At first glance, getting a second job to pay off your debts more quickly seems like a pretty straightforward solution. In reality, however, it takes careful planning to make the whole thing work. Make a couple of wrong decisions along the way and you may end up still in debt but significantly more stressed. So, before you try to figure out the best way to land that second job, you need to take the following things into consideration first:
How much extra time do you really have?
Sure, it’s pretty common nowadays for Americans to take on second jobs. Unfortunately, it only works if you actually have enough extra time to do so. If you’re already working extremely long hours and still not making enough money, then maybe polishing that old resume and getting a higher paying job should be your first priority. Getting a second job, in this case, could lead to decreased productivity, burnout and maybe even health issues. Needless to say, these three things would not only negatively impact your performance at work but also cost you even more money.
How much extra money do you need to make?
“Need,” in this case, does not only refer to the amount required to pay off your debts. It also pertains to the amount you need to not mess up your taxes. Keep in mind that depending on how much additional money you make from your second job, you could not only end up paying significantly higher taxes but also lose any tax benefits—like the Earned Income Credit, for instance—that you are currently enjoying. The goal is to either earn just enough extra cash to boost your cash flow without changing your tax bracket or earn so much more that the extra taxes and lost tax benefits no longer matter. At the end of the day, as long as you actually end up taking home enough additional money to get out of debt, you’re doing something right.
Supplement it with better financial management
Regardless of how much extra money you make from taking on a second job, you’d still need to get better at handling your money for the whole thing to work. The first step is to cut back on unnecessary spending to increase your total cash flow. Step two is to direct 100% of the money you make from your side hustle into paying off your debt. Just use your full-time income for everything else. The third and final step is to stop needlessly spending money you don’t have so you never have to deal with debt problems again in the future.