Coming up on 2 months as an Uber/Lyft driver

Miscellaneous and Personal Stuff I Must Share
1

My first couple of weeks were rather experimental and slow, but for the last 5 weeks I’ve gotten into a sort of routine. Weeknights – drive 2-4 hours after work, stop after earning $50. Weekends – drive both days, stop after earning a $100.

In 7 weeks, I’ve earned Uber $3900, and I’ve netted a total just over $2500, and in my routine I’m earning about $450 a week. I’ve completed 399 rides. That’s about 35% to Uber, much more than they promote. This is because they take a dollar right off the top of every ride, and 20% of the rest. Most of my rides are in the campus town area, taking students between dorms, bars, sports arenas, etc. Almost all of these are very short, and Uber charges 5 bucks and I get 3.

So far I’ve spent about $140 on gas, and $50 on car washes. Next month my insurance premium goes up $11/per month to cover a gap in my insurance. I expect to add a monthly cost of $35 for a local car wash’s “unlimited washings per month.”

I got this car brand new just before Christmas, and I’m now close to 6,000 miles. I’m beginning to think maybe I should have bought an extended warranty, since at this pace the original one will hit its limit in the next 15 months or so. But that can wait (maybe forever, we’ll see).

I like the job quite a lot. I’ve had lots of interesting conversations, and I haven’t run into a single person I thought of as real sketchy or scary. I’ve been to lots of nooks and crannies of the city I never knew existed, and I already know it much better than I did before, considering I’ve been here more than 20 years.

I’m starting to think about future expenses now that I’ve determined that doing the driving at least more than covers expenses. A new set of tires every two years? Or a new car every two years? Tough choice! Had I thought of driving for bucks at the same time I thought of buying the car, and had I known the earning potential, I would have either bought my car with all the options, or maybe bought the somewhat larger Mazda6. But in the meantime, I have some other debts to pay off and I think I can be completely debt free (except for my mortgage) within 2 years.

And writing this little monologue is helping me make some choices. No new car in 2 years. If I wait another 2, I’ll be about to pay the bulk of a new one in cash, and in the meantime have a cash reserve in case of … trouble.

Oh, and don’t quit the day job!

2

There’s a reason cabbies used to pay many thousands of dollars for their medallions. There’s real money to be made.

That having been said, about what are you spending on the weekends as far as hours go? When you say you’ve spent $140 on gas, is that across the whole seven weeks?

~3 hours per night X 5 nights = 15 hours
~5 hours per weekend day X 2 days = 10 hours

450(net earnings per week after Uber takes their cut) - 20(Gas per week, 140/7) - $9(Car Washes, $35/4) - 3(insurance, 11/4) / 25(hours per week) = ~16.72 per hr(not counting time getting gas/washing car/etc).

That’s a decent hourly rate, about 32k/yr if it was full time. Does Uber take out for taxes? Or are you in for a nasty surprise next filing season?

I’ve told my wife and daughter they should look into driving for Uber in their downtime. They have odd-hour jobs or classes that make regular work hard to come by. But they’re not really interested in keeping their cars clean and doing the hustling. Maybe this can change their mind, that’s significant money.

Enjoy,
Steven

3

The area where you are working is holding down your income. I live in South Florida, which is a sprawling suburb, so average rides are more like $15.

Tipping should help too. I generally tip $5 regardless of ride length unless it’s really far, so if I do have a really short run the driver still gets like $10. Poor tippers in your area?

4

Uber discourages tipping. Lyft supports it, but so few people here are aware that Lyft even exists that 95%+ of my calls are from Uber users.

5

Yes, $140 is for the whole 7 weeks.

No, Uber doesn’t do withholding. It will be up to me to put enough aside to pay the taxes.

It’s hard to say whether keeping the car clean makes a difference to passengers. I think it’s generally one reason that people prefer Uber to “regular” cabs – the cars are newer, cleaner and better maintained. But I doubt anyone would cancel the ride if I showed up and the exterior was mud-streaked. Polls of vomit inside, though …

6

Yes, but the area where I work is one reason I enjoy doing it. Don’t know that I would want to do this around, say, Chicago or Milwaukee.

Actually I could drive in Milwaukee. Uber tells me I can operate legally anywhere in the state. That may be worth a few days of experimentation – though it’s about an hour and a half just to get there. But, less than that probably to get in range of people calling for Uber in the general area.

7

What percentage are you putting aside for taxes?

Will you be able to write off car payments/maintenance on taxes?
I’m looking for a new used car and uber has been on my mind as a second income source. I worry about the taxes though.

8

Have you considered increasing the withholding on your primary job’s salary to cover anticipated Uber taxes?

9

Taxes: I’m thinking to put aside 25%. This income has to be added to the income from my normal day job, so it’s not quite as easy to figure as it might otherwise be. But one of my co-workers has suggested something that sounds simple and promising – just have the day job withhold more than it does now, and I don’t have to put more aside from the Uber income.

I’ve also had it suggested that I incorporate so I can wrote off more expenses. I haven’t done any serious research about this yet, though. I’m told that not only should I be able to write off gas, washes, and even the car payments, but I can claim a piece of my home as my business office and write that off too. I do in fact have a spare bedroom set off as an office/library, though I don’t want to get too crazy and raise any red flags for an audit. Probably, though, I’d be too small a business to be worth investigating – though never too small for some IRS asshole to kick around just for fun. :stuck_out_tongue:

10

Somebody check my math.

Weekly mileage (6,000 miles divided by 7 weeks): 857 miles

Weekly income:
$450 gross

Weekly expenses:
Income tax - (25%) $112.50
Gas - ($140 divided by 7 weeks) $20
Insurance - $3
Car washes - 8.75 [Maintenance per AAA](http://newsroom.aaa.com/2015/04/annual-cost-operate-vehicle-falls-8698-finds-aaa/) - (.30 per mile) $260

(the above maintenance figure includes only upkeep, tires, and depreciation. This is because we’re already accounting for gas, and I presume you would be registering this vehicle regardless of Uber)

Total expenses for average week - $404.25
Hours driven average week - 29

Net income by hour: $1.58

11

It’s not quite that bad. I put 2000 miles on the car before starting for Uber, and some more since not attributable to Uber. So let’s say Uber adds 12K miles a year to my driving, which would be doubling my non-Uber driving. Also, my employer (the state) would reimburse me at 51 cents a mile if I used my car for company business – though I’m not sure how that would figure into your calculations.

Oh, and as far as maintenance is concerned, I’m under warranty until it runs out. My only maintenance expenses should be periodic oil changes.

12

Oh, and one last thing – I have to figure how much would be deductible and hence untaxed, so my 25% withholding might be considerably less than your calculation.

13

Ah, good. Let’s revise the mileage from 6,000 over 7 weeks to 4,000 over 7 weeks. That lowers the maintenance bill from $260 per week to $171.

This translates to a $4.65 net hourly wage. Still not great.
I don’t think your point about being under warranty effects the maintenance figure of $0.30 per mile. The warranty doesn’t cover normal wear on items like tires. The car being under warranty doesn’t prevent wear on the systems that the above figure accounts for.

14

I’ve seen a lot of speculation that many Uber/Lyft drivers are making less than they think because they’re not factoring in maintenance and consumables (apart from gas and oil). An extra 12k miles a year is going to cause real wear on all parts of your car, and most of them aren’t covered by the warranty. Generally, warranties cover the parts that are expected to last through the warranty period, not the ones that are expected to get used up and replaced regularly.

15

Far as I know, there’s nothing else expected to wear out in that time period. Maybe an air filter, and tires, but the tires at least have a tread life warranty.

16

Although you’re under warranty now, the extra miles mean you’ll be out of warranty sooner and will have to start paying for maintenance sooner than you would have.

Another thing to consider is the loss in value when you sell your car because it will have high mileage for it’s age. You can go to a used car site like kbb.com and get the value for your used car. Change the mileage and see how the price changes.

17

I would talk with an accountant/tax advisor before deducting the home office.

I know a guy who bragged to me about his economic savvy in deducting a home office. He thought he’d covered all the angles. When his situation forced relocation, he had all kinds of tax consequences when he sold his home “too soon”.

18

Yeah, I’m looking into this right now.

19

The hourly rate varies a lot from one day to the next, and it’s already clear it wouldn’t be enough to support me if I gave up the day job and did it full time.

OTOH, I started the whole thing with a very limited goal – to cover the monthly payment on the new car. The work covers that very comfortably, in fact I’m grossing more than 4 times the monthly car payment.

I’ve gotten somewhat enamored with the idea of an extra 20 grand a year, but I think it would be an equally valid choice to eliminate three quarters of the driving and the expenses. It would certainly give me a whole lot more free time. OTOH, I hardly have any social life at all.

20

For the record, depreciation of the value of the car was factored into the “maintenance” figure I compiled through the AAA.