Household debt has reached $16 trillion USD in the US. Now getting out of this debt isn’t easy. Whether you need to pay off your student loan, credit card bills, mortgage, or auto vehicle loans, you need a game plan.
A tried and tested way is to build side hustles to pay off debt. You can use this extra income to make quick loan repayments and improve your finances along the way.
Game Plan to Get Out of Debt
Building a profitable side hustle needs consistent efforts. You may need to give it a few hours every day or week after your main job or business.
But how can you make good use of side hustle income to pay off loans earlier than planned?
For that, you need a strategy. Here’s a brief game plan that can help you with getting out of debt fast:
Set Your Goals
Before you begin making any payments, set your goals. You need to focus on:
- How quickly do you want to get rid of debts?
- How much you aim to pay off every month
- Which loans you want to clear first
- What about minimum payment goals?
By answering these questions, you’ll find it easier to set goals that will help you clear loans and live debt-free.
Define Your Budget
It takes months and sometimes years to break even and make a business profitable. But you can do it quicker by investing your time and money in good business ideas that are in demand.
When paying off loans, you need a clear picture of business finances. Understand how much profit your side hustle is generating. To calculate profit, subtract expenses from revenue. Then allocate a specific percentage of this profit to different tasks.
For instance, you need to budget how much you will reinvest for business growth. Then how much would go towards other expenses. And the most important: how much profit %age would you dedicate to debt payments.
Prioritize Loan Payments
Not all loans are equal. The terms of each loan vary and so do their interest rates. So, make sure you prioritize high-interest debts and pay them off first.
Credit cards tend to have the highest interest rates with some companies charging up to 18% from clients. So, focus on paying off your credit card loans first. With this high-interest debt paid off, you will have more money to pay off other loans fast.
Mortgage rates usually fall in the range of 5-7%. So, you can prioritize these loan payments after your credit card bill payments. Auto financing loans, student loans, and other relatively low-interest loans come next.
Think of Your Options
In certain conditions, your lender may agree to lower your interest rates. For instance, if you have a good relationship with them and a good track record of on-time payments.
You can discuss your financial situation and find out whether they can bring down your interest rate.
Further, look into debt consolidation. With this service, you can roll old debts into new ones. The benefit is that such services offer discounts such as lower interest rates than your original loans. So, you can pay off your high-interest loans with this new loan and use your side hustle income to pay off loans that carry a lower interest rate.
Don’t Lose Motivation
The journey to achieve your goal of becoming debt-free can be quite challenging. You may lose the will to pay off all your loans if your side hustle isn’t making enough profits. But it’s important to keep yourself motivated.
Even if there’s little progress and it seems it will take ages to pay off loans, don’t stop! These extra loan payments will add up and make a big difference in the long run.
So, stay motivated by keeping track of your progress. Don’t forget to celebrate little victories. Share your knowledge with others and build a support system of people experiencing similar debt problems. Then your network can support each other in getting out of debt.
Side Hustle Ideas
Looking for some side hustles to pay off debt? Then you can think about starting the following businesses:
- Pet sitting or training – You can take care of pets for others and teach them interesting tricks while they are in your care
- Make the most of your tech skills – Develop games or apps and upload them on Play Stores. You can earn with ads and in-game purchases by players. But you’d need to regularly update and maintain these digital apps
- Become an IKEA Furniture Expert – Many people buy furniture from the global home furnishing product chain. But not everyone is good at building the items on their own. You can help them out in your spare time with your furniture assembling side hustle.
- Launch a t-shirt printing business – Customized t-shirts are in demand and you can target individuals or businesses. It can be helpful if you’re a designer too. But if that isn’t the case, you can always hire a freelancer on per project basis to design tees for clients or customers
Passive Income Ideas for Hustlers
Is it your goal to achieve financial freedom by building multiple streams of income? But you are struggling to set up side hustles due to an extremely busy routine? Then you can look into passive income ideas to increase your income without investing too much time.
It would be a good idea to invest in the stock market. You can identify potentially profitable stocks, bonds, or mutual funds and build a stable income source.
When it comes to a long-term income source, you can’t go wrong with real estate. Look into residential or commercial properties and see what works for you. If you don’t have enough funds to buy a new property, you can go for crowdfunded real estate investment opportunities.
Digital platforms such as CrowdStreet, EquityMultiple, Fundrise, and PeerStreet can connect you with these passive income opportunities.
Another smart idea is to invest in an already established business. Your business network can help you find entrepreneurs looking for investors. You can evaluate their business performance and plan to determine whether investing with them would be a good idea.
You can also monetize your Photography skills to increase your income. Stock websites such as Pexels, iStock, Adobe Stock, and Dreamstime enable photographers to upload their copyrighted images. Then anyone can download the image after paying a fixed fee.
Additionally, you can turn to the internet to set up a passive income source. Some examples include publishing an affiliate marketing blog, selling online courses, or offering eBooks on Amazon.
Conclusion
Having multiple debts can be quite stressful. But it doesn’t have to be a life-long problem. You can build a side hustle or look into passive income ideas to increase your income. With this extra income, you can pay off your debts faster.
But you need a clear plan and motivation to achieve your goal of living a debt-free life.
Do you have stories about how you or your friends built side hustles to pay off debt? Or do you have any questions about establishing a new side hustle? Our team is always here to assist you in your journey!