Lack of Motivation

One Soldier's Journey from Brueaucratic Fuck-Fest to Freedom

I know a shitload of people who drive for Uber/Lyft on the side.  I’ve talked to some drivers who do it as their sole source of income, and I’ve talked to some others who justified the cost of a new car because they’d make the payment driving for Uber.  I remember one driver in particular who bought a brand new Prius so that he could increase his Uber-driving profit margin.

It makes sense, right?  Buy a car that runs on farts to cut down on your fuel expense?  What about the hidden costs though?  The depreciation?  The interest on that car payment?  The cost of a replacement hybrid battery?  Let’s use a case study to analyze the true cost of driving for Uber and figure out if driving for Uber is a sensible step to take on the path to financial independence.

The Car

Let’s analyze the 2017 Toyota Prius Three.  Let’s assume we bought it brand new, that it’s got all the standard options.  We’ll use Kelly Blue Book (KBB) values, and assume that the condition is “very good.”  Using KBB, we find that the fair purchase price of a brand new 2017 Toyota Prius Three is $24,863, but let’s assume we’re suave and haggle it down to $24,000.

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Just so you know I'm not bullshitting you, here's a screenshot

We also have tax, title, and tag– let’s assume $1200, keep in mind this varies by locality.

Let’s also throw in the interest we’re going to pay on the loan up front.  We’ll do this because all the math we’ll run from here on out will be dollars per mile, and the interest is in terms of dollars per month.  I’m all about easy math bruh and that fucks up my mathematical fung shui.  Let’s say we got good ass credit and got a loan for 3.5% interest.  We’ll take out a 60 month note and put down $3,000– for a starting loan balance of $21,000.  With this loan, we’ll end up paying $1,922 in interest. 

The total cost of our Prius, then, is $27,122, with $4,200 of that paid up front (the down payment plus tax, title, and tag.)

The Revenue

How much does an Uber driver actually make?  I know I pay a shit load of money to get my drunk ass from place to place ($100 one time to go 20 miles on St. Patties day in Savannah), but how much does the driver see of that money?  This one took some serious digging and talking to people, but let’s lay it out.

Let’s first figure out how much the average Uber ride costs the rider per mile.  To do this, I looked at my own ride history.  Disclaimer up front– the sample size is only four.  Definitely not scientific, but I write a blog that maybe ten people at most look at so fuck it– if this shit blows up I’ll re-visit this.  Check out the screenshot below:

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So $3.05 per mile is our number.  That’s how much a rider pays, on average, to go places using Uber.  You know just as well as I do that the driver doesn’t see all of that though; let’s see what kind of expenses you’ll rack up driving.

The Expenses

We’ve got depreciation expense, we’ll have to replace our hybrid battery at some point.  Brakes go bad, ball joints go bad, transmissions, engines.  Oil needs to be changed.  There’s a lot of expense.  Let’s hit depreciation first.

Our brand new Prius cost $24,000 before taxes, but how much could we sell it for if we put it on craigslist immediately after driving it off the lot?  KBB says $22,700.  So right off the bat we lost $1,300 in initial depreciation.  Let’s add in taxes and interest expense too, which we determined before was $3,222.  Adding all this together, we’re $4,522 in the hole.  That first $4,500 we make driving for Uber is going straight to getting us back to even.  Of course, if we just buy a cheaper used car we can avoid some of this cost, but I ride in a lot of brand new Ubers.

Now, what about our per-mile expenses?  Check out the somewhat poorly formatted spreadsheet below showing depreciation.  All the depreciation values I got were from using KBB to determine the value of our car at various mileages.

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The first column is number of miles, next is KBB value.  The next shows the depreciation between the two mileages (for example, our car depreciates $1,492 between 500 miles and 20,000 miles.)  The third is the depreciation per mile.  Next is cumulative depreciation and cumulative depreciation per mile.

As you can see, the most rapid depreciation will occur between 50,000 and 100,000 miles (that’s the $.091 per mile depreciation.)  After 150,000 miles, depreciation slows down.  We’re going to assume that we’ll drive this bad bitch till the engine blows (so we’ll use the $.069 per mile depreciation from the bottom right corner of the spreadsheet.)  The next spreadsheet goes over maintenance expenses (we have to maintain our car well to hit the KBB values shown above.)

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Hopefully this spreadsheet is a little easier to understand.  If you don’t understand it or you think my cost assumptions are totally off-base, blow me up in the comments and I’ll haze myself.  Big take away here is the 25 cents per mile total cost, and the big assumption is the price of gas staying steady at $2.50 (if it goes back to 2009 prices your cost per mile goes up to 28 cents a mile.)

Of course, this is just a fraction of the real costs.  We still have taxes to pay, and you can bet your ass that Uber takes a cut of what the rider pays.  On that note, Uber advertises that their commission is 25%, but the research I’ve done seems to suggest that isn’t quite true.  The number I saw is 39%.  If you want to know more about that check out the following link:  https://www.ridester.com/uber-fees/

Here’s our net income spreadsheet.  It accounts for the tax deduction we can make (The IRS lets us deduct 59 cents per mile.)  It accounts for our income tax (we assumed 15%, which is roughly the effective tax rate if you make 60k a year.)  It also accounts for the self employment tax of 15.3% (if you’re self employed, you don’t have an employer to pay half of your social security and medicare tax.)  It does not, however, account for insurance.  Driving for Uber will likely drive your insurance cost higher, but only $20 or so per month.

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So your actual take home out of that $3.05 the rider pays per mile?  $1.17, or just over one third.  Fuck.

We have to drive some 4,000 miles just to break even on the taxes, interest, and depreciation.  Many of the drivers I know only make a $300-500 or so a month driving, basically enough to cover their car payments.  They’re probably driving 500 miles a month for Uber, and it takes them 8 months just to break even.  That’s a raw deal.

Then you make $1.17 a mile after that in after-tax profit.  But most of the time you’re not fucking driving, you’re sitting around waiting for a fare.  And, you have to drive just to go pick up those fares.  Uber drivers don’t get paid to drive to pick you up, they only get paid when someone is riding.  This $1.17 doesn’t account for that cost.

What about the Uber drivers who don’t drive Priuses?  I’ve been in some F-150 Ubers, how much do they make?  I’ll tell you, only $1.07 a mile, assuming 16 MPG.  If gas goes up to $4, they’re sitting at 97 cents a mile.

At that rate, you’re probably better off trying to create a successful blog to make money.  Get Fucked.

Soldiers run on alcohol, nicotine, caffeine, and junk food.  This was my life for years: I’d drink nightly, power through the next day with Monsters and Red Bulls, eat gas station food for lunch, and toss in fat dips at all times throughout the day.   There are still times that I load up on tornados and monster, but I’ve cut out most of the booze and all of the dip.  There are two reasons that I cut back on the booze and chaw:  hangovers, and money.

If you’re over the age of 25 you probably know what I’m talking about — hangovers get worse with age.  It got to a point where a 6 pack would put me out of commission the next day.  But the real reason is money — I knew after a $600 weekend bender that I needed to cut the bullshit and grow up.

 

THE FOUR HORSEMEN OF THE APOCALYPSE

 

Numbers Don’t Lie

While I nursed the hangover from that bender I decided to run some numbers.  How much did my drinking habit cost me?  I combed over the last six months of credit card statements for anything bar or liquor store related.  Here’s the averages I came up with:

  • $100 spent each month at liquor stores
  • $450 spent each month at bars
  • $70 spent on Uber/Lyft
  • $620 total alcohol related spending per month

$620 is a shitload of money.  It was damn near 20% of my take-home pay at the time.  But let’s not stop here, because booze isn’t the only thing I blow my money on.

Dip.  I’ve been dipping since I was a kid, but not habitually until I joined the Army.  I tried to quit once, and that lasted three weeks.  We went to the field, and I was that piece of shit that mooched off everyone else.  I quit again when I went to Ranger school, but only because you can’t dip there– and then as soon as I pinned on my tab I threw in a boss fuckin chaw.  I should have just stayed quit, but I needed that victory dip.  So it goes.

I chewed a can or more of grizzly straight each day, and a can costs just under $4 where I live — for a total of $120 each month on dip.

To round off the unnecessary spending, let’s throw in energy drinks and eating out for lunch.  I drank an energy drink every work day — that’s $60 a month on caffeine.  My weekly breakfast/lunch spending averaged out to $33, or $132 each month on eating out at work.

The sum total of my bullshit spending each month was $932 dollars!  That’s a fucking mortgage payment!  More than $11k each year on nothing.

The Long-Term Impact

I felt pretty shitty looking at that number, but I wanted to feel shittier.  I wanted to know how much money I would have at age 50 if I would invest that $932 instead of blowing it on hangovers and cancer.  I used google sheets to figure this out, and ran the numbers into three columns.  Tot Contributions is how much money I would have by just saving the money and not investing it, and the two Account Value columns show how much that money would grow to assuming a 5% and 8% yearly rate of return.  Both of these assumptions are very reasonable as we know the Dow Jones Industrial Average rate of return going back to 1925 is close to 10% with dividends reinvested (source.)

 

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THE TOTAL DAMAGE -- $1 MILLION DOLLARS

I was already feeling nauseous, but seeing these numbers just about pushed me over the edge.  If I continued drinking, dipping, and being wasteful like I was, I could be 1 million dollars poorer at age 50.  That’s only 25 years — Imagine how much that number would grow to by age 65?  70?  Even if I just stuffed cash under a mattress instead of drinking I would be $300k richer for it.

This was back in 2016.  I didn’t change my ways overnight, but I did start going out less.  Soon I stopped drinking during the week.  I eventually quit dipping for good (that didn’t happen until two months ago– I’ll dedicate a post to that process sometime in the future.)  I still allow myself some bullshit spending because life isn’t all about frugality, but I’m happy to report that I’m able to keep my booze and lunch spending under $150 most months and still manage to have a great time.

So What?

I know a lot of soldiers that live like I did — spending 10 to 20% of their paycheck on booze, dip, caffeine and junk food.  I’d say 70% of single lieutenants, 50% of single captains, and goddamn near 90% of  single joes and NCOs spend that much or more.  Usually the married folk are more responsible with their cash but not always.  And so far we’re just talking about the booze budget — what about cars, trucks, rims, pay day loans, strippers, and all the other stupid shit we waste money on?

How many more soldiers could get out of the Army sooner (and happier) if we didn’t live like animals?  Let’s run another spreadsheet, this time we’ll look at two young enlisted soldiers.  Both stay in for a 3 year contract and promote at the same times.  Both lived in the barracks for the whole contract.  But one spent 40% of his take-home pay on booze, the other only 10%.  Here’s what their numbers look like (using 2015 after-tax pay):

 

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These examples are a little extreme, but are by no means out of the ordinary.  I know soldiers who spent that much on booze.  Most don’t, but many come close.

The soldier who spends 10% of his paycheck on booze still has a good time, but he can leave the army with almost $18k more in the bank.  That $18k would allow him to live pretty well while going to school on the GI bill, put a down payment on a modest home, or purchase a well maintained used car with cash to spare.  That $18k could be $120k in 25 years if he invested it at an 8% annual return.

Looking at these numbers forced me to ask myself:  is it worth it?

Would I rather spend my weekends fucked up and my Mondays hung over or retire early?  Seems like a fucking no-brainer when you put it that way, doesn’t it?

Fuck this.

You ever hit that breaking point at a job?  Have a moment of clarity?  Did you enter a state of nirvana where you just know you gotta find something else to do?

It happened to me after 4 years and some change in the U.S. Army.  The Army had been great to me, the Army had been bad to me.   I got through rough times in the past because of some intrinsic drive– I just wanted to be a soldier, and a good one.  There came a time, though, when that drive faded.  I had seen some good people get fucked, some bad people skate by, and put up with enough stupid shit.  It was time to go.  I felt simultaneously liberated and terrified.

What the fuck am I gonna do instead?

That’s the buzz-kill thought that came next.  What the fuck am I gonna do now?  The Army is all I’ve ever known.  I also don’t like the idea of being some corporate sycophant. Most of the jobs I want to do doesn’t pay well, I like doing shit that costs money.  Shit.

What I really want to do is travel the world on a sailboat, but middle class people don’t get to sail around the world during their prime wage earning years.  This is an enticing fantasy though, and I let my mind drift to it frequently at work when I would otherwise be contemplating whether the ceiling in the battalion conference room could support the weight of my body.

The more I let the dream run, the more I convinced myself I could make it happen.  I started reading:  books, blogs, anything.  I became convinced that I could buy my freedom– but how?

I ended up planning it like a military operation because the Army did a good job of indoctrinating me.

My mission is to build passive income through dividend-paying stocks and rental properties in order to buy my freedom from wage slavery.  At end state, I will be able to lounge around eating cheetos and drinking PBR in the galley of my own small sailboat until the end of my days.

This would be a four phase operation.

Phase one is the twilight of my Army career, which was ongoing and would end the day I took my boots off for the last time (likely summer of 2019.)  Key to this phase is setting myself up for the possibility of lean-years.  I need to establish $1000/month of passive income before I get out, primarily through rental properties.

Phase two is corporate wage slavery, which would run me until I could semi-retire (target date of 2024).  Key to this phase is building my passive income to $3000/month.

Semi-retirement is the third phase and is loosely defined:  at $3000/month of passive income I can do whatever the fuck I want in terms of work.  I’m not loaded, but I can live comfortably on 3k a month.  During this phase I’ll still work, but only doing what I like.  The only rule is that net spending each year must come from my labor, not my capital.  Capital would be re-invested and allowed to grow on its own.

Phase four– Emancipation– begins once my passive income reaches $6000/month.  Key to this phase is asset preservation, or living off the dividends and not touching the underlying investments.

Decisive to the operation is saving $50,000 before leaving the Army; it is decisive because of the exponential growth of investments (the longer you hold a good investment, the faster it grows.)  I would assume risk by forgoing the job stability and medical/retirement benefits of the Army, I would mitigate this risk by lining up a job at least 4 months prior to my exit and maintaining a $10k emergency fund.

I’ve got a vision and I’ve got goals.  The details aren’t solid, but I’ll figure it out in due time.  I’ll write this blog along the way for three reasons.  First, to keep myself honest and disciplined.  Two, because I like writing.  And three, because I want ad revenue   because I think I’m right about everything   because I want to spread my radical theories of emancipation from wage slavery to the multitude of oppressed soldiers sweating in their kevlar, yearning to breathe free.  And while this blog will include a special emphasis on achieving financial independence from a soldier’s point of view, I think many of the lessons learned can apply to anyone.

Let’s get started.