Student loan debt is serious business. With tuition and fees at an all-time high, the number of students carrying loans to finance their education has increased by 70% from 2004 to 2012. This means that more than 70% of students graduate owing exceptionally large amounts of money to their lenders. Paying off student loans with a side hustle can help lighten the financial burden.
While student loan debt may be a reality of life these days, if you want to earn a college or advanced degree, one reality you do not have to accept is that you’ll never be able to pay it back. The debt may be large, but no mountain is impossible to climb. One tool available for making a serious dent in paying back those loans is the art of the side hustle.
The Gig Economy is Here
Every industry sector experienced significant growth in “nonemployer” (“gig”) businesses between 2003 and 2013, and those numbers are expected to grow. Many people create freelance businesses based on their personal skills, while others jump on opportunities with service providers like Uber, Lyft, and Grubhub. With whichever side hustle you choose, there’s a way to work down those student loans.
Times Haven’t Changed … Much
I attended a state school in the mid-1990s and desperately wanted to transfer to a private school. My parents discouraged this. They knew the realities that increased tuition costs would bear. I was insistent. My dad agreed to fly me to the private school for a visit. While there, he toured the school with me quietly.
He let me see that, while the new city was certainly different and exciting, the dorms were still dorms, the classrooms were still classrooms. There really wasn’t much about the school that would justify a near 75% percent increase in costs over my current school.
He told me that he and my mother would continue to pay the same amount for tuition and fees that they were paying for my state school, through the end of my fourth year, as originally planned. I would have come to up with the difference.
Once my parents contributed their (very generous) amount of money, I would still be responsible for coming up with $15,000 a year, for four more years (because my freshman year wouldn’t transfer).
Ouch.
Coming up with that money was impossible without my taking on debt.
I would have started my career with an average starting salary of $28,000 a year (typical for my field at the time). This is the equivalent of a $43,000 starting salary in today’s economy. I also would have accumulated $70,000 in student loan debt ($108,000 in today’s dollars). That may be small compared to student loan debt today, but is not insignificant.
If I had gone down that road, I would not have gone to graduate school for my master’s degree. I almost certainly would not have even considered a doctorate. More importantly, my life choices would not have felt like my own, because I would have been focused on eliminating an enormous debt instead of focused on building my career.
I would have graduated owing the equivalent of $1,240 a month, every month, for ten years.
There goes the down payment for a house. Heck, I wouldn’t have even been able to rent my own apartment. I would have needed a roommate (who are we kidding, I would have needed several roommates), and probably at least one extra job.
The thing is, this may have been my story in the mid-90s, but the narrative hasn’t changed much over the last twenty years. The only real difference is that the numbers are bigger, and the pain is more real.
I dodged a bullet. But what about people who don’t have parents willing or able to pay for even state school tuition?
Why Paying Off Student Loans With a Side Hustle Works
If you are one of the 70% of people with student loan debt today – and I’m betting you are or you wouldn’t be reading this – I’m here to tell you that there are more options available than simply scrimping, eating ramen, and struggling to pay bills for the next decade.
None of us likely have a time machine to go back and finance school a different way or figure out a less expensive way forward. The important thing is to move forward confidently now in the knowledge that you really can take back control of your finances and by beating student loan debt.
Taking side gigs to pay student loan debt is a great strategy. Side hustles are both common and plentiful, which makes the only limitations your imagination and the number of hours you have to spare each week. Don’t worry, though, because as long as you’re willing to supply the imagination, I can help you find some extra time.
A side hustle equals extra money, plain and simple. You have already budgeted living expenses out of your regular paycheck and so can afford to throw every penny you earn from your side hustle income to pay off school debt.
Small Steps Equal Big Returns
Have you ever heard the expression: Inch by inch, it is a cinch?
That may sound simplistic, but by breaking down debt repayment into smaller, manageable chunks, you can make a big impact on the bottom line.
As an added bonus, side hustles can be fun and tap into your creative side. Some of them even allow for a bit of extra time to do other things (such as while waiting for an Uber customer).
You can grow your side hustle as you see fit or limit it as you need to. Either way, you have more control over your life and your finances. That, my friends, equals freedom.
Leveraging the skills and abilities you already have in your niche for cold, hard cash will teach you how to budget both time and money like a budget ninja.
Be a Budget Ninja
There’s a popular technique for paying down credit card debt that involves paying off the smallest balance first. Then move on to the next biggest balance, and the next, and so forth until you have achieved your goals. This is because the psychological satisfaction of eliminating a debt completely is so satisfying that it helps inspire you to keep going.
The same concept works with side hustles. If you have six figures of student debt or more, say for graduate or professional school, putting comparatively small amounts of money towards paying off that debt may feel futile.
If, though, you owe $50,000 or less, the extra couple hundred (or more) dollars a month that you can spare will make a big impact, fast, especially if you make sure to designate the extra money toward the principal each month.
But What About Free Time?
If you are worried that taking on a side hustle is code for “working all the time,” do not worry. Most side hustles are flexible, and the key is to choose the opportunity that is right for you.
If you are convinced that you could not possibly fit one more thing into your week, it’s time to conduct a personal audit. For three days, write down your activities in one-hour blocks.
Then, look at that list very critically. Be honest. How much time do you really spend checking email but not replying? Or replying when you don’t need to? How many hours do you really spend mindlessly surfing the internet, checking Twitter, and watching people do silly things with cats? I guarantee you can get back at least one hour a day, minimum, by cutting back on unnecessary internet use.
Look at how much time you spend figuring out food. There are ways to cut back on time in the kitchen while still eating healthfully. Stock your kitchen with quick and easy foods, like oatmeal, hard-boiled eggs, and ingredients for smoothies.
Meal plan and meal prep, so you can pull a pre-made meal out of the freezer throughout the week and don’t have to spend an hour or more cooking and cleaning on weeknights.
Get up an hour earlier. Really. You can do this. I believe in you.
Consider the balance. You won’t be able to linger at the office shooting the breeze because you have things to do. Before you know it, when you schedule your time carefully because there are things that need to get done, you might be surprised to find how much more time you have to do the things that don’t need to get done.
As an added bonus, the less free time you have, the less time you’ll have to spend your hard-earned money.
The Benefits of Side Hustles Reach Beyond the Financial
It is empowering to have control over your finances, your time, and your life. You may even find something you really love to do.
The change from working more at your day job to working smarter at your day job and then transitioning on nights and weekends to your empowering debt-smashing side hustle can be inspiring. Not to mention the personal satisfaction that comes from watching that student loan debt decrease every month.
The sense of security you give yourself when you take on a side hustle cannot be overestimated. Embrace the joy that comes in knowing that you have options on how you spend your time and how you move your life forward.
Who knows, a side hustle may even become a more profitable pursuit than your day job, and you may even transition to doing it full time.
Strategies for Success
Budget Wisely
If you haven’t already, structure your budget so you are living off of the income from your main job. Then, put every cent you earn from your side hustle toward your student loans.
Set Priorities
Sleep, exercise, and nutrition should ideally be non-negotiable. It is possible to prioritize these things while working at a successful side hustle. You may have to give up keeping up on the latest show or you may need to give your Twitter obsession a rest, but aren’t those things worth it in the long run?
Set Specific Hours
Budget time for working at your side hustle and stick to it. Turn off the sound and notifications on your phone. Close email. Get it done.
Learn to say no. Love the word “no.” Embrace the word “no.” This is not limiting, it is empowering.
Set Milestones
Reward yourself when you meet them. When you pay off the first $1000 of principle, give yourself a treat. Then double your goal for the next time. You define what makes a treat a treat. Fancy chocolate? A bike ride? Take yourself to the movies? You decide what rewards are meaningful to you.
Don’t Forget to Live
It’s okay to still spend some money. In fact, budget for wellness and entertainment separately. Wellness can mean whatever you want it to mean: a yoga class, a gym membership, a race registration, acupuncture. Make taking care of yourself a priority. And, be sure to check with your health insurance provider, because many insurance companies offer financial incentives and reimbursements for some of these things.
How to Make Extra Money to Pay Off Student Loans
Here are some of the best side hustles for paying off student loans:
- Sell your stuff (Craigslist, Facebook, yard sale, eBay, etc.)
- Have a craft to provide? Put up an Etsy page and open a shop
- Rent a room in your home (if you’re like me, you are immediately averse to the idea of sharing your space. Remember, nothing is permanent, especially not student loans. Screen candidates wisely, have a written rental agreement, and remember that this too shall pass)
- Walk dogs (advertise on your own or join a service)
- Offer your tutoring services on Craigslist
- Check out websites like LinkedIn Profinder, Fiverr, and Upwork to see what types of projects and skills are in demand, and create your own profile
- If you have a unique skill, look into becoming an instructor for Udemy.com or your local community college or continuing education center
- Traditional part-time work never hurt anyone. Apply at a local coffee shop or find a business with weekend hours where they might need some part-time help.
What’s Next?
When you’re feeling stressed and overworked, remember that you have control over your side hustle. Take a break when you need to, work ahead if doing project-based work, or let your clients know when you’ll be off for a while.
Remember, you started the hustle, you can end the hustle. Maybe you only want a part-time job for six months to make a dent in those loans, but then want some of your life back.
You choose your path. Every penny you put toward the principle on those loans today means paying that much less over time and taking back your financial freedom that much sooner.
Paying off student loan debt with a side hustle can be empowering. Every little bit helps. Small rewards equal big gains. Progress is real. Keep your eye on your goals, both short and long-term. Be diligent with your time, money, and health (both physical and financial) and you will reach your goals.
While a side hustle will help increase your income so you can put more money toward your debt, you’ll still need to create a specific debt repayment strategy.
If you have questions about your student loans or need help coming up with a solid plan to tackle your six-figure loan debt, we can help with a one-on-one consult and custom plan.
Have you ever side hustled before? What’s your favorite way to make extra money?
Refinance student loans and get a bonus in 2018
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