Obligations on Your Side Hustle Money | Evolving Personal Finance

June 22nd, 2012 | 14 Comments

Kyle has been volunteering with the production team at our church for about a year, mostly running the slides and handling the video-playing.? One of the men who runs the sound board is taking a sabbatical and they are looking for someone to fill his weekends.? Kyle has wanted to learn how to run a sound board for a while so this is a perfect opportunity.? Plus, we found out that it is a paid position, not volunteer as we had thought!

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When Kyle tallied up how much this side hustle might earn him ($70-80 every three weeks) he blurted out ?I?ll be able to buy a Kindle!?? But what was running through my head was ?Actually, you?ll have to save up twice as long because of taxes, tithe, and retirement!?

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The reason I thought this is because of the rules we and the government have concerning our income.? When we have an extra $10 here or there in income I don?t worry about changing our contribution levels, but I don?t consider a regular paycheck, however minor in comparison with the bulk of our income, to be negligible.

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Taxes: This additional income will of course be taxed at our marginal tax rate, 15% federal + 7% state, instead of our overall tax rate (8% federal and 4.5% state), so that?s a 22% bite right there.

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Tithe:? We would give 10% of this income away, either to our church or other charitable organizations.

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Retirement: I think that 15% toward retirement is a good baseline, and since we are not yet maxing out our Roth IRAs I would want to take a portion of this hustle to bump up our contribution.

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All together, those obligation sum to 47% of the income.? It?s quite demotivating to realize that we?ll only get to pocket half of what Kyle makes from this hustle!

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Do you consider your various obligations when you receive a paycheck from your side hustle, or do you ignore them until you square everything up at year-end?? What percentage of your extra income is spoken for?

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photo from ceasedesist

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Filed under: giving, retirement, side income, taxes, values

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