When it comes to getting out of debt, too many experts spend their time trying to get you to significantly reduce your expenses by cutting back on both big and small expenditures. Unfortunately, there’s only so much you can cut back on which means the amount you can save through frugality alone has a limit. After a while, you no longer have luxuries you can forego or pennies you can pinch.
That’s why I believe that the best way to get out of debt quickly isn’t by being excessively frugal. Frugality can help, but you’re far better off to focus on maximizing your earning potential. I found that once I focused on earning more rather than saving more, I was able to make a much bigger impact and that’s why it’s the topic for the third month in our 2016 debt-free journey.
Related read: 4 Ways to Make More Money with a Side Job>
So, how do you make more money? Here are three suggestions:
1: Make More Money at Your Current Job
There are a lot of ways to potentially make more money at your current job. The first is the most obvious: you could ask your boss for a raise. While it might seem risky to do so, the worst that he or she can say is no. To increase your chances of success, wait to ask after you have done something that makes your value to the company clear. This could be after you score a new client or get a good review.
The next way to maximize your earning potential at your current job is to apply for a promotion. Even if you’re not certain that you qualify for a position, it can sometimes make sense to apply since you are signalling to management that you’re interested in moving up. You might also talk to your boss about your next career move and ask them what you should be doing so that you can progress to the next level. Finally, you could also make more by taking on overtime.
2: Look for a New Job
If you can’t make more money at your current job, you might consider looking for a new gig that will pay you better. Some of my best and most profitable career moves came because my financial circumstances motivated me to seek a better position.
For example, when my partner lost his job, I realized that I would have to make more and that made me apply for a job that I thought I was underqualified for. Guess what? I got the job and a $15,000 pay bump with it. But I probably wouldn’t have made the move if I hadn’t been worried about money. Think of your debt as motivation to help you get on a better career path.
3: Start a Side Hustle
A side hustle is a new term for an old idea. Basically, it’s a part-time job or business that brings in additional income on top of your primary job. While some people do work actual part-time retail jobs, most people’s side hustles are small businesses or freelance work that they do in their spare time.
For example, I work full-time and I also freelance by writing personal finance articles as a side hustle. Some months, I make half of what I make in my full-time job through my side hustle, therefore boosting my income 50 per cent. But I’ve also had months where I made the same amount through my side hustle as I made from my full-time job and boosted my income 100 per cent.
Many people have skills for which they can charge a significant hourly rate. For example, if you’re a marketing professional, you might do some freelance marketing work for small businesses. Let’s say you could charge $35 per hour for these services. If you work 10 hours a week, you would make $350 per week or $1400 per month. That would add up to $16,800 per year. Even after taxes, you’ll still have a significant amount of extra money to put towards your debt.
Even if you can’t command a large hourly rate like that, there are some jobs that almost anyone can do and make $10-$20 per hour. For example, weddings are on the weekend which makes them the perfect potential market for a service that your side hustle can provide. You might work as a special events bartender, DJ, videographer, photographer, or a wedding planner.
You might also consider doing things like raking leaves, shovelling snow, cutting grass or doing other outdoor things that your neighbours would need help with when they don’t have the capacity or time to do them.
You could also turn your hobby into your side hustle. If you enjoy sewing, then you could make things that you could sell on Etsy or work as a seamstress doing alterations. If you enjoy gardening, you could provide gardening services to your elderly or busy neighbours.
You could also tutor students in a subject that you’re good at, or find freelance work on sites like fiverr.com, freelancer.com, and Upwork.com. There are tons of options for making extra money on the side – just get creative and find a side hustle that’s right for you.
4: Use These Funds to Pay Off Your Debt
The reason why I believe that making more money is the best way to get out of debt quickly is that you can make significantly more money by focusing on maximizing your earnings than you can save by clipping coupons. Depending on your lifestyle, you have the capacity to work as many extra hours as suits your schedule and your goals.
By taking on extra work and maximizing how much you make doing the work you’re already doing, you will be able to accelerate your debt repayment, cut down on the amount of interest and be able to enjoy being debt-free sooner.