Cash Flow Crusher

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Category: Make Money

Why Shouldn’t You Withdraw from a 401k Early?

It can be difficult to look at the money in your 401(k) account and realise that you can’t touch it for many years to come. Whether you want to buy a new toy, or you’ve hit some financial strife having money that’s yours but not yours is a frustrating feeling. As much as it seems like a great idea to pull some of the money out early, there are reasons why you should leave it alone as long as possible.

Early Withdrawal Penalties

If you attempt to withdraw from your 401(k) prior to age 59 and six months, you’re subject to federal taxes and in many cases a 10% penalty. If you’re under 60 and withdraw $100,000 from your 401(k) account, you will only get to keep $75,000 of that if you are in the 15% federal tax bracket. In one transaction you’ve lost 25% of your money.

Cheating Yourself Out of a Cushier Retirement

If you pull money out of your 401(k) early, you might be cheating yourself out of a cushy retirement. $100,000 left alone for 10 years with a 7% return will be worth over $200,000. Once you reach an age where you can withdraw this without penalties the required minimum distribution for $200,000 is $8,000 a year, though you can take more.

While you might be the type of person to withdraw from your 401(k) and invest it elsewhere, studies of human psychology show us that once people have money in their hands they spend it. The best choice is to leave your retirement accounts alone for as long as possible and allow compound interest to work on them to ensure you have a comfortable nest egg when you retire.

Rolling Over to Other Accounts

Many people withdraw from their 401(k)s because they change employers, or want to access the money at a younger age.

If you switch employers you can roll your current 401(k) balance over to your new employers plan with a few forms. As long as this is done within 60days of changing employers, you won’t pay any fees.

Another option is to roll your 401(k) account over to an Individual Retirement Account (IRA). An IRA account is not tied to an employer and stays with you regardless of who you work for, but check the fees and charges before making the switch. A 401(k) might still be the better choice for you.

If you really desperately want to pull money out of an IRA or 401(k) early there are ways you can do it without paying a penalty, but it requires a lot of pre-planning. Any amount converted from a traditional IRA to a Roth IRA can be withdrawn penalty and tax free five years later. It won’t help you today to buy a new car, or fund a down payment for a house, but might make all the difference in your long term plans.

 

5 Lucrative Side Jobs to Work During College

Getting a side job during college is one of the best ways to get extra money. The cost of tuition is on the rise, with students paying an average of $19,548 in education, room, and board each year, according to Discover. And there are other costs like having a car and buying books. Even if you’re not in deep student debt, having income from a side job will make life easier.

Ideally, you’d work in something relating to your degree. If you’re majoring in Chemical Engineering, you could work in the lab helping other students. If you’re getting a degree in Kinesiology, you might try working at a gym.

However, it’s not always possible to get something closely related to your major. The important thing is that you have the cash flow to make the road ahead easier. Here is a list of five lucrative jobs that you can do during college:

1. Social Media Manager

How would you like to make social media posts and get paid for it? Being a social media manager might be a job you haven’t thought of, but it makes total sense if you like to hang out online on Facebook, Twitter, and Instagram.

Companies across the globe need social media marketing in a big way. It’s a must-have, but not every company is willing to hire an in-house employee to sit in an office and write posts. They hire freelancers to write posts, manage Facebook groups, and build followers.

Pay is $20-$30 per hour, and will probably require at least 10 hours per week. The best thing about this work is that it is ongoing and you can do it from your laptop before or after study time.

2. Bartender or Server

If you’re over 21, you can work as a bartender. You can make an average of $16.71 per night serving drinks, according to Payscale. Making drinks for people builds fantastic experience in customer service and solving needs. You’ll have to think on your feet, and it is tough work, but you can make significant money on nights and weekends.

If you haven’t reached the legal age, try making your tips by serving tables. Bringing food to people is another excellent resume-builder because employers love to see that you’ve worked in customer service. Waiting tables is hard work, but you’ll love having the quick cash that tips provide.

3. Tutor

Being an on-campus or online tutor is a fantastic way to practice your skills while earning cash on the side. Campuses will pay as much as $15-20 per hour for tutoring subjects like Algebra or English.

Working as a tutor online may give a lower hourly wage than in-person tutoring, but you’d also have the freedom of working from your laptop. Two of the best online tutor sites are Skooli and Tutor.com.

A third option is to make and post flyers offering private tutoring to college and high school students. Many students have trouble keeping up in certain subjects in which you might excel. Math, engineering, English as a second language, and foreign languages are all subjects that people frequently need help learning.

4. Sell Clothing on eBay and Other Online Sites

This job is bound to be a favorite for anyone who loves shopping and fashion. It’s not a job where you’re clocking in anywhere, but your results are based on your performance, just like any business.

Selling on online retailers like Amazon and eBay is one of the most lucrative online side hustles you could have if you’re knowledgeable about high-end fashion brands.

Do research on which brands sell well online. Then go to your local thrift stores and upper-end second-hand shops like Plato’s Closet.

You’ll need to take pictures and write some creative product descriptions, but your items can pay off. Your total expenses will include the cost of the product, shipping fee, eBay fee, and usually a PayPal fee. You can score a nice profit if you calculate your sale price and profit correctly.

Don’t like fashion? Try buying and selling textbooks or graphing calculators instead.

5. Brand Ambassador

Brand ambassador is an exciting job that will pay you a good wage to represent a brand on or off campus. Companies are in constant need of temporary labor to be on site to promote their products, create awareness, or to hand out freebies.

The jobs are usually easy, but will usually require you to drive to a location unless it’s on campus. Most of these jobs require little or no experience and the hours are typically evenings and weekends.

The best sites to find brand ambassador jobs is Indeed or Snagajob.

Conclusion

Finding a lucrative side job during college is one of the smartest things you can do to minimize debt and make your college experience more comfortable. Are you looking for a job to do during college? What side jobs have you worked?

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