Debt traps you in a seemingly endless cycle. More debt means more interest and less disposable income, which means youâre constantly fighting against the tide and are always one issue away from complete financial disaster.Â
Once you start making repayments on this debt, there will be less interest to compound, which means the grip will loosen, youâll have more breathing space, and you can look forward to a debt-free future.
In this guide, weâll look at some of the ways you can earn extra cash to start clearing your debt, from acquiring additional work and responsibilities to making money-saving sacrifices.
Stop Wasting Money
The average American household wastes over $10,000 a year on unnecessary purchases. These purchases all fuel the economy and keep you and your family happy. But if youâre losing sleep because you have so much debt, itâs worth making these sacrifices to give you some peace of mind and build towards a better future.
Save on Grocery Bills
The average family spends between $300 and $500 a month on groceries and as much as 40% of this food goes to waste. The majority is fresh food past its expiration date but we also have a tendency to cook monster-sized meals that end up being thrown away.
To save money on your grocery bill, try the following:
- Plan your shop carefully. Only buy fresh when youâre confident that the food will be eaten in the next day or two.
- Reduce your portion sizes when cooking. Itâs okay to err on the side of caution and make more than needed, but to cook double or triple what will be eaten is just wasteful.
- Donât worry too much about best-before dates. It doesnât mean the food should be thrown away, just that itâs not at its best. The same applies to lots of fresh fruit and vegetables. In this case, you can rely more on the squeeze and sniff test.
- Cook food that is about to expire and would otherwise be thrown out. You can freeze the meals for later. You can also try picking, preserving or juicing to reduce waste.
On average, American families spend close to $3,000 a year eating out. Itâs a great way to spend time with the family or have a date night with your partner. However, if you have a lot of debt then $3,000 worth of restaurant visits is a little excessive.Â
Stop spending so much money eating out and focus on some cheaper alternatives. A picnic is a great alternative. You can use some of that uneaten food and spend time with the family without paying a small fortune for the pleasure.
Stop the Vacations
Big families take one vacation a year on average and this costs them between $4,000 and $5,000. The more children you have, the more expensive it becomes. Whatâs more, around a third of these families will take as many as three additional, smaller vacations every year, potentially spending over $7,000.
Donât sacrifice spending some time with your family but look for cheaper options instead. Choose a small cabin instead of a plush hotel. You can go for walks, play games, swim, hikeâall free activities that could bring you even closer and cost even less.
Hold the Vices
Thousands are spent on cigarettes and gambling, and much more is spent on shopping sprees. If you have any of these habits, itâs time to put a stop to them. We donât need to tell you about the benefits of stopping smoking or giving up those shopping sprees, but if youâre still not convinced about the gambling, then spend a few months recording every single dollar that you bet.
Most gamblers think they are breaking even or only losing a little, but when they monitor their activity, they discover they are actually losing a lot.
Check Your Subscriptions
According to a recent survey, most Americans underestimate how much money they spend on subscriptions. Weâve turned into a nation of subscribers, spending hundreds of dollars a month on dozens of services we barely use.
We pay for cable, streaming services, gymsâwe convince ourselves that it wonât matter as itâs only a few dollars, but those costs can add up to a lot of wasted cash at the end of the year.
Sell Your Stuff
Many sites can help you offload your unwanted items. Thereâs a home for all the things you no longer need, from electronics and video games sold on eBay or Amazon, to clothes and furniture sold through sites like Craigslist, Facebook Marketplace, and Swappa.Â
Itâs time to let go, stop hoarding, and earn some cash from the things you donât need. Be honest with yourself and get rid before the value of those items depreciates more and you end up with worthless, dust-covered junk that just takes up space.
As an example, letâs imagine that you have a dozen old video games worth just $5 each on average, 10 old school textbooks worth just $2 each, a couple of furniture pieces worth $10, an unwanted guitar worth $50, and a couple of handbags worth $25 each.
Individually, those items arenât worth much and you might think theyâre not even worth your time trying to sell them, But combined, youâll get $200 and if you put that towards a high-interest credit card debt, it could save you twice that in interest over the term. You will also free up some space in the process.
Get Another Job
You know you can make more money by asking for a pay rise. It goes without saying. The problem is, life isnât quite that easy and, in most cases, asking for a pay rise will elicit little more than a short, sharp laugh from your employer.Â
However, there are many ways you can earn money from a side hustle, taking advantage of the gig economy and swapping a little talent, a little time, and a lot of hard work for some cash.
Get a Part-Time Job
There is a multitude of ways you can earn some extra cash these days. The pay isnât always great, but if youâre working towards clearing your debts and have some free time, every dollar helps.
Uber and Lyft are always looking for new drivers; retailers need shelf-stackers and greeters, and there is no shortage of delivery jobs. Review your free time, calculate when you can work, and see whatâs available.Â
Teach a Skill
Can you play a musical instrument or speak a second language? Do you have some other teachable skill? It has never been easier to make money as a part-time teacher, as sites like Preply.com, Udemy.com, Tutor.com, Noodle.com, TakeLessons.com, and many more bring all of these opportunities to you.Â
You can visit the studentâs house, invite them to yours or simply conduct the lessons via Skype or the siteâs built-in conferencing software.
Upwork.com, Guru.com, Fiverr.comâthese sites and more have created a world of possibilities for skilled writers, designers, coders, and other experts. But they offer so much more than that.Â
You donât need to be particularly skilled to work on these sites as the pay is scaled based on ability and experience. If you have a little free time and some competent language skills, you can hire yourself as a virtual assistant to do basic admin work.
There are countless entrepreneurs seeking individuals to complete basic tasks such as transferring data, reviewing images, and answering emails. The pay isnât great if your skills are limited, but you get to work from home on your own time.Â
Cover the Basics
Freelancing and teaching may be out of the question if you donât have any skills and are not computer literate. But there are still a few other options, including dog walker, lawn mower, babysitter, and general handyman.Â
Ask your neighbors, friends, and family if they need any work; check Craigslist and local classifieds. Everyone can do something and there are always odd jobs available if youâre willing to work.
Try Some Other Methods
When the ordinary fails, itâs time for the extraordinary. There are some weird and wonderful ways you can make extra cash when needed.
Sell Your Hair
If your hair is long and untreated, you could make a tidy sum by selling it. Good quality human hair is used to make premium wigs and some companies are willing to pay thousands for the right locks. However, there are some strict conditions, such as the fact that it must be untreated and very well looked after.
Sites like Thumbtack can connect you to homeowners looking for skilled workers, as well as people willing to look after their homes and belongings. They will pay you to stay in their homes and perform some basic chores while theyâre away, such as watering plants, feeding pets, and mowing the lawn.
If your skills are practical and not creative, turn your hand to making things and sell them through sites like Etsy, Facebook or your own online store. The world has been obsessed with single-use plastics for many years and itâs now waking up to the damage that has been done. Many consumers are willing to pay extra for something that has been handmade and is unique, especially if the money supports an independent creator.
Grow Your Own
If you have a yard and some free time, start growing some produce. Crops like potatoes, carrots, greens, and even some fruits are easy to grow and can give you a bumper crop every year. Youâll pay a few cents for the seeds and simply need to devote some time to digging, watering, and harvesting.
Think about how much money youâll save if you have your own supply of vegetables and fruits and can just pick fresh from the yard whenever youâre cooking. If your family eats a lot of cheese or drinks a lot of wine or beer, you can also start producing your own supply.Â
Cheese can be made with a lot of milk, a little rennet, and a few simple steps. Beer can be made using some do-it-yourself kits.Â
As for wine, itâs one of the easiest things you can make yourself. You donât even need grape juice as wine can be made from a multitude of fruit juices, vegetable juices, and more. You can even make a strong, fragrant white wine with a handful of fruit teabags. The only expense is the sugar, which means you can make several dozen bottles worth of wine for less than $10.
Join a Clinical Trial
Although itâs not a method we would recommend, itâs one thatâs worth including. If you join a clinical trial, youâll be paid to act as a guinea pig. The good news is that the majority of these trials run without incident and most subjects are as healthy at the end as they were at the beginning. The bad news is that there is always a risk and thereâs no telling what will happen.
You can search for available trials on the Clinical Trials website run by the US National Library of Medicine.Â
Summary: Paying Off Your Debt with Extra Money
Your first priority is to meet your minimum payment obligations and avoid any missed payments. Once you meet this obligation every month, you can put any extra cash you have towards clearing those debts. Every little helps, even if itâs just $50 or $100 here and there.
As an example, if you have a credit card debt of $10,000 with an APR of 25% and a minimum payment of $300, youâll repay $17,251 in total over 58 months. Add just $100 a month and youâll reduce the term by a whole 12 months and the balance by a massive $3,000.Â Take a look at our guides to the Debt Snowball Method and the Debt Avalanche Method to find the right payoff strategy for you. Both methods rely on you earning some extra cash and now that youâve made it to the end of this article, youâll know just how to do that!
Ways to Earn Extra Money for Paying Off Debt is a post from Pocket Your Dollars.