Split Costs and Save
Type “sharing economy” into Google and you’ll find two things: First, people can’t agree on a definition. Second, ‘sharing’ isn’t really about sharing at all, it’s more about money — both making it and saving it. Does your car sit in your driveway or parked on the street? Are you paying too much for daycare? Is your love of organic produce sabotaging your grocery bill? If so, there’s a sharing solution that can help you save money, and in some cases, even make money.
We analyzed some of the most popular options — from sharing food or childcare expenses to splitting a home purchase — and what you need to know before you do.
Daycare costs can be formidable for families, especially those in higher cost urban areas. A 2013 report from Child Care Aware found that in 2012, the average annual cost of full-time care for an infant in center-based care ranged from $4,863 in Mississippi to $16,430 in Massachusetts. It’s not just the cost either, strict pick-up policies — if you’re late you pay — and inflexible schedules can be hard to work around for parents with work schedules that aren’t 9 to 5.
As child care rates rise, some people are turning to a nanny share, in which two or more families share one nanny. The arrangements vary: You can have the nanny watch both families’ kids together, alternate days or times or a mix of both. The three main benefits of a nanny share are cost-savings, convenience and socialization for the children.
The cost varies across the country, but you’ll pay less sharing a nanny than having a dedicated child-care provider. Say you pay $15/hour for a dedicated nanny for one toddler, if you add another family with one toddler, you can offer to pay the nanny $26 an hour. That’s $13 per hour. That may not seem like much of a difference, but if she works 50 hours a week, that’s a savings of $100 a week, or $5,200 a year — and you get the added convenience of having your child at home, or at the other family’s home, and the benefit of your child having a playmate.
There are potential pitfalls, too. The popular Brooklyn-based parents blog, Park Slope Parents (which has written several in-depth guides on nanny shares) notes that “similar parenting styles is the single most frequently mentioned key to a successful nanny share.” Another important factor to consider is family chemistry: “Coordinating schedules, negotiating differences in parenting styles, and the question of what to do when one child is sick add to the complexity of making a nanny share situation successful.” If you’re not on board from the beginning on what to do in situations like this, you’re going to have problems.
A nanny share can work for almost any parent, working full-time, part time, or stay-at-home, as long as you find a family that complements your needs; and it helps if your kids are similar ages. To find a family, ask around the playground, ask your pediatrician, or visit sites like Care.com and other local parenting sites in your neighborhood. You’ll also need to equip your house or apartment to accommodate the additional child for meals and nap time. A nanny share won’t work for you if you have a demanding schedule and need someone to be very flexible with their hours (think last-minute late nights in the office) or other instances that will put the other family out.
If you want organic, farm-fresh produce delivered right to your door — straight from the farm — consider joining a CSA. A CSA, or Community Supported Agriculture, is a way to get fruits and vegetables direct from the source. A farmer offers “memberships or shares” in their crops: You purchase a share and in return get a box of fresh produce every week or month. The Blue House Farm in Pescadero, Calif., for example, offers a full-season CSA membership for 30 weeks, between the weeks of May 22 and December 12, 2014. You can also sign up for bi-weekly boxes if that suits your needs better. If you're looking for something a bit more flexible, they also offer a 4-box deposit/weekly payment plan. After the first four boxes of prepaid deliveries, you will be automatically charged on a weekly basis or can cancel at any time. Each box costs $22, has 8 to 10 different items, and is estimated to feed 2 to 4 people.
Although CSAs all basically work the same way, the details can vary. Some CSAs, for example, deliver right to your door while others require pick up. Some CSAs require you to volunteer one or two days by helping out, say, at a local farmer’s market. Some offer many different size variations, offering boxes that can feed a single person or a family of eight. And they’re not just delivering fruits and vegetables. You can get eggs, meat, flowers, herbs, soaps and more. Look for a CSA that aligns with your needs and lifestyle.
The main benefit of joining a food share is receiving locally grown, organic, and farm-fresh deliveries weekly or bi-weekly for less than you would typically spend at the grocer. At Blue House Farms, for example, a box costs $22. If you split it with a neighbor or co-worker, it’s $11 a week. If you buy a week’s worth of organic vegetables from your supermarket, you’ll spend more than $11. (I checked in with a local grocer, and $11 would only get me a head of broccoli, two zucchinis, two peaches, and a lemon — all organic.)
Other benefits: You’ll get to try new produce that you may not have picked up at your grocer. (Some farmers include recipes, too.) You’re also helping your community by investing in local farms. Your share helps farmers buy new equipment and more.
A CSA isn’t for everyone. If you eat out a lot, or don’t enjoy cooking, odds are you’ll wind up wasting money on a CSA. Remember, you’re essentially pre-paying for a box of surprise food. If there’s any doubt whether you’ll make the most of the foods you receive, pick a CSA that doesn’t lock you in for a whole season so you can try it out before you make a big commitment.
If you like cooking, are a bit of a foodie, and are cooking for more than one, you’ll likely enjoy what a CSA offers. To find a CSA, check in with area farms or plug in your location at LocalHarvest to find one in your area.
Buying a home isn’t as easy as it used to be. Just 36 percent of Americans below the age of 35 have bought homes, according to a recent Wall Street Journal story, an all-time low. Yet with mortgage rates still low and home values rising (not to mention the possibility of building equity with monthly payments versus just paying rent to someone else), buying a home is a great option if you can afford it. If you can’t afford to buy a home yourself, co-purchasing — or buying a home with a friend or family member — can allow you to enjoy the benefits as well, for less.
If you’re single and in your mid- to late-20s or early to mid-30s, the biggest benefit to buying a home with someone else is to get out of the renting cycle and into home ownership. Instead of paying rent every month, you’ll be paying down a mortgage and building equity.
Co-buying can also make it easier to qualify for a mortgage loan than applying by yourself. The debt-to-income ratio of borrowers must often be under 42 percent to be granted approval on a mortgage from most lenders. That is, the total of all monthly payments for all liabilities that appear on a credit report, including the new mortgage payment must be less than half of the total monthly income from the borrower (or borrowers). “This is very difficult to accomplish on a single person's income,” said David Reischer, a New York-based attorney that specializes in real estate law. Less so, when you purchase a home with someone else.
The key of course is that both parties have solid income coming in and good credit. If one person has a poor credit score, it can drag down the eligibility for both to get approval for a mortgage loan (or result in a higher interest rate). Many banks like to see credit scores from both borrowers above 700 to get a mortgage loan on favorable terms, Reischer says.
A big potential drawback of co-buying a home is that if one person is delinquent on his or her share of the mortgage, it could hurt you both. It can also get complicated when one person wants to sell and move, and the other doesn’t.
A major advantage is that it can help build equity and put you on the path to (solo) home ownership. The con is if you’re not cautious upfront — and don’t spell out the details and what-ifs — then you could be stuck with a bigger problem that affects your credit for a long time to come.
There are two types of car-sharing models: the kind in which you rent a car short-term, like a ZipCar or similar services from Avis, Enterprise and Hertz, or peer-to-peer car renting, in which someone lists their car for rent and a user rents it. According to an AAA survey, owning a car costs about $10,000 a year. That’s a lot, and if you live somewhere public transportation is readily available, there’s a good chance you’re not even using it every day. That’s where the latest crop of peer car-sharing apps come into play.
Whether you’re trying to share your car or are looking for a share there are a number of apps you can try, like RelayRides, Getaround, and JustShareIt. For those who want to list their cars, it’s easy and only takes a few minutes. For example, I plugged in our car’s information and, based on year, make and model, I got a suggested rate per hour and per day. Our 2009 Acura RDX could be listed for $14 an hour or $84 a day. You typically receive 80 percent of that fee if you use a service. For those looking to rent a car, browsing for a car is just as simple: You can choose by make, model and address where the car is parked.
What do you have to watch out for? Different services provide different coverage and protection and with so many services available, whether you’re an owner or renter, make sure you choose one that has your back. For example, if someone gets a parking ticket while using your car, and doesn’t let you know or pay for it, JustShareIt will charge the offender a $99 fee plus the cost of the ticket. GetAround boasts premium insurance coverage for renters and owners, including 24/7 roadside assistance. The more covered you are the better your experience will be.
If you own a car, a major benefit is making money on your car while it would otherwise sit idle, helping ease what you pay in car payments. Just be aware of the potential liabilities, since the rules protecting an owner vary among states and insurance policies. Then there’s the wear-and-tear on your car. If you rent out your car often, racking up miles could accelerate your car’s depreciation.
If you don’t own a car, the benefits of participating in a car share is price. You’re saving money by not owning a car, and peer-to-peer car sharing is usually cheaper than renting cars often. The biggest drawback is that a car might not always be ready when you need it, or you might not get the type of car you want.
How You Can Profit
With the proliferation of ‘sharing’ services, comes an outlet for you to share — and make a profit — on things you own and skills you have. The best part is you can do it on your own time.
Are you good at organizing? Filing? Crocheting? Taking photos? Whatever your specialty, people are willing to pay for it. While you can list your services on any number of sites, TaskRabbit has a rating system and performs background checks on people listed. Also, instead of having to invoice or wait to get paid, TaskRabbit pays you upon completion of the job.
TaskRabbit isn’t the only services-based sharing site out there. There are specific service-offerings, too: InstaCart is a similar service model that offers people your food-shopping services. If you have a car, and a clean driving record, become a “Washio ninja” and pick up and drop off people’s laundry on demand. If you do have a car, you can also give people a lift around town with Lyft.
These types of service “shares” are great if you’re looking to make some money doing something you’re good at. The one con to consider is that you might be inclined to take on projects for less money than you deserve, but the benefit is that you can take on as much or little work as necessary, and usually work it around your schedule.