A side gig is one of the strategies that you can use to help you complete a debt consolidation program. The thing about this debt solution is that there is no reduction in what you owe. That means you still have to pay off the whole debt. The good thing is, debt consolidation can help restructure your debt payments so it is more affordable.
However, for a lot of Americans, this can still feel like a huge burden. After all, if they accumulated a lot of debt, that meant their income was not enough to cover their monthly expenses. Either they are not earning enough or they are simply spending more than what they should.
Obviously, something has to change if they want to improve their financial situation. And if you already have a lot of debts, you might want to think about getting a side gig to help you pay it off. It could possibly help you stay out of debt too.
Statistics reveal that the demand for part-time workers is rising in the past few years. Apparently, 44 million Americans currently have side hustles. So if you feel like your income needs a boost, you can join a third of the American workforce who currently has a side gig.
How can a side gig help with debt consolidation
Having a side gig has a couple of benefits that can help you complete a debt consolidation program. Here are three of the most important ones.
Increases your debt payment fund
One of the main benefits of having a side hustle is the extra income that it can bring. When you have a lot of debts, that can make a huge difference. According to reports, 2 out of 10 debt-ridden consumers are forced to use 50% to 100% of their income to pay off debts. If your debt payments are eating up a huge portion of your income, earning an extra $200 to $500 a month can make a huge difference in your life. It can keep you from feeling too stressed as you try to stretch your limited income to accommodate everything that you have to pay for.
Not only that, if the extra income can help you increase your current payments, that will help you get out of debt faster. If you can shorten your repayment period, it can help you save on the interest payments.
Keeps you busy
Another benefit of having a side gig while in the midst of a debt consolidation program is that it keeps you busy. When you have a lot of time in your hands, you are more inclined to find ways to entertain yourself. When that happens, you are more likely to spend money. In case you overspend, that can threaten your debt consolidation efforts. Instead of using the money to pay off your debts, it will be spent on something else. When you have a side gig, you will have less free time. This might make things a bit tenser or tiring. However, it will keep you from spending your money unnecessarily. In the end, it is more important to spend your money wisely.
Makes you work hard for debt freedom
Finally, having a side gig to pay off debts will force you to exert extra effort. The more you work hard for something, the more you value the result that comes out of it. In this case, if you think about everything that you had to go through to complete the debt consolidation program, you will be less likely to waste all your hard work. You will think twice about borrowing too much money again. Your experience will encourage you to make better choices when it comes to your finances.
A side gig sets you up for a better financial future
Apart from helping you with the debt consolidation program, a side gig can also help you achieve a better financial future. Since you worked hard to achieve debt freedom, you will be more likely to ensure that debt consolidation effects will last. With the help of the side gig, this will be easier to accomplish. You can continue with your side hustle because it will bring a couple of benefits that can strengthen your financial security.
You can save for retirement
Once you have finished paying off your debts, you do not have to stop the side gig just yet. You can use the freed money to save for your retirement. This will allow you to catch up with your payments and increase your retirement money significantly. With bigger contributions and the compound interest, you can have it grow within no time at all.
You can set more financial goals
Another benefit to continuing with a side gig after the debt consolidation program is that you can set more financial goals. With the money you are earning on the side, you can save up for a vacation, your dream house, or even a new car. Ideally, you should use the money to improve your financial position. If you can use the money to start a new business, that might increase your income even more.
You can stay away from debt
When you are busy with a side gig, you do not have time to spend your money unnecessarily. That means it is easier to stay away from debt. But beyond that, it is also easier to save for an emergency fund. This fund will really make it debt freedom last for a very long time. Maybe even forever. You should make sure that this fund is always sufficient. That way, you do not have to resort to borrowing money to get yourself out of a tough situation and into another debt consolidation program.