacts my family time. The scheduled hours this weekend are more likely to work as I tend to be an early riser and everyone will be asleep. But those three hours have been shown thus far to fall short of what would be needed to hit the goal (not a surprise, as I was in no way expecting to earn in excess of $30/hour, as the typical reported results are $15-$18 for DoorDash and early results show that to be accurate if I remove burrito outliers) (peak pay alert just let me know it is $4 now).
I will share what I learn going forward if there appears to be any interest.
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So my DH and I use to do this as a date night! We would cruise around blasting music and make it a fun game.
While having 2 people there splits your "hourly pay." There were actually some major benefits. We didn't have to park which saved precious time, especially in the hip areas where everyone likes to order food from. One person would run in and grab the order while the other circled the block. IMO we got better tips because the food would get there really fast.
I could also look up directions for the next order while DH dropped off at the door. So when he got back in I would yell "DRIVE DRIVE DRIVE" lol. We are nerds. We haven't done it in over a year though. Mainly because we make a lot more now so the door dash money seems paltry. But I always liked the idea of making money on a date night instead of spending it.
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Do you have to have a car? Or can you deliver by bike?
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Have you let your car insurance know you are doing this?
You should really figure your hourly rate after increased insurance costs, gas, wear and tear on your vehicle, etc.
It's likely much lower than you think it is, and maybe even net negative.
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Oy, this seems like a terrible idea. The pay is low, and do much wear and tear on your car.
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So much learning I can share in just two days. Will make sure to include your questions and can give a lot more detail if anyone wants. Also at this point I have built a spreadsheet that calculates my hourly rate for each "shift" but also overall and will use that to compare the three services once I can operate in all of them so i can determine which is the most lucrative.
So the basics:
- Yes, I am currently doing DoorDash, as they are the only one that lets you get started without waiting for stuff to arrive or for you to go through some sort of training.
As soon as I can delve into Postmates and GrubHub, I will. - You do get to accept and offer, decline, or if you do not respond in a period of time (in my area it is 45 seconds, but I saw in the help in some places it is 90) it goes to someone else. The issue is one metric is your acceptance rate and it can be a problem as I will explain later.
- I an not sure what you mean on coverage radius
- The area is divided into service areas. You select the service area you work in, but that also is a bit ephemeral as I will explain.
- A delivery may make you change service areas. This is pretty common in my short experience. So I would pick up in one zone but deliver in another, suddenly finding my next order outside of the zone I though I was in. This creates a lot of dynamics to consider. I am a middle aged white male, and many of my deliveries or pickups were in some areas that a college aged female might not be comfortable in. In fact some of them, I was not comfortable in. I have not operated past 9 PM, but as my wife said when I shared this might be a good option for our 20 year old daughter who is struggling to find money for her car repairs, so said she'd not be comfortable with her in some of the locations I ended up in. You can mitigate that by being very careful what you select, but that has adverse impacts of metrics that DoorDash measures you on which you will learn about below. It also can change you peak pay and therefore earning level substantially, again more details on how that works below.
- App is actually quite well designed and easy to use, but you do need a solid level of organization. I actually ended up not delivering a drink with an order because I got things mixed up. So far, not a problem, but this may come back to haunt me.
- Can contact customer via text or phone and this is done through a masking interface that does not expose the actual phone to you or them so not privacy dangers I can see there
- DoorDash offers something called Peak Pay which can be worked, and as a Mustachian this is actually very intersting to me as it plays right to our optimization love. My earnings are certainly juiced because of deliberate choices I made to learn to play the game to the best advantage I could.
- You can get alerts when not working. So for example I currently have left these on, and it will notify me when peak pay is available in areas I have scheduled in. Just got an alert over my lunch hour as I write this that I can get $2 peak pay right now if I head out and deliver.
- You can schedule a "dash" (think of this as a shift you work) in the future. So for example I have scheduled 5:30 - 7:30 AM Saturday morning in one service area and 6 - 7 AM Sunday morning in the service area I live in. Scheduling gives you priority for orders when you do a dash (though not sure that helps as I have yet to work a schedule and I have not had much trouble getting orders, but if there is zero break between them then it might do it, but I cannot talk about this with personal evidence until after this weekend). Schedules are not available whenever, each service area only had a certain amount and if can differ and can change. So for example the Sunday morning schedule is the only time available all Sunday in my service area, but other service areas can have 6-12 time blocks. Soem blocks are large (I have seen 4PM - 1AM (next day)) or as small as 30 minutes. For example the zone I am working Saturday morning has 4 - 4:30 AM before the one I choose, and then 11 AM - 12PM next, plus many others.
- The did a great job of what would be known as "gamefication" which appeals to the game player in me. Each delivery seems like a quest does in the games we play.
When I complete that quest, I am served up another. Also the peak pay draws "players" to an area to mazimize their earnings. Peak Pay for a single order for me last night was $9, meaning I got a $9 add-on to the standard rate of the order so it boosted that delivery to $13.50, This is what I refer to about optimizing the process. At times I drive to the next service area over if it has peak pay and the one I am in does not. So you are doing cost/benefit mental math all the time, which can be fun for some or irritating for others. I think Mustachians will find this appealing, because it falls right in line with our optimization strategies. How can we maximize the benefit we are getting? - The earning rate is low enough that it appears the taxable income on any of these endeavors will be very, very low. For example on my $97 of earnings, I have $93.13 in mileage (162 miles), so my taxable income is less than $4 right now. This can once again be Mustachian maximized. I did a dash (shift) last night from 5 - 8 and did it from work. My first pick up was less than a mile away, and because I was working at my delivery business, my drive home after my shift can be included in those miles, so even though I was 30 miles from home, effectively going by my office on the way home, my trip home was tax deductible, so if you can work in a pickup each way (what I did both ways that day, delivering in the morning on the way in and after work before heading home) you are suddenly turning in the miles you drive to a from your job into something that benefits you rather than just costs you. Might be worth MMM taking a peak at this method as perhaps a way to lower the cost of clown car ownership.
- There were times I was driving around for 10 minutes without an order, so it is not perfect. Again, will see if I notice any difference with a schedule.
- I did have one order last night at a Chipotle where I truly waited 40 minutes for them to make the order. My entire time for that delivery was 1 hour and 3 minutes, which made my earning $9.52/hour, so very poor with what I had seen. My best dash so far was $19.50/hour. So you do need to learn the local area, much like a cabbie. There were 20+ drivers waiting for orders when I walked in and the place was very, very slow. Some drivers cancelled their orders (something all services penalize you for up to and including banishment from the system) and went on. It was my last order of the night so I choose to stick with it.
- That led to another flaw in the process. While I was stuck waiting for said burrito order, the app sent me 3-4 other orders that were nearby (the app will help you maximize. Next point below for more). I intentionally did not hit Decline as I did not want to impact my acceptance rate and I let them time out. However, it appears that did not help, because my acceptance rate is now 78%, down from the 100% I had until then. So this means you really have to be careful thinking you can choose which orders you pick up because it does seem there is no way to not get dinged for not accepting an order. According to the site, this metric getting too low can accept you ability to get orders (I assume the algorithm will prioritize drivers with a higher acceptance rating to get the order first and on a busy night that can mean a long time between an order coming your way). In my area, as others, there are some places where I would not feel safe driving into, especially late at night, so you can decline orders to avoid that with the mentioned consequences.
- On my morning run it, I received one order and in seconds got another offer asking if I wanted to add it to my route. It was at the same IHOP so I did that, and that was the one where I hit the $19.50/hour as I was not making two pickups and two deliveries, but one pickup and two deliveries so it took less time. This was a nice feature, but it has a dark side as noted above.
- All of this resulted in me working longer than I intended. Some of the reasons were positive (I was having fun, the game feeling of "I'll just do one more!", etc.) but they can be negative (now that I know my acceptance rate was hammered I might have accepted those additional orders while stuck at Chipotle and added 30-60 minutes to my night just to avoid a bad outcome).
- At this point, with the very small sample size, it appears that 30 minutes for an order is about what things are working out to. So I can plan for 2 orders an hour. This should factor heavily into your decision on if this works for you or not. While my local service area (the one I live in and would prefer to work in for convenience) does not have much or high peak pay, I have 3 others within 10-20 miles away that regularly seem to have a level ranging from $3-$9. Since the base rate is $3-$5 for a delivery, working all your dashes in non-peak pay times or areas can easily cut your earnings in half or more. On my 11 deliveries, 8 had a peak pay booster which totaled $36 on top of my $45 base pay. Adding in $16 of tips from 4 of those orders means that over 50% of my pay was tips or peak pay. It is also crucial to note that it does not appear that tips are popular. The service does say customers can add them later or at the time of the order. 0 customers added a tip later. All 4 of the tips were in the initial order. You will get an alert if a customer adds a tip later.
- The threshold for retention is pretty hard to reach. If you have more than 1 delivery issue reported by a customer in your last 100 orders your account can be deactivated so you need to maintain a 99% rating there to avoid a problem. Also your customer rating needs to be 4.2 out of 5 to avoid the same potential for review.
The system does not share how many reviews you have just your score. At this point my only rating is a 1, likely from the customer who I forgot to deliver the drink to.
Or... I suppose I could have had more ratings all of which are a 1, but no way to tell. I assume it is the former because I had no rating until that happened on my 6th delivery and the number has not changed since then, even though I think I have upped my customer service game as I learned to operate the customer contact interface on my second day. This allowed me, for example, to keep the person with the terrible Chipotle order updated as I waited for 40 minutes and they knew what was happening, or that likely would have been another terrible rating. Perhaps it was, there is no way to tell. At this time I have not been norified that I am under review because of my rating and perhaps, like in many organizations, those metrics are there to offer a way to remove problem children, but that unless it gets really bad drivers escape notice. I'm hoping they at least will give me a chance to get to 100 or more deliveries before they even look at that. The sad reality is that people do not take time to provide ratings very often unless they are mad, and since I did not know how to contact customers on that first day, I could not even have apologized, though once you complete the order the ability to contact them is gone and I did not notice the oversight until I was delivering my second order and realized the drink went with the first one I had done. So this one hangs over me already like a sad spectre over my shoulder. The published quality metrics are something I have already failed at just 6 deliveries in and will work to make up, but my hope lies in not being noticed, so in this way it works like many minimum wage or other jobs.
So overall, my assessment is that this is a great opportunity for a job you can apply to on the internet and have zero experience and begin working at in less than a day and make around $30K/year full time. In that regard, from a Mustachian perspective, I have learned in two days that these types of jobs offer a wonderful safety net in FIRE where you can jump in an supplement any shortfalls quite easily. My target right now was $100/week to get me a bit over $5K a year that I can add to my stash. In two short days I am three dollars away from that goal with less than a full days work, so my next challenge is making it fit in my life. The two nights I went out are not something I normally will do as it impacts my family time. The scheduled hours this weekend are more likely to work as I tend to be an early riser and everyone will be asleep. But those three hours have been shown thus far to fall short of what would be needed to hit the goal (not a surprise, as I was in no way expecting to earn in excess of $30/hour, as the typical reported results are $15-$18 for DoorDash and early results show that to be accurate if I remove burrito outliers) (peak pay alert just let me know it is $4 now).
I will share what I learn going forward if there appears to be any interest.
Great summary of your experience. Thank you.
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For example on my $97 of earnings, I have $93.13 in mileage (162 miles), so my taxable income is less than $4 right now.
That tax deduction for mileage isn't because the IRS is nice, it's because that's their estimate of how much it costs to drive. Yeah, you can probably get away with costing less if you have a low-value, high-gas mileage, low-maintenance car, but that looks to me like they basically pay your car costs while you drive for free.
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For example on my $97 of earnings, I have $93.13 in mileage (162 miles), so my taxable income is less than $4 right now.
That tax deduction for mileage isn't because the IRS is nice, it's because that's their estimate of how much it costs to drive. Yeah, you can probably get away with costing less if you have a low-value, high-gas mileage, low-maintenance car, but that looks to me like they basically pay your car costs while you drive for free.
This. You didn’t earn $97, you had $97 of revenue. You’re saving money on taxes because your “profit” was $4 for all that work.
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Thank you for your detailed description of working for DoorDash. Very informative.
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For example on my $97 of earnings, I have $93.13 in mileage (162 miles), so my taxable income is less than $4 right now.
That tax deduction for mileage isn't because the IRS is nice, it's because that's their estimate of how much it costs to drive. Yeah, you can probably get away with costing less if you have a low-value, high-gas mileage, low-maintenance car, but that looks to me like they basically pay your car costs while you drive for free.
So my DH and I use to do this as a date night! We would cruise around blasting music and make it a fun game.
While having 2 people there splits your "hourly pay." There were actually some major benefits. We didn't have to park which saved precious time, especially in the hip areas where everyone likes to order food from. One person would run in and grab the order while the other circled the block. IMO we got better tips because the food would get there really fast.
I could also look up directions for the next order while DH dropped off at the door. So when he got back in I would yell "DRIVE DRIVE DRIVE" lol. We are nerds. We haven't done it in over a year though. Mainly because we make a lot more now so the door dash money seems paltry. But I always liked the idea of making money on a date night instead of spending it.
I suspect this is what was happening when I placed an order a few weeks ago. My food tracked in the opposite direction and then someone of the opposite gender as my driver finally showed up with my cold order.
So, OP has a $4 profit from how many hours of work? Not exactly a strong recommendation.
Even leaving out additional maintenance, have you worked out how much additional fuel you have used in that time?
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So all good points, and YMMV with my views on some of this.
Certainly there is wear and tear on the car, but having used my car to drive for work (many times at an office job we had we took advantage of not renting a car and instead driving our own on a business trip and claiming the mileage because we felt the pay far outpaced the maintenance and gas). 58.5 cents a mile is quite a bit and I've never seen that getting eaten up with fuel and maintenance, but yes obviously the actual net profit is less.
In addition at this point, as I optimize the experience, I will see if I can juice this all a bit. This weekend was an eye opener, but I think I have enough for a plan of attack.
So, the scheduled times in the morning are something I will never do again. Saturday I had scheduled a time they suggested of 5:30-7:30. Not a single order came in during that time, and in fact it was actually good after 7:30. Similarly times for dinner began around 4:30, but I determined 6-8 PM is actually busiest and keeps you running around. If you can pinpoint those times then earnings were $20-$25 per hour. At this point for $241.50 I have spent $40 on gas and driven about 400 miles, so given that my car gets oil changes every 7,500 miles and they cost $35 at the dealer, this does not seem like a terrible result. I am really at the point that the ChooseFi boys would say it is hard to earn more at my current job as I am paid fairly for the market. The amount earned here is not really needed for our budget, but is just a way to try to increase cash we can save. The impact of the earnings being offset by mileage allows this money to be earned tax free in essence, and it make me feel like I am doing something versus just waiting things out. At this point I think I can make the $100 relatively easily with about 8 hours of work on the weekend (2 hours for breakfast on Saturday, and 3 hours each for dinner on Saturday and Sunday).
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The benefit of food delivery is there is nothing that impacts your insurance. You are not adding anyone into your car. It may increase your mileage, but for most people doing this as a side hustle you are not going to be driving thousands of miles a week that might necessitate a change. This was a big reason i chose not to do Uber ot Lyft, because your liability does change because you have passengers who do not know you and therefore would be likely to seek damages etc. in the event of an incident.
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Oy, this seems like a terrible idea. The pay is low, and do much wear and tear on your car.
I understand there are costs, but these services are suggested all the time as side hustle ideas on FI sites. You are using the car more but you are monetizing an item that is normally just pure cost. A big part of the argument about the reason car side hustles makes sense if the tax savings that allow you to keep the money you make versus paying tax on it. Will that 30%+ tax savings be enough to cover the added maintenance remains to be seen. 500 miles a week is a bit more than 1 tank of gas, and this week was really about 2 1/2 weeks of what I will likely do, so my net change in fuel will be perhaps 1/3 of a tank a week, so let's say an additional 1.5 tanks a month to be generous. That means about 20 extra fill ups a year, or about $600 of fuel in my case. That will be against about $5,000 in revenue. I think anyone would be hard pressed to say you are going to increase your maintenance costs by over $4,000 per year, so on the surface that is my thought.
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At this point for $241.50 I have spent $40 on gas and driven about 400 miles, so given that my car gets oil changes every 7,500 miles and they cost $35 at the dealer, this does not seem like a terrible result.
The benefit of food delivery is there is nothing that impacts your insurance...
500 miles a week is a bit more than 1 tank of gas, and this week was really about 2 1/2 weeks of what I will likely do, so my net change in fuel will be perhaps 1/3 of a tank a week, so let's say an additional 1.5 tanks a month to be generous. That means about 20 extra fill ups a year, or about $600 of fuel in my case. I think anyone would be hard pressed to say you are going to increase your maintenance costs by over $4,000 per year, so on the surface that is my thought.
You are clearly NOT accounting for all of your costs, and are therefore grossly exaggerating your hourly rate. A few points...
- Are you SURE your personal insurance policy covers food delivery? Have you read your policy to confirm? Have you spoken to your agent directly? My auto policy doesn't cover food delivery. And many online sources say it is NOT covered...
"If you are delivering food in your personal vehicle, then you must purchase commercial coverage for your vehicle."
- Did you subtract your fuel costs from your revenue before calculating your hourly rate?
If not, you need to re-do your numbers.
- You said you spent $40 in gas and drove 400 miles.
If you do this on a weekly for a year, you will spend OVER $2000 in fuel, plus put OVER 20,000 extra miles on your car!!!
That is about 3 oil changes & tire rotations, plus about 50% wear on your tires (~$300). This doesn't even count other needed maintenance (brakes, trans fluid & coolant changes, cabin/air filters, spark plugs, ect).
- Did you factor in needing to replace your vehicle TWICE AS FREQUENTLY as you would otherwise?
As noted above, you will be putting on ~20K miles just in food delivery, so your car will wear out twice as fast. That means the cost of a new vehicle, the reduced value of your current car (given the excess miles it will have), plus all of the transaction costs (sales tax, dealer doc fee, title/registration fees, ect).
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The benefit of food delivery is there is nothing that impacts your insurance. You are not adding anyone into your car. It may increase your mileage, but for most people doing this as a side hustle you are not going to be driving thousands of miles a week that might necessitate a change. This was a big reason i chose not to do Uber ot Lyft, because your liability does change because you have passengers who do not know you and therefore would be likely to seek damages etc. in the event of an incident.
This isn't true. The vehicle is still being used for business purposes.
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I wonder if gigs like this allow folks who live in dense areas to confine their delivery area such that delivering via bike were possible. I'll have to look into it - I could get paid to get some cardio in!
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So updating where things are at right now.
I researching the insurance issues more I did make a change and moved only the car I use for deliveries to a new carrier that covers delivery (food or other items just no ride share) as part of their basic policies. By only having my wife and I insured on that car and not our teenagers, the rate was reasonable and overall my insurance costs have gone down even though I am now covered for the business.
In four months I have not made over $6,000 with about 10-15 hours per week of work. I did also pick up Instacart in the height of the COVID shutdown and for about six weeks that was my main focus and had several weeks where between three services I made well over $300, again in 10-15 hours of work. Instacart orders are hard to come by and have been that way since late April. Rumors about bots or just too many shoppers hired are wrestling for traction, but I am just trying to work side hustles that make money and do not cause aggravation. I have settled mainly on GrubHub as they limit drivers in an area and therefore avoid over saturation. My current model is to head out after I eat dinner and work until 7 or 8 at night when the orders start to dry up and/or turn into fast food runs to seedy neighborhoods. I have been using an app (Stride) to track miles and income and so it gives me a view into the offset, so I have about $2,000 that is taxable at this point with the rest written off to mileage. Given that our entire household's fuel spend for this time has been $800, certainly making money in this process. In my full time job we took pay cuts in March so I have increased my weekly target for this side hustle to cover that along with my original extra savings target which means I look to make $250/week and I am easily doing that. I could make the original $100/week target in a single weekend night in about 4-5 hours. Last night I made $120 in 4.5 hours and I had periods of waiting for orders so it could have been another $20 on a busier night.
So far I feel this makes sense for me and my family and has been a nice way to really increase our savings at a much higher rate than I expected when I started in February.
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When I talked to my insurance agent, I was told that working for a restaurant like Domino's would be covered, but DoorDash wouldn't. I guess they assume that an established business would have their own coverage. This was USAA.
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I am with State Farm. I was very clear what I was doing and they said it was all covered. FYI, they also clarified that pizza delivery establishments do NOT cover their drivers. That is on the driver. This was another thing the insurance would cover hence why USAA covers Domino's. Doing this work, I understand why they would cover pizza for one company versus general food delivery, as the risk is less. You are not using an app wheen delivering for a pizza place you just run out to where they tell you to go and you keep coming back to the same place. There is also a limit of orders to some degree with a single delivery source. When I can pickup from hundreds of places in my area my insurance understands I can be anywhere, not just within the 5 miles radius most pizza places restrict their deliveries to because of timing to get a warm pizza to you.
What I so not understand is that AllState would let you get a ride share add-on which covers people in your care and the added risk of medical injuries to passengers but will not cover any food delivery. To me you were covering a much higher risk already and if I then just did less why not, but was not able to get an answer from my agent who was just able to let me know it would not be covered.
So to turn back to your point, in my research I did find that it is very, very uncommon for a pizza business to insure their drivers.
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Makes sense. I opted against doing any of it due to wear/tear on my vehicles and the fact that the OT fairy once again made an appearance at my real job.
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OP, what vehicle do you drive?
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Last night I made $120 in 4.5 hours and I had periods of waiting for orders so it could have been another $20 on a busier night.
So far I feel this makes sense for me and my family and has been a nice way to really increase our savings at a much higher rate than I expected when I started in February.
I'm glad you listened to me about the insurance, but you are still wildly overestimating your hourly rate...
- You still aren't subtracting fuel costs from your revenue before calculating your hourly rate.
- You still aren't factoring in all of the extra wear/tear on your vehicle (oil changes, tire rotations, tires, brakes, transmission fluid, ect).
Your stop-and-go delivery miles are the absolute hardest miles you can put on a vehicle.
- You still aren't accounting for the fact that you will have to replace your vehicle TWICE AS FREQUENTLY as you would otherwise.
Based on your OP, you are racking up ~20K miles just in food delivery!
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Last night I made $120 in 4.5 hours and I had periods of waiting for orders so it could have been another $20 on a busier night.
So far I feel this makes sense for me and my family and has been a nice way to really increase our savings at a much higher rate than I expected when I started in February.
I'm glad you listened to me about the insurance, but you are still wildly overestimating your hourly rate...
- You still aren't subtracting fuel costs from your revenue before calculating your hourly rate.
- You still aren't factoring in all of the extra wear/tear on your vehicle (oil changes, tire rotations, tires, brakes, transmission fluid, ect).
Your stop-and-go delivery miles are the absolute hardest miles you can put on a vehicle.
- You still aren't accounting for the fact that you will have to replace your vehicle TWICE AS FREQUENTLY as you would otherwise.
Based on your OP, you are racking up ~20K miles just in food delivery!
Geez, dude, lighten up! OP is learning and responsive, yet you're kicking his ass!
The calculation for mileage costs is similar to those estimates of what it costs to raise a child. They're based on averages, based on the way average people live and spend. As mustachians, we work the angles and spend far less than average, which works in our favor. OP is not driving a late model vehicle, nor is it a lease. He's also using this to mitigate his commute costs, which you're conveniently ignoring.
It's great that you know so much, but the OP is not stupid. Let him learn. Even though I have no intention of doing this ever, it's fascinating to learn how it works from an insider's point of view. @caracarn, thank you for taking the time to share your experiences with us.
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Geez, dude, lighten up! OP is learning and responsive, yet you're kicking his ass!
The calculation for mileage costs is similar to those estimates of what it costs to raise a child.
He's also using this to mitigate his commute costs, which you're conveniently ignoring.
It is great to read about pie-in-the-sky "I'm making $25/hr" claims, but that is simply not reality.
My points are important so the OP and others account for their true costs and know what they are actually making.
I'm not sure I understand your point about mileage calculations being estimates.
The OP explicitly told us how many miles he is driving each week, so you can easily calculate his actual mileage.
And those calculations come out to the OP driving and ADDITIONAL 20K miles just delivering food.
You are also incorrect in the OP "mitigating his commute costs."
He explicitly said that his approach is to..."head out after I eat dinner and work until 7 or 8 at night."
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Thanks dicey and researcher1.
I'm fine with the direct approach, but thanks for the protection dicey.
Researcher1 I am not sure I agree with the logic, so let me explain.
The fuel costs, wear/tear etc. are intended to be covered by the mileage deduction against your taxes, or at least that has been how I have heard any CPA ever explain why when examining any business that uses vehicles that you can "ignore" this because you are made whole that way. This has always made sense to me as at the $0.54 at 100 miles you are getting $54 of credit. My oil changes are $19 at the dealer. I do not change my oil every 100 miles and I am therefore way ahead on the "wear/tear" department and therein lies the logic of the CPA advice I have been given that typically mileage allowance covers those earlier replacements etc.
I would love to continue to discuss as I certainly want to learn other perspectives, so I ask a counterpoint. If what you are advocating is true then everyone who delivered would stop doing it because they would be losing money.
So that we can look at this with more detail, let me share my actual info on all fronts. If I miss something else let me know.
Income so far $5,885.37
Fuel March - June (4 full months): $523 - keep in mind we have two other cars in the household and even though they were not going out as much as me, my kids are working and driving to their jobs so at least 2-3 tanks of gas are theirs, but lets just say all the gas is mine to make it easy
Oil changes - $50 (twice for the miles driven)
Miles: 6,574 - this is the mileage used for deliveries as I am tracking this in a log as I must for tax purposes
Insurance; $61/month (again hard to say this is all for delivery especially since there is no markup at all for State Farm as delivery is included in their base provisions and this insurance was a net savings of about $200/year over what I was paying before)
So yes if I keep up this pace I will be at about 19,720 miles for the year for deliveries. I would at that point have made a little under $18,000 for that work, had 4 more oil changes and spent another $1,000 in fuel.
So the annual numbers extrapolated would be
Income $18,000
Expenses $1,600 fuel - 150 oil changes = $1,750
$16,250 to cover insurance (which as stated above really is not extra cost than just having the cat anyway) and to build up a fund for a replacement vehicle
So if I needed to replace the car every 3 years (figuring I'd get to about 100,000 miles total with other driving by then versus 6-7 years otherwise), I have $48,000 in extra income to pull from to do that. I can likely find a good Honda or Toyota for $15K with low enough miles to last me another 100K, so it seems that I might be roughly $30K in the plus column here. Again, want to hear the counter argument to what I am missing, but this would seem to be how this could realistically play out.
On a side note of luck, in May I had my check engine light go on at a little over 118K miles. When I took it into the dealer they said I needed a new engine, but it was under warranty until 120K so I got a new engine in my car now for free, which will likely get me the next 100K in deliveries without any more cost now. I understand this was just dumb luck as otherwise I would have been at the point of replacing the vehicle as you note, so I am not factoring this into my calculations, just enjoying the benefit it has provided me.
Taking this from a different perspective, if I make $100K in my job ($50/hour) would you also then say because I cannot get to my job for free that my hourly rate is therefore lower? I do not think we normally look at work that way any more than my kids making $10/hour at McDonald's factor in their car cost and say they only make $8. I understand and agree that you want to look at your expenses, but am still not certain that it is not fair to state that I can average $20-$25 per hour doing this work and that their are fuel and wear/tear expenses that come with that that mean I will need to buy a car sooner. At this point I also need to say I have been working from home in my normal job since March so I am not commuting to work there, so not even an opportunity to offset commuting cost, but in reality that is such a challenge at least heading into work that I would likely not do that again when we do return to office which at this point with the last we heard will not be for at least two more months.
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OP, what vehicle do you drive?
I drive a 2015 Hyundai Sonata for this.
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Thanks for the updates.
I signed up for doordash about a month ago, but they say there were too many dashers in my area. I was signing up by bike.
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Researcher1 I am not sure I agree with the logic, so let me explain.
The fuel costs, wear/tear etc. are intended to be covered by the mileage deduction against your taxes...so you can "ignore" this...
If what you are advocating is true then everyone who delivered would stop doing it because they would be losing money.
I'm curious about some of your expenses...
- You mentioned your oil changes cost you $19, but you previously said they cost $35. Which is it?
- The only "expenses" you account for are oil changes. What about all of your other costs?
Tire rotations, cabin/air filters, tires, brakes, transmission fluid, coolant changes, belts, spark plugs, ect?
- How does a new engine in your vehicle "get me the next 100K in deliveries without any more cost"??
You will still have all of the same maintenance/repair costs you had before the engine was replaced, right?
- You drove 6,574 miles but only spent $523 on fuel? Assuming you are getting 25 MPG in your hard stop/go driving, that means you filled up for less than $2/gallon?
- Income was $5,885.37. I assume that is after the fees/commissions charged by the company?
You also mention that you will replace a vehicle every 3 years, instead of ~6 years if you didn't deliver.
- The average driver puts on ~12K miles/year. You are driving an additional 20K miles on top of that.
- That means you are racking up miles 267% faster than if you didn't deliver, so your car replacement timeline seems off.
- And this car replacement isn't being taken out of your quoted hourly rate. If you factor this in, what would your hourly rate be?
If drivers actually accounted for all of their expenses, they would see how low their hourly wage really was, and many should absolutely stop doing it.
There is a huge amount of information on the internet about this. Here is one summary...
- Uber drivers typically collect $24.77 per hour in passenger fares.
- From that, Uber takes $8.33 in commissions and fees, about a third of all passenger fares.
- Vehicle expenses like gas and maintenance cost drivers about $4.87 per hour, Mishel determined, even after taking into account their tax deductibility.
- That leaves drivers with $11.77 per hour, from which they pay $0.90 in extra Social Security and Medicare taxes, because they are self-employed.
- If drivers don’t pay for health insurance or contribute to a retirement plan, they can take home $10.87 per hour.
https://www.marketwatch.com/story/this-is-how-much-uber-drivers-really-make-2018-05-15 (https://www.marketwatch.com/story/this-is-how-much-uber-drivers-really-make-2018-05-15)
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Researcher1 I am not sure I agree with the logic, so let me explain.
The fuel costs, wear/tear etc. are intended to be covered by the mileage deduction against your taxes...so you can "ignore" this...
If what you are advocating is true then everyone who delivered would stop doing it because they would be losing money.
Mmmmm, no, that's not quite how it works. The deduction in taxes doesn't make up for cost of ownership. You are making the same common mistake that people do when donating to charity. If you donate $7k in charity, that doesn't reduce your tax bill by $7k. That reduces your taxable income by $7k. So if you made $50K in a year profit, donated $7K to charity, you are instead taxed on $43K. In this case you might owe $3K instead of $4K for your income. See how that $7K donation turned into a $1K monetary value on your deduction? And with the new tax structure, you may see NO BENEFIT from deductions because the standard deduction is so high. So you won't even break even on your deductions until you are at $12.5K! Meaning you'd have to drive 25000 miles before even seeing a slight benefit from deducting the government mileage from your taxes. Not super peachy. Up until that $12.5K, 100% of the cost per mile on your vehicle is unaccounted for and paid directly from you. Married, filing jointly? The two of you need to come up with $25K before itemizing deductions make sense.
If you run the numbers in a ride-share scenario, you need to look at the profit/loss. The only reason we use the government's cost/mile estimate is it turns out to be an accurate estimate of the cost to run a passenger car per mile in the US. This accounts for everything- gas, maintenance, depreciation, etc. of the average vehicle in average driving conditions. You may be able to beat the average, but it's a good baseline.
So, in this case, it's prudent to estimate that you are costing yourself 57.5c per mile you drive. You don't get to stack that with gas and maintenance either; meaning that as you deduce 57.5c per mile for your business, your maintenance and fuel costs come directly from your profit. No double dipping. You have to repair your transmission? That's an out of pocket cost and not counted for your deduction.
You know why Uber and DoorDash and Lyft and all of that can beat the market delivery prices so much? It's because they don't have to maintain a fleet of vehicles- something which turns out to be a significant cost in the long run. They are taking advantage of the fact that the average person doesn't realize the true cost of driving a vehicle. Depreciation, tires, maintenance, gas, oil, etc. all add up- to about $.57 a mile! You can reduce that if you get a reliable vehicle and drive it well, but you won't deviate that much... and if you're going to err, you might as well err on the side of caution and use the $.57.
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Mmmmm, no, that's not quite how it works. The deduction in taxes doesn't make up for cost of ownership. You are making the same common mistake that people do when donating to charity. If you donate $7k in charity, that doesn't reduce your tax bill by $7k. That reduces your taxable income by $7k. So if you made $50K in a year profit, donated $7K to charity, you are instead taxed on $43K. In this case you might owe $3K instead of $4K for your income. See how that $7K donation turned into a $1K monetary value on your deduction? And with the new tax structure, you may see NO BENEFIT from deductions because the standard deduction is so high. So you won't even break even on your deductions until you are at $12.5K! Meaning you'd have to drive 25000 miles before even seeing a slight benefit from deducting the government mileage from your taxes. Not super peachy. Up until that $12.5K, 100% of the cost per mile on your vehicle is unaccounted for and paid directly from you. Married, filing jointly? The two of you need to come up with $25K before itemizing deductions make sense.
They are taking advantage of the fact that the average person doesn't realize the true cost of driving a vehicle. Depreciation, tires, maintenance, gas, oil, etc. all add up-
EXACTLY.
This more clearly stated the point I've been trying to make from the beginning.
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I think food delivery is a losing proposition for everybody involved: restaurants, customers, drivers, and ultimately taxpayers.
However, I want to push back on the idea that the IRS mileage allowance is a canard. It's not.
Using conservative numbers on a car that's used exclusively for delivery:
- one car, bought new = $25,000
- lifetime mileage on the car of 150,000 miles at 25 MPG and $3.50/g = $21,000
- one $50 oil change every 5,000 miles = $1,500
- one new set of tires at 50,000 miles, another set at 100,000 miles = $1,500
- throw in an extra $5,000 of various repairs
- car insurance for 10 years = $10,000
Total for operating the car from birth to death = $64,000
IRS mileage deduction allowance for 150,000 miles at 50 cents per mile = $75,000. This is before optimizing any of the conservative numbers that I've listed so far. If you know what you're doing:
1) you don't buy a 25k car that gets only 150,000 miles out of it at 25 MPG
3) you save a couple thousand dollars on the other items
and, most importantly:
3) you derive a non-negligible value out of the operation of the car for personal travel.
So yes, unless you drive an idiotic vehicle in an idiotic way, the IRS allowance more than compensates for the added wear and tear.
That being said, fuck everything about delivery apps.
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I think food delivery is a losing proposition for everybody involved: restaurants, customers, drivers, and ultimately taxpayers.
However, I want to push back on the idea that the IRS mileage allowance is a canard. It's not.
Using conservative numbers on a car that's used exclusively for delivery:
- one car, bought new = $25,000
- lifetime mileage on the car of 150,000 miles at 25 MPG and $3.50/g = $21,000
- one $50 oil change every 5,000 miles = $1,500
- one new set of tires at 50,000 miles, another set at 100,000 miles = $1,500
- throw in an extra $5,000 of various repairs
- car insurance for 10 years = $10,000
Total for operating the car from birth to death = $64,000
IRS mileage deduction allowance for 150,000 miles at 50 cents per mile = $75,000. This is before optimizing any of the conservative numbers that I've listed so far. If you know what you're doing:
1) you don't buy a 25k car that gets only 150,000 miles out of it at 25 MPG
3) you save a couple thousand dollars on the other items
and, most importantly:
3) you derive a non-negligible value out of the operation of the car for personal travel.
So yes, unless you drive an idiotic vehicle in an idiotic way, the IRS allowance more than compensates for the added wear and tear.
That being said, fuck everything about delivery apps.
I completely agree with all of this. But if you don't know your actual costs of ownership over your vehicle lifetime, its a good baseline to start with. Also, I personally believe that the type of driving done for delivery is harder on your vehicle than average driving. Stopping, starting, city streets, idling, etc. will be harder on your vehicle than commuting or travel.
Usually people arrive at the delivery service in the opposite mindset; they buy a really nice car that they like to drive, and then decide that since they like driving enough they might as well make some money while doing so. Then rack up like 20K miles extra per year on their WRX or Lexus without planning. If you bought a beater civic or perhaps a cargo van to make heavy specilized deliveries... something not a luxurious... you are more likely to come on top.
But driving around in air conditioned living rooms with premium stereos that have lost 90% of their value after 200K miles isn't good finance, and most likely requires a facepunch! My stereo at home looses almost no value over the same time period.
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Geez, dude, lighten up! OP is learning and responsive, yet you're kicking his ass!
The calculation for mileage costs is similar to those estimates of what it costs to raise a child.
He's also using this to mitigate his commute costs, which you're conveniently ignoring.
It is great to read about pie-in-the-sky "I'm making $25/hr" claims, but that is simply not reality.
My points are important so the OP and others account for their true costs and know what they are actually making.
We are not in disagreement on this point, and OP seems to understand this as well.
I'm not sure I understand your point about mileage calculations being estimates.
The OP explicitly told us how many miles he is driving each week, so you can easily calculate his actual mileage.
And those calculations come out to the OP driving and ADDITIONAL 20K miles just delivering food.
Sorry you did not understand. Please see Paul's excellent elaboration in bold below. Note that I believe he was using 50 cents/mile as an example. The IRS actual MDA for 2020 is 57.5 cents, which is down from 58 cents in 2019.
You are also incorrect in the OP "mitigating his commute costs."
He explicitly said that his approach is to..."head out after I eat dinner and work until 7 or 8 at night."
Second "explicit" quote below is directly from the OP.
I think food delivery is a losing proposition for everybody involved: restaurants, customers, drivers, and ultimately taxpayers.
However, I want to push back on the idea that the IRS mileage allowance is a canard. It's not.
Using conservative numbers on a car that's used exclusively for delivery:
- one car, bought new = $25,000
- lifetime mileage on the car of 150,000 miles at 25 MPG and $3.50/g = $21,000
- one $50 oil change every 5,000 miles = $1,500
- one new set of tires at 50,000 miles, another set at 100,000 miles = $1,500
- throw in an extra $5,000 of various repairs
- car insurance for 10 years = $10,000
Total for operating the car from birth to death = $64,000
IRS mileage deduction allowance for 150,000 miles at 50 cents per mile = $75,000. This is before optimizing any of the conservative numbers that I've listed so far. If you know what you're doing:
1) you don't buy a 25k car that gets only 150,000 miles out of it at 25 MPG
3) you save a couple thousand dollars on the other items
and, most importantly:
3) you derive a non-negligible value out of the operation of the car for personal travel.
So yes, unless you drive an idiotic vehicle in an idiotic way, the IRS allowance more than compensates for the added wear and tear.
That being said, fuck everything about delivery apps.
"I did a dash (shift) last night from 5 - 8 and did it from work. My first pick up was less than a mile away, and because I was working at my delivery business, my drive home after my shift can be included in those miles, so even though I was 30 miles from home, effectively going by my office on the way home, my trip home was tax deductible, so if you can work in a pickup each way (what I did both ways that day, delivering in the morning on the way in and after work before heading home) you are suddenly turning in the miles you drive to a from your job into something that benefits you rather than just costs you. Might be worth MMM taking a peak at this method as perhaps a way to lower the cost of clown car ownership.[/li][/list]
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We are not in disagreement on this point, and OP seems to understand this as well.
Actually, the OP didn't seem to understand this, which is what several of us have been trying to point out.
The only expenses he's currently accounting for is fuel & oil changes. In fact, the OP explicitly said that "fuel costs, wear/tear ect ... can be ignored".
Sorry you did not understand. Please see Paul's excellent elaboration in bold below. Note that I believe he was using 50 cents/mile as an example. The IRS actual MDA for 2020 is 57.5 cents, which is down from 58 cents in 2019.
You're not following my point. I was responding to this comment from you...
"The calculation for mileage costs is similar to those estimates of what it costs to raise a child. They're based on averages, based on the way average people live and spend."
My point is that the OP should not rely on estimates from the IRS to calculate his costs. He should be keeping track and calculating his actual costs.
He knows how many miles he's driving, what his MPG is, what maintenance his owner's manual calls for, how often he needs to replace brakes/tires, ect.
There is no reason to guess or use government averages...instead, track his actual costs!
Second "explicit" quote below is directly from the OP.
You stated..."He's also using this to mitigate his commute costs, which you're conveniently ignoring."
This is simply wrong.
The OP made ONE delivery when he first started that coincided with his commute.
He then theorized that "if you can work in a pickup each way" it could mitigate commute costs, not that he's actually doing that.
In fact, he goes on to say..."My current model is to head out after I eat dinner and work until 7 or 8 at night when the orders start to dry up..."
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Ha! I was wondering if someone was going to notice my 50c/mile approximation. I generously rounded up (or down) every single number to account for increased costs compared to today's baseline. Still more than compensates.
Now it's possible that there is a potential delivery driver in rural Alaska who faces $6 gas, $500/month insurance because of evil polar bears, and a cabal of local dealerships that only sells luxury cars, I guess. For everyone else, it should be just fine.
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We are not in disagreement on this point, and OP seems to understand this as well.
Actually, the OP didn't seem to understand this, which is what several of us have been trying to point out.
The only expenses he's currently accounting for is fuel & oil changes. In fact, the OP explicitly said that "fuel costs, wear/tear ect ... can be ignored".
Sorry you did not understand. Please see Paul's excellent elaboration in bold below. Note that I believe he was using 50 cents/mile as an example. The IRS actual MDA for 2020 is 57.5 cents, which is down from 58 cents in 2019.
You're not following my point. I was responding to this comment from you...
"The calculation for mileage costs is similar to those estimates of what it costs to raise a child. They're based on averages, based on the way average people live and spend."
My point is that the OP should not rely on estimates from the IRS to calculate his costs. He should be keeping track and calculating his actual costs.
He knows how many miles he's driving, what his MPG is, what maintenance his owner's manual calls for, how often he needs to replace brakes/tires, ect.
There is no reason to guess or use government averages...instead, track his actual costs!
Second "explicit" quote below is directly from the OP.
You stated..."He's also using this to mitigate his commute costs, which you're conveniently ignoring."
This is simply wrong.
The OP made ONE delivery when he first started that coincided with his commute.
He then theorized that "if you can work in a pickup each way" it could mitigate commute costs, not that he's actually doing that.
In fact, he goes on to say..."My current model is to head out after I eat dinner and work until 7 or 8 at night when the orders start to dry up..."
Okay researcher1, I'll concede. You are right about everything and everyone else is wrong. Or maybe it's just me that's wrong. There, you win. Game, set, and match to researcher1.
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Ha! I was wondering if someone was going to notice my 50c/mile approximation. I generously rounded up (or down) every single number to account for increased costs compared to today's baseline. Still more than compensates.
Now it's possible that there is a potential delivery driver in rural Alaska who faces $6 gas, $500/month insurance because of evil polar bears, and a cabal of local dealerships that only sells luxury cars, I guess. For everyone else, it should be just fine.
I noticed that. But that's missing the bigger picture that costs are being incurred in the first place.
Ok, so let's assume that it costs $.30 per mile to drive the car because the driver does their own maintenance, they bought used so depreciation isn't killing them, using only liability insurance, etc.
Now, lets assume you're getting about 10% of the $.57/mile cost as a tax writeoff (contract workers generally pay between 8-15% come tax season). So that's about $.06 less per mile to run your vehicle. In this case, with tax write-offs included, it's still costing an efficient driver about $.24/mile to drive their vehicle.
So for 10,000 miles of driving, it is costing a driver $2400 to operate their business. Figures online are all over the place, but drivers seem to make an average of $1/mile, so $10,000. Running a vehicle in this scenario is costs about %25 of profits.
That really tells us nothing about opportunity cost until we know how much time it is taking to drive those miles. $/hour rate.
I am skeptical of the notion that you could "double down" and effectively cover your commute with running the service. You can turn down a % of offered jobs, but if you start turning down too many, the app will give you fewer options in the future. Most drivers shoot for over 50% acceptance rate. All of these factors are highly dependent on the region that you're delivering in (some people can't afford to turn down any jobs because the driver/delivery ratio is so bad.
The real way to do this is to take your total yearly earnings, reduce by your total time driving (including waiting for next order, etc), and then subtract something like $.24 per mile accrued, assuming those miles aren't "double down" miles. My untested guess is most people come out under minimum wage.
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" MyFast thinks Delivery is for the Weak ! "
Classic 30 second Volkwagen GTi commercial ---- https://www.youtube.com/watch?v=77Tes6vWF5M
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Thanks for all the excellent dialogue folks! It is fun to hear the perspectives. Let me respond to some of the items mentioned, mainly from researcher1. I tossed in the three year car life estimate for commentary and surprised no one talked about that as to me that was the "case study" to pick at.
I am aware there are other costs and I track my car costs (along with everything else) very diligently in YNAB. It is how I know I spent $523 on fuel for all our cars in the house (I can track down to each car but was not bringing that forward here as I felt that even if the full $523 was delivery related I provided those numbers). The other costs associated with a car will happen anyway, delivery just accelerates them, so I do agree I relatively flippantly disregarded them. If I think it through I will need one extra set of tires over the life of the delivery as I have a great set that I like that costs $400, installed and mounted for this car and runs for over 80K miles (I replaced the first set at 88K miles and still had not fully gotten down to the wear level but winter was coming and I figure I would in another 5-10K so I changed them a bit early). I hit all the other maintenance faster as more miles get turned up. My attempt of showing the 3 year estimate and that I still had $15K a year at the end (which I could cover those maintenance costs I did not detail, but that I think we can all agree will not add up to more than $15K a year). The post was long already, was trying to make it not insane.
On the "delivery miles are hard", I do not drive in a city. I am in a low traffic area (compared to what I think most people think of such as Chicago, LA or NY where most of this activity happens) and I have two highways that run through my delivery region and are about 3 miles apart so I usually use one of the other on every delivery. The stop, start, sitting in traffic is much less than when I lived in Chicago and just drove let alone did something like delivery. If I was operating there, I would be more concerned and honestly I would hate it and would not do it. Part of why I can make the higher dollars per hour is because I am NOT in an area like that, so I get paid for more miles by the delivery app and still get to a 15 mile delivery in the same time a <5 mile delivery would take in another market. Yes, that impacts the car, but I am not driving an hugely expensive vehicle as some others had suggested. When I repalce this vehicle it will be with a higher mileage Honda or Toyota as I said which will increase by average gas mileage from 27ish that I get to well over 30 mpg.
Also with are well above the standard deduction each tax year even with the higher level. The caps on mortgage interest etc have meant we leave things on the table but the self employment deductions are almost fully used for my wife already so this will increase that level. I may find in actuality I am wrong but then I will only have been at this endeavor for a year or so and learned my lesson with a small case study.
For me this an experiment to see if I am better off than I was not doing it. Right now I enjoy it, I get to drive around in the country and enjoy the wonderful scenery in our area and make some money while I do it. I would never make this my full time job other than to plug an significant employment gap as I also think part of why this works better for me than most (and also why the models are hard to apply apples to apples) is that I select the times I go specifically because I have optimized when the best orders exist in my area. Someone doing this more "typically" is just out waiting for orders. I do not do that. I go during the hot time when tips are highest and supply is best and as soon as things turn down I shut down for the night rather than drive around incurring expense and taking more time and diluting my hourly earnings. I get this is a special snowflake example and I am likely less special in my usage than I think. My acceptance rate is nearly 100%. I have found that makes more money. I can do that because I am not in a congested area where a long haul would take 2 hours in rush hour traffic. Our city space has virtually no times when the freeways are stop and go (other than accidents which are also rare), so I can get anywhere very fast. That also means I am almost never waiting for an order as they apps just send them one after the other because the acceptance rate is high. In talking with other drivers I am certainly an exception as most of them turn down quite a bit. I just see no reason to do that, as if you turn things down you can wait 10 minutes for another order to arrive and that means 10 minutes of my 90-120 targeted minutes are spent doing nothing. Why?
I do appreciate all the discussion. It is helpful for me to think about, and it seems the sharing is helping others who are thinking about it.
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For me this an experiment to see if I am better off than I was not doing it. Right now I enjoy it, I get to drive around in the country and enjoy the wonderful scenery in our area and make some money while I do it. I would never make this my full time job other than to plug an significant employment gap as I also think part of why this works better for me than most (and also why the models are hard to apply apples to apples) is that I select the times I go specifically because I have optimized when the best orders exist in my area. Someone doing this more "typically" is just out waiting for orders. I do not do that. I go during the hot time when tips are highest and supply is best and as soon as things turn down I shut down for the night rather than drive around incurring expense and taking more time and diluting my hourly earnings. I get this is a special snowflake example and I am likely less special in my usage than I think. My acceptance rate is nearly 100%. I have found that makes more money. I can do that because I am not in a congested area where a long haul would take 2 hours in rush hour traffic. Our city space has virtually no times when the freeways are stop and go (other than accidents which are also rare), so I can get anywhere very fast. That also means I am almost never waiting for an order as they apps just send them one after the other because the acceptance rate is high. In talking with other drivers I am certainly an exception as most of them turn down quite a bit. I just see no reason to do that, as if you turn things down you can wait 10 minutes for another order to arrive and that means 10 minutes of my 90-120 targeted minutes are spent doing nothing. Why?
This is interesting. I am now curious at what you come out at on the year-end! Seems that you are keeping track and documenting well. It would be interesting for me to see how different your experiences as an "optimized side hustle" differs from those who are more full-time about it. Seems that there is more room than I had originally thought to come out on top. Kind of a catch-22 of a deal, in that the more that someone relies on it for the money, the less money they can make doing it.
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For me this an experiment to see if I am better off than I was not doing it. Right now I enjoy it, I get to drive around in the country and enjoy the wonderful scenery in our area and make some money while I do it. I would never make this my full time job other than to plug an significant employment gap as I also think part of why this works better for me than most (and also why the models are hard to apply apples to apples) is that I select the times I go specifically because I have optimized when the best orders exist in my area. Someone doing this more "typically" is just out waiting for orders. I do not do that. I go during the hot time when tips are highest and supply is best and as soon as things turn down I shut down for the night rather than drive around incurring expense and taking more time and diluting my hourly earnings. I get this is a special snowflake example and I am likely less special in my usage than I think. My acceptance rate is nearly 100%. I have found that makes more money. I can do that because I am not in a congested area where a long haul would take 2 hours in rush hour traffic. Our city space has virtually no times when the freeways are stop and go (other than accidents which are also rare), so I can get anywhere very fast. That also means I am almost never waiting for an order as they apps just send them one after the other because the acceptance rate is high. In talking with other drivers I am certainly an exception as most of them turn down quite a bit. I just see no reason to do that, as if you turn things down you can wait 10 minutes for another order to arrive and that means 10 minutes of my 90-120 targeted minutes are spent doing nothing. Why?
This is interesting. I am now curious at what you come out at on the year-end! Seems that you are keeping track and documenting well. It would be interesting for me to see how different your experiences as an "optimized side hustle" differs from those who are more full-time about it. Seems that there is more room than I had originally thought to come out on top. Kind of a catch-22 of a deal, in that the more that someone relies on it for the money, the less money they can make doing it.
From my experiences thus far I would totally agree with your last statement. IF you rely on it for you main income you are forced to stick with it all day and there are huge gaps of the day when nothing is happening, but the way the apps work they encourage you to drive to a "hotspot" and then maybe you will get an order. It becomes a lot like fishing with a fish finder. Both GrubHub and Doordash have heat maps that show you if there are orders in your area. So just like a fish finder shows you dots that are fish, does not mean casting your line will get a fish to bite. In the same way just because Doordash says your area is Busy does not mean that you are the closest driver or there are enough orders for all the drivers signed on. So you would spend a lot of time just driving around hoping to get close enough to an order that it bites in your app (maybe I pressed the fishing analogy too far?) This means a lot of miles and time with no income to offset your expense. I have figured out which times in my area are the best. For example orders die down between 7-8 PM. Also heading out for less than an hour is almost always a losing proposition because you may only get one order done if you get one that is over 10 miles of delivery for example, so I will not head out unless I have 90 minutes or more before 7. There is no lunch rush in my area on the weekends (which is the only time I can drive around lunch due to my regular job), and going out before 4:30 PM is very sketchy. I have also found that looking for addresses after it gets dark wastes a ton of time and so as the days shorten so will my window, but I should still be OK until about 7 so my model is likely to remain intact. I also keep an eye out for shifting trends. I make a killing with Instacart for about 6 weeks (easily exceed $300 in 10 hours or less and this gig has much less driving so your expenses stay down) but then orders dried up and you could get one good shop in and then nothing or orders around $10 exist. Given that you can typically not shop and deliver even the smallest order in less than 45 minutes the hourly return is too little, so I will do things like grab an Instacart order at 9 AM on Saturday when orders drop and then switch to GrubHub or Doordash for the trip home and snag one or two deliveries at early lunch. Also holidays are a disaster as the lines are too long. I made the mistake of trying to run on both Easter and Mother's Day and that was enough for me to modify my script and exclude holidays as I had orders both days where the wait was over 2 hours and the restaurant might not be able to make the food (this is certainly COVID anomalies but will never try a holiday again until restaurants are fully back to normal).
Another thing is GrubHub has what are called Place and Pay orders and from what I see on the boards most drivers refuse these as they think it is too much. Basicaly what than means is the restaurant is not in the GrubHub system and therefore the driver calls or arrives at the restaurant and orders as if they are the diner (you do not say you are with GrubHub). GrubHub pays you more for these orders because of the extra work and if you have any ability to organize you can make these work just as fast as regular orders. I will usually call as soon as I get the order so that my drive time to the restaurant allows them to make the food. If the time they give me is excessive (some weekends it can be an hour) I turn on Doordash and grab an order or two in that time, so I am constantly working to fill every minute with something I am getting paid for. I do believe that makes a huge difference. You have to be good with the apps and your phone to not lose an order because you had one app minimized and the timer ran out for example. But using this method I have had two weekends in a row where for that hour I made $40 - $50+ because of running both together.
So what I am doing is skimming the cream off the top for certain because I am likely putting far more optimization thought into my activities rather than just heading out when I have free time. Being as Mustachinan though I find this type of gaming the system a thrill, so I keep looking for other ways to maximize the return.
I will keep updating for those who are interested and certainly welcome any observations of what you all see, as we can certainly be blinded by thinking what we are doing is great because we thought of it.
I do feel that my drive to press it has gone down a bit with the warmer weather. For example, Friday night (tonight) would normally be a sure thing, but I am just not feeling it right now and storms are rolling in so I may stay home, which will lower my weekly earnings for certain. In the end I will be able to keep sharing what my hourly earn is and then can run up my expenses for the year as well. This week I have been out for 1.5 - 2 hours and made $58.34.
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So what I am doing is skimming the cream off the top for certain because I am likely putting far more optimization thought into my activities rather than just heading out when I have free time. Being as Mustachinan though I find this type of gaming the system a thrill, so I keep looking for other ways to maximize the return.
This, right here, is gig work done right. Providing "liquidity" in times of demand, on your own terms and schedule, and getting fairly compensated for it.
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Ahhhh car mileage. Lets step back folks.
What goes into the IRS mileage number? It is a National AVERAGE of:
fuel costs
Insurance costs
Maintenance costs
DEPREICIATION.
Again, these are national averages. OP's modest mobile, the F-150 next door, the Prius down the road, the new Audi in your neighborhood, The hanyman next door's GMC 2500 Duramaster diesel blaster. 2019 average new car fuel efficiency was 24.9 according to professor google.
The more of these categories you can ride under the average of, the more $$ you can make with the standard deduction. OP is getting up to speed on that and tightening up his accounting like any good businessman.
At a minimum OP is now depreciating his cheap car at national average, which is favorable to him.
Or, he is not making money in his business to get things that are useful to him for free or partially free. He should be writing off some phone costs too against his earnings, further shrinking them. Does that write off make the door dash work less? some here have made statements to the effect that it does!
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This, right here, is gig work done right. Providing "liquidity" in times of demand, on your own terms and schedule, and getting fairly compensated for it.
That's the benefit. I just heard a local company pays $14/hour to anyone to sit at home on the phone to do contact tracing for COVID. No driving at all. I didn't think it was for me, but I wonder if that's something where one could do just a few hours a day (say, 2 hours/day after work) for a few extra dollars, or a few hours on weekends.
It seems like an easier thing than to try to game bonuses on delivery apps and deal with driving and other people. Of course, I'm lazy, so that affects my judgement here. :D
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This, right here, is gig work done right. Providing "liquidity" in times of demand, on your own terms and schedule, and getting fairly compensated for it.
That's the benefit. I just heard a local company pays $14/hour to anyone to sit at home on the phone to do contact tracing for COVID. No driving at all. I didn't think it was for me, but I wonder if that's something where one could do just a few hours a day (say, 2 hours/day after work) for a few extra dollars, or a few hours on weekends.
It seems like an easier thing than to try to game bonuses on delivery apps and deal with driving and other people. Of course, I'm lazy, so that affects my judgement here. :D
To be clear I am not doing anything with bonuses. If they occur (which is rare in my area) they are truly a bonus and may get me to adjust my behavior if I was already going out. For example GH one weekend added $25 to every 5 deliveries (so a $5 bonus per delivery which is about a 30% bump) so I stayed out a bit longer to get the 5 deliveries, but otherwise what I am doing is being aware of the best times when I can go and only going out then.
This is not foolproof. For example this week so far is a great example. Normally 5:30-7 has been guaranteed to be one order after another and good ones. Monday and Tuesday I have been waiting and orders are sub $10 many times. So instead of the $100 I would normally have made so fat, I have made $75.
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I wonder if gigs like this allow folks who live in dense areas to confine their delivery area such that delivering via bike were possible. I'll have to look into it - I could get paid to get some cardio in!
I deliver for Instacart on a bike. The good thing about Instacart is that you get to choose the batches you want to do. So I only pick small batches from small stores such as pharmacy. A pharmacy is small enough to shop quickly and people usually get 3 or 4 items, and the items are usually small so it's really easy to carry them on a bike. Works for me. I only do it when I have a bit of time to spare in between other things. Got $130 this week for an exercise.
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I wonder if gigs like this allow folks who live in dense areas to confine their delivery area such that delivering via bike were possible. I'll have to look into it - I could get paid to get some cardio in!
I deliver for Instacart on a bike. The good thing about Instacart is that you get to choose the batches you want to do. So I only pick small batches from small stores such as pharmacy. A pharmacy is small enough to shop quickly and people usually get 3 or 4 items, and the items are usually small so it's really easy to carry them on a bike. Works for me. I only do it when I have a bit of time to spare in between other things. Got $130 this week for an exercise.
If Pete, Mr. Money mustache, gave out gold stars he would give you one!
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I wonder if gigs like this allow folks who live in dense areas to confine their delivery area such that delivering via bike were possible. I'll have to look into it - I could get paid to get some cardio in!
I deliver for Instacart on a bike. The good thing about Instacart is that you get to choose the batches you want to do. So I only pick small batches from small stores such as pharmacy. A pharmacy is small enough to shop quickly and people usually get 3 or 4 items, and the items are usually small so it's really easy to carry them on a bike. Works for me. I only do it when I have a bit of time to spare in between other things. Got $130 this week for an exercise.
This is great. If I lived in a city (and was younger) I would certainly look at this method over a car. Lots of density and several apps let you deliver via bike. In addition to Instacart check out Postmates.
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I wonder if gigs like this allow folks who live in dense areas to confine their delivery area such that delivering via bike were possible. I'll have to look into it - I could get paid to get some cardio in!
I deliver for Instacart on a bike. The good thing about Instacart is that you get to choose the batches you want to do. So I only pick small batches from small stores such as pharmacy. A pharmacy is small enough to shop quickly and people usually get 3 or 4 items, and the items are usually small so it's really easy to carry them on a bike. Works for me. I only do it when I have a bit of time to spare in between other things. Got $130 this week for an exercise.
If Pete, Mr. Money mustache, gave out gold stars he would give you one!
Why wait for Pete? I can do this! ⭐⭐⭐⭐⭐ Good job, @Catica!
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So posting here briefly to share some further detail nearly 3 more months in so now past the 6 months mark of this side hustle.
I will post in the next week or two about my current numbers, but I will say things have gone down a lot, partially by choice and partially not.
If I had to guess, I think the loss of the extra unemployment for people impacted this sector a lot because about a week after 7/31 when that extra amount ended and the last check would have arrived, it became harder to get orders in Grubhub or Doordash for me. I noticed more time between orders and as the weeks went by it got so bad that in the last month I turn on my phone and wait to get an order before I even leave my house. It has taken an hour sometimes for an order to appear. Some days I just shut down the app after 20 minutes knowing that even if one appears it likely means that I can run that one and then would be waiting 30 minutes or more for another. That is the non-choice side.
On the choice side, as I said when I started, my target was $100 per week to improve my saving rate. Because of that I determined that I am not going to press things just to try to get some money because I think it shifts the results into the negatives that others have raised on this thread of just burning gas and not making any money. As the days are shorter it is back to the point when I started in late February that it is dark by around 7 PM and that makes it hard to see the addresses on homes. I am mulling about if I will buy a handheld spotlight to help over the winter but have not pulled the trigger on that yet. I had one of these before, for a fun purpose as we did road rallies in Chicago nearly two decades ago, but I had gotten rid of the spotlight a while back as it is not something you need unless you need to read signs and numbers in the dark. If I do that I may find that working into the night can be less frustrating but for now, given the dearth of orders I have not done it because I am fine coming back as it gets dark having done two orders. Right now I target Tuesday and Thursday as the only weeknights I try because my wife works until about 8:30 on those nights anyway so it just makes sense to try then, but as I said some days I do not go at all because no orders appear. The stranger thing is that Instacart also is now drying up as of the last month. I used to spend Saturday morning doing Instacart. I could always find orders, though they may have been less profitable than pre-7/31, but they were there if I wanted to go. I had since lowered my target to $20 from $30 as it was hard to find anything over $30 as the pandemic has dragged on. In the last month however there have been two Saturdays with no orders at all at 9 AM when they are released. This has never happened since I started. I am hoping it does not get worse. This past Saturday I got $62 from two orders, which was excellent. This was after 2 weeks with nothing. I have not hit $100 in a given week for five weeks now. I believe my lowest week was $23 when I got Grubhub orders one night and then nothing the rest of the week. Some weeks I would get one IC order on Saturday morning and then when done nothing to choose from and no other income that week. Since this is a side hustle it is just a disappointment and not a real problem. If I relied on this income it would be very stressful.
I will compile the numbers since the last report and provide that soon for those following along. Obviously miles on the car are much less at this point too.
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Interesting information here. I haven't tried it, but I have a sibling who does this as a side hustle from whom I've heard a bit about how it works and how California's current relevant ballot proposition (22) would affect the landscape (if the proposition fails California will likely see most if not all of these services stop operating here). The proposition provides a minimum earning floor (based on engaged time, not accounting for indirect vehicle expenses, averaged over two week earning period), medical insurances subsidies if meeting engaged time threshold over a calendar quarter, disability insurance for online time, and automotive liability insurance for engaged time.
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OK, so I got everything in through today.
$8,358.11 income
$5,323.72 mileage deductions
Net $3,034.39 taxable so a little under $1,000 in tax right now
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OK, so I got everything in through today.
$8,358.11 income
$5,323.72 mileage deductions
Net $3,034.39 taxable so a little under $1,000 in tax right now
What do you mean by "mileage deductions"? How did you calculate that?
Mileage deduction is not writing off that expense. It is not a tax credit.
It only lowers the amount of GROSS INCOME that you are taxed on.
Also, do you have more than $24,000 worth of itemized tax deductions?
If not, then you would be better off taking the standard deduction, which means you would get zero "mileage deductions" benefit.
Lastly, you still haven't outlined your expenses.
Fuel, maintenance, wear/tear, ect.
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What do you mean by "mileage deductions"? How did you calculate that?
Mileage deduction is not writing off that expense. It is not a tax credit.
It only lowers the amount of GROSS INCOME that you are taxed on.
Also, do you have more than $24,000 worth of itemized tax deductions?
If not, then you would be better off taking the standard deduction, which means you would get zero "mileage deductions" benefit.
That's not how this works. Business deductions incurred during the course of self-employment, which is what OP is engaging in, go on Schedule C and are completely separate from personal deductions (itemized vs standard).
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OK, so I got everything in through today.
$8,358.11 income
$5,323.72 mileage deductions
Net $3,034.39 taxable so a little under $1,000 in tax right now
What do you mean by "mileage deductions"? How did you calculate that?
........
Lastly, you still haven't outlined your expenses.
Fuel, maintenance, wear/tear, ect.
Car expenses for a business are calculated one of two ways.
Standard mileage rate which is set annually by the IRS. Sounds like this is what the OP is using.
Or...Actual expenses (fuel, maintenance, etc. as you list)
You use one or the other, not both. Over years as a tax preparer, it was almost always better for my clients to use the standard mileage deduction. Not least, due to the easier record-keeping. As a guess, the OP's actual expenses are probably less than the standard mileage deduction. But maybe not if they are doing a lot of idling, waiting around. They'd have to figure that for their situation.
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OK, so I got everything in through today.
$8,358.11 income
$5,323.72 mileage deductions
Net $3,034.39 taxable so a little under $1,000 in tax right now
I am curious, how much did you spend on gas and additional insurance? Did you add it all up? Curious to find out.
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That's not how this works. Business deductions incurred during the course of self-employment, which is what OP is engaging in, go on Schedule C and are completely separate from personal deductions (itemized vs standard).
Got it.
So after taxes, his income was ~$7300.
If the OP calculated his "mileage deductions" using the IRS rate of 57.5 cents/mile, that means he drove ~9,300 miles.
He needs to subtract his costs for fuel, oil changes, tire rotations, pro-rated tires/brakes/filters/fluids, additional insurance, ect.
Then estimate how much of the life of his car he used up (based on how long he typically keeps his vehicles).
After all of that, he would have his net income.
I would be interested in what that number is.
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That's not how this works. Business deductions incurred during the course of self-employment, which is what OP is engaging in, go on Schedule C and are completely separate from personal deductions (itemized vs standard).
Got it.
So after taxes, his income was ~$7300.
If the OP calculated his "mileage deductions" using the IRS rate of 57.5 cents/mile, that means he drove ~9,300 miles.
He needs to subtract his costs for fuel, oil changes, tire rotations, pro-rated tires/brakes/filters/fluids, additional insurance, ect.
Then estimate how much of the life of his car he used up (based on how long he typically keeps his vehicles).
After all of that, he would have his net income.
I would be interested in what that number is.
OP has stated a few times about fuel, oil change, and insurance. Insurance on the car being used was changed to a separate carrier than the rest of the family cars with only the OP and his wife as drivers. Delivery use is covered and overall insurance went down (excluded teenage drivers from this car). I imagine that the direct costs for the driving have been close to $1000 and that the overall cost including wear & tear/depreciation is probably closer to half the standard mileage rate. After total vehicle expenses this is still at least $5000 income (about $2000 tax free due to costs below standard mileage rate). Overall the compensation is probably still about minimum wage (but could be well below minimum wage in an anti-mustachian car).
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Overall the compensation is probably still about minimum wage.
This is the point I'm getting at.
The OP has stated a few contradictory things about fuel/maintenance/repairs/ect.
He's clearly fixated on the gross income, but is nonchalant about all of the many costs incurred to earn this income.
I agree his net income / total hours is probably about minimum wage.
Which doesn't seem like the greatest use of his nights and weekends.
Spending time with friends/family, hobbies, work/chores around the house, exercise is hopefully worth more than a minimum wage job (on top of his full-time job).
It appears he has racked up nearly 10K miles of driving in just the few months he's been doing this.
This means he'll be replacing vehicles about twice as often as he would otherwise. This is a huge factor the OP is not accounting for.
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OK, so I got everything in through today.
$8,358.11 income
$5,323.72 mileage deductions
Net $3,034.39 taxable so a little under $1,000 in tax right now
What do you mean by "mileage deductions"? How did you calculate that?
Mileage deduction is not writing off that expense. It is not a tax credit.
It only lowers the amount of GROSS INCOME that you are taxed on.
Also, do you have more than $24,000 worth of itemized tax deductions?
If not, then you would be better off taking the standard deduction, which means you would get zero "mileage deductions" benefit.
Lastly, you still haven't outlined your expenses.
Fuel, maintenance, wear/tear, ect.
Researcher, A lot of your tax advice is misleading to make the Side hustle look bad.
OP is paid on a 1099, so he should be deducting expenses on a schedule C and this has no bearing on his "deductions" on other parts of the tax return.
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OP is paid on a 1099, so he should be deducting expenses on a schedule C and this has no bearing on his "deductions" on other parts of the tax return.
Agreed.
This was pointed out a few posts ago by Paul.
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So rather than respond to each individual post, just jumping in here.
So yes, Paul, troll and others are right.
This is self employment income and is reported on Schedule C along with deductions, at the IRS rate, which is a direct removal of taxable income, i.e you take income subtract expenses and you are taxed only on the remainder, in this case $3,000. The IRS deduction is meant to compensate for the wear/tear, fuel etc as you cannot remove those expense in addition to the deduction and also means there is little value in calculating those separately, though I had gone through and done that earlier on. In short you are getting more back at 57.5 cents than you typically spend, which is why many people, including me have used their personal car for along road trip for an employer as you get much more back in your reimbursement. Yes there is wear/tear on the car, but in this case I am getting paid to use the car not just wearing it out.
Look at this another way. Most of the services are paying you on average 0.60/mile for the delivery (they pay other items but the mileage calculation for GrubHub is that for example) AND you can deduct the expense at 57.5 along with that, basically washing out that income and "getting it back" so to speak.
On the insurance side, yes it was cheaper to insure for delivery with another insurer than I was paying without and that insurance is not marked up for delivery, meaning it would not be cheaper to be insured with them even if I did not deliver, so again, this is almost like getting that insurance or free, because I am. It is included in the coverage and happens to cost me less. Add in that the monthly cost dropped from $69/month to $56 because of good driving for six months and the low mileage given that right now I drive very little for anything else and this has gotten even less expensive.
On the personal time side, it is true I could lose time with family. So I choose to do this when my wife is working late into the night on Tuesdays and Thursdays with students and when she works on Saturday morning until noon. So I would be sitting around by myself waiting for her to be done. Instead I have turned that time into an income opportunity as well. If you look at the last three months versus the first four months you will see that the income is much less, that is because I spend much less time doing it, because I am choosing to not let it eat into time I would rather do something else. The lower order volume I spoke of also makes it a bit of a necessity because some nights there are just no orders.
The $24,000 deduction has nothing to do with the income here are others have said. Schedule C is self contained for the most part and these expenses are 100% deductible as it is the most basic IRS mileage and therefore does not raise any red flags if I tried to claim other expense, but I am not, because I cannot. The mileage deduction is all you can take for a car. We do the same thing with my wife as a self-employed teacher. All those miles getting to schools etc. is deductible in the same way though she has other expense such as training and supplies, which I do not in this case.
So researcher, I did absolutely shows all my expenses above for the 4 months time frame. The expenses have tracked the same. At this point it is one extra tank of gas for the whole month for the lower hours. Insurance is free as we talked about. Yes, I have to replace the car earlier, but I have already made about what the cost of a replacement used car would be in the course of a single year. That accounts for all my expenses. I wouild argue in that case that once I get to $10K (the cost of a replacement car) everything I make after that is pure profit as I have covered all my expenses.
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So researcher, I did absolutely shows all my expenses above for the 4 months time frame.
Just for everyone to see what your total costs were, could you summarize the key information here?
Gross Income - $8,358.11
Taxes - ~ $1,000
Commissions/Fees - ?
Miles Driven - ?
Average MPG - ?
Fuel Costs - ?
Oil Changes/Tire Rotations - ?
Other Maintenance - ?
Estimated Pro-Rated Costs (tires/brakes/filters/fluids/ect) - ?
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I wonder if gigs like this allow folks who live in dense areas to confine their delivery area such that delivering via bike were possible. I'll have to look into it - I could get paid to get some cardio in!
I deliver for Instacart on a bike. The good thing about Instacart is that you get to choose the batches you want to do. So I only pick small batches from small stores such as pharmacy. A pharmacy is small enough to shop quickly and people usually get 3 or 4 items, and the items are usually small so it's really easy to carry them on a bike. Works for me. I only do it when I have a bit of time to spare in between other things. Got $130 this week for an exercise.
This is great. If I lived in a city (and was younger) I would certainly look at this method over a car. Lots of density and several apps let you deliver via bike. In addition to Instacart check out Postmates.
Yeah, I've considered doing this, but only by (e-)bike. Likely after FIRE. No real desire to do it by car.
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It's interesting to see the back and forth on the tax side of things.
One thing that should enter into the calculus is self-employment taxes. I don't recall all the details offhand, but basically you get to pay both sides of Social Security and Medicare taxes, which is 15.3% of net income - see Schedule SE. You do get a deduction for 1/2 of the SE taxes, but the value of that I think would depend on the OP's tax bracket (which I'm guessing is in the 12% bracket range - so I think it would be 7.65% x ~12% or less than 1% of net income). See Schedule 1 line 14. The OP has probably racked up about a 14.4% self-employment tax bill, or $432 in taxes.
OP might also check into deducting health insurance as a self-employed person if they qualify. See Schedule 1 line 16. The value of this deduction would depend on the OP's health insurance costs. I'm fairly certain that these would have to be after-tax health care premiums, so if they get health insurance through their day job this would not apply.
OP might also qualify for the QBI deduction, which is generally 20% of net income, but there are limitations and rules. See Form 1040 line 10. This would be a deduction of $600, which assuming a 12% tax rate would be about $72 less in taxes owed.
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Now that we've flushed the Schd C out in the open, OP is Dramatically under reporting his costs. Gloriously and Horrendously so in fact!
I don't see any costs for his cell phone or phone bill, which is required for the job. is 25% or 75% of it deductible on the sch C? only OP, his accountant and his pastor can make that judgment as to what percentage is it used for the business.
OP presumably has a small home office that he uses for planning this venture, and posting things like this journal where he tracks and evaluates his business.
OP may have had other necessary IT costs to support the business. Does he use his home internet service 15-20% for the business? I bet by the time he's done, OP will have hardly made anything.
For a poor guy with almost no profits, he might find himself with a confusing amount of cash. As others have noted, he will have to pay self employment taxes on the small accounting profit, but not the cash pile.
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Right, deducting costs that are kinda-sorta-fixed is the name of the game when you run a small business. Anything you can deduct just disappears from the revenue line, never to be taxed.
A good example is home internet service. Whether I use the internet solely for pleasure or 50/50 for work/pleasure, I still have to pay $49.99 to the internet mafia beloved ISP every month. There is no increased cost because there is no way in hell I'd live without internet at home. I didn't get a faster package for business purposes, there is no increased wear and tear on my router and modem.
Same thing for the phone line. I'm already at the cheapest plan possible that has all the features I want for pleasure. But you bet I'm deducting some of that for business use.
We also chose to pay for dental insurance even though it's basically the same price as paying cash. Insurance is a deductible expense, cash visits are not.
The list of micro-optimizations goes on and on and on...
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So researcher, I did absolutely shows all my expenses above for the 4 months time frame.
Just for everyone to see what your total costs were, could you summarize the key information here?
Gross Income - $8,358.11
Taxes - ~ $1,000
Commissions/Fees - $0
Miles Driven - 9,258
Average MPG - 27
Fuel Costs - $617.40
Oil Changes/Tire Rotations - $186(use the car for regular driving to so these costs are all not comparable)
Other Maintenance - None
Estimated Pro-Rated Costs (tires/brakes/filters/fluids/ect) - No idea how you'd like me to answer this
So the general agreement is this by anyone who does this "The standard mileage rate is pretty generous unless you drive a gas guzzler. It far exceeds the costs per mile you incur". Quote taken from the tax tracking app I use for my income and expenses. What this means is that what I spend on gas and tires and oil is really irrelevant because that is what the mileage deduction helps cover. The tires I have in the car lasted 90K miles for the first set and I am on that pace for the second set as I am about at 5 to 7 on the wear measure at nearly 130K on the car and the set installed is $317 for 4 or 0.3 cents per mile. If I had a beater or bought stupidly expensive parts this would be a losing gig. As I am a Mustachian I optimize everything including my car costs. Oil and tire rotations are 1.6 cents per mile. Gas is 7 cents per mile. Again, getting 57.5 cents per mile is extravagantly generous to cover my 8.9 cents per mile costs and help save for the wear and tear that gets me to a replacement car.
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Again, getting 57.5 cents per mile is extravagantly generous to cover my 8.9 cents per mile costs and help save for the wear and tear that gets me to a replacement car.
To be clear, the 57.5 cents per mile the IRS uses is a deduction against your business income, so you'd have to multiply it by your marginal rate to determine your actual economic benefit. Assuming a 12% marginal rate, that's about 7 cents a mile.
I think elsewhere you said that one of the services you work for pays you a mileage rate of 60 cents a mile or something. If that's on top of the delivery fee, that's helpful, and would be different and separate from the tax benefit.
Just don't think that you're getting 57.5 cents from the IRS for every mile you drive. You're not.
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Also, even if you don't know how to calculate it, the overall depletion / depreciation / whatever you want to call it is probably one of your bigger costs, and it's a real cost. You could do some rough estimates by figuring out how much you pay for a new car, what it's worth when you sell it, how many years you keep it, how many miles you drive, and then what percentage of those miles are business miles to get a rough figure.
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Again, getting 57.5 cents per mile is extravagantly generous to cover my 8.9 cents per mile costs and help save for the wear and tear that gets me to a replacement car.
You don't "get" anything, you just aren't taxed on expenses that you deduct. Including mileage. It's the whole "spend $500 to save $50" argument. It is worth something for sure- and anyone who runs a business will gladly deduct any business expenses. But you aren't earning anything soley by driving around at a lower cost than IRS standard mileage.
Also, even if you don't know how to calculate it, the overall depletion / depreciation / whatever you want to call it is probably one of your bigger costs, and it's a real cost. You could do some rough estimates by figuring out how much you pay for a new car, what it's worth when you sell it, how many years you keep it, how many miles you drive, and then what percentage of those miles are business miles to get a rough figure.
+1
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What this means is that what I spend on gas and tires and oil is really irrelevant because that is what the mileage deduction helps cover.
Again, getting 57.5 cents per mile is extravagantly generous to cover my 8.9 cents per mile costs and help save for the wear and tear that gets me to a replacement car.
As others have repeatedly pointed out, your thinking here is completely wrong.
StashingAway -
"Mmmmm, no, that's not quite how it works. The deduction in taxes doesn't make up for cost of ownership. You are making the same common mistake that people do when donating to charity. If you donate $7k in charity, that doesn't reduce your tax bill by $7k.
You don't "get" anything, you just aren't taxed on expenses that you deduct. Including mileage. It's the whole "spend $500 to save $50" argument. But you aren't earning anything soley by driving around at a lower cost than IRS standard mileage. "
Secondcor -
"To be clear, the 57.5 cents per mile the IRS uses is a deduction against your business income, so you'd have to multiply it by your marginal rate to determine your actual economic benefit. Assuming a 12% marginal rate, that's about 7 cents a mile. Just don't think that you're getting 57.5 cents from the IRS for every mile you drive. You're not.
Also, even if you don't know how to calculate it, the overall depletion / depreciation / whatever you want to call it is probably one of your bigger costs, and it's a real cost."
Your real earnings are dramatically lower than you are stating here, because you're not accounting for your costs.
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Secondcor -
"To be clear, the 57.5 cents per mile the IRS uses is a deduction against your business income, so you'd have to multiply it by your marginal rate to determine your actual economic benefit. Assuming a 12% marginal rate, that's about 7 cents a mile. Just don't think that you're getting 57.5 cents from the IRS for every mile you drive. You're not.
Also, even if you don't know how to calculate it, the overall depletion / depreciation / whatever you want to call it is probably one of your bigger costs, and it's a real cost."
Don't forget that the 57.5 cents per mile is also reducing the income subject to self employment tax (15.3%). That makes the total value about 15.6 cents per mile reduction of tax liability if in the 12% marginal income tax bracket (not to mention state taxes). Of course reduced self employment tax comes with reduced social security earnings to base benefits off of.
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I've read most of this and would calculate all this in a slightly different way.
I have thrown in numbers to fill the spot, I don't expect they are correct.
Gas $0,10
Maintenance .05
Insurance $?
Auto depreciation $?
and other costs $?
Say this totals $0.30 per mile. Call this Costs
Earnings average $12 per hour (peak means nothing, it's total $/hrs worked)
(Earnings minus Costs). $11.70
Hours worked x ( Earnings minus Costs) = Net earnings
Net earnings minus ($0.57 x miles) = taxable earnings before taxes
Taxable earning minus taxes + SS taxes = after tax earnings
After tax earnings divided by hours = pay per hour.
I may have missed or added something not needed.
Any care to guestimate numbers for this?
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I've read most of this and would calculate all this in a slightly different way.
I have thrown in numbers to fill the spot, I don't expect they are correct.
Gas $0,10
Maintenance .05
Insurance $?
Auto depreciation $?
and other costs $?
Say this totals $0.30 per mile. Call this Costs
Earnings average $12 per hour (peak means nothing, it's total $/hrs worked)
(Earnings minus Costs). $11.70
Hours worked x ( Earnings minus Costs) = Net earnings
Net earnings minus ($0.57 x miles) = taxable earnings before taxes
Taxable earning minus taxes + SS taxes = after tax earnings
After tax earnings divided by hours = pay per hour.
I may have missed or added something not needed.
Any care to guestimate numbers for this?
It looks like you are assuming 1 mile per hour driven. In reality it is more $1/mile for DoorDash income (Based on my experience). So if you are assumign $12/hr, then it must be about 12 miles driven. So costs per hour is $3.60 (Assuming your calculation of $0.30). So earnings minus costs in your calculation is $8.40 and not $11.70
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I think $0.30/mile is a pretty good estimate of total cost for a reasonable car. Going with revenue estimate of $1/mile driven, you get $0.70/mile earned ($0.425/mile taxable earnings). $15/hour earned would require about 21.5 miles driven each hour which seems plausible if everything is going smoothly.
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It looks like you are assuming 1 mile per hour driven.
As I said, " I don't expect they are correct." I didn't assume anything , if you see an error, change what I wrote, I don't see where what you say should change what I wrote. You mat be correct, I just don't understand what you want changed.
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Again, getting 57.5 cents per mile is extravagantly generous to cover my 8.9 cents per mile costs and help save for the wear and tear that gets me to a replacement car.
You don't "get" anything, you just aren't taxed on expenses that you deduct. Including mileage. It's the whole "spend $500 to save $50" argument. It is worth something for sure- and anyone who runs a business will gladly deduct any business expenses. But you aren't earning anything soley by driving around at a lower cost than IRS standard mileage.
Also, even if you don't know how to calculate it, the overall depletion / depreciation / whatever you want to call it is probably one of your bigger costs, and it's a real cost. You could do some rough estimates by figuring out how much you pay for a new car, what it's worth when you sell it, how many years you keep it, how many miles you drive, and then what percentage of those miles are business miles to get a rough figure.
+1
OK, so my response was a bit cavalier, I admit, because I felt this has been asked and answered at least three times.
What it was getting it is that is is pretty commonly accepted that the IRS deduction of expenses more than fairly compensates for the business use of a private vehicle. Going through the exercise to prove what most commonly accept is not an exercise I want to waste time one because I fall into that category. It is similar to someone asking me to prove that humans breathe oxygen. Sure I could go through the effort, but most people accept this as common fact, so why bother?
There are very few points where this is not true. In my market, I have all the clear positives that show that I am not in a position where things go poorly for me. I do not live in a congested area, so I am not sitting around in traffic literally ever. In NYC or LA these jobs tend to be losers but here in fly over country where we move along at 50+ miles per hour almost everywhere I get between stops very efficiently. This also means I avoid the worst wear and tear on a car: stop and go traffic. I also have a fairly fuel efficient car and use my speed sensitive cruise 90%+ of the time even on city street because my car will go all the way to a full stop if needed. That also helps increase my MPG, as I have run sessions with and without using it and find I average about 2 MPG better using the cruise.
I believe I have responded to most, if not all, of the other, "yeah, but" options asked about saying that does not apply.
In short, I believe the lens most view these services through is large metro areas that are densely populated as this is where these services tend to be in more popular use, but for all intents and purposes one needs to look at my situation are doing this in farm country in Iowa and Nebraska with long stretches of clear road between the restaurant and the house I am going to which allows me to feel this is a worthwhile enterprise for now. I enjoy the activity. Am I going to get rich off it? Of course not, nor is that my goal. I am looking to make a few thousand dollars a year more money, and this clearly does that.
This has started to feel like an exercise in futility (convincing reasarcher1 I am not an idiot). No matter what I present, I will get a "yeah, but" and I just am not willing to keep engaging there. My point was to share with other my experience of food delivery as a side hustle. There is honestly very little that would not make me recommend this to someone in my circumstances: Looking for an easy gig to make some extra cash with some extra time is you enjoy driving and you enjoy people and enjoy the gamification of this particular type of service. To me I make more than I would make in retail or food service, which are the other common alternatives for easy gigs to get and make a little cash on, and I enjoy it a whole lot more because of the flexibility of doing in whenever I want and not having to be an employee in the fast food or retail industry, which I have done in my teens, so I understand that gig. This, in my opinion, is like working on a luxury yacht compared to the slog that is those similar paying jobs.
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I never would have thought this would pay well in farm country. I understand the reduction in cost per mile, but I would also expect to have lower revenue per mile driven due to more miles between dropping off an order and picking up the next one.
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OK, so my response was a bit cavalier, I admit, because I felt this has been asked and answered at least three times.
What it was getting it is that is is pretty commonly accepted that the IRS deduction of expenses more than fairly compensates for the business use of a private vehicle.
I believe I have responded to most, if not all, of the other, "yeah, but" options asked about saying that does not apply.
This has started to feel like an exercise in futility (convincing reasarcher1 I am not an idiot). No matter what I present, I will get a "yeah, but" and I just am not willing to keep engaging there.
It is not just me who has attempted to point out the major flaw in your line of thinking, which you are still failing to acknowledge.
You've said the following in this thread...
- fuel costs, wear/tear ect ... can be ignored.
- what I spend on gas and tires and oil is really irrelevant
- getting 57.5 cents per mile is extravagantly generous.
- IRS deduction of expenses more than fairly compensates for the business use of a private vehicle
All of these costs ARE relevant and can NOT be ignored. You are NOT "getting" 57.5 cents per mile from the IRS.
I'll point out again what other people have tried to tell you...
- Mmmmm, no, that's not quite how it works. The deduction in taxes doesn't make up for cost of ownership. You are making the same common mistake that people do when donating to charity. If you donate $7k in charity, that doesn't reduce your tax bill by $7k.
- You don't "get" anything, you just aren't taxed on expenses that you deduct. Including mileage. It's the whole "spend $500 to save $50" argument. But you aren't earning anything soley by driving around at a lower cost than IRS standard mileage.
- To be clear, the 57.5 cents per mile the IRS uses is a deduction against your business income, so you'd have to multiply it by your marginal rate to determine your actual economic benefit. Assuming a 12% marginal rate, that's about 7 cents a mile. Just don't think that you're getting 57.5 cents from the IRS for every mile you drive. You're not.
- Also, even if you don't know how to calculate it, the overall depletion / depreciation / whatever you want to call it is probably one of your bigger costs, and it's a real cost.
You can't just dismiss these costs.
Especially considering you're running your car into the ground with 15K+ miles/year in around town delivery miles.
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having used my car to drive for work (many times at an office job we had we took advantage of not renting a car and instead driving our own on a business trip and claiming the mileage because we felt the pay far outpaced the maintenance and gas).
Right, when you work an office job or when I worked for the federal government, you would actually be reimbursed at the going rate, around 57.5 cents/mile. This is worth doing because your actual expense is probably less than that.
But DoorDash and GrubHub don't reimburse. According to google, only grubhub reimburses anything, and even with them they only reimburse maybe 1/4 of the mileage. First they only pay from restaurant to customer, not to the next restaurant or back home, cutting mileage in half. Second, they don't pay navigational miles, but "as the crow flies" miles, cutting it in half again.
The IRS, in contrast, doesn't reimburse you anything. They simply dont tax you or charge you self-employment for those miles. If your actual expense is 30 cents, then you save paying taxes on 27.5 cents. In the 25% bracket you save 7.7 cents/mile, or $715 for 9300 miles. But you still had $3000 in car expenses.
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Agreed with those who have noted that while the IRS reimbursement rate is fine (as long as you don't have a car that was either an expensive purchase or is expensive to maintain) when you're getting fully reimbursed for that cost, a tax deduction at that rate is far smaller and is not nearly enough to compensate you for the cost of operating a car.
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OK, so let me ask it another way.
Saturday happened to be quite good this week.
I made $150 Saturday and drove about 100 miles so did not buy any gas. Are those of you saying I am missing something in this estimation saying that somehow it cost be over $150 to operate my car that day?
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I made $150 Saturday and drove about 100 miles so did not buy any gas. Are those of you saying I am missing something in this estimation saying that somehow it cost be over $150 to operate my car that day?
No one is saying your costs exceed your $150 income.
Instead, we are saying there are costs you blindly ignore, which significantly reduces that $150 income.
In your example above, you said you drove 100 miles and "did not buy any gas".
But that doesn't mean you didn't use fuel and incur costs over those 100 miles!!!
Your costs for that trip...about 4 gallons of fuel and pro-rated costs for oil changes/tire rotations/tires/brakes/filters/fluids/reduced vehicle life/ect.
There have been two more posters pointing out your flawed interpretation of the IRS mileage. We're up to about six separate people who have outlined why you are wrong on this. The new comments...
- "Right, when you work an office job or when I worked for the federal government, you would actually be reimbursed at the going rate, around 57.5 cents/mile. This is worth doing because your actual expense is probably less than that. The IRS, in contrast, doesn't reimburse you anything...In the 25% bracket you save 7.7 cents/mile, or $715 for 9300 miles. But you still had $3000 in car expenses."
- "Agreed with those who have noted that while the IRS reimbursement rate is fine when you're getting fully reimbursed for that cost, a tax deduction at that rate is far smaller and is not nearly enough to compensate you for the cost of operating a car."
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OK, so let me ask it another way.
Saturday happened to be quite good this week.
I made $150 Saturday and drove about 100 miles so did not buy any gas. Are those of you saying I am missing something in this estimation saying that somehow it cost be over $150 to operate my car that day?
That's not what anyone is saying, but this is a good exercise to figure out how much was made.
$150 cash is brought in. Let me see if I can work through this right.
Deduct actual cost-to-run vehicle expenses (including gas). Let's go with the 8.9c per mile that is being suggested here. Round to 9c for easier math.
-$9 actual running expenses.
Ok, now let's take out taxes. 15% self employment tax on earnings. But you can deduct mileage from your earnings. Federal tax rate on mileage is 57.5 c per mile. So in the Fed's eyes, you made 150 - (57.5c/mile)100miles = 150 - $57.5 = $92.5. This number could be reduced further if you include deducting other expenses- cell phone, etc. But that's difficult to do in this scenario because you need to pro-rate it at contractor use vs personal use. For now we'll say 15% of that $92.5 is $13.89 ~ $14.
$150 earnings - $9 (running costs) -$14 (taxes) = $127 net gain for the weekend.. This number will go lower as your actual running costs go up. I suspect running costs are quite a bit higher for most people, but those are the numbers that are being suggested in this thread. The Fed thinks that 57.5c is fair, so even if you are at half that you are at 27c/mile. (which would make the net gain at $114). My personal opinion is that this is the easiest part to underestimate. One ball joint replacement or one new fuel pump or whatever can significantly change the numbers. Plus there are unseen costs; more likely to get in an accident (insurance rates go up), the opportunity cost of other work or interesting hobbies, etc.
How many hours were you working? From when you decided to jump in the car to when you were pulling back in the drive? What do the numbers look like on an "average day" vs a good day? Essentially you'd have to do this exercise for a few months to really know. These variable rate earnings are a little like gambling, where you remember the "wins" disproportional from the "losses"
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That's not what anyone is saying, but this is a good exercise to figure out how much was made.
Deduct actual cost-to-run vehicle expenses (including gas). Let's go with the 8.9c per mile that is being suggested here. Round to 9c for easier math.
$150 earnings - $9 (running costs) -$14 (taxes) = $127 net gain for the weekend..
This number will go lower as your actual running costs go up. I suspect running costs are quite a bit higher for most people, but those are the numbers that are being suggested in this thread.
These variable rate earnings are a little like gambling, where you remember the "wins" disproportional from the "losses"
As you gently suggested, the OP is grossly underestimating his expenses with the laughable $0.09/mile.
This trip likely incurred costs of $0.09/mile in just fuel alone! (~100 miles, 27 MPG, $2.25/gal).
Then you have to add all of the other costs associated with operating a vehicle.
A huge part of the equation the OP has completely ignored is the vehicle life being used up with this side job.
He is adding 15K-20K miles/year just in delivery miles, yet assuming there is no cost associated with this!
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Think of the numbers you originally offered:
earned gross: 8400
tax: $1000
gas, oil: $800
net: $6600 earned
What we're suggesting is that real earnings is mayb4e $2000 less than that, accounting for full wear and tear on the car.
That means your net earnings are $4600, almost a 33%reduction.
You didn't mention how many hours it took you to earn that money.
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All you guys need to stop arguing about the mileage deduction and get yourselves a halfway decent accountant.
Good side hustles produce more cashflow than taxable income.
OP what is your marginal tax rate? This is really important to value the costs that are written off.
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That's not what anyone is saying, but this is a good exercise to figure out how much was made.
Deduct actual cost-to-run vehicle expenses (including gas). Let's go with the 8.9c per mile that is being suggested here. Round to 9c for easier math.
$150 earnings - $9 (running costs) -$14 (taxes) = $127 net gain for the weekend..
This number will go lower as your actual running costs go up. I suspect running costs are quite a bit higher for most people, but those are the numbers that are being suggested in this thread.
These variable rate earnings are a little like gambling, where you remember the "wins" disproportional from the "losses"
As you gently suggested, the OP is grossly underestimating his expenses with the laughable $0.09/mile.
This trip likely incurred costs of $0.09/mile in just fuel alone! (~100 miles, 27 MPG, $2.25/gal).
Then you have to add all of the other costs associated with operating a vehicle.
A huge part of the equation the OP has completely ignored is the vehicle life being used up with this side job.
He is adding 15K-20K miles/year just in delivery miles, yet assuming there is no cost associated with this!
I am not ignoring them. I know they are there.
My point was, I will assume that the life of my car drops from 10 years to 5, so I am replacing the car every 5 years. Is it then not fair for the question to be, did I make enough money to replace the car and then make some as well?
I will likely end up with at least $10K made this year, so that would mean $50K earned over 5 years. If I purchase a replacement car for $15-20K to avoid any concern that I cannot get a decent, reliable vehicle that can repeat the cycle, then the other $30-$35K is there to cover all the other costs (fuel, tax) etc.
The challenge here is the rabbit hole this can go down to try to figure out the costs is always prone to now being accurate. I use the car outside of food delivery. When my water pump fails was it really because of the delivery, or would it have failed anyway just owning the car and making no money with it? If I only deliver on sunny days does that mean i can ignore wiper costs because those only happen on the personal time? You can see what I am getting at about how this seem to me to be an exercise in minutiae. If i make even 1 cent of profit does that not mean that this is a money making effort? I do not think anyone who had posted thus far will argue that I am losing money here. The rub seems to be am I making as much as what? I claim? i have never claimed to be making any amount, I have just been sharing the details of what I am doing so that others can learn from them and make their own decision.
I also struggle to equate being concerned about all the expenses when those things are not considered in a "real" job. If I was to work fast food would everyone be worried about the wear and tear on my car? Of course not, because driving to work is assumed to be part of having a job. Taxes would also not matter because we all understand income is taxed. No one tells a fast food worker do not work at McDonald's because your tax rate it too high. I understand self employment tax quite well. Either my wife or I have had some for of self employment income for the better part of two decades. The goal of that game is to lower the taxable wages as much as possible by offsetting expenses. Mileage is one that I am not paying to receive, versus say advertising or inventory, where I would have $1 in expense for every $1 I claimed. Here I have some fraction of 57.5 cents of expense for every mile. We can again get into minutiae about how much that really is. Is it 9 cents of 20? So when I say I "get" something here, I do mean that in a somewhat literal sense. I am spending a fraction of that expense but get to claim 100% of the mileage expense, so I view it as a better "deal" that the other business expenses I get to deduct. So why is the calculus here need to me any more complicated than am I spending less over all than what I am being paid?
I understand we are trying to make it clear to someone examining this as a side hustle what the situation would be using my experience as a model. I am happy to provide any numbers anyone wants that I can provide. At this point almost all $8,000 I have made have gone into the stock market in my index funds. In this case that has also made me money as the market is up over that time. I understand that can change tomorrow, but there are shares I own that I can make even more money with that I would not have owned because my overall income would have been $8K less.
My foray into this at this time was to determine if this is a legitimate side hustle when I RE and have a bad stock year and need to find a way to make $5-10K to make up the difference. At this point it would seem to be. It appears others see it differently, though my question is still if you are not seeing it as a losing proposition why is it a bad idea? Is it because it does not reach some percent return threshold? I look at the last article the MMM posted where one of the sets of numbers was $2,800 in rent against $2,250 in expenses for a $550 profit. I understand that real estate appreciates and the asset itself is able to be sold unlike a car that eventually is worth $0, but I seem to be missing the point of how making $1,000/month and spending about $300 at best is not viewed with a similar positive viewpoint?
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All you guys need to stop arguing about the mileage deduction and get yourselves a halfway decent accountant.
Good side hustles produce more cashflow than taxable income.
OP what is your marginal tax rate? This is really important to value the costs that are written off.
This year will likely again hit 35%
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Think of the numbers you originally offered:
earned gross: 8400
tax: $1000
gas, oil: $800
net: $6600 earned
What we're suggesting is that real earnings is mayb4e $2000 less than that, accounting for full wear and tear on the car.
That means your net earnings are $4600, almost a 33%reduction.
You didn't mention how many hours it took you to earn that money
Ok but that is $4,600 I made even after all the costs right? So how is that a bad thing?
I do not track all the hours, as I am not paid hourly, but when I calculated my earnings for months to figure out my hourly rate as I said it is at least $15/hour and more accurately between $18-$22 so I guess that means I worked between 560 and 382 hours.
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That's not what anyone is saying, but this is a good exercise to figure out how much was made.
Deduct actual cost-to-run vehicle expenses (including gas). Let's go with the 8.9c per mile that is being suggested here. Round to 9c for easier math.
$150 earnings - $9 (running costs) -$14 (taxes) = $127 net gain for the weekend..
This number will go lower as your actual running costs go up. I suspect running costs are quite a bit higher for most people, but those are the numbers that are being suggested in this thread.
These variable rate earnings are a little like gambling, where you remember the "wins" disproportional from the "losses"
As you gently suggested, the OP is grossly underestimating his expenses with the laughable $0.09/mile.
This trip likely incurred costs of $0.09/mile in just fuel alone! (~100 miles, 27 MPG, $2.25/gal).
Then you have to add all of the other costs associated with operating a vehicle.
A huge part of the equation the OP has completely ignored is the vehicle life being used up with this side job.
He is adding 15K-20K miles/year just in delivery miles, yet assuming there is no cost associated with this!
It's also the one I have the least ability to contest because of variance and luck. Someone could go out an buy a $3000 Hyundai Elantra with 150k miles on it, drive it for 100K miles doing minimal maintenance and sell it for $1000 while getting 35mpgs. In that type of scenario it's feasible to get under the 10c/mile scenario. Plenty of people have done it, but it's a roll of the dice on whether or not a person can do it predictably. One faulty transmission or one botched brake job or one physically impairing accident and you've thrown it all down the drain. You can skew the odds by driving safely or buying reliable brands or doing your own maintenance, but the fact is that there are real costs there, and they are more than gas and oil, and most people probably significantly underestimate them.
I think this is one of those things where anecdotal experience is hard to judge because it is better measured by aggregate data. Insurance companies would probably do really well at this exercise, lol
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My point was, I will assume that the life of my car drops from 10 years to 5, so I am replacing the car every 5 years. Is it then not fair for the question to be, did I make enough money to replace the car and then make some as well?
Yes, that' a fair question (also assuming that you are counting the running/maintenance costs as well a replacement cost in that equation). For instance, if I buy a car for $5K and sell it for $2K, but spend 3K on maintenance over that lifespan, then I've really spend 6K on that car (where at first glance it looks like I've spent 3K on that car).
When my water pump fails was it really because of the delivery, or would it have failed anyway just owning the car and making no money with it?
You can fairly confidently assume that it's mileage, so an emphatic "yes" it was because of delivery, at the % rate that your miles are from delivery vs personal. There is no real deep rabbit hole here. Some wear items are more based on age, but we don't seem to be in those timespans (10 year for a set of tires, etc).
The rub seems to be am I making as much as what? I claim? i have never claimed to be making any amount, I have just been sharing the details of what I am doing so that others can learn from them and make their own decision.
So, if you don't have a final $/hr rate that you are earning, what is the point of this exercize?
If I was to work fast food would everyone be worried about the wear and tear on my car? Of course not, because driving to work is assumed to be part of having a job.
Nope, this is the mmm forum, mate! I specifically bought a house that is biking distance from my job. That assumption is a big one that pushes this "tough love" analysis that you're getting here (and being a great sport about, may I add!). Driving to work is in the same category of what we are looking at here. And for the people who live in big cities, owning a car is a laughable proposal.
Taxes would also not matter because we all understand income is taxed.
I somewhat agree here, the only real reason taxes are brought in is because the deduction on mileage seems to be contested. But it's definitely not an 'apples to apples' comparison of a McDonalds job. If we were comparing it to McD's we would add the income tax difference between your income and your adjusted income (which is about $8.50) back into your earnings. In this example it would be $136 apples to apples comparison to your $150 at a job with no driving costs, again with the caveat that 9c a mile is pretty optimistic.
My foray into this at this time was to determine if this is a legitimate side hustle when I RE and have a bad stock year and need to find a way to make $5-10K to make up the difference.
It really depends on if it takes 20 hours or 200 hours to make that money. Hence the questioning of the final "hourly" rate.
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All you guys need to stop arguing about the mileage deduction and get yourselves a halfway decent accountant.
Good side hustles produce more cashflow than taxable income.
OP what is your marginal tax rate? This is really important to value the costs that are written off.
If we are working under the assumption that this is a side job to get a little cash in retirement (in the US), can we say that 15% is a reasonable assumption? Granted, this isn't an assumption that I can make for OP currently, but the hypothetical scenario is that if you are looking for a little more $ after you retire (or at least the one that I was running under).
And if we work that, can you play accountant and work the numbers if you are seeing us(me) making mistakes here?
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Is it then not fair for the question to be, did I make enough money to replace the car and then make some as well?
So why is the calculus here need to me any more complicated than am I spending less over all than what I am being paid?
I seem to be missing the point of how making $1,000/month and spending about $300 at best is not viewed with a similar positive viewpoint?
If i make even 1 cent of profit does that not mean that this is a money making effort?
It appears others see it differently, though my question is still if you are not seeing it as a losing proposition why is it a bad idea?
You are the ideal candidate for a food delivery job.
You ignore both the costs incurred AND how many hours you spent to earn the money.
All you care about is generating enough revenue to exceed your (unknown) costs, regardless of how many hours it takes to do so.
Just because something isn't a "losing proposition" doesn't make it a good idea.
If you kept an accurate accounting of all your expenses and hours worked, and found you were making minimum wage with this side hustle, would you think this was a good idea or a bad idea?
If I was to work fast food would everyone be worried about the wear and tear on my car? Of course not, because driving to work is assumed to be part of having a job.
A car isn't a requirement for working at a fast food restaurant. They can walk, ride a bike/bus, catch a ride, or drive a short distance.
They aren't required rack up 20K unreimbursed miles in their own vehicle as a condition of their employment.
The average fast food worker (if they even have their own car) is likely only driving a few miles to work. Say 1.5K miles/year, not 20K miles/year.
If someone gets a job at a fast food restaurant 80 miles away from their house, then yes you would absolutely be worried about the wear and tear on the car.
Here I have some fraction of 57.5 cents of expense for every mile. We can again get into minutiae about how much that really is. Is it 9 cents of 20? I am spending a fraction of that expense but get to claim 100% of the mileage expense.
You still aren't getting it, even though it's been pointed out by multiple people.
You may be spending a fraction of the 57.5 cents/mile, but you are also getting only a fraction of that 57.5 cents as an actual financial benefit on your taxes.
The challenge here is the rabbit hole this can go down to try to figure out the costs is always prone to now being accurate. I use the car outside of food delivery. When my water pump fails was it really because of the delivery, or would it have failed anyway just owning the car and making no money with it? If I only deliver on sunny days does that mean i can ignore wiper costs because those only happen on the personal time? You can see what I am getting at about how this seem to me to be an exercise in minutiae.
You know it is not this complicated.
All you need to do is allocate vehicle expenses based on the proportion of total miles spent on delivery. For examples...
Total Miles - 30,000
Personal Miles - 10,000 (33%)
Delivery Miles - 20,000 (67%)
Take all of your expenses during this time, say $1500 for oil changes, tires, brakes, battery, ect.
That means $1000 of this cost is allocated as delivery expenses.
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All you guys need to stop arguing about the mileage deduction and get yourselves a halfway decent accountant.
Good side hustles produce more cashflow than taxable income.
OP what is your marginal tax rate? This is really important to value the costs that are written off.
This year will likely again hit 35%
For every extra 1.55 dollars you earned W-2 (approx) OP get a spendable dollar.
This means, for every 1 of 1099 earnings that goes against a legitimate biz expense OP that he would have had anyways, OP gets a spendable dollar.
Lets also note, OP, if you do this a lot and at the end of the year wrack up your schedule C, see too many thousands of dollars profit... you can open a SEP IRA and disappear a lot of that income.
now, as a FI Side hustle, the value starts to go down with the drop in marginal tax rate. I'm also 95% on the same page as you on car costs, but its boring arguing with third rate trolls like researcher. He will always be a wage slave.
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I'm also 95% on the same page as you on car costs, but its boring arguing with third rate trolls like researcher. He will always be a wage slave.
So you agree with the OP that the 20,000 miles spent driving around making food deliveries, and all of the vehicle costs associated with this mileage, should be ignored?
That is the OP's position...
- fuel costs, wear/tear ect ... can be ignored.
- what I spend on gas and tires and oil is really irrelevant.
Why am I a "third rate troll"?
Are StashingAway, Runrooster, Arbitrage, secondcor521 also trolls?
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Ok but that is $4,600 I made even after all the costs right? So how is that a bad thing?
I do not track all the hours, as I am not paid hourly, but when I calculated my earnings for months to figure out my hourly rate as I said it is at least $15/hour and more accurately between $18-$22.
I have a sister who is doing app based driving who also reports similar earnings (also ignoring indirect costs). If your earnings after direct costs are $18-22/hour, you're probably close to $15/hour after indirect costs like depreciation. For many workers in service industries this would be considered reasonable pay (it seems to be the rate all the labor organizations are clamoring for as a minimum); but only you can decided if your time is worth this rate to you (many on this forum would not be willing to trade their time for money at $15/hour). I'm pretty sure if you're in a 35% marginal tax rate, this activity is not close to your pay rate at your regular job (or your have a high earning spouse).
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secondcor521 also trolls?
I mean, I have my aspirations. Some day, maybe.
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secondcor521 also trolls?
I mean, I have my aspirations. Some day, maybe.
Hard to compete with someone named "troll". I have found my own niche in "ignorant pedant"
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All you guys need to stop arguing about the mileage deduction and get yourselves a halfway decent accountant.
Good side hustles produce more cashflow than taxable income.
OP what is your marginal tax rate? This is really important to value the costs that are written off.
This year will likely again hit 35%
Is that just federal or do you include state, and 15% self employment?
My side hustle is tax prep, obviously only 3.5 months out of the year. Before taxes I made $2500 this year, because tax season "ended" early, and worked 150 hours, for a gross pay of $16/hr. That's one evening and weekends, down from two evenings, and its still hard on me. I get less exercise, eat a lot more junk food, rely on my housemates for more cooking and cleaning. Work always feeds me, and even with getting some healthier options other nights, I was eating pizza one night a week. If Im honest, Id say there's an hour or two downtime during every shift. I get paid to eat, shop for groceries, surf the net.
Numbers for 2019 were almost double, working 300 hours for $4500. There was more downtime on the second evening a week so it didn't pay as well (commission) but it was also relaxing. I was able to use about a week paid leave from work for the end season. Thats vacation I havent had a use for this year.
I know tax prep requires minor training. A coworker had a second job in the grocery store, at our county minimum wage of $14, until she stopped because it was too draining. These part-time, second jobs are easy to get, even for retirees, but they do require a commitment which is hard with a full time job.
I'm aware that troll would not call tax prep a good side hustle because there's minimal expenses attached. I do expense my commute from my home office to work, one day of which I would do anyway (the tax office is literally next door to my usual grocery store). I dont expense food, phone, internet, home office. There has been serious talk of my buying into the business - before covid, again - and possibly expanding to medical billing.
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Is it then not fair for the question to be, did I make enough money to replace the car and then make some as well?
So why is the calculus here need to me any more complicated than am I spending less over all than what I am being paid?
I seem to be missing the point of how making $1,000/month and spending about $300 at best is not viewed with a similar positive viewpoint?
If i make even 1 cent of profit does that not mean that this is a money making effort?
It appears others see it differently, though my question is still if you are not seeing it as a losing proposition why is it a bad idea?
You are the ideal candidate for a food delivery job.
You ignore both the costs incurred AND how many hours you spent to earn the money.
All you care about is generating enough revenue to exceed your (unknown) costs, regardless of how many hours it takes to do so.
Just because something isn't a "losing proposition" doesn't make it a good idea.
If you kept an accurate accounting of all your expenses and hours worked, and found you were making minimum wage with this side hustle, would you think this was a good idea or a bad idea?
If I was to work fast food would everyone be worried about the wear and tear on my car? Of course not, because driving to work is assumed to be part of having a job.
A car isn't a requirement for working at a fast food restaurant. They can walk, ride a bike/bus, catch a ride, or drive a short distance.
They aren't required rack up 20K unreimbursed miles in their own vehicle as a condition of their employment.
The average fast food worker (if they even have their own car) is likely only driving a few miles to work. Say 1.5K miles/year, not 20K miles/year.
If someone gets a job at a fast food restaurant 80 miles away from their house, then yes you would absolutely be worried about the wear and tear on the car.
Here I have some fraction of 57.5 cents of expense for every mile. We can again get into minutiae about how much that really is. Is it 9 cents of 20? I am spending a fraction of that expense but get to claim 100% of the mileage expense.
You still aren't getting it, even though it's been pointed out by multiple people.
You may be spending a fraction of the 57.5 cents/mile, but you are also getting only a fraction of that 57.5 cents as an actual financial benefit on your taxes.
The challenge here is the rabbit hole this can go down to try to figure out the costs is always prone to now being accurate. I use the car outside of food delivery. When my water pump fails was it really because of the delivery, or would it have failed anyway just owning the car and making no money with it? If I only deliver on sunny days does that mean i can ignore wiper costs because those only happen on the personal time? You can see what I am getting at about how this seem to me to be an exercise in minutiae.
You know it is not this complicated.
All you need to do is allocate vehicle expenses based on the proportion of total miles spent on delivery. For examples...
Total Miles - 30,000
Personal Miles - 10,000 (33%)
Delivery Miles - 20,000 (67%)
Take all of your expenses during this time, say $1500 for oil changes, tires, brakes, battery, ect.
That means $1000 of this cost is allocated as delivery expenses.
Answer to first question: It is a good idea. Thinking I can make more than minimum wage with this type of side hustle would make me pretty foolish.
OK, so on the last portion, I have had $400 in total car expenses above fuel. At this point my miles are split 50/50. So $200 in expenses. Add that to a total of $350 in fuel.
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Ok but that is $4,600 I made even after all the costs right? So how is that a bad thing?
I do not track all the hours, as I am not paid hourly, but when I calculated my earnings for months to figure out my hourly rate as I said it is at least $15/hour and more accurately between $18-$22.
I have a sister who is doing app based driving who also reports similar earnings (also ignoring indirect costs). If your earnings after direct costs are $18-22/hour, you're probably close to $15/hour after indirect costs like depreciation. For many workers in service industries this would be considered reasonable pay (it seems to be the rate all the labor organizations are clamoring for as a minimum); but only you can decided if your time is worth this rate to you (many on this forum would not be willing to trade their time for money at $15/hour). I'm pretty sure if you're in a 35% marginal tax rate, this activity is not close to your pay rate at your regular job (or your have a high earning spouse).
Yes, I make over $100K (so over $50/hour) at my current job and have made 50% higher than that for nearly a decade prior before I decided to step back to individual contributor for quality of life change when I determined senior corporate executive bullshit is just not worth the pay. My wife is making about that in self-employment as well.
As i have said before, the times I go out are times my wife is working with students so I am not losing any "quality" time with my spouse, I am losing time watching TV or playing video games by myself. I have plenty of other time to read or do those things outside of those hours, so I am choosing to trade $0 hours for $15 hours and make a tiny bit of extra money to help speed up the FIRE train as much as I can. The level of effort to get and keep this type of job is virtually zero for me because I take every order i get and therefore make the apps super happy as not refusing orders. Versus literally any other job i have examined this is the easiest way on earth to make this amount of money. No boss, no schedule. It's wonderful and I am helping people get something that makes them happy. Win-win.
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It's wonderful and I am helping people get something that makes them happy. Win-win.
This is everything. Glad you are happy with this way of being productive with your time.
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Thinking I can make more than minimum wage with this type of side hustle would make me pretty foolish.
Yes, I make over $100K.
My wife is making about that in self-employment as well.
As i have said before, the times I go out are times my wife is working with students so I am not losing any "quality" time with my spouse, I am losing time watching TV or playing video games by myself. I have plenty of other time to read or do those things outside of those hours, so I am choosing to trade $0 hours for $15 hours and make a tiny bit of extra money to help speed up the FIRE train as much as I can.
It's wonderful and I am helping people get something that makes them happy.
Your position makes much more sense to me, based on your last few posts...
The focus of this endeavor is more about your day-to-day lifestyle vs. the actual money earned.
You are home alone and bored. Food delivery gives you something to do and helps pass the time.
As an added benefit, you can earn a bit of extra cash doing it.
For a family of 2 with a household income over $200K in a LCOL state, the money you earn with this food delivery gig is inconsequential.
This is why you don't care about your expenses, the number of hours worked, or your hourly rate.
It is just a "hobby" to get you out of the house when your wife is working.
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Thinking I can make more than minimum wage with this type of side hustle would make me pretty foolish.
Yes, I make over $100K.
My wife is making about that in self-employment as well.
As i have said before, the times I go out are times my wife is working with students so I am not losing any "quality" time with my spouse, I am losing time watching TV or playing video games by myself. I have plenty of other time to read or do those things outside of those hours, so I am choosing to trade $0 hours for $15 hours and make a tiny bit of extra money to help speed up the FIRE train as much as I can.
It's wonderful and I am helping people get something that makes them happy.
Your position makes much more sense to me, based on your last few posts...
The focus of this endeavor is more about your day-to-day lifestyle vs. the actual money earned.
You are home alone and bored. Food delivery gives you something to do and helps pass the time.
As an added benefit, you can earn a bit of extra cash doing it.
For a family of 2 with a household income over $200K in a LCOL state, the money you earn with this food delivery gig is inconsequential.
This is why you don't care about your expenses, the number of hours worked, or your hourly rate.
It is just a "hobby" to get you out of the house when your wife is working.
Sure, though hobby is a bit off and I am certainly not doing it because I am bored; I could do other things for certain but none make any money, they are just fun. I wanted to find a way to make a little extra money and speed up the stash, however little it might help (guessing even it I keep at this pace from now until 2029 which is my target FIRE date I might move things up a year with added cash this late in the game. At times my daily change in index funds is more than I have made thus far in this process).
I know I am not losing money, but yes, if I was looking for this to be my main job there are a lot of alternatives that make more sense.
Goals have been simple:
- Find something I enjoy a bit to make extra money
- Speed up the stash
- Try to pick something I can do anywhere we might move to once we FIRE and in the event I need to plug a hole in a bad year with a few thousand in earnings
The last point was really the value of this exercise. As I get closer to FIRE and see how a pandemic can really mess with things I wanted to know that if the world blows up once I step away I can do something other than Wal-Mart greeter to make extra income in my older age as I am not going to be a spring chicken when I hit that FIRE date (not one now).
Now with that said, I am a strong proponent of "do not let perfect get in the way of the good". I bristles against the minutiae of figuring every last dollar that might be an expense in this enterprise. Once you get the big nuggets, the other things are just not worth the bother and I stand by that even for someone not in my circumstance. Sure if someone's entire income is $20K, $100 expense is a much bigger deal than it is in my case with 10 times that household income. If my car fell apart tomorrow and I could not afford a replacement that was able to let me continue this I would stop immediately. If traffic picks up or I find that in winter this gig makes no sense because of the change in dynamics, I will stop, at least until spring. I am constantly testing the scenarios in my head as I live them each week with this gig. I have made adjustments to make it worthwhile. I no longer go out every night as order volume makes that a losing proposition. From a trucking perspective I am not running a lot of deadheads. Every time I am in the car for this it is making me money. If orders dry up for that day, I turn off the app and head home. I do not try to milk a dead horse. So the statement above of "do not just compare what happens on a good day" does not fit how I do this. Every day is a good day. The only difference is some might be great. The $150 on Saturday was mostly Instacart, which has less driving per hour hence the high dollars and low miles. Yes I spend time, so I account for that in hourly rate, but since Instacart is around $25/hour for the time spent it covers things quite well, with the downside being more of those dollars would be taxable as I do not have miles to offset them.
That last point might be worth delving into as it may not be the typical way to look at this. On the FB groups for these gigs I see people posting "Would you take this order?" with a screenshot from their phone. The latest was an Instacart order for $40, that would take an hour to shop most likely and had a delivery of 20 miles. My point was I would because the 40 miles round trip would assure me that I had earned at least $20 of those dollars tax free. The responses indicated most people are not considering that, they just focus on the distance and time not on a new order. But is it really better to take an $11 order that takes 45 minutes to shop and is 2 miles to deliver? I think not, because then you may have another $11 order next and now you have spent the same time I have even with the driving time and you made half of what I did and are taxed on almost all of it. Not realizing there is a way to use the mileage to make more money is a flaw in focusing on what is the hourly rate you are making, because I assure you, that taking shorter, smaller orders does not move the needle enough (increase on the high end is $1-2 per hour best case, and most case you make less, that I achieved when trying that model and was heavily reliant on a steady stream of orders, which is not the reality one can count on now). I think these are the things people, even on this thread, overlook if they have not actually done the work and tested the results. There are a lot of ways to get taken to the cleaners on these gigs. I am confident I am fully aware of them, even though it appears I am "ignoring" costs, and have made them irrelevant because of the offset I achieve my doing this smart. It is no different than the analysis people do about rental properties. You can lose your shirt buying properties for rent, and many people do and get out of it because they do not do the work to understand how to maximize value. As I have said many times, I think I have maximized the crap out of this gig work. That is part of why I think there are so many of you pressing me on I must be not giving you the expenses right because I cannot do it that cheaply. This feels the same as when I share with couple who spend $400-$500 on groceries a month that I spend $600 or less a month for a family of 8 and I get told I am lying or must not be tracking. I show them the YNAB and the credit cards that show the spend and there is not much to say. I bring that same level of optimization to this process and so that is why I may seem flippant because I am aware of the spend and I am making money. Is the main rub for those pressing back that it is not worth the money I am making to use their time this way? If so, I certainly get and respect that, and when this starts being a chore of me and less of a fake "hobby", I will stop.
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All you guys need to stop arguing about the mileage deduction and get yourselves a halfway decent accountant.
Good side hustles produce more cashflow than taxable income.
OP what is your marginal tax rate? This is really important to value the costs that are written off.
This year will likely again hit 35%
I'm aware that troll would not call tax prep a good side hustle because there's minimal expenses attached. I do expense my commute from my home office to work, one day of which I would do anyway (the tax office is literally next door to my usual grocery store). I dont expense food, phone, internet, home office. There has been serious talk of my buying into the business - before covid, again - and possibly expanding to medical billing.
I'm actually gonna approve tax prep. BAM, there is your stamp of approval. Seriously, since its only part of the year, I'm leaving the time suck/value as your personal decision.
Its also an office intensive job. so you've got all the home office, phone, internet write offs. not just for tax season, but for any time of the year you are marketing the job. You may do the tax work at this office, but if you run your business of "you who goes places and does tax prep" from home, you can take the home office deduction for that.
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Its also an office intensive job. so you've got all the home office, phone, internet write offs. not just for tax season, but for any time of the year you are marketing the job. You may do the tax work at this office, but if you run your business of "you who goes places and does tax prep" from home, you can take the home office deduction for that.
I'm going to go off on another tangent here, but IRS has pretty restrictive rules about what actually qualifies as a home office (namely, that the location in the home has to be used exclusively and regularly as an office). From what my accountant told us last year, most people over-deduct in this area and would not fare well in an audit.
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Its also an office intensive job. so you've got all the home office, phone, internet write offs. not just for tax season, but for any time of the year you are marketing the job. You may do the tax work at this office, but if you run your business of "you who goes places and does tax prep" from home, you can take the home office deduction for that.
I'm going to go off on another tangent here, but IRS has pretty restrictive rules about what actually qualifies as a home office (namely, that the location in the home has to be used exclusively and regularly as an office). From what my accountant told us last year, most people over-deduct in this area and would not fare well in an audit.
I am a Huuuuuge fan of using a real accountant when you go down this road. Find a good one, a really really great one.
Seriously, its very important note if you are not taking a deduction at all, you are very far from over-deducting. Most accountants should have some kind of standard data-sheet (on size/exclusivity of the area)you fill out so they can correctly calculate the home office deduciton and then your basis is documented. Real accountants also do this, so if your home deduction gets audited, they hand over the sheet and a lot of times thats enough to make the audit end then and there.
Now this is me talking out of my A$$, but it sorta feels like in a COVID world, they really can't argue with the home office deductions as much either. Part time tax prep, will that be done at a home office or a crowded office space? all the gig drivers, especially if they drive for multiple services need a landing pad where they evaluate/plan their days. Lots of people have been pushed to home offices.
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I am a Huuuuuge fan of using a real accountant when you go down this road. Find a good one, a really really great one.
Seriously, its very important note if you are not taking a deduction at all, you are very far from over-deducting. Most accountants should have some kind of standard data-sheet (on size/exclusivity of the area)you fill out so they can correctly calculate the home office deduciton and then your basis is documented. Real accountants also do this, so if your home deduction gets audited, they hand over the sheet and a lot of times thats enough to make the audit end then and there.
Now this is me talking out of my A$$, but it sorta feels like in a COVID world, they really can't argue with the home office deductions as much either. Part time tax prep, will that be done at a home office or a crowded office space? all the gig drivers, especially if they drive for multiple services need a landing pad where they evaluate/plan their days. Lots of people have been pushed to home offices.
Yeah, we're pretty much on the same page, here! I think it was in reference to people who do their own business deductions that our accountant had brought it up.
And yeah, I doubt they'll argue about home office ones much this year just due to the sheer volume of them that will be coming in - presumably most of them without malicious intent - and it's just not worth their while to get nit-picky. But I could see the tax code changing in a year or two for this reason.
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I work for a franchise tax prep place. We charge minimum $400 for a Schedule C 1040. One of our tax preparers recently graduated to a real accounting firm, which charges 3 times as much. On a $2500 gross income you want me to spend how much to approve sketchy tax deductions? I'm okay with taking the advice of my managers, thanks.
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I work for a franchise tax prep place. We charge minimum $400 for a Schedule C 1040. One of our tax preparers recently graduated to a real accounting firm, which charges 3 times as much. On a $2500 gross income you want me to spend how much to approve sketchy tax deductions? I'm okay with taking the advice of my managers, thanks.
Yes, those recommendations were not only a one-size-fits-all blanket statement, but targeted at you personally. You should have been called out by name to make it more clear. If you do not comply it means that not only are you a poor citizen, but an awful person to boot. I would prefer you spend at least $2K, but $400 seems adequate.
JK, you do you man, of course there's variance in all of this ;)
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So latest update is with the surging numbers in out state my wife and I agreed I will suspend doing any of these activities as the risk makes no sense. It is a side hustle after all and not something we need to pay the bills, so unless a miracle happens am done for 2020 and who knows when I may start again in 2021, thinking late spring at best so probably a six month plus hiatus until vaccine starts to take effect. That likely means July or August.
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Caracarn, I am just jumping in here to say 'thank you' for sharing such a detailed account of your experiences with food delivery, costs, etc. I signed up for DoorDash but have been hesitant to get started because I wasn't sure if the costs would outweigh the benefits. Your posts have provided a wealth of information.
For reference, I drive a VW Jetta that I bought from my parents last year for $2,500. It is older (2008) but has only 80k miles on it. I have to put premium gas in it :( I work from home (permanently) so I only use the car currently for errands, etc. I could technically live without a car at all because I live close enough to walk to stores, etc. So, the car is an asset but one that is not doing a whole lot for me. On the flip side, I really need to be building up my $$$ right now. I am 38 years old and late to the game. I only have about 70k saved for retirement and I owe $130k on my house. So I am thinking that even if I sacrifice the wear and tear, etc. on the car, it might be worth it to use the extra income to bulk up my investments and/or pay toward my mortgage.
I do have some more time to think on it. Like yourself, we are having a surge of Covid cases in my area as well. So it is something I would be starting once it is safer to do so.
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Caracarn, I am just jumping in here to say 'thank you' for sharing such a detailed account of your experiences with food delivery, costs, etc. I signed up for DoorDash but have been hesitant to get started because I wasn't sure if the costs would outweigh the benefits. Your posts have provided a wealth of information.
For reference, I drive a VW Jetta that I bought from my parents last year for $2,500. It is older (2008) but has only 80k miles on it. I have to put premium gas in it :( I work from home (permanently) so I only use the car currently for errands, etc. I could technically live without a car at all because I live close enough to walk to stores, etc. So, the car is an asset but one that is not doing a whole lot for me. On the flip side, I really need to be building up my $$$ right now. I am 38 years old and late to the game. I only have about 70k saved for retirement and I owe $130k on my house. So I am thinking that even if I sacrifice the wear and tear, etc. on the car, it might be worth it to use the extra income to bulk up my investments and/or pay toward my mortgage.
I do have some more time to think on it. Like yourself, we are having a surge of Covid cases in my area as well. So it is something I would be starting once it is safer to do so.
If you dont' need the car, it's in good condition, and are looking to add money, why not sell the Jetta for $5K whilst also ditching insurance and registration costs?
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Caracarn, I am just jumping in here to say 'thank you' for sharing such a detailed account of your experiences with food delivery, costs, etc. I signed up for DoorDash but have been hesitant to get started because I wasn't sure if the costs would outweigh the benefits. Your posts have provided a wealth of information.
For reference, I drive a VW Jetta that I bought from my parents last year for $2,500. It is older (2008) but has only 80k miles on it. I have to put premium gas in it :( I work from home (permanently) so I only use the car currently for errands, etc. I could technically live without a car at all because I live close enough to walk to stores, etc. So, the car is an asset but one that is not doing a whole lot for me. On the flip side, I really need to be building up my $$$ right now. I am 38 years old and late to the game. I only have about 70k saved for retirement and I owe $130k on my house. So I am thinking that even if I sacrifice the wear and tear, etc. on the car, it might be worth it to use the extra income to bulk up my investments and/or pay toward my mortgage.
I do have some more time to think on it. Like yourself, we are having a surge of Covid cases in my area as well. So it is something I would be starting once it is safer to do so.
If you dont' need the car, it's in good condition, and are looking to add money, why not sell the Jetta for $5K whilst also ditching insurance and registration costs?
That's a really good point to consider! I think I could actually get more for it that that because the market for used cars is so great right now and it's in pristine condition. I am less than 2 miles to grocery, library, etc. so I could easily live without it. Now you really have my wheels turning!
Now I am wondering if it would be better to just sell it (I prob would need to invest a small amount in a used bike) or better to use it to make more money. That's quite the math assignment...
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Caracarn, I am just jumping in here to say 'thank you' for sharing such a detailed account of your experiences with food delivery, costs, etc. I signed up for DoorDash but have been hesitant to get started because I wasn't sure if the costs would outweigh the benefits. Your posts have provided a wealth of information.
For reference, I drive a VW Jetta that I bought from my parents last year for $2,500. It is older (2008) but has only 80k miles on it. I have to put premium gas in it :( I work from home (permanently) so I only use the car currently for errands, etc. I could technically live without a car at all because I live close enough to walk to stores, etc. So, the car is an asset but one that is not doing a whole lot for me. On the flip side, I really need to be building up my $$$ right now. I am 38 years old and late to the game. I only have about 70k saved for retirement and I owe $130k on my house. So I am thinking that even if I sacrifice the wear and tear, etc. on the car, it might be worth it to use the extra income to bulk up my investments and/or pay toward my mortgage.
I do have some more time to think on it. Like yourself, we are having a surge of Covid cases in my area as well. So it is something I would be starting once it is safer to do so.
If you dont' need the car, it's in good condition, and are looking to add money, why not sell the Jetta for $5K whilst also ditching insurance and registration costs?
That's a really good point to consider! I think I could actually get more for it that that because the market for used cars is so great right now and it's in pristine condition. I am less than 2 miles to grocery, library, etc. so I could easily live without it. Now you really have my wheels turning!
Now I am wondering if it would be better to just sell it (I prob would need to invest a small amount in a used bike) or better to use it to make more money. That's quite the math assignment...
Certainly worth consideration. My only caution is do not take the "for a carpenter with a hammer every problem is a nail" approach. Be certain this is not the knee jerk drive from MMM forum to you should not have a car. Like it or not the reality of life in much of the US is not having a car places limits on you. We were just looking at the possibility of getting rid of an extra car our kids use for work and school, after all there is a bus system in town. However the buses stop running at 8 PM and working in fast food when you close at 10 or 11 means that is not an option and walking that late at night is not the brightest option to ask your 16 year old to undertake.
I agree that if you have no other need for the car in the next few years as you see it other than something like Doordash you need to investigate. You said you are permanently working from home which I assume means you are not able to find a different job that would have you commuting, so that is off the table. Just do not think short term and find yourself in the expensive used car market you speak of as a buyer because you only looked at immediate issues.
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Caracarn, I am just jumping in here to say 'thank you' for sharing such a detailed account of your experiences with food delivery, costs, etc. I signed up for DoorDash but have been hesitant to get started because I wasn't sure if the costs would outweigh the benefits. Your posts have provided a wealth of information.
For reference, I drive a VW Jetta that I bought from my parents last year for $2,500. It is older (2008) but has only 80k miles on it. I have to put premium gas in it :( I work from home (permanently) so I only use the car currently for errands, etc. I could technically live without a car at all because I live close enough to walk to stores, etc. So, the car is an asset but one that is not doing a whole lot for me. On the flip side, I really need to be building up my $$$ right now. I am 38 years old and late to the game. I only have about 70k saved for retirement and I owe $130k on my house. So I am thinking that even if I sacrifice the wear and tear, etc. on the car, it might be worth it to use the extra income to bulk up my investments and/or pay toward my mortgage.
I do have some more time to think on it. Like yourself, we are having a surge of Covid cases in my area as well. So it is something I would be starting once it is safer to do so.
If you dont' need the car, it's in good condition, and are looking to add money, why not sell the Jetta for $5K whilst also ditching insurance and registration costs?
That's a really good point to consider! I think I could actually get more for it that that because the market for used cars is so great right now and it's in pristine condition. I am less than 2 miles to grocery, library, etc. so I could easily live without it. Now you really have my wheels turning!
Now I am wondering if it would be better to just sell it (I prob would need to invest a small amount in a used bike) or better to use it to make more money. That's quite the math assignment...
Certainly worth consideration. My only caution is do not take the "for a carpenter with a hammer every problem is a nail" approach. Be certain this is not the knee jerk drive from MMM forum to you should not have a car. Like it or not the reality of life in much of the US is not having a car places limits on you. We were just looking at the possibility of getting rid of an extra car our kids use for work and school, after all there is a bus system in town. However the buses stop running at 8 PM and working in fast food when you close at 10 or 11 means that is not an option and walking that late at night is not the brightest option to ask your 16 year old to undertake.
I agree that if you have no other need for the car in the next few years as you see it other than something like Doordash you need to investigate. You said you are permanently working from home which I assume means you are not able to find a different job that would have you commuting, so that is off the table. Just do not think short term and find yourself in the expensive used car market you speak of as a buyer because you only looked at immediate issues.
Definitely should be analyzed. Probably the easiest way in this situation is to pretend you don't have a car and go about life. See how often it's actually used. If you manage without too much stress for a couple of months, then likely you are in a situation where renting a car infrequently is a better option in the long run for trips or something.
We went from 3 cars to 1 car in our household this way.
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So entered all my income and deductions into app and here is what 2020 is like:
$8,860.31 income
$5,557.75 deductions
$3,302.56 profit
From my other numbers I had one more tank of gas so another $35 or so. Nothing else.
I may or may not ever return to this line of work.
Right now I am benched because of the pandemic getting super bad in our county. At his point will likely wait until vaccines are distributed to even consider again and given that will be 6-9 months from now I may not longer have that drive as I will have settled in to having weekends and evenings fully mine again without the pull to make a few bucks.
As I told my wife the initial goal was to test this out to see if post-FIRE I could make $5-$10K in a down year. I think I have proven that with certainty if we had a terrible stock market year in the first 5 years of RE I could cushion the loss and likely fully make it up with this, so it was a rousing success. Secondary goal was to speed up the stash but that requires multiple years of this to really make a dent, so on that front the jury is out if I ever do this again without a need. Happy to answer any questions now or down the road.
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I may or may not ever return to this line of work.
I may not longer have that drive as I will have settled in to having weekends and evenings fully mine again without the pull to make a few bucks.
The italicized point is the one I've been making throughout this thread.
Life is short.
For someone like you who doesn't need this money...you should value your free time and spend it doing things you enjoy.
I can't fathom spending my free time on weekends/evenings standing around McDonald's/ect. for hours waiting on orders, then driving all over town for hours delivering stinky food to lazy people. Just to make a few extra bucks.
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As I told my wife the initial goal was to test this out to see if post-FIRE I could make $5-$10K in a down year. I think I have proven that with certainty if we had a terrible stock market year in the first 5 years of RE I could cushion the loss and likely fully make it up with this, so it was a rousing success. Secondary goal was to speed up the stash but that requires multiple years of this to really make a dent, so on that front the jury is out if I ever do this again without a need. Happy to answer any questions now or down the road.
This is good and re-assuring. I'm not claiming to know better, but it doesn't count for the opportunity cost in a down year. If you are retired and looking at less ideal portfolio situation, there are many ways to make money. That's not to say that driving isn't valid, but it is far from the only option. Also, who knows what the food delivery service market will look like in 5+ years? The industry popped out of nowhere, so who's to say it won't drastically change as the companies evolve their product?
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As I told my wife the initial goal was to test this out to see if post-FIRE I could make $5-$10K in a down year. I think I have proven that with certainty if we had a terrible stock market year in the first 5 years of RE I could cushion the loss and likely fully make it up with this, so it was a rousing success. Secondary goal was to speed up the stash but that requires multiple years of this to really make a dent, so on that front the jury is out if I ever do this again without a need. Happy to answer any questions now or down the road.
This is good and re-assuring. I'm not claiming to know better, but it doesn't count for the opportunity cost in a down year. If you are retired and looking at less ideal portfolio situation, there are many ways to make money. That's not to say that driving isn't valid, but it is far from the only option. Also, who knows what the food delivery service market will look like in 5+ years? The industry popped out of nowhere, so who's to say it won't drastically change as the companies evolve their product?
This is certainly a valid point, but all I can do it make decisions on what is known, without a crystal ball. At this point most elderly workers are Wal-Mart greeters or do similar "greeting" activity at tourist attractions. Given we are potentially looking at settling in TN near the Smokies I may do that. It is still the only real option I see that does not require me to show up somewhere for a set number of hours (meaning if I just don't feel like it today I could get fired for not appearing, where with food delivery no one will take that action). The barriers to entry are virtually zero. Hard to say that about any other option (though happy to hear if I may have missed some). I do not need to go find clients, which would be required for any self employed side job like consulting, coaching etc.
These are the reasons I wanted to test it. What I have read/understood is having a way to make up a $5-$10K shortfall provides a much safer path to FIRE, so that is what I was seeking. All your points are valid. It could not exist in 5 years if/when I step away even earlier than planned but what my current calculations show is my glide path and then I have the make decisions then, but if I was stepping into FIRE today, this would be my plan.
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I may or may not ever return to this line of work.
I may not longer have that drive as I will have settled in to having weekends and evenings fully mine again without the pull to make a few bucks.
The italicized point is the one I've been making throughout this thread.
Life is short.
For someone like you who doesn't need this money...you should value your free time and spend it doing things you enjoy.
I can't fathom spending my free time on weekends/evenings standing around McDonald's/ect. for hours waiting on orders, then driving all over town for hours delivering stinky food to lazy people. Just to make a few extra bucks.
All that was very clear.
I just do not view it as negatively as you do. I am in the car, listening to the radio and enjoying myself, and not missing something else. At this point laziness would be more the thing that I would succumb to about not picking it up again. I am binge watching The Crown instead of making money. Not sure that is such a "better" use of my time. Yes I enjoy the show/TV in general, but as with anything one can get sick of it too. Post COVID restrictions I do feel my options for spending my time will obviously open up immensely again and that is actually what I mean, but certainly while my options were really about doing something on the couch or in a chair at home versus helping people out, enjoying the fresh air and singing away while making money, it was pleasant to spend the time that way. Only as the risk increased beyond what was reasonable have I hung up the delivery bags, perhaps forever.
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I just do not view it as negatively as you do.
I am in the car, listening to the radio and enjoying myself, and not missing something else.
but certainly while my options were really about doing something on the couch or in a chair at home versus helping people out, enjoying the fresh air and singing away while making money, it was pleasant to spend the time that way.
For someone like you, food delivery sounds like a reasonable way for you to pass the time.
Though it may indicate an opportunity to develop more meaningful interests, which would also serve you well when you early retire.
There are MUCH better ways of getting off your couch and enjoying the fresh air than delivering food.
Sitting in your car isn't any different than sitting on your couch.
And you can't "enjoy the fresh air" when sniffing the grease fryers at McDonalds, or inhaling the Big Mac smells and car exhaust fumes while on delivery.
How can you not be "missing something else" more meaningful by spending your evenings/weekends delivering food?
What about hiking, biking, fishing, photography, canoeing/kayaking, sightseeing, home improvement, lawn care, vehicle maintenance, ect.
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How can you not be "missing something else" more meaningful by spending your evenings/weekends delivering food?
What about hiking, biking, fishing, photography, canoeing/kayaking, sightseeing, home improvement, lawn care, vehicle maintenance, ect.
+1
Not to throw judgment. We're all different people and it's good that way. But I can think of 20 things off the top of my head that I'd rather do than drive around. None of them are watching TV.
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How can you not be "missing something else" more meaningful by spending your evenings/weekends delivering food?
What about hiking, biking, fishing, photography, canoeing/kayaking, sightseeing, home improvement, lawn care, vehicle maintenance, ect.
+1
Not to throw judgment. We're all different people and it's good that way. But I can think of 20 things off the top of my head that I'd rather do than drive around. None of them are watching TV.
My point was a bit hyperbolic. At this point my wife does not even want to go hiking until health conditions get better so we are sitting at home, but yes, in normal times lots that can be done. I read a lot, I record audio books. I do hate lawn care/gardening as does my wife and we've only with a slight joke talked multiple times about paving over the entire lawn around with house with rocks or just a big parking lot to do away with the chore entirely.
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How can you not be "missing something else" more meaningful by spending your evenings/weekends delivering food?
What about hiking, biking, fishing, photography, canoeing/kayaking, sightseeing, home improvement, lawn care, vehicle maintenance, ect.
+1
Not to throw judgment. We're all different people and it's good that way. But I can think of 20 things off the top of my head that I'd rather do than drive around. None of them are watching TV.
My point was a bit hyperbolic. At this point my wife does not even want to go hiking until health conditions get better so we are sitting at home, but yes, in normal times lots that can be done. I read a lot, I record audio books. I do hate lawn care/gardening as does my wife and we've only with a slight joke talked multiple times about paving over the entire lawn around with house with rocks or just a big parking lot to do away with the chore entirely.
Ah, interesting... I didn't translate the hyperbole at all! I have seen weirder things on this forum so it didn't stand out at all. And if hiking is out of the picture... well, you already said you've stopped grabbing grubby handled food... but I don't know what could be much safer. Unless you're doing some extreme traverse that could end you in a hospital.
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For example on my $97 of earnings, I have $93.13 in mileage (162 miles), so my taxable income is less than $4 right now.
That tax deduction for mileage isn't because the IRS is nice, it's because that's their estimate of how much it costs to drive. Yeah, you can probably get away with costing less if you have a low-value, high-gas mileage, low-maintenance car, but that looks to me like they basically pay your car costs while you drive for free.
This. You didn’t earn $97, you had $97 of revenue. You’re saving money on taxes because your “profit” was $4 for all that work.
Come on, what mustachian pays 57 cents per mile to drive? I have a 2014 Ford Focus that I purchased brand new with financing and my total cost per mile is at most half of that. And it is really the marginal cost per mile that matters. Nowadays with the pandemic sometimes I barely drive my car all month but the insurance is still $93/mo. The first mile is very expensive but the last is cheap.
EDITed to add - With that said, I won't be driving for DoorDash anytime soon, but if I was I would make sure to open a SEP-IRA.
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I haven't read through this whole post but I just wanted to chime in and say I delivered food on my bike full time for about a year, and it was pretty cool. I was in really good shape and developed a love for cruising around cities (worked in Seattle and SF). I did something like 3k deliveries. Doing it on a bike has significant advantages over a car, the biggest being you don't have to deal with parking and there are essentially zero costs (rather you get paid double--money and exercise).
I'm building an ebike now and am probably going to get back into it as a side hustle. On a good day I'd make $200, with my ebike I'm hoping for more.
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This was a great read. Caracarn, thank you for sharing your experiences. Researcher1... you're really triggered throughout. Odd.
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ptf and also to note that I had a blast when I worked in pizza delivery. I generally enjoy driving (especially on ice, lol), listening to tunes, and learning the ins and outs of a neighborhood.
Also, people and dogs are typically pretty happy to see food arrive, so there's very little of the negative part of customer service I dealt with when I worked a cash register.
I can totally see how this is a fun side hustle.
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On our Nextdoor feed is a thread where people are relaying their experience of food delivery people STEALING their orders! Unbelievable!
The delivery folks snap a photo of the food at the address, and then pick it up and drive away with it! Someone even has video of this happeneing with their Postmates delivery. Several people have chimed in to say it happened to them. Then one person said “maybe the delivery person needed the food...” so there we go. I am in urban St.Louis where we like to coddle criminals.
I have had Doordash deliveries about six times in two years and never a problem.
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^Lol, my son one time caught a delivery lady drinking some of his milkshake. Ewww! Note to self: no milkshake delivery. Not that I was planning to ever do that anyway.
On the flip side, some customers are cads and don't tip the driver. Tip your server, people! C'mon.
Let's all be honest with the fact that there is almost no barrier to getting a food delivery gig. It takes about 60 to sign up on a phone app, and then you are cleared and ready to go that same day as long as you pass a rudimentary background check. It can be a nice side hustle if you have a fuel efficient car or bike, prefer to work at meal times, and live in a high restaurant density area. OP's idea to use it to optimize his commute as a tax write off borders on brilliance.
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Glad to see this helped some folks.
I am still on the sidelines waiting for my second dose of COVID vaccine next week, but at this point not really sure if/when I might jump in again. I have liked having the time back and the experiment proved out that as a easy to earn $5-$10K a year it beats being a Wal-Mart greeter. I wanted to know if I needed to make some money after FIRE if I could, and I certainly can.
New things of note:
- Restaurants in our area have severely cut back hours (even Taco Bell now closes at 8 PM, yes TACO BELL the 4 am joint), so this has closed the window and gives me no desire to fight for scraps
- With more people out, I think orders have decreased as evidenced by all the apps offering higher and higher incentives to go deliver that I get texted and also having blocks open in what used to be prime time. I think this means orders have dropped and drivers have said they are not dealing with it and moved to something else, so when there is an order there is no driver which creates a bad expereience and no repeat order so a vicious spiral. Will see if this industry comes out OK on the other side.
- Everything is pandemic related right now, so I absolutely expect these items to be temporary, but still means now is a bad time to do this, at least in my area as what made it work I think would be gone and this would me much less lucrative
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I recently began experimenting with this. I've found multi-apping to be highly effective.
Some nights I've been bored, so I'll DoorDash/GrubHub/UberEats for a couple hours and make some money. Tonight I made over $100 (yes, before taxes and yes before accounting for gas/wear and tear/etc) in three hours.
Other times, like yesterday, I had to run an errand, so I turned it on, wait til I got an order that took me in that direction and off I went. What would've been a trip to the grocery store to spend $50 wound up being a trip to the store to spend $50 but also make $15.
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Need to start following this thread... my wife is interested in becoming an Instacart shopper - she really enjoys grocery shopping and is very good at finding and picking out items that aren't damaged and messed up lol.
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Need to start following this thread... my wife is interested in becoming an Instacart shopper - she really enjoys grocery shopping and is very good at finding and picking out items that aren't damaged and messed up lol.
I'm late to the thread.
I highly recommend this. We made just over $19,000 last year on Instacart, mainly because we live near a Costco.
The first 10-20 orders will stink, then you'll (she) will get better at batch selection, when to work, ect. Solid $30/hr hustle if you're selective, $20/hr if you're not. Those are gross numbers, so you still owe taxes and will put a few miles on the car. Less driving than food delivery though. Actually have a guest post coming out on Rideshare Guy in a week about it
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Some nights I've been bored, so I'll DoorDash/GrubHub/UberEats for a couple hours and make some money. Tonight I made over $100 (yes, before taxes and yes before accounting for gas/wear and tear/etc) in three hours.
Other times, like yesterday, I had to run an errand, so I turned it on, wait til I got an order that took me in that direction and off I went.
This is a lifestyle that I'm unfamiliar with, lol! I'm never bored and usually plan my trips so that I've got a pretty specific "errand hopping map" already.
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Need to start following this thread... my wife is interested in becoming an Instacart shopper - she really enjoys grocery shopping and is very good at finding and picking out items that aren't damaged and messed up lol.
I'm late to the thread.
I highly recommend this. We made just over $19,000 last year on Instacart, mainly because we live near a Costco.
The first 10-20 orders will stink, then you'll (she) will get better at batch selection, when to work, ect. Solid $30/hr hustle if you're selective, $20/hr if you're not. Those are gross numbers, so you still owe taxes and will put a few miles on the car. Less driving than food delivery though. Actually have a guest post coming out on Rideshare Guy in a week about it
That's awesome! So both you and your wife and separately doing this? I've seen it where ppl will 'team' up in a single car to make deliveries faster. In terms of deliveries - can you be selective about what the orders that come through and whether or not you want to take them? So you can basically *choose* jobs where the person lives within 5 miles and the grocery store they've chosen is also within 5 miles? Or is it more like Lyft/Uber where you are sort of 'obligated' to take jobs and if you don't you'll get penalized (at least, that's what I thought I heard regarding how Uber/Lyft, or one or other, does things).
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@jeromedawg
No penalties for *not* taking an order. We have 4-6 to choose from at any time on our screen and the options rotate through. We have to be quick on the higher paying orders.
We shop together, we know how to split up and conquer an order quickly. Not technically permitted per IC's terms of service, but nobody is going to report us if we're respectful in the store. On the rare occasion we'll be shopping on one account and we see a small order going to the same general area from the store we're already in...and will absolutely double those up.
In the peak time, we would alternate orders and could pickup some efficiency that way. It's not *that* good anymore.
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@jeromedawg
No penalties for *not* taking an order. We have 4-6 to choose from at any time on our screen and the options rotate through. We have to be quick on the higher paying orders.
We shop together, we know how to split up and conquer an order quickly. Not technically permitted per IC's terms of service, but nobody is going to report us if we're respectful in the store. On the rare occasion we'll be shopping on one account and we see a small order going to the same general area from the store we're already in...and will absolutely double those up.
In the peak time, we would alternate orders and could pickup some efficiency that way. It's not *that* good anymore.
Wow you guys really have a system down... are you doing this on the side apart from work? I think I'd get stressed out and under too much pressure trying to split-up the work and also taking on orders *while* shopping hahaha. Once at least one kid is in school my wife has been talking about doing this on the side (and I think maybe after she has been vaccinated too) - she says she really enjoys shopping and thinks she'd be good at this (especially picking out the best of the batch like fruits and veggies...not sure about meat haha). Logistically trying to juggle this with two small kids seems challenging otherwise.
Are there any 'upstart' fees when signing up?
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Zero fees to signup. Only real costs we incurred initially were buying two good insulated frozen bags to be more efficient hauling car to door.
We eventually bought a $40 folding cart off amazon to make hauling bigger loads into apartment complexes easier.
We don't have kids and are FIRE, so we have all the time in the world. This morning we doubled up a Costco order and made $63 in an hour twenty. 9am on Saturday tends to be the highest paying window in our market.
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Found myself out at 6pm today and headed home. Decided to turn on GH and DD instead and wound up making $37 in 45 minutes versus driving home and making zero dollars in 10 minutes.
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Need to start following this thread... my wife is interested in becoming an Instacart shopper - she really enjoys grocery shopping and is very good at finding and picking out items that aren't damaged and messed up lol.
I'm late to the thread.
I highly recommend this. We made just over $19,000 last year on Instacart, mainly because we live near a Costco.
The first 10-20 orders will stink, then you'll (she) will get better at batch selection, when to work, ect. Solid $30/hr hustle if you're selective, $20/hr if you're not. Those are gross numbers, so you still owe taxes and will put a few miles on the car. Less driving than food delivery though. Actually have a guest post coming out on Rideshare Guy in a week about it
Solid numbers. Now that it's tax time how does that figure in? Are you responsible for both sides of FICA/Medi, so called Self employment tax, bc it is a contractor position? Also was mileage or gas factored in? Just curious what your overall net was/will be on the $19k.?
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Need to start following this thread... my wife is interested in becoming an Instacart shopper - she really enjoys grocery shopping and is very good at finding and picking out items that aren't damaged and messed up lol.
I'm late to the thread.
I highly recommend this. We made just over $19,000 last year on Instacart, mainly because we live near a Costco.
The first 10-20 orders will stink, then you'll (she) will get better at batch selection, when to work, ect. Solid $30/hr hustle if you're selective, $20/hr if you're not. Those are gross numbers, so you still owe taxes and will put a few miles on the car. Less driving than food delivery though. Actually have a guest post coming out on Rideshare Guy in a week about it
Solid numbers. Now that it's tax time how does that figure in? Are you responsible for both sides of FICA/Medi, so called Self employment tax, bc it is a contractor position? Also was mileage or gas factored in? Just curious what your overall net was/will be on the $19k.?
Yes you are self employed, so all that applies. Key is to have expenses that offset so small amount is taxable, as in my case of the $9K I made only $3K was taxable.
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@jeromedawg
No penalties for *not* taking an order. We have 4-6 to choose from at any time on our screen and the options rotate through. We have to be quick on the higher paying orders.
We shop together, we know how to split up and conquer an order quickly. Not technically permitted per IC's terms of service, but nobody is going to report us if we're respectful in the store. On the rare occasion we'll be shopping on one account and we see a small order going to the same general area from the store we're already in...and will absolutely double those up.
In the peak time, we would alternate orders and could pickup some efficiency that way. It's not *that* good anymore.
Be careful on shopping together. At least in out market other Instacart shoppers will report you as they see you as having an unfair advantage. People talk about turning in people all the time on our local Instacart FB feed.
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Need to start following this thread... my wife is interested in becoming an Instacart shopper - she really enjoys grocery shopping and is very good at finding and picking out items that aren't damaged and messed up lol.
I'm late to the thread.
I highly recommend this. We made just over $19,000 last year on Instacart, mainly because we live near a Costco.
The first 10-20 orders will stink, then you'll (she) will get better at batch selection, when to work, ect. Solid $30/hr hustle if you're selective, $20/hr if you're not. Those are gross numbers, so you still owe taxes and will put a few miles on the car. Less driving than food delivery though. Actually have a guest post coming out on Rideshare Guy in a week about it
Solid numbers. Now that it's tax time how does that figure in? Are you responsible for both sides of FICA/Medi, so called Self employment tax, bc it is a contractor position? Also was mileage or gas factored in? Just curious what your overall net was/will be on the $19k.?
Taxable was around $14,500, with the largest write-off being mileage expense at 57.5 cents per mile (reduced to 56 for 2020). I put our actual cost per mile in the 20-23 cents per mile range. It also includes half of our cell phone bills becoming a business expense.
We were responsible for both sides of the payroll tax, but then were able to deduct our ACA premiums of nearly $7,000 on a separate portion of the tax return.
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@caracarn - I've seen that as a risk, but we also have shoppers running around with kids in tow and nobody seems to care/report them.
We usually have pictures of the order ahead of time and split up and shop it in two baskets. We stick to Costco and have a pretty solid system splitting the store in half.