How to Pay Down Big Debt Without Resorting to Ramen
Editor’s note: Guest post by Joan Otto
If you simplify the advice of most financial advisors, it goes something like this: Pare your budget down to the very essentials. Use the rest of the money to pay off your debt. Then you can do all sorts of things.
It’s pretty good advice, to a point.
Lots of pretty famous people share versions of the same philosophy. You know what it looks like, too. In its extreme, it’s eating ramen and driving a car that’s held together with duct tape, prayers and plenty of dirt. It’s no vacations; it’s not even driving 30 miles to a relative’s house for Christmas so you can save on gas.
Done in moderation, this philosophy is great. But when you’re trying to pay off what I call BIG Debt – like I am – moderation is key, and extremism is unlivable. My husband and I do share a pretty awful car (our only vehicle). We don’t take extravagant vacations, and we try to be reasonable with our travel.
But we’re two years into what looks like a six-year battle to pay off almost $90,000 in credit-card and loan debt. And that means that, yes, I prefer to eat something other than cheap noodles occasionally in that time.
So we compromise. We’re not lobster, but we’re not ramen, either. What we’re not willing to compromise on, though, is our debt-payoff schedule. We have a dollar amount above the minimums that we aim to hit every month. Sometimes, there are hurdles that prevent that, but we definitely try.
But what about when money is tight?
Side hustling: Why it matters
I can cut expenses. I do it all the time – negotiating the cable bill, shopping around for insurance, the works. You can do this too – any number of sites out there can give you step-by-step instructions; heck, I’ve written about all those topics and more myself.
But at some point, no matter what standard of living you’re aiming for, you’re going to hit a wall. There just isn’t any more to cut, either because you really can’t (you still need a roof over your head) or because you’re as low as you’re willing to go.
Then what? That’s where I get crazy about side hustling. That’s really just my not-so-fancy way of saying, “Hey, I can’t spend much less, but I can earn more.” That’s the difference between no vacations ever (if we want to hit our above-the-minimum payment goals) and last summer’s three-day getaway to Washington, D.C., where we spent about $800 for a great time for our family of three – in a way that also fit in with our learning goals for the year as homeschoolers!
That money has to come from somewhere. In our case, my husband and I are blessed to have varied interests and skill sets that are, you know, kind of revenue-producing. So, between his full-time salary job and my primary freelance contracts, we fit in as many other revenue streams as we can. At one point, we had something like nine streams of income, from everything from Google AdSense to leading Weight Watchers meetings to designing websites.
Many were for fairly small change. But that small change can and does add up!
How could you make an extra $200 this week?
That’s the question I asked last year when I shared our side-hustle arrangement with the community at Man Vs. Debt. My contention is that no one is incapable of earning extra money. Maybe you can’t sustain a part-time job for months and months.
But there is almost certainly something you can do.
- Sell crap you no longer want using Craigslist or Amazon.
- Pet-sit for a weekend.
- Have a yard sale.
- Advertise your services running errands for an hourly fee.
- Mow lawns.
- Design a website for a local small business.
The options are almost endless, but first you have to ask: Am I willing to do the work? And do I have what it takes in terms of skills, supplies and time?
I bet there is something out there to which you can answer “yes” to those two questions. And whether you throw that money against debt, like we’re doing, or drop it into an amazing down-the-road splurge fund (Tahiti vacation, anyone?) or even take $50 or $100 and get some new shoes or a hot purse, well, that’s money you might have been taking out of the budget before, but now don’t need to!
So how could you make an extra $200 this week? And are you willing to give it a shot?
Joan Otto is a writer, editor and virtual assistant who, among other hustles, shares her family’s financial journey as the community manager for Man Vs. Debt. Find out more about Joan; her husband, Chris; and their 13-year-old daughter, Sarah, at Our School at Home.