It is very easy to accumulate debt. An emergency expense, a decrease in income, or a rise in routine monthly costs can create a situation where the income doesn’t cover what needs to be paid, leading many to turn to debt to cover the gap. Unfortunately, it can be much harder to get out of debt than to create it. Today, many people are turning to side hustles to help them get rid of debt faster. Here are some tips I found helpful for using a side hustle to get out of debt.
Choose The Right Side Hustle
The key to using a side hustle to get out of debt is choosing a job that you can do in your free time that you will enjoy enough to continue. For me, the side hustle that worked best was writing online because I could do it at night after my full time job and putting my kid to bed. For some people, the best choice may be driving for a rideshare or delivery company. For others, it could be selling products online. Take a look at a variety of side hustle opportunities and weigh their pros and cons before making a choice.
Make Debt Payment A Priority
When you start getting payments from your side hustle, it can be very tempting to want to spend that money on other things that you desire. It is very important to remember that the whole reason for starting the side hustle in the first place was for you to get out of debt. The easiest way to ensure that the money you earn from your side hustle goes to repaying outstanding debt is to make a payment to the creditor for the amount you are paid from your side hustle as soon as that payment is deposited into your bank account. If the side hustle has daily or irregular withdrawal dates, come up with a withdrawal plan that will allow you to pay your debts on time.
Save For The Future
One of the biggest reasons that most people accumulate debt in the first place is that they have no emergency savings to fall back on. To prevent the accumulation of debt in the future, you need to save money to handle future unexpected expenses. Once you have gotten your debt down to a manageable amount, you may want to divert part of your side hustle earnings to a savings account that you’ll only access for emergency expenses. The amount to divert will depend on the amount of debt you have left to repay and the amount you are paid from your side hustle, but saving even $20 twice a month will result in an emergency fund of nearly $500 in a year.
What To Do After You Get Out Of Debt
After you have used your side hustle to get out of debt and boost your emergency savings, there are a few paths you can take to ensure financial success in the future. Some people choose to continue with their side hustle and may even eventually make it their full-time gig, like I did. Others choose to dial back the amount of time they dedicate to their side hustle while saving the money they earn for other wants, like vacations or a down payment for a home. If you do not want to continue the side hustle, review your budget and cut expenses before you stop so you reduce the chances your expenses will exceed your income and you can continue saving for the future.
Do you have any tips on getting out of debt? Let us know in the comments below!
Toi Williams began her writing career in 2003 as a copywriter and editor and has authored hundreds of articles on numerous topics for a wide variety of companies. During her professional experience in the fields of Finance, Real Estate, and Law, she has obtained a broad understanding of these industries and brings this knowledge to her work as a writer.