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How to Use a Side Job to Pay Off Debt

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Written by Edward Canty
Updated on November 30, 2019

How to Pay Off Debt With a Side Hustle

This is a guest post by Sandra Parsons, a freelance writer for a website dedicated to helping people dream big, spend less, and travel more.

We live in a culture that normalizes debt. 

It’s scary how many people accept student loans, car loans, and credit card balances as a way of life. 

Need a car? Finance it. Want to take a vacation? Charge it! 

With lending so accessible and ubiquitous, it’s no wonder so many people are struggling to make monthly debt payments. 

It seems harmless enough. Almost everyone is doing it. But once you’re on the debt carousel, it’s hard to get off. 

Interest costs mean that only a portion of your debt payments goes toward your balance. And when you owe out a big chunk of your income, you have limited spending power. That makes you vulnerable - one emergency could mean maxing out your credit card. It’s a precarious way to live. 

If you’re ready to go against the grain and get serious about tackling your debt, it can be hard to get started. That’s because most people budget for their minimum payments and not much else. Finding extra money can be a challenge. After all, you can only cut so much. 

If spending less isn’t an option, you’re left with one obvious choice: earn more

While getting a new, higher paying job may not be on the table right now, I know something that is: starting a side hustle. 

The equation is simple:

  • Start a side gig
  • Funnel all your earnings into debt payments
  • Achieve debt-free (or at least reduced debt) status

It sounds like an over-simplification, but with so many legitimate work from home jobs available today, there’s no reason it can’t be a reality. 

Why You Need to Ditch Debt

If you ask me, debt is the enemy of freedom. Financial freedom, but also psychological freedom. 

When too much of your income is tied up in debt payments, you don’t have the flexibility to work toward the goals that are important to you. 

Things like saving for retirement, traveling, or funding an emergency savings account fall by the wayside because you simply can’t afford them.

Your professional options are limited, too. If you’re unhappy at work, you can’t quit or even take a lower-paying position - less money would mean financial disaster. How would you make your payments? You’re trapped. 

Here’s the point: debt holds you back. It robs you of the freedom and flexibility to live your life the way you want. 

The sooner you pay down your debt, the sooner you take control of your income and spend it on the things that really matter to you. A side job can help you do it. 

What’s a Side Job? 

A side job or a side hustle is anything you do for money outside your full-time employment. It can be a traditional part-time job you work on evenings and weekends, or it can be a business venture you work on from home. 

In my experience, working a side hustle from home has been more lucrative than a part-time job. 

I take freelance writing jobs whenever and wherever it works for me. Usually, that means a few evenings a week in my home office. But it also might include a sunny Saturday morning in my backyard or a layover in an airport. I love the flexibility. 

If writing isn’t your thing, there are tons of other opportunities out there. 

Some ideas to consider:

  • Blogging
  • Working as a virtual assistant (VA)
  • Proofreading
  • Website design
  • Teaching English online
  • Giving music lessons from home
  • Making and selling jewelry, crafts, etc. 

Sound intimidating? It’s important to understand that you don’t need a ton of free time to start a side hustle. 

I know how hard it is to find free time when you work and have family responsibilities. But even a few hours a month can put some extra money in your pocket. That’s another reason a side hustle can sometimes be better than a traditional part-time job: you do it on your schedule, not someone else’s. 

Whatever route you take, the important thing is that you earn extra money and have a plan for it.

If you are looking for side hustle ideas check out our article on Side Hustles You Can Start Today.

Use Your Side Income to Tackle Debt

If you’re serious about tackling your debt, you need to commit to dedicating your side income to paying it down.

That’s easy in theory, but when you’ve spent months (or years!) strapped for cash because debt eats up all your money, it can be so tempting to indulge a little.

There will be plenty of time for that later. Right now, you need to put that money to work for you. Your future self will thank you.

Here’s how to go about it. 

Find a Debt Destroying Approach That Works for You

It’s a good idea to choose an approach to paying down debt. 

Are you going to focus on paying down the highest-interest debts first (the snowball method)? Or will you zero in on the smallest balances so you have fewer things on your plate sooner (the avalanche method)? 

Personally, I prefer the snowball method because the financial impact is greater, but some gurus advocate for the small psychological wins you get with the avalanche method. 

The best approach for you is the one that will keep you motivated. Make a plan and stick to it!

Make a Plan of Attack

Normally, I recommend building debt payments into your budget. That’s what you should be doing with your regular payments.

But with a side job, things can get a little tricky if your income is variable. When you’re not sure how much you’ll earn, it’s hard to commit to paying a set amount. 

You have a couple of options. 

You can budget for a worst-case scenario payment and make sure you earn at least that much.

For example, your goal might be to pay an extra $200 a month on your credit card balance. So, you would build that into your budget based on the assumption you’ll earn at least $200 from your side job.

If you’re just starting out and aren’t sure what your earning potential is, you can funnel all your side income into a dedicated account and use all the money in the account to pay down debt. 

For example, say you earn $50 here and $75 there over the course of a month. Stash it all in a separate account that’s just for your side income. At the end of the month, use whatever’s there to make an extra credit card payment. Just be sure to open an account that doesn’t have a minimum balance requirement. You don’t want bank fees to take away your hard-earned dollars.

Note that in both these scenarios, you continue to make all your regular debt payments with your full-time job income, just as you (hopefully) have been doing all along. The payments we’re talking about are extra, and they’ll help you get debt-free sooner. 

Wrapping Up

Taking on a side job isn’t always easy, but extra income is a powerful tool for digging yourself out of debt. 

Sacrificing your free time can be painful, but lifting your debt load will bring a new kind of freedom you might appreciate more. 

What are your favorite ways to make money on the side?

How to Use a Side job to pay off debt
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