If the huge credit card debt or student loans are taking a toll on your personal financial life, then you can think of a side hustle. It plays a significant role in helping to generate some extra money. Thus, you can pay off debt aggressively by making the debt payment.
However, if you do not stop spending money on useless purposes, then nothing will be enough for paying off your deadly debts.
When to consider a side hustle for paying off debt
If the income that comes from your full-time job is just not enough after making other necessary expenses (not shopping), then you can think of a side hustle to make progress on your debt payoff goal.
You can continue with your mainstream job while considering a side hustle; it can be a freelance writing, promoting good quality products, surveying online, giving online tuition, weekend cooking class, pet sitting, etc. Whatever it is, make sure you do the job wholeheartedly and get a good amount of money.
Once you have started a good amount of extra income, it is important to know how to use that extra bucks properly on debt repayment so that you can get the good result.
Here are some vital tips on using side hustle in the best way for debt repayment purposes.
Having an extra income doesn’t mean you can loosen up the budget
Having some extra money can be enticing to get spending spree. If you think you have more money, so it can be okay to spend some money on your wishes, then you are digging dangerous financial problems further.
Once you are earning more money you shouldn’t increase your expenses, especially when you want to pay off your debts. The whole extra income is for the debt repayment.
So, revisit your budget and cut down every unnecessary expense. Doing so, you will notice some extra money will start flowing in. So, no need to use your extra income for your own expenses and you can freely use the income of side hustle for making debt payments.
Decide a mode of debt repayment
A side hustle will help you to earn decent money. But until or unless you follow a proper debt repayment strategy, making extra payment will not work.
Target a debt that you want to pay off first. In terms of debt pay off strategy, you can go for debt avalanche method, which can be done by yourself by targeting the highest interest rate debt while making minimum payments on the other debts.
If not avalanche method, then you can choose debt snowball method, where you need to target the lowest balance first while making the minimum payment on the rest of debts.
If you don’t want to bang your head on any DIY debt repayment option, then you may consider debt settlement program as well.
Whatever the strategy is, make sure the extra debt payments are being applied properly so that your burden gets reduced soon. And to successfully funding the debt repayment goal, you need to manage the extra income properly.
Set up automatic transfer to avoid missing a payment
Missing a single debt payment while you’re on debt payoff goal can spoil your whole effort. To avoid a debt payment or spending money on something else, set up an automatic transfer from your checking account.
It reduces your stress and helps to assure you that the payments are sent on time. Thus, you will no longer be charged any unnecessary hassles related to making debt payments.
Set up an automatic payment to happen right after you get paid from your side hustle.
Stay motivated with your efforts
To get rid of your debts with the help of the side gigs, you must choose a work that you love to do; otherwise, you may feel stressed out due to the burden of work. It is recommended to consider a side hustle that is related to your interest.
For example, if you’re expertized in writing, then freelance writing would be the best side hustle for earning some extra income. Or, if you love pets, then pet sitting can be the perfect choice to feel relaxed while earning a good amount.
Choose a side hustle that gives consistent cash flow
Make sure the side hustle consistently provides you with an income each month. The income of freelancing or side hustling often fluctuates month-to-month. You may end up $0 in a month. So, you have to be prepared for cutting down your expenses. Otherwise, you may not be able to make the debt payment successfully.
Learn from your past financial mistakes
Considering side hustle can be a good strategy for killing the painful debts. However, you should be careful not to accumulate further debts in future. Remember, earning some extra money doesn’t always guarantee that you will be able to become debt free every time you fall into debts. You shouldn’t repeat the financial mistakes (using credit cards randomly, not paying the bill on time, living a lavish life) that invite debts.
Lastly, getting rid of debts with the income of side hustle is possible. A lot of people are doing it and getting the good result. You can give it a try. But, you need to put extra effort by choosing a profitable side hustle that can help you generate a good income side by side.
On the other hand, make sure you review your monthly budget and your expenses time to time and make some lifestyle changes on your way to becoming debt free forever.
Author’s Bio: Amy Nickson is a web enthusiast. She completed her graduation from Oglethorpe University, Atlanta, Georgia. She works as a financial writer and she shares her expertise through her crisp and well researched articles based on money management, money saving ideas, debt, and so on.