Ask GFC 025: Does Roth IRA Conversion Make Sense When I’m Already Retired?

I’ve talked a lot over the years about Roth IRA conversions, but do they make sense when you are already retired? And if so, what’s the best strategy to bring about the conversion?

We received an Ask GFC question that refers to both topics:

“I have 300K in a former employer 401K. I am 69 years old. Preparing for the RMD (Required Minimum Distributions) in 2 years, I am thinking of moving some 401K to a Roth before then. Can I
do the following:

— Move $50k from the 401K after the 4th Q distribution (so I get that income), but before year end? Assume distribution is 12/23, get distribution, then move 401K 12/28 for tax hit this year.

— Move $50k from 401K sometime next year for tax hit next year.I may move more depending on how the tax hit plays out, will analyze that.”

For the most part, doing a Roth conversion is usually a good idea, no matter which side of the retirement line you’re on. And spacing the conversion out over several years is usually the best strategy. But let’s discuss the specifics, since doing the conversion in retirement might add a wrinkle or two to the process.

The Benefit of Doing a Roth Conversion in Retirement

Since withdrawals taken from Roth IRAs are tax-free, this is the most obvious benefit for doing a conversion. By converting 401(k) funds to a Roth IRA, the writer is exchanging a taxable income source for a tax-free source. The tax implications however aren’t always a pure play, particularly in retirement, but we’ll get more specific with taxes in the next section.

The next biggest advantage of a Roth conversion – in fact, maybe the biggest in retirement – is that Roth IRAs don’t require required minimum distributions (RMD’s).

Why is that such a big deal?

RMDs are the method that the IRS uses to force funds out of tax-sheltered retirement plans, and into taxable income. After years of accumulating tax-deductible and tax-deferred contributions and earnings, RMD’s represent tax payback time.

RMD’s are required once you reach the age of 70 1/2. At that point, each plan must begin distributing funds based on your remaining life expectancy at the age of each distribution. In theory, this will mean that from age 70 1/2 to, say 90, your retirement plan will be roughly depleted, or very close to it.

That becomes an obvious problem if you live past 90, which is no longer uncommon. But you will arrive at that age with greatly reduced retirement assets.

Since Roth IRAs don’t require RMD’s, they are almost certainly your best hope of not outliving your money.

In the same way, Roth IRAs are an excellent way to preserve at least some of your retirement assets to pass on to your heirs upon your death. While traditional IRAs and other retirement plans generate a tax liability for your heirs (because of RMD’s), Roth IRAs don’t generate taxable income.

So there are clearly compelling reasons for converting a 401(k), or any other tax-sheltered retirement plans, over to a Roth IRA.

The Possible Tax Consequences of this Roth Conversion

In order to get the tax-free income that a Roth IRA provides, you first have to pay regular income tax on the amount of money that you convert from other retirement plans. Once again distributions from any retirement plan – other than a Roth IRA – are subject to income tax.

By converting $50,000 of his 401(k) plan to a Roth IRA, the writer is adding $50,000 to his taxable income. If as a result of adding that amount to his other taxable income puts him in the 25% tax bracket, then he will have to pay $12,500 on the conversion. Any state income taxes will add to that liability.

This is where you have to evaluate your current tax situation, compared to what you expect it to be in a few years. The writer is 69 years old and doesn’t indicate if he is retired or if he’s still working. That creates an extra consideration.

If he is in anything greater than the 15% tax bracket, but expects to be in a lower tax bracket after turning 70 1/2, he might not want to do the conversion right now. That is especially true if he does have employment income.

However if he does not expect a significant decline in his tax bracket going forward, it will make sense to do the Roth conversion now.

I don’t know if any apply to the writer, but there are at least three other tax factors that need to be considered when doing a Roth conversion:

1) The 3.8% Medicare surtax. Under the provisions of Obamacare, there is a 3.8% Medicare surtax on investment income earned by couples filing jointly with a modified adjusted gross income (MAGI) of more than $250,000 (or $200,000 for single filers). You’ll want to be careful that the amount of the Roth conversion won’t trigger that tax.

2) If you have company stock in your 401(k) plan. The writer wants to convert his 401(k). That raises the possibility that the plan contains company stock. There are special rules that apply to net unrealized appreciation (NUA) of appreciated company stock in a company plan. Since the writer is over age 59 1/2, those rules would allow him to take a lump sum distribution from the 401(k), and pay the income tax only on the actual cost of the stock. He can sell the stock at a later date, paying only the long-term capital gains rate. This may cost him less in taxes than doing the Roth conversion.

3) Pay the tax liability out of non-tax sheltered savings. If the writer wants to be able to convert the entire $50,000 to a Roth IRA, he will need to pay the income tax liability out of taxable savings. For example, if he is in the 25% tax bracket, he will have to pay $12,500 in taxes. If he pays this out of the conversion amount, only $37,500 will make it to the Roth. By paying the tax bill out of taxable savings, he can convert the entire balance.

Addressing the Writer’s Specific Questions

Now that we’ve covered the basics of doing a Roth conversion after retirement, let’s get to addressing the writer’s specific questions.

The writer asks if he can do the following:

Move $50k from the 401K after the 4th Q distribution (so I get that income), but before year end? Assume distribution is 12/23, get distribution, then move 401K 12/28 for tax hit this year.

Move $50k from 401K sometime next year for tax hit next year.I may move more depending on how the tax hit plays out, will analyze that.”

The answer to both questions is virtually the same. He can certainly do this, and it makes a lot of sense to spread the conversion out over several years. There’s $300,000 sitting in his 401(k), and the tax consequences of moving that all at once can be overwhelming. It’s better to do the conversion on the installment plan when that kind of money is involved.

If he were to attempt to move the entire 401(k) balance of $300,000 in one year, it could push his combined federal and state income tax liability to somewhere between 40% and 50%. Paying upwards of $150,000 in taxes, for the privilege of having tax-free income in the future, is too steep price to pay even for that benefit.

By making annual conversions of $50,000, the transfer should be subject to much lower tax rates, enabling him to move more of money into the Roth.

This is what I meant when I said earlier that the tax implications of a Roth conversion aren’t always a pure play. Much depends on your income tax bracket, and on the amount of funds that you are converting to a Roth.

In all likelihood however, the writer will be able to set the conversion up in a way that keeps his tax liability to a minimum, and accomplishes the goal that he hopes it will.

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Here’s Your Month-by-Month Guide to the Best Time to Buy Almost Everything

Imagination at work

There are a lot of great places in the area to see art created by local artists. With many different art galleries in the Pocono region, finding some local culture isn’t too difficult, or too far away. The Madelon Powers Art Gallery in East Stroudsburg University’s Fine and Performing Arts Center is gearing up for a new show beginning next month. The gallery, designed by David Ross in 1978, is 1,000 square feet of art-filled space. [...]

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Worried About Losing Obamacare? Here’s What You Can Do Right Now

Making good on many campaign promises, the new crop of Congressional Republicans kicked off 2017 yesterday with their first step toward a plan to “repeal and replace Obamacare.”

GOP legislators resurfaced a bill with some ideas to replace the Affordable Care Act, which introduced health insurance exchanges and subsidies, among other efforts to expand insurance coverage in the U.S.

“Make no mistake about it,” vice president-elect Mike Pence told reporters yesterday after a meeting with Republican lawmakers. “We’re going to keep our promise to the American people — we’re going to repeal Obamacare and replace it with solutions that lower the cost of health insurance without growing the size of government.”

While supporters are happy to see such swift action from representatives on the promises that got them elected, many Americans are worried.

What Exactly is Happening With Obamacare?

With only vague mentions of “a plan” from House Speaker Paul Ryan (R-WI), we’re uncertain what to expect.

The bill making headlines now is “unlikely to become the main vehicle in the House to repeal Obamacare,” according to CNN. No one seems to know exactly how “repeal and replace” will look.

It leaves us in limbo, with many people wondering: Are we about to lose our health insurance?

Unfortunately, all public answers to that question are, for now, only speculation.

What to Do if You Rely on Obamacare for Health Insurance

If you’re one of about 20 million people who’ve gained health insurance since 2010 directly because of the Affordable Care Act, don’t panic.

Few people know what’s actually going to happen as Republicans move forward with their plan, so don’t let guesses get you down.

If you don’t like sitting on your hands waiting to learn your fate, here are two pragmatic steps you can take now to prepare yourself (a bit) from whatever “repeal and replace” might mean.

1. Enroll (or renew) in the health insurance marketplace before Jan. 31.

If you don’t have health insurance through an employer, Medicare, Medicaid or another source, enroll through the health insurance marketplace before Jan. 31.

You can enroll:

• Online at healthcare.gov

• By Phone: 1-800-318-2596 (TTY: 1-855-889-4325)

• In person, with help from groups in your community.

• By mail, with this paper application (Follow these instructions.).

If you had coverage in 2016 through the health care marketplace and didn’t make any changes, you were probably automatically enrolled in the same plan for 2017 — so you should be covered.

You can check your enrollment status through your account at Healthcare.gov or by calling the number above.

Even if you were automatically enrolled, you may want to check your plan to make sure you have the best coverage available. You can update it through the marketplace before Jan. 31.

Sign up to make sure you have the best coverage you can get now, so you know you’re covered as long as possible. This will save you from scrambling for coverage or care after the full plan is unveiled.

2. Make an appointment with your doctor.

We don’t know that you’ll be stuck with a gap in health care coverage between “repeal” and “replace.” But if a gap would have serious ramifications on your health, plan ahead.

“People should sign up and continue to be covered as long as the Republicans let them,” Tim Jost, a health care law expert at Washington and Lee University told MONEY. “People should think about if there’s anything I can get now, that might not last past repeal.”

That could mean getting in your annual physical now, scheduling a procedure you’ve been putting off, filling prescriptions or switching to a birth control method that will outlast the incoming administration.

Resources to Reduce Your Health Care Costs

In the meantime, resourceful Penny Hoarders can always search for alternative ways to afford health care.

Visit a doctor online! Use telehealth to meet with a Board-certified medical professional online at a fraction of the cost of a clinical visit.

For your mental health, here are nine ways to get free or cheap therapy when you don’t have health insurance.

If you’re engaged in a Christian church and are relatively healthy, consider joining Medi-Share or another health-care sharing ministry.

For medication, check out these six ways to save money filling your prescriptions.

And, with or without health insurance, follow these 10 tips to save money on your medical bills.

Your Turn: Will your family be affected if Congress decides to repeal Obamacare?

Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).

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2 Major Credit Bureaus Owe Consumers $17.6 Million. Do You Qualify?

The Big Three.

Not the automobile manufacturers. Not the World War II leading trio (for you history buffs). Not a band. Not a football division (try 10 and 12 on that one).

In our Penny Hoarding world, the big three are Experian, TransUnion and Equifax — the three largest credit reporting agencies.

Two of these credit reporting agencies have screwed up — to the tune of more than $17.6 million.

And if you were affected, you might be able to get your hands on some of that money.

TransUnion and Equifax Facing Major Fines

The Consumer Financial Protection Bureau has fined TransUnion for two violations, and Equifax for three uh-ohs.

Here’s the breakdown.

1. Misrepresenting credit scores

FICO scores are the best known and most widely used among lenders, reports our contributor Sarah Kuta. It’s not a credit reporting agency, but FICO uses information from those all three to calculate a score.

Consumers who bought scores from TransUnion received VantageScores, according to the CFPB. Equifax provided consumers with its own Equifax Credit Score.

Neither of these numbers are typically used in credit decisions.

2. Signing up unknowing consumers for paid subscription programs

Each agency advertised its services for free — or for $1. (By the way, there are plenty of opportunities to get free credit scores.)

“In reality, consumers who signed up received a free trial of seven or 30 days, after which they were automatically enrolled in a subscription program,” the agency said in its news release

Unless folks canceled during the trial, they began getting charged $16 or more — per month. No part of this process was “clearly and conspicuously disclosed,” the CFPB said.

3. Exposing consumers to advertisements

This was Equifax’s bad.

The mogul also violated the Fair Credit Reporting Act, which requires agencies to provide a free report once a year and to do so on the Annual Credit Report website, according to the CFPB.

Up until January 2014, those who opted for their free report through Equifax were forced to view advertisements before receiving a score, which totally violates the law.

Did the TransUnion and Equifax Mistakes Affect You?

TransUnion’s violations have been going on since at least July 2011 and have affected approximately 700,000 consumers. Equifax violated laws between July 2011 and March 2014; the CFPB did not report the number of people affected.

Now, the agencies must pay more than $17.6 million to affected customers — $13.9 million from TransUnion and $3.8 million from Equifax.

If you’re one of these affected customers, you should get a notification letter in the mail. The companies have 60 days to make a plan, then consumers should expect to get word on the specifics.

On top of that big ole payout, the companies will pay $5.5 million total in penalties — plus make major changes to their operations.

Your Turn: Were you affected by these credit reporting agencies?

Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder. After recently completing graduate school, she focuses on saving money — and surviving the move back in with her parents.

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31 Days to Financial Independence (Day 21): Starting a Side Business

“31 Days to Financial Independence” is an ongoing series that appears every Thursday on The Simple Dollar. You might want to start this series from the beginning!

Last time, we examined strategies you might want to use if you’re looking to move on to a better job. Today, we’re going to to take a different approach to income generation and look at some strategies for starting a side gig.

So, what’s a “side gig”? A side gig simply refers to anything you do outside of your main job in order to earn some additional money that’s self-funded (meaning you don’t have to take out debt for it and already have the gear you need or can buy it out of pocket) and won’t require employees, at least not at first. Usually, it’s in reference to a microbusiness, where you’re making something and/or selling something. This can take a lot of forms, from starting a Youtube channel to engaging in freelancing parallel to your career, from repairing smartphones to building wooden Adirondack deck chairs, from making jewelry to sell on Etsy to mowing lawns.

The key to a successful side gig is to find something that you enjoy doing that you can turn into profitability or else find something that other people hate doing that you don’t mind doing so that they’ll pay you for it. For example, in the first category, you might make a Youtube channel about your hobby, or in the second category, you might mow lawns. It also needs to be something that isn’t so time-consuming that you can’t do it in your spare time.

In my own experience, building a side gig was a fundamental part of achieving financial and professional success. The Simple Dollar started as a side gig for me, one that grew into a full time job over a series of years, and it helped both with our financial turnaround but also with our life flexibility.

Let’s get to it!

Exercise #21 – Building a Side Gig

Most of the strategies in this article seek to tease out some of those ideas from your own life and then how to turn that idea into something that actually makes money along with a few basic tips on keeping your money straight.

Identify your personal skills and passions. People pay money for skills. They also pay money for passion. That’s what people like to spend their money on. People want things that are done with skill. People enjoy things that are produced with passion and care. People put up their money for things that they want and enjoy.

Thus, if you want to make money, one great way to start is with things you’re passionate about and things with which you have skill.

To start, make a list of all of the skills you have: things you can do well that elude others, either through natural talent or through training. Maybe you’re good at photography or line drawing. Maybe you’re really good at poker. Perhaps you can play the piano, or you’re a wizard at Adobe Illustrator. Perhaps you’re good at making videos, or maybe you can write reasonably good prose in large volumes quickly (that’s something I can do!). Maybe you’re a borderline golf pro. Figure out the things you’re notably good at.

Then, figure out things that you’re really passionate about. What do you love doing or learning about? Perhaps you’re passionate about science fiction books. Maybe you’re really into binge-watching shows on Netflix. Maybe your passion is board games. Think of things that you truly love, that you’re opinionated about, that you think about all the time.

Those two lists are things that you can draw upon to form a side gig. The best ones, I’ve found, come when you combine a skill that you have – say, video making – with a passion that you have – say, science fiction. That means you’re in a place to create something with skill that you’re passionate about, and you’ll almost always find fans who will buy into what you’re doing when you combine the two.

If you don’t have a skill that matches up well with a passion, you can always focus on learning a skill. Video making is a great skill to learn, for example. Starting a side gig can be a wonderful incentive for learning a skill.

Identify things you don’t mind doing that other people hate doing. If you’re struggling with the previous list, switch your focus to considering things that you don’t mind doing that other people seem to loathe doing. House cleaning. Lawn mowing and other yard work. Laundry. Moving stuff. Walking dogs. Those are all tasks that people don’t enjoy doing and will often pay others to do.

Think about things that others complain about all the time that you really don’t mind doing and you’re probably pretty close to the source of a side gig for yourself. People will always pay to offload a task that they don’t enjoy.

From those lists, identify two or three ideas that might work for you. At this point, you should have a bunch of skills, passions, and tasks you don’t mind tackling written down. Now is the time to start filtering all of those ideas.

The first step here is to start mining those skills, passions, and tasks for potential side gig ideas. Just look at those things and ask yourself what you could do with them to make money, especially when you can combine a skill and a passion.

For example, if you wrote down that you’re skilled at Adobe Illustrator and that you’re passionate about board games, perhaps you could find someone with an interesting prototype for a game and turn it into something beautiful that you could publish together. If you’re passionate about chess and interested in learning videography, perhaps you could start a Youtube channel where you teach basic chess or else analyze matches in a way that a layperson could understand. If you’re passionate about board games and skilled at writing quickly, maybe you could start a blog about board game reviews. Add those things to your list.

You might have freelancing opportunities related to each of your skills as well. You might have the opportunity to directly sell your creative works or offer consulting.

Maybe you don’t mind doing laundry and others hate it; you could start a “laundry service at your door” business. If you like mowing, maybe you could start a lawn care business. Almost everything that other people dislike doing that you don’t mind is a great basis or a business.

Hopefully, you’ll come up with a list of several ideas for businesses during this process. If you did, spend some time whittling that list down to the two or three that intrigue you the most. You should strive to end with your three best ideas for a side gig.

Develop a real business plan for each idea. Take each of those three ideas and flesh them out into a business plan. This seems like a painful formal process to many, but there’s a very good reason for making a business plan: it helps you see the potential problems in your idea before you start running with it, which means you can think of ways to get around those problems so that you’re more likely to have success right off the bat.

I highly suggest following the recommendations for writing a business plan from the Small Business Administration. You can skip over the parts about funding – a side gig should be self-funded, as noted above – but take the other parts seriously. Unless you’re doing this just for kicks, you’re going to want to have a side gig that will succeed and walking through the steps of writing a business plan for each of your ideas will pretty quickly help you figure out the problems and benefits for each of your ideas.

I did this with The Simple Dollar (back then, I used a business plan book from the library rather than these great SBA resources that exist today) and with many other small businesses I’ve dabbled in. The process of writing such a plan has almost always helped me see obstacles and helped me figure out how to deal with them before they become disasters that I’ve invested many hours in. I’ve walked away from many ideas after writing a business plan, and for good reason – they would have turned into black holes of time and money, slurping away all of those resources and giving me little in return.

Once you’ve written up a business plan using these ideas, pass them around to some trusted family members or friends or mentors. Send each one to a few people and get their feedback. Send them to people you trust and whose advice you trust and take their comments seriously. They might be really negative on an idea that you think is great, but rather than just brushing it off as “jealousy” or something, stop and listen to what they’re saying. Often, the good people in your life are critical of something you’re doing for a reason – they may be seeing something you’re not seeing due to your own blind spots.

Often, this can turn into a feedback cycle, where people give you comments, you improve the business plan, and then you send it to people for a second reading or to new people for a fresh reading. The goal is to develop a plan as well as you can so that you have a strong plan going forward when you start.

Choose the one that makes the most sense. Once you’ve written up a few plans, passed them around to people for comments, and made some changes to each one, read each one of them again and make a decision on which one to follow up on.

Most of the time, you’ll already know in your gut which one you should choose, but if you’re still uncertain, my general suggestion is to choose the one that you think you could sustain over the longest period of time. If you’re thinking that a particular idea sounds profitable but that you can see it becoming misery in a few months or a year, skip that one. You don’t want to invest the time and effort into building something up only to find yourself hating it down the road.

Wall off blocks of time to devote to your business. Once you’ve got a business plan in place, wall off some blocks of time during your typical week to devote solely to this business. This is your time to work on your side gig – make it as uninterruptible as your main job.

Unless the tasks for this side gig require long blocks of time – meaning that the weekend is the best time for it – it’s usually better to devote a block of time most days to the business. Plan for it every day unless there is a mitigating reason not to, like a particular meeting you have on Tuesdays or something like that. Put this in your calendar. Make it a real thing.

Blocking off a segment of time each day for your side gig means that you’ll move forward on the things that need to be done and you’ll begin to take it more seriously. It will become a routine for you, and when it becomes a routine, you’re going to find that you’re much more likely to do the hard work it takes to make it succeed.

What if you don’t have anything to do at the moment? Spend that time promoting the business so that you’ll have more to do later on. Get engaged on social media or in your community in an effort to promote what you’re doing. Alternately, spend that time sharpening the skills you have that the business is based on by taking classes or working on interesting personal projects that use those skills. Don’t waste that blocked off time; do something that adds value or potential value to your side gig.

Launch sooner rather than later. If there’s one thing I’ve learned about side gigs, it’s that “the perfect is the enemy of the good,” to borrow that old maxim. It’s completely true, too – if you spend your time preparing to launch something and you keep tweaking it and editing your business plan and making promotional stuff and talking about it and thinking about it but never actually doing it because it doesn’t seem “perfect” yet, you’ll never do it.

Just do it. Let go. You have something good there, so launch it. Dig in. Get started.

Yes, there will be problems. There would be problems if you waited until things were “perfect” to launch it, too. Nothing will turn out exactly like you dream it to be.

You know what? That’s okay. The purpose of a side gig is to spend some of your spare time doing something that makes money and if you’re not launching, you have zero chance of making money. You can only succeed if you throw it out there.

Don’t sit around fretting and worrying and planning and trying to perfect things. It will never be perfect. Instead, just dive in and get started.

Start off as a sole proprietor, but keep all money separate from the very start. Much small business advice suggests starting off with a legal business structure, but I think that’s really only a good idea if you’re investing a lot of money in equipment solely for the business itself and not directly for personal use. Given that this is a side gig, one that may or may not take off, and one that you’re starting by using things you have on your own or with very little investment – as suggested at the start – I’d suggest just sticking with a sole proprietorship at first.

So, what’s a sole proprietorship? It means that any income you earn from this business is considered personal income. It’s by far the easiest way to handle a side gig in terms of taxes, but it doesn’t offer you any real personal protection, either. If the business starts to grow or if you’re starting to acquire significant things in the name of the business, you may eventually want to structure it legally like a business.

Because of that, I strongly suggest keeping all money separate from the very start. Keep a separate checking account solely for the business and get in the habit of paying for all expenses for the business out of that account, putting all income for the business into that account, and if there’s money in there, paying yourself by taking the money out of the business account and moving it to your personal checking account.

Eventually, if you move to a more robust business structure, having this already in place will make everything much easier. This will also make things easier when it comes time for taxes, even now, because you’ll have all expenses related to this side gig separate from all of your personal stuff.

When might you transition to a different structure? That gets into a completely different ball of worms…

If things start to click, dig deep into entrepreneurship reading. This article isn’t a be-all-end-all of entrepreneurship, obviously. It’s a “getting started” guide that can push you to the point where you’re launching a little side gig that can make you a few dollars.

Sometimes, that’s all that will happen. (And, yes, sometimes even that won’t happen.) But sometimes, you’ll find that things really click. People like what you’re doing. You accumulate more popularity, more viewers, more readers, more clients than you ever expected. It starts to eat more of your time. You start making significant money. You wonder what the next steps are. You wonder about things like business structures and legal protection and possibly hiring employees. You wonder whether this could become your full-time thing.

When those things start happening, then you need to turn to some deeper guides on entrepreneurship and building a business. One great place to start is The $100 Startup by Chris Guillebeau, which covers some of the ground in this article but carries it further, describing many of the steps one would take if a side gig grows up. The Lean Startup by Eric Ries is a great book about what steps to take if you have a side gig that seems successful and you want to grow it while avoiding failures that can come from growth. Ready, Fire, Aim by Michael Masterson focuses well on what you need to do to take that core idea and turn it into something that will grow rapidly. The Tax & Legal Playbook by Mark Kohler is a great book for when you start to earn significant income from your side gig and you want to understand some basic tax strategies and whether different business structures are right for you. And those options just scratch the surface.

Those books will help you greatly if you find that you have a successful side gig on your hands, one that might grow faster than you think you can handle. That’s a good problem to have.

Next time, we’ll step back and look at “the gap” you’re creating with all of your efforts.

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An Unusual Job With Awesome Benefits is Helping This Couple Get Out of Debt

In the winter of 2008, my husband and I were like many other families, struggling to pay our bills.

We took all the advice we could to save money — like cutting the cable, using coupons and buying used when we could — but the simple truth was we simply weren’t making enough money.

We both worked part-time for a local newspaper, he also was a part-time college instructor and I was freelance writing.

It all added up to a lot of hours, and not enough money. We averaged about $1,500 a month working as much as 60 hours a week.

To our surprise, our answer lay in a job that first looked far less than awesome.

Our Weird and Wonderful New Job

We found the ad in our local newspaper. A storage facility located about five miles from where we were in Carbondale, Illinois, was seeking facility managers.

Our interview lasted less than 30 minutes over coffee at the local Denny’s. After answering a few questions about our basic computer and customer-service skills, we were hired as live-on-site managers for a self-storage facility.

Our first job working as self-storage managers had a starting salary of $800 a month in return for keeping the office open 52 hours a week.

Even living in the one of the cheapest parts of the country — rural southern Illinois — how could we not only live, but save money, on such a low salary?

The benefits made this job worth taking — and they turned out to be perfect for letting us live our lifestyle.

The Benefits That Made It All Worth It

Accepting the job meant the owner gave us a 1,200-square-foot, two-bedroom apartment and paid all our utilities — in addition to the small salary.

The apartment was furnished with only major appliances, so we ended up buying some extra furniture for the second bedroom.

The salary was commission-based with a guaranteed minimum of $800. We got the minimum exactly once, our first month there. Our monthly commission rose steadily, but topped out in five years at less than the $1,500 a month we made previously.

Even with the boss paying your rent, electric, phone and Internet bill, how exactly do you pay off your bills and become nearly debt-free in five years?

Other than our student loans, we paid off all our old bills, took our first vacation in years, bought a washer and dryer and paid cash for a new car.

Here’s How We Did It

First, we got serious about saving money.

We ate at home, limiting dinner out to the night we went grocery shopping. We made a menu and shopped to it.

And we put every dime we possibly could into our car fund. We were driving a 1995 Kia Sephia with 150,000 miles when we took the job, and we vowed to keep driving it until we could pay cash for a new car.

Working from home meant we saved on gas and car insurance, and we didn’t have to buy lunches or snacks at the office.

Next, we looked for other opportunities.

One of the first things our boss said to sell us on the job was he didn’t mind if we played video games, cleaned the house or watched TV during office hours — as long as we answered the phone and helped customers who came in.

So if someone came in needing a storage unit, we’d show them their options and try to convince them to rent with us. When they did, we’d have to sign a contract and take their payments.

We also went above and beyond those requirements.

We’d answer the phone and help customers based on their schedules, including after normal business hours and on traditional holidays like Memorial Day and Labor Day. As a result, our commissions grew.

But more than that, if the office was open, we were working — on our side hustles.

My husband’s degrees are in photography and graphic design and mine in journalism. He designed ads for the newspaper and I wrote fiction and nonfiction during office hours.

The first few years as storage managers, our income topped out at $25,000 a year, but by 2012 we had saved enough to buy a car. Using Ford’s employee discount (my grandfather was a retired Ford employee), we paid just under $18,000 for a new car and left $7,000 in the bank.

We joke that we took the job because both of us wanted to be writers, but didn’t want to be starving artists. Working as self-storage managers helped us live our dream!

In 2015, our side jobs netted us an additional $28,000.

Finding Even Better Benefits

After five years on the job, we had more experience, a two-year-old car still under warranty, and enough money in the bank to fund a cross-country move.

When we were ready to leave southern Illinois, we looked for websites dedicated to the type of job we wanted and stumbled across WorkingCouples.com, which specializes in jobs for married teams. Through the site, we found another self-storage management position.

This one came with a company vehicle, cell phone and a three-bedroom home on the storage property. They even pay for our gym membership!

During our second year here, we made three times as much as we had at the old facility. Food, car insurance, health insurance and those dreaded student loans were our only normal monthly expenses.

With the new job, we have quickly rebuilt our just-in-case nest egg and started making extra payments to get rid of the student loans.

Is a Storage Job Right for You?

The work is easy and we’re only busy a few days a month.  

You’ll probably live close to an industrial area, which means no neighbors, but we don’t mind.

And, the first time new friends come to visit, you have to carefully explain that you live at the storage facility. Once most people see how little we work and how nice the house is, their first question is, “Where do we sign up?”

At least one of you needs to be good at customer service. That means answering the phone and talking with potential renters when they visit the office.

You’ll need basic computer skills — and it’s nice if you can do very basic handyman work to replace broken latches.

That’s it. We suggest working in jeans.

Of course, no job is perfect — there are a few pitfalls.

You Live Where You Work

For some people, living where you work can be difficult.

We make it clear we don’t keep cash in the office. It’s attached to our house and we have a good relationship with the local police.

But because of the facility’s security, we probably have better security than most people’s homes. We have security cameras, an alarm system and an electronic gate between us and the world.

We also plan to spend time away from the house several times a week. Even if it’s just taking a walk at the local mall, it helps fight the monotony of working where you live.

You Work Every Saturday

We’re only open a half-day on Saturdays, but we’re still open.

But we get two weeks paid vacation every year, a part-time helper who comes in when we need a mental health break, and major holidays off — Thanksgiving, Christmas and Fourth of July.

You also have to teach customers not to bother you after office hours.

Usually, it means gently reminding them the office is closed even if you’re home. Because you live on the property, it’s not a great environment for children or outdoor animals.

But for those of us who want to create without being starving artists, it’s a great way to make and save money!

Your Turn: Would you work as a storage facility manager to pursue your dream?

Lucinda Gunnin and her husband Thor manage 422 Spacemall Self Storage in Oaks, Pennsylvania. Both are published authors with Twin Trinity Media and love knowing that they can create while not worrying about paying the bills.

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Petrol and diesel hit highest prices for 18 months

Helen Knapman

Petrol_pumps.jpg

Petrol and diesel prices rose by about 3p a litre in December taking them to their highest average prices since July 2015, according to the latest RAC Fuel Watch data.

Petrol and diesel prices rose by about 3p a litre in December taking them to their highest average prices since July 2015, according to the latest RAC Fuel Watch data.

Unleaded hit 117.23p a litre on 29 December, while diesel rose to 119.63p having been at 114.24p and 116.56p a litre respectively at the beginning of the month.

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How to Save a Job Interview That’s Going Downhill Fast

If you’re heading into a job interview soon, you’ve probably read a lot of advice on how to make a good impression on the hiring manager. Almost all of it will focus on preparation: practicing interview questions, researching the company and the role, even making sure your interview outfit is top-notch. Read enough of this advice, and you’ll start to get the impression that if you’re prepared, nothing could possibly go wrong.

If only that were true.

Of course, if you’ve been on an interview or two in your life, you already know this. No amount of preparation will prevent you from spilling coffee down the front of your white shirt or getting stuck in traffic for an hour. Sometimes, the best you can do is brainstorm solutions for the common problems that might arise, no matter how well-prepared you are.

When you’re late…

Obviously, you do your best not to be late for interviews. But sometimes, leaving an extra hour won’t be enough – the train will stall in the station or construction will reroute your trip through Antarctica and you’ll wind up a few minutes late, despite all your planning.

When this happens, your first instinct will be to rush into the office panting and flinging papers everywhere, apologizing to everyone you see. It’s counterintuitive, but take a beat instead and get yourself together. You don’t need to compound a bad impression by being late and having anxiety-induced cowlicks.

Find a restroom, fix your hair and your clothes, and take a few deep breaths. Then, when you go in, apologize once to the people you’re meeting, and leave it at that. They had to get to work today, too – chances are, they know everything that can go wrong on the commute.

When you put your foot in your mouth…

There are 1,000 ways to accidentally insult someone, no matter how hard you try to be polite. You might get their name slightly wrong, for example – hey, it’s not your fault that the interviewer’s name is CaroLINE and your sister’s name is CaroLYN – or you might try to find a common point of connection by mentioning your favorite sports team, only to find out that the interviewer is a fan of their bitterest rivals.

Ideally, of course, everyone’s an adult and lets it go. But again, a quick apology can go a long way toward helping the situation along. Just don’t overdo it. The goal is to get everyone thinking about your qualifications, and let the incident fade from memory.

When you suddenly become the clumsiest person you know…

You spill your coffee, or you trip over the carpet, or you drop your portfolio … into a tray of sandwiches. It’s flustering and embarrassing, but unless the job you’re interviewing for requires a high level of dexterity – for example, waiter at a fancy restaurant – there’s no reason for a little clumsiness to derail the conversation. In fact, you can turn the incident to your advantage by showing that you recover quickly from unexpected setbacks. Clean up any mess as quickly as possible, make a joke, and use it as a segue. Maybe now’s a good opportunity to talk about a time you used your skills to fix a mess at a previous job.

When you don’t know how to answer a question…

Not knowing the best answer to a question won’t ruin a job interview – but rushing to answer it might. Take a moment to gather your thoughts before you answer, and don’t be afraid to ask the interviewer for clarification on what he or she means.

If you still need more time, Lily Zhang at The Muse suggests thinking out loud:

“For example, if you get asked something like, ‘Tell me about your copy editing process for long form articles,’ and you don’t actually have a process (yet), a good approach would be to imagine that you’re editing that article and share the steps out loud,” she advises. “Add transitional adverbs like ‘first,’ ‘then,’ and ‘lastly’ to give your answer some structure. You can also finish off with a qualifying statement that ‘the process varies depending on the situation,’ which shows that you’re flexible even if your answer isn’t what the hiring manager would do.”

Whatever you do, don’t try answering a question that wasn’t asked. The interviewer will probably call you on it. If you’re really stuck, it’s better to reiterate your interest in the position… and in learning new things. It’s honest, and allows you to move on as quickly as possible.

When the interviewer just doesn’t like you…

The interviewer doesn’t make eye contact, or doesn’t seem to like a single answer you give, or looks bored, or is dismissive. When you get the sense that the interviewer doesn’t like you, it can feel like all is lost.

First of all, don’t make assumptions. Your gut might well be telling you something… or the interviewer might just have a more aggressive style than you prefer. The goal remains the same as it would be if the interviewer seemed like your biggest fan: Make your case for why you’re the best candidate for the job, learn as much as possible about the role and the company, and pay attention for cues that will tell you what it’s like to actually work there.

That last bit is important: If the interviewer seems hostile or like they just don’t get you, you might want to ask yourself whether you really want to work at the company. While it’s totally possible to meet the one bad apple at your very first meeting, it’s also worth considering whether the hiring manager’s misery is induced by the job… or if their behavior indicates a culture you wouldn’t want to join.

File the information away with everything else you learn. After all, you’re interviewing the company as much as they’re interviewing you.

Related Articles:

• About Half of Job Applicants Don’t Follow Basic Instructions, Say HR Pros
• Do You Hate Your Job – or Your Boss?
• Five Reasons Hiring Managers Aren’t Calling You Back

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