Earning extra money is an important part of paying off your student loans early. If you have a main job that pays for all of your living costs and expenses, then any money you make on the side can be completely devoted to student debt. Indeed, earning extra money is one of the reasons why I was able to pay my student loans years ahead of schedule. However, earning extra money makes saving easier, and this is an important side-effect of working part-time jobs.
Earning extra money makes saving easier because this puts saving money into perspective and may change your spending habits. For instance, while paying off my student loans, I worked a few part-time hustles that yielded small amounts of money. As previously discussed, I used InboxDollars and Mechanical Turk to make small amounts of money during gaps in my time during the day. Most days, I only made around 10-15 dollars from these hustles, although some days I earned several multiples of this amount. Of course, if you earn small amounts every day, over time, this can be a substantial amount of cash. Over the course of a year, for instance, these smaller side-hustles can earn you thousands of dollars, and this can have an impact on your student debt balance.
Working side-gigs for smaller amounts of money can demonstrate how earning extra money makes saving easier. When I thought about the hour or so I had to spend to make the small amount of money I earned each day from smaller side-gigs, I put my purchases in perspective. If I bought lunch out instead of bringing my own lunch to work, I could save the equivalent of a day’s effort at smaller side-gigs. Moreover, buying prepared coffee over the course of a week took all of my effort for a day at these side-gigs.
As a result, working smaller side-hustles made me more disciplined with my saving techniques. We all have little pleasures we spend money on, and sometimes it is advisable to have these splurges to avoid debt fatigue. But if you can put the cost of these items into perspective due to side-gigs that you work, then you might be less tempted to spend money on things you do not absolutely need.
Earning extra money makes saving easier because it can impact the amount of free time you have. If you find yourself with a substantial amount of free time, you may be tempted to go out and spend money on entertainment expenses. For instance, during periods of time when my main side-hustles were not as busy as they usually were, I definitely noticed that I spent larger sums on entertainment costs. Of course, everyone needs to enjoy life, and there are steps people can take in order to save money on entertainment expenses.
However, having one or more side-hustles can help ensure that you only go out for the important occasions and stay in to complete side-hustle work the rest of the time. When you work side-hustles, you get a better sense of how “time is money” because you are more able to monetize spare time than you are if you only work a main job. This can have a huge impact on your bottom line because you may have less of a need and an outlet to spend money on entertainment costs.
Moreover, having side-hustles is a pretty good excuse not to go out for events that you would not ordinarily care to attend. For instance, many of my friends knew that I worked side-hustles that had several busy periods which would leave me relatively indisposed during those times. If I blamed my side-work to get out of events I had no interest going to in the first place, most people would not question me since they knew how passionate I was about my part-time jobs.
Earning extra money makes saving easier because of the taxes you need to pay on any income that you earn. This website has already discussed in a few prior articles how money you save is better than money you earn due to the taxes you must pay on any money you make. Obviously, you do not need to pay taxes on money you save and these funds can be completely devoted to student debt or other financial goals.
Since people ordinarily do not withhold income from money they earn through smaller part-time jobs, they must usually pay the taxes on these funds at the end of the year. Seeing the tax bill associated with part-time work can give anyone pause, and I myself was completely shocked my first year working side-hustles when I had to pay sizable sums to the tax man. This shock may convince borrowers to focus more on saving money so that they can devote more money to student loans without losing a large percentage of their funds to taxes like with money they earn.
All told, pursuing side-hustles is important for anyone try to pay off their student loans early, since this allows individuals to devote as much cash as possible to student debt. Moreover, earning extra money makes saving easier, since it puts the power of saving into perspective, changes spending habits, and helps fill time that might be spent with activities that consume money.