Top Money Hacks and Side Hustles to Pay Off Debt Quickly

Published May 23, 2024 | By Kris Harper

Drowning in debt can feel overwhelming, but there are practical ways to regain control of your finances. I’ve been there, and I know firsthand how challenging it can be to find effective strategies to pay off debt quickly. That’s why I’ve compiled a list of the best money hacks and side hustles to help you tackle your financial burdens head-on.

From leveraging cashback apps to starting a profitable side gig, these methods aren’t just theoretical—they’re tried and tested. Whether you’re looking to make a few extra bucks or significantly boost your income, these tips will empower you to take actionable steps towards financial freedom. Let’s dive into how you can start turning your debt into manageable, conquerable goals.

Who Should Read This

This blog post is aimed at individuals striving to conquer debt and achieve financial freedom. Whether you’re grappling with credit card bills, student loans, or a mix of debts, this article offers a roadmap to navigate your repayment journey.

It empowers you with practical money-saving hacks, explores effective side hustles to boost your income, and guides you through different debt repayment strategies. If you’re feeling overwhelmed by debt and seeking actionable steps to take control of your finances, this blog post provides valuable tools and encouragement to help you pave the way to a debt-free future.

Understanding Your Debt

Identifying and calculating your debt is essential for creating an actionable plan. Breaking down your financial obligations helps to manage and eliminate them effectively.

Identify the Type of Debt

Categorize your debts to understand the best repayment strategy for each. Common types include:

Credit Card Debt: High-interest revolving credit; often the most expensive type.
Student Loans: Fixed or variable interest rates; potential for deferment or forgiveness.
Mortgages: Long-term, collateral-backed loans with various interest rates.
Auto Loans: Secured loans with fixed repayment terms.
Personal Loans: Unsecured loans with variable terms and interest rates.

Identify each of these to tailor your repayment approach.

Calculate the Total Debt Amount

Calculating the total debt amount provides a clear picture of the challenge ahead. List all debts, several examples include:

Outstanding balances on credit cards
Remaining balances on student loans
Unpaid mortgage principal
Auto loan balances
Personal loan amounts

Create a spreadsheet or use financial software to sum these values. This total amount is the target for your repayment plan.

Setting Financial Goals

Establishing financial goals is crucial for effective debt management and long-term financial stability.

Establish a Clear Timeline

Determine a timeline for debt repayment to maintain focus and progress. I incorporate clear deadlines for paying off each type of debt like credit cards or student loans. Use tools such as calendars or financial planning apps to set and track these deadlines.

Define Short-Term and Long-Term Goals

Segment financial goals into short-term (under 1 year) and long-term (over 1 year) categories. Examples of short-term goals include paying off a specific credit card debt or saving $500 for an emergency fund. Long-term goals might involve eliminating all debts or saving for retirement. Maintaining this segmentation provides a balanced approach to immediate and future financial stability.

19 Best Money Hacks to Pay Off Debt

Conquering debt requires smart money management strategies. Use these proven techniques to take control of your finances.

1. Budgeting Techniques

Effective budgeting forms the bedrock of financial freedom. Start by creating a comprehensive budget that tracks all your income and expenses. Utilizing a zero-based budgeting method ensures every dollar has a purpose. For example, allocate specific amounts for rent, groceries, utilities, and debt repayment, leaving no money unaccounted for at the end of the month.

Implementing the 50/30/20 rule offers another straightforward approach. Designate 50% of your income to necessities (e.g., housing, groceries), 30% to discretionary spending (e.g., dining out, entertainment), and ensure 20% strictly covers savings and debt repayment.

Monitoring your spending with budgeting apps like Mint or You Need a Budget (YNAB) streamlines your financial management. These tools automate categorizing expenses and provide visual insights into spending patterns.

2. Financial Apps: Exploring Your Options for Debt Management

The article emphasizes the importance of financial tools to streamline your debt repayment journey. While it doesn’t mention specific apps, there’s a vast array available to empower you. Consider these apps as companions in your fight against debt:

Budgeting Apps: These apps help you take control of your spending. Mint (https://mint.intuit.com/) and YNAB (You Need a Budget) (https://www.ynab.com/) are popular choices. Mint categorizes your transactions and offers spending insights, while YNAB uses a zero-based budgeting approach to ensure every dollar is allocated.
Debt Tracking Apps: Stay on top of your progress with debt tracking apps. Apps like Debtwatch (https://debtwatch.treasurer.ca.gov/) or Power Debt Tracker (https://www.nerdwallet.com/article/finance/debt-tracker) allow you to monitor your debts in one place, including balances, interest rates, and due dates.
Automated Payment Apps: These apps simplify the process of setting up and managing automated payments. Qapital (https://www.qapital.com/) and Bright Money (https://www.brightmoney.co/) automate bill payments and help you stay on track to avoid late fees.

Finding the Right App for You: With so many options available, explore and compare features to find the best fit for your needs. Consider factors like budgeting style, debt management features, and ease of use. Many apps offer free trials or basic functionalities, allowing you to experiment before committing.

By leveraging financial apps strategically, you can streamline your finances, automate tedious tasks, and gain valuable insights into your spending habits. This empowers you to make informed decisions and stay focused on achieving your debt-free goals.

3. Identify Non-Essential Expenses

List every expenditure. Cut back on non-essentials like dining out, streaming services, and impulse buys. For example, I saved $50 a month by canceling my unused gym membership. Every dollar saved can then be redirected toward paying off debt.

4. Allocate Savings to Debt Payments

Take the amounts saved from non-essential cuts and allocate them directly to debt payments. For instance, if you save $200 a month, apply that to your highest-interest debt. This action accelerates your repayment plan, saving you interest fees.

5. Utilize the Snowball Method

The Snowball Method is a popular debt repayment strategy that builds motivation and momentum. Here’s how to make the most of it:

6. Start With the Smallest Debt

Pay off the smallest debt first. List all your debts from smallest to largest balance. Focus on paying as much as you can towards the smallest debt while making minimum payments on the others. For example, if you have three debts—$500, $1,200, and $3,000—tackle the $500 debt first. Seeing this debt paid off quickly provides a psychological boost and keeps you motivated.

7. Gain Momentum as Each Debt Is Paid Off

Accelerate debt repayment. Once you eliminate the smallest debt, roll the payment you were making on that debt into the next smallest one. This is where the snowball effect comes in—your payments grow bigger as each debt is paid off. By the time you reach the largest debt, you’ll be making significant payments, speeding up the process. Use this momentum to stay focused and committed to becoming debt-free.

8. Apply the Avalanche Method

Unlike the Snowball Method, the Avalanche Method prioritizes high-interest debts, which can save you more money over time.

9. Focus on High-Interest Debts First

Target debts with the highest interest rates first. By doing this, I reduce the total amount of interest I have to pay. Start by listing all debts from highest to lowest interest rates. Pay the minimum on all debts except the one with the highest rate. Allocate any extra funds to that high-interest debt until it’s paid off, then move to the next highest.

10. Save Money on Interest Over Time

Saving on interest accumulates significantly over time. By paying off high-interest debts first, I reduce the principal quicker, which decreases the interest charged. For example, eliminating a credit card balance with 20% APR before tackling a loan at 10% APR means I accumulate less interest overall. This strategy is cost-effective and accelerates my debt-free journey.

11. Negotiate Lower Interest Rates

Reducing interest rates can drastically help in paying off debt more quickly. Here are two straightforward ways to lower those rates.

12. Contact Creditors to Discuss Options

Reaching out to creditors directly is often the first and most effective step. I found that a polite yet firm request can work wonders. When I called my credit card company, I cited my good payment history and asked if they could reduce my interest rate. They requested some details regarding my financial situation, and after a brief review, they agreed to lower my rate by 3%. The reduction saved me hundreds of dollars in interest over a year, making my debt repayment more manageable. Always remember to stay calm and be prepared with supporting information like your credit report or payment history.

13. Consider Balance Transfer Credit Cards

Opting for a balance transfer credit card can also significantly cut down interest costs. I researched and found several cards offering 0% introductory APR on balance transfers for up to 18 months, which allowed me to pay down the principal amount without accumulating extra interest. After transferring my high-interest credit card balance to a new card with a 0% APR offer, I set a strict plan to pay off as much debt as possible within the promotional period. This move helped me save a substantial amount in interest fees.

By implementing these strategies, I turned high-interest debt into something more manageable, accelerating my journey toward becoming debt-free.

14. Increase Your Income

Increasing your income can significantly speed up debt repayment. Here are some practical ways to boost your earnings and accelerate your journey to becoming debt-free.

15. Start a Side Hustle

Starting a side hustle is one of the best ways to increase your income. Popular side hustles include freelancing, ridesharing, and tutoring. Websites like Upwork, Fiverr, and TaskRabbit offer platforms to find freelance work in various fields. Your existing skills can help you earn extra money, whether it’s writing, graphic design, or teaching a language. With a steady side income, you can dedicate more funds to pay off your debt faster.

16. Sell Unwanted Items

Selling unwanted items can quickly generate extra cash. Go through your home and identify items you no longer use or need—clothes, electronics, or furniture. Online marketplaces like eBay, Facebook Marketplace, and Poshmark make it easy to list and sell items to interested buyers. You might be surprised at how much money you can make from things that are simply taking up space. Use the proceeds from these sales to make additional debt payments and reduce your balance more rapidly.

17. Use Windfalls Wisely

Unexpected financial gains can be a game-changer if used correctly. They offer a unique opportunity to make significant progress in paying off debt.

18. Allocate Tax Returns to Debt Payments

Direct tax returns towards debt repayments to reduce balances quickly. Many people treat tax returns as a bonus to splurge, but they’re a fantastic tool for debt reduction. For example, if you receive a $1,500 return, put it towards credit card debt to save on interest.

19. Use Bonuses and Refunds to Reduce Debts

Apply work bonuses or refunds from returns to outstanding debts. Year-end bonuses, for instance, can make a big dent in loans or credit balances. Instead of using these windfalls for discretionary spending, funnel them into your debt repayment plan. This strategy accelerates your progress towards becoming debt-free.

Automate All Your Payments

Automating your payments can save you time and ensure you never miss a due date. It allows you to focus on other financial priorities without worrying about manual payments each month.

Setting up automated payments plays a crucial role in achieving financial stability. By automating bill payments, the chances of missing a payment and incurring late fees significantly diminish. Here is a step-by-step guide to setting up automated payments:

Set Up Automatic Transfers

Setting up automatic transfers from your checking account to your debt accounts ensures timely payments. Most banks and financial institutions offer this feature. Check if your creditor supports automatic payments directly from their website or app. I always make sure to align my payment dates with my paycheck schedule to avoid any overdrafts. This method guarantees that a portion of my income automatically goes toward debt repayment without me having to remember each due date.

Avoid Late Fees and Penalties

Avoiding late fees and penalties is one of the biggest benefits of automated payments. Late fees can add up, making it harder to pay off debt. By automating my payments, I never incur these extra costs, ensuring every dollar goes toward reducing my principal balance. Some creditors even offer interest rate reductions for setting up automatic payments, which can accelerate debt repayment. Check with your creditors for any incentives they might offer for automated payments and take full advantage.

Assess Recurring Bills

Identify all recurring bills, including utility bills, credit card payments, mortgage payments, loan repayments, and subscription services. Make a comprehensive list to ensure no bill is overlooked.

Choose a Payment Method

Select a payment method that suits your financial habits. Options include credit card, debit card, or direct debit from a bank account. Direct debit often proves more reliable due to fewer chances of payment rejection.

Set Up Automated Payments For Your Service Providers

Log in to each service provider’s online portal or call their customer service to set up automated payments. Most providers offer simple procedures for automating payments. Make sure to confirm payment dates and amounts.

Monitor Bank Account Balance

Keep a close watch on your bank account balance to avoid overdraft fees. Ensure sufficient funds are always available on the payment dates to cover all automated transactions.

Utilize Financial Apps

Consider using financial apps designed to manage automated payments. Apps like Mint or Prism can consolidate all payments into one interface, making tracking easier and more efficient.

Adjust As Necessary

Review and adjust automated payments periodically. Changes in income, expenses, or financial goals may necessitate updates to your automated payments setup.

Automated payments streamline financial management, minimize the risk of missed payments, and can ultimately contribute to faster debt repayment by ensuring financial obligations are consistently met.

Debt Snowball vs. Debt Avalanche Method

Choosing between the Debt Snowball and Debt Avalanche methods can impact how fast debt is repaid and the motivation to stay on track.

Advantages of Each Method

Debt Snowball Method

Motivation Boost: Paying off smaller debts quickly provides a sense of accomplishment, which sustains motivation.
Simple Tracking: Focusing on one debt at a time simplifies the repayment process and makes it easier to track progress.

Debt Avalanche Method

Cost-Effective: Prioritizing debts with the highest interest rates reduces the total interest paid over time.
Faster Repayment: Paying off high-interest debts first leads to a quicker overall debt reduction.

How to Choose the Right One for You

Evaluate personal financial goals and motivations to decide between these methods. If immediate progress and psychological wins are important, choose the Debt Snowball Method. Opt for the Debt Avalanche Method if the primary goal is minimizing interest costs and paying off debt as quickly as possible.

Review personal debts, list them based on balances and interest rates, and consider individual financial priorities to select the most suitable approach.

Best Side Hustles to Pay Off Debt Quickly

Side hustles offer flexible opportunities to boost income and accelerate debt repayment. Explore these lucrative options to find a fit.

1. Digital Freelancing

Digital freelancing allows monetization of skills like writing, graphic design, and web development. Platforms like Upwork, Fiverr, and Freelancer connect freelancers with clients seeking various services. Start by creating a robust profile highlighting skills and previous work. Set competitive rates based on market research. Consistent client communication and delivering quality work yield positive reviews, attracting more clients.

2. Selling Handmade Goods or Art

Selling handmade goods or art offers a creative way to monetize skills while paying off debt. Utilize online platforms to reach a broader audience and maximize sales.

3. Establishing Your Online Presence

Creating an online presence provides access to global audiences. Begin by choosing a platform like Etsy or Shopify, known for their user-friendly interfaces and established customer base. Set up a compelling shop profile, including a bio and a professional photo, to build trust with potential buyers.

Next, focus on product photography. High-quality images attract more customers. Use natural light and simple backgrounds to highlight your items. Consistent branding, including cohesive shop names and logos, helps establish recognition.

Social media marketing enhances visibility. Platforms like Instagram and Pinterest showcase your work to potential buyers. Regular posting, engaging with followers, and using relevant hashtags widen your reach. Collaborating with influencers in your niche can significantly boost your marketing efforts.

4. Tutoring or Teaching

Tutoring or teaching offers a stable side hustle with the potential for high earnings, aiding in debt repayment. It leverages subject expertise to generate income while providing valuable guidance to students.

How to Manage Time Between Side Hustles and Full-Time Work

Managing time efficiently between side hustles and a full-time job demands precision. Using a planner or digital calendar to schedule side hustle tasks helps.

Combining diverse side hustle strategies may significantly enhance the journey toward debt repayment. Utilizing both organized time management and rigorous financial tracking ensures consistent progress.

Prioritize Tasks: Listing daily tasks and prioritizing them guarantees timely completion. For example, allocate morning hours to the most critical tasks.
Set Boundaries: Designating specific hours for side hustles and personal time prevents burnout, ensuring a balanced life.
Utilize Breaks: Taking advantage of lunch breaks or commuting time for small side hustle tasks can boost productivity.
Automate Processes: Implementing tools or apps that automate repetitive tasks, such as invoicing or social media posting, saves valuable time.
Batch Similar Tasks: Grouping similar tasks reduces context switching and increases efficiency.

Tracking Financial Progress

Regularly tracking financial progress offers a clear picture of debt repayment. Monitoring accounts ensures every payment contributes effectively to reducing debt.

Set Benchmarks: Establishing short-term and long-term financial goals helps maintain focus. For example, achieving a monthly decrease in outstanding loan amounts.
Use Financial Apps: Leveraging budgeting apps like Mint or YNAB simplifies tracking expenses and payments.
Review Statements: Regular examination of bank and credit card statements identifies unnecessary expenses or discrepancies.
Maintain a Spreadsheet: Creating a debt repayment spreadsheet can give a visual representation of progress. Include columns for debt types, amounts, payment dates, and interest rates.
Celebrate Milestones: Recognizing when significant debt is repaid boosts motivation. Whether it’s paying off a credit card or reducing substantial loans, acknowledging milestones reinforces commitment.

Implementing these strategies harmoniously directs efforts toward achieving debt freedom.

Common Issues and Troubleshooting

Addressing common issues is key to staying on track with debt repayment. Practical solutions to motivational challenges and unexpected expenses can streamline the journey.

Overcoming Motivational Challenges

Maintaining motivation becomes challenging in long-term debt repayment. Setting small, achievable goals helps keep motivation high. For instance, aiming to pay off a $500 credit card balance within three months builds momentum. Celebrating these small wins, such as treating myself to a favorite meal, also sustains my motivation.

Using visual aids like debt payoff charts provides a constant reminder of progress. Placing these charts where I see them daily reinforces my commitment. Incorporating positive affirmations into my routine further cultivates a determined mindset. If motivation wanes, I revisit my “why” for paying off debt—this anchors me to my greater financial goals.

Handling Unexpected Expenses

Unexpected expenses are inevitable and can derail debt repayment plans. Building an emergency fund, even starting with $500, acts as a buffer against these surprises. Allocating a portion of my side hustle income directly to this fund ensures it grows consistently.

Reevaluating my budget quickly identifies any non-essential expenses I can cut temporarily. For example, temporarily pausing subscription services frees up funds to handle emergencies. Negotiating payment plans with service providers also spreads the financial impact over a manageable period.

By systematically addressing these common issues, I can maintain a steady course toward debt freedom.

Credit Counseling Services: An Option to Consider

The article provides a wealth of information on tackling debt independently. However, it doesn’t explore credit counseling services, which can be a valuable resource for some individuals. Credit counselors can offer personalized guidance on managing debt, budgeting, and creating repayment plans. They may also be able to negotiate with creditors to lower interest rates or secure more favorable terms.

Conclusion

The journey to financial freedom through effective money hacks and strategic side hustles requires discipline and consistency. I explored various practical measures, starting from leveraging cashback apps to evaluating side gig opportunities like digital freelancing and selling handmade goods. Clear comprehension of debt types and calculating total debt were foundational steps in developing a concrete repayment plan.

Proper time management between side hustles and full-time work plays a vital role in maintaining balance. Overcoming common motivational challenges can be achieved by setting small, achievable goals, using visual aids like debt payoff charts, and celebrating wins. A proactive approach is indispensable when unexpected expenses arise. Building an emergency fund and reevaluating budgets are critical actions.

Tracking financial progress through regular benchmarks is essential. Utilizing financial apps for accurate tracking and celebrating milestones contributes significantly to staying motivated. These combined strategies form a robust framework for systematically paying off debt and achieving financial independence.

Further Resources and Reading

Paying off debt can feel overwhelming but with the right strategies and mindset it’s entirely achievable. Leveraging cashback apps and starting side gigs can provide that extra push toward financial freedom. Remember to stay consistent with budgeting techniques and choose a debt repayment method that suits your needs.

For those looking to dive deeper into specific areas consider exploring personal finance blogs, podcasts, and books that offer detailed insights and tips. Financial apps can also be invaluable tools for tracking progress and staying motivated. By continuously educating yourself and adapting your strategies you’ll be well on your way to a debt-free life.