Making extra money always seems like a good idea. Except when it costs you more in time and resources to do the work than it brings in. If you are investing that time toward something bigger, then it can still be worthwhile. But if you have your main job and a worry that the side thing is cutting in, use this checklist to evaluate.

We used to call it a second job, but now you can make some decent money at home, from your computer and by selling items. The question then becomes: just because you can make a little extra money, is it worth your time to do that?

Costs to Do The Work

Costs come in a lot of forms. There is the hard costs for gas money or supplies or internet connection. A big hidden cost is the time you might be using for something else. Even if you are physically at home doing this side work, does it keep you mentally separate from your kids or partner? Time with kids is precious, so weigh the dollars coming in against the amount of time you can’t get back again.

I started doing graphics design on the side and several projects required extra time to learn how to do some things clients wanted. The steep learning curve cut into the limited evening time with my young daughter and kept me up late so my husband felt alone. The few hundred dollars I was making every month was fun, but it wasn’t worth creating resentment with my husband or giving up time I would never get back with my kiddo.

Time To Do the Work

Sometimes the extra money is clearly a win. Maybe you have a truck and someone will pay you to pick up their stuff and take it over there. No extra supplies are needed, it’s easy to fold that into your day.

Consider if you are a talented knitter and decide to sell the items you make on eBay. That sounds like an easy win, too. Until you start adding up the hours it takes you to make the items and then take photos and respond to dumb questions from eBay buyers. Oh, and they’re not ALL buying. Some seem to make it their business to come up with the dumbest questions and want quotes and additional photos.

Then if they leave you a bad review, you have to spend time asking “can you tell me more about your concerns and I’ll see what I can do to fix them?” To make a bad situation worse, they might actually take you up on it and for then to support a $25 sale you have already made, you have to spend three additional hours righting a made-up wrong. And did you factor in shipping to get that item to Maine in 2 days? Yeah, that’s extra.

Pretty soon, this slightly profitable hobby becomes a black hole of time, sucking all the fun out of it one nickel and two dimes at a time. Even if making the thing or doing the work is fun, you have to look at the whole picture and evaluate it against the income. Here is a simple formula:

Over a month, how much money did you make? I mean hard dollars, in hand. Don’t count any invoices that haven’t been paid yet or promises or trade agreements. Stacks of cash only.

Then tally up all the hours it took driving to the place or answering emails or taking the photos or correcting the website or dealing with shipping or responding to reviews or calming yourself down from the anxiety of dealing with stupid questions.

Hard dollars earned
————————- = Your Effective Hourly Rate
Hours worked

If you aren’t making minimum wage, it probably is not worth your time.

Now, a low effective rate might mean you still keep doing it, but you look for smarter ways to reduce the time to do that work. You could change your shipping policies so you aren’t at the whims of complaining internet users. Or you find a new outlet for selling your items, or someone to help you with the website maintenance. Maybe it is a better use of your time to sell stuff at weekend craft fairs than on eBay or Etsy. There’s no right answer: just be analytical and smart about how you spend your time because it’s not good business to lose your shirt or your passion for the work.

Time Away From Your Day Job

Certainly you would never take on an extra project that cut into your day job. But a few minutes here and few minutes there, a long lunch, doesn’t always feel like a compromise. The specifics can be easy to compartmentalize.

But what about when you are just thinking about your side thing during the day. What about when it becomes a distraction? That’s not fair to your employer.

Occasionally a side job can make you better at your day job like if you’re taking on smaller projects to show your employer your new track record of expanding management skills for a step up in the organization. You have to look within to evaluate if you’re creating value or liability.

What about the cost in your energy? We all need a certain amount of sleep. While we might be able to overlook sleep for a while, new science is emerging that makes it very clear our emotional state needs us to have some downtime. When we are pushing in several directions, working a full job and then using the whole weekend to do this other thing, then we never fully relax and hit our internal reset button. That can reduce our overall enthusiasm for things we love and even lead to depression. Creativity is reduced when we are one a 50-, 60-, 80-hour work week. Most importantly, our resilience to emotional setbacks is diminished over time. That extra $1,000 might not be worth risking burnout and ruining both situations.

Tax Troubles

You don’t have to pay income tax on the money you make in Nevada, but you do have to pay sales tax on any items you make or sell. The sales tax rate in Nevada is 6.85%. That means you have to either charge more than you might prefer to cover your tax obligation, or you take it out of what you earned.

Sales tax is due in the period it was generated. If you earned it in 1st Quarter, it is due in 1st Quarter.

Even if you ‘forget’ to pay, it is still due and State of Nevada will come take their due. Here is relevant info from the State of Nevada Department of Taxation:

One of the biggest items I spent time on was filing taxes and working with my accountant. That time spent is a real cost of doing the business and is part of your Effective Hourly Rate.

Do You Love It?

Now, if you love it, despite the costs, none of the above matters.

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