How to Use a Side Job as One of Your Debt SolutionsDec 22, 2016
As debt loads increase there is a growing trend across the country — especially among millennials — to take on additional work to earn more money. This might be because of a job market that offers more contract work than full-time employment, or a need to earn more income to deal with the rising cost of living. No matter the reason, earning more income can be one of your debt solutions in 2017. As you plan for the new year, setting goals is an important component of your overall financial plan. And finding a way to earn extra income might be a good way to help you tackle lingering debt problems.
Before looking for new income opportunities you need to set goals for the short, medium, and long-term. If you need assistance in setting realistic achievable goals, the Financial Consumer Agency of Canada has just the tool for you. It’s called the Financial Goal Calculator. A simple online search will also provide you with tools, resources and news articles, like this one in the Financial Post about how millennials can set achievable goals.
If you’re already earning extra income or looking to pick-up a side job in the near future, what can you be doing with that money to improve your financial situation?
- Pay off debts faster.
Debt payments can require a big chunk of your monthly income. They might even be a reason why you’re considering a second job. Whatever the situation using the money you earn from your second job can be a good way to pay off debts faster. If you want to fast track your debt repayments, use your primary income as a basis for your monthly budget, then use income from your second job for extra debt payments. Use a targeted debt repayment option like the debt avalanche or debt snowball to really make a dent in your debt.
- Save for emergencies.
Debt can create a number of challenges and place a large amount of stress on an individual. With a job market that favors short-term contracts over full-time employment, having an emergency nest egg to fall back on is a great thing in case of a period of unemployment occurs.
- Save for retirement.
As traditional pensions continue to disappear that means reducing debt now and saving for retirement is even more important. There are many seniors who now struggle to pay their bills. Despite the changes coming to the Canada Pension Plan this will not make up for a shortfall in retirement savings. You may also have to eventually take care of an elderly parent dealing with their own debt issues, which can put an increased strain on finances.
- Save for fun.
Reducing debt and saving for emergencies and retirement is very important, but so is having the ability to pay for your entertainment and vacations without relying on credit cards or add to your debt. The percentage of your “extra” income that you’re able to put aside for fun will depend on your financial situation. But it could mean saving for a trip or just a night out at your favourite restaurant every so often.
Even though many Canadians are turning to side jobs, it can be an unstable source of income, so build your budget around your primary income. Use your extra money to increase your debt reduction efforts, save for the long-term, and have fun. If debt problems are still bringing stress or a sense of being overwhelmed seek out professional debt help. The debt solutions they provide can help you get debt under control.
If you do it right, the money earned from your extra job can be one of your debt solutions. For more around tackling debt and growing your savings, join the conversation on Twitter using #LetsTalkDebt.