When working toward FI or paying down debt, most people try to spend less, some try to earn more. You need to increase the gap between what you earn and what you spend. Why not do both?
Getting out of debt is hard. We often feel stuck. We’re usually in a job that we either can’t get out of, or don’t want to leave so we just try to adjust and reduce costs. This is fine as it should be something you are already doing. It’s called being frugal.
But frugality can only go so far. You can’t cut out everything. You need to eat, have a place to live, need electricity, etc. So it is impossible to cut everything. After you’ve cut out as much as you can or as much as you are comfortable with, what more can you do?
You obviously have the option to pursue a higher paying job. But that is not always an option. You may already be making a decent income and just due to life circumstances ended up in a large amount of debt. You can take the long-term approach and get more education to improve your job skills but that may not be an option either depending on your age or circumstances.
The other option is to get a second job. This is probably the easiest way to earn more but comes with a big trade-off… your time. If you are already working 40 or more hours per week giving up another 20 or more can really put a strain on your family or personal social time. However, depending on your situation it may be a sacrifice you’ll need to make for a short period of time to help improve your financial position.
Side Hustles
While I think it is always a good idea to cut out unnecessary expenses from your life or look for lower cost options, such as searching for lower cost insurance or reducing your internet bill, you should also find ways to increase your income.
Say for example you are currently paying $300/month to reduce your $10,000 debt. For simplicity we’ll assume 0% interest since that will make a huge difference in reducing debt. If you need help with that, visit my Travel Rewards page for 0% interest card options to do a balance transfer for 12-18 months and focus on paying down your debt.
Simple math now, $10,000 divided by $300/month would take 33 months, or just under 3 years. What is you could add an additional $200/mo toward that debt? So you now pay $500/mo. It would then only take 20 months, or just over 1 and a half years. That reduced the total time to being debt free in half!
And the important thing here is that you have the option to either just do whatever you need to do to earn more income long enough to pay off the debt or keep doing it for as long as you like and use that additional income to build up your savings to help you avoid debt in the future or invest to earn passive income.
There are so many options out there to earn extra income. Some don’t require much or any expense to get started. I think doing a side hustle is not only a great way to earn more income but it could also be the start of a new business venture for you.
For example, since I am already a Real Estate Investor and manage my own properties and my wife is a licensed Realtor, last year I started managing rental properties for other people as well. Since it was something I was already doing for myself and I had systems in place that I use, it wasn’t much more additional work to do it for others. I am picky though and don’t want to add on a ton of work to take time away from my family so I only manage high quality units that help to avoid problem tenants. These types of properties also rent for more so I can add a good additional income with minimal additional work.
Something else I have considered and looked into a bit is being a signing agent. A signing agent basically is a Notary that goes to someone that needs a public notary for signing documents. Every agent needs a notary, usually this is done at a Title Company but can be done outside. For example when I recently purchased a rental property in another state, the Title Co in that state sent a notary to me since they didn’t have a local Title Co that would work with them.
A signing agent can make anywhere from $75-$200 per job. The startup costs are low and a few jobs will repay the initial expense. There are some people that do this as a full-time job and make $10k/mo. But if you just need a few hundred extra each month, it is a good option as your services will mostly be needed in the evenings anyway. Each state varies for the requirements so you’ll need to check your state. An express option is to take a class/program that can train you. You can find that option here: https://www.loansigningsystem.com/
Believe it or not a 10 year old kid in my neighborhood started a dog poo cleanup business. She charges to pick up poo from your yard and since this is something most people don’t want to do, they pay her.
Do you like taking pictures? Maybe you could start doing photography. Do some freebie jobs for friends and impress them so much that they refer you to everyone they know. A guy I know had a job working in the financial investment industry and then started a photography business and now travels the world taking pictures and loves it.
If side hustles interest you, an excellent resource that has a huge list and personal testimonies and detailed explanations on how it all works is the SideHustleNation podcast. There are some incredible ideas there you would never have thought of. Best of all they give you the info on how to get started as well. I enjoy listening to the show and getting new ideas for myself and my kids. Hopefully you will find something there you can do as well.
There are many people that have started a side hustle as a way to earn more income and then turned it into a multi-million dollar business. I would not expect that same result for everyone but at least it is possible to be a great source of supplemental income.
Multiple Streams of Income
The best thing you can do for yourself is to set yourself up to get paid from many sources. If you depend on only one source of income, what happens when that source is cut off? If your only source of income is your W-2 job, what happens if that company goes out of business, or worse, you get injured and can no longer work?
What if your only source of income is a few rental properties in one location and that area has a natural disaster that wipes it out or something like what happened in Detroit occurs and the city basically dies and all your renters leave?
Set yourself up to be safe no matter what happens. Have a full-time or part-time job if you desire or need to, but you should not cut yourself off from other sources of income such as rental property or stock dividends (though this is really only effective if you have a lot invested), maybe earn some royalties for songs or music (this is covered in an episode of SideHustleNation), write a book, create a blog that earns income, become a Realtor part-time, sell stuff on eBay, the list is endless.
Find something you like or would want to try out and give it a shot. You never you, you may find something you love and can find a way to tweak it just enough to set yourself apart and start a revolution! Become the person you want to be.