The following is a guest post about how to crush your debt. It was written by Pauline Paquin, you may know her blog Reach Financial Independence, Pauline has just launched Make Money Your Way to help readers multiply their sources of income with real estate, investing, entrepreneurship and online endeavors. Born and raised in Paris, Pauline writes about how she has been traveling the world for the past 10 years, while trying to build wealth and achieve financial independence, and how you can follow your dreams and reach your goals too. You can follow Pauline on Twitter @RFIndependence. If interested in submitting a guest post, please read my guest posting policy and then contact me.
In the personal finance world, there are two school of thoughts when it comes to living within your means. You can either spend less than you earn, or earn more than you spend. I believe that life is meant to be enjoyed and frugality will only take you so far. For as much as you can try to trim the fat and cut down on your expenses, you will still need to eat, have a home, commute to work and buy clothes, and you will get to a point where you can’t make more cuts because you are already on a bare bones budget. On the other hand, if you try to earn $100 more instead of cutting $100 from your expenses, you can still maintain the same lifestyle and have an extra $100 to throw at your debt. How many cable and magazine subscriptions or cups of overpriced coffee will you have to get rid of in order to save $100 per month? Work an extra couple of hours per week and you can make those extra $100 instead. Here are a few ideas.
Earn more at your day job
Pick up an extra shift. If you work by the shift, try to pick up an extra shift per week, preferably one that pays more like a night shift or a Sunday shift. If your line of work has a peak season, like Christmas or sales for a retail shop, ask to work more during that period. The company will rather have you since you are trained than a temp who needs to learn everything.
Ask for a promotion. Haven’t had a raise in a while? Ask your manager to sit down with you and review your work. Show what added value you have brought since your last review and why you think you should earn more, or move up the hierarchy.
Do extra hours. Instead of doing a full extra shift, if you are paid hourly, stay an hour late every night. An 8-hour day converted into a 9-hour is 12.5% more money on your paycheck.
Volunteer for a new project. You will be taking a gamble on that one. If your boss wants people to work on XYZ, volunteer to do the job, accept the extra work, show dedication, and do it to the best of your ability. Your boss is likely to give you either a bonus or a raise.
Earn more at a second job
If none of the above is possible at your current job, try to find a second part-time job, to work on top of your main job. To make your commute easier, your second job should be either close to your day job, or close to home. Losing two hours in commute to go make minimum wage on the other side of town is not worth it.
Because you will be tired after working for 8 hours already, I recommend a job that is not very demanding. If you have been sitting at your desk all day, a shift at a local bar serving beers can be a nice change of scenery. If you stand at your day job, look for a job where you can sit, like night clerk in a hotel, or call center rep.
Jobs that will hire you easily and be willing to have you work part time on evening and weekends are usually paying close to minimum wage. But even at $10 an hour, 10 hours per week that is an extra $430 you can throw at your debt every month! 10 hours is just 5 hours on Saturday and two 2 1/2 hour shifts in the evening, so if you are really motivated about getting rid of your debt it is completely achievable. When was the last time you made $430 in extra payments? Remember this is a temporary solution while you get out of debt. You may even stay a couple more month at that job once you are debt free and save the money for a holiday to celebrate!
Freelance or start your business from home
There are dozens of businesses you can start today with no money down, or very low starting costs. A few examples include:
Tutor. Find kids at the nearby school who struggling, you can make good money tutoring them, and work evenings and weekends only.
Baby sit. No skills required, you just have to like kids, and you can ask your neighbors so no commute is required.
Start a blog. It takes time to start making money online, if at all, so if you are trying to crush your debt NOW, it may not be ideal. But over the long term blogging can bring in a nice side income.
Sell and flip stuff online. You can easily open a shop on Ebay or Etsy if you make your own crafts, and start selling things there for a profit.
Freelance. If you know a foreign language, you can be a translator, if you know coding and web design, you can build websites for small businesses, if you like writing, lots of people are looking for copywriters or staff writers, etc. you can find clients online on Elance, Taskrabbit, and why not on Fiverr, where most gigs cost $5 but you can build a clientele and offer quick tasks for a quick $5.
All those jobs allow you to work as little or as much as you want. One hour tutoring at $20 is on average $86 per month, a weekly $35 night of baby sitting is $150 per month, etc. It really adds up if you have the discipline to throw all that extra money at your debt.
What do you do for extra money? Do you use it to pay off debt faster?