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With interest rates persistently high and the government recently resuming collections of student loans in default, you might be looking for a way to repay your debt quickly. If you feel limited in how much you can currently afford to pay, picking up a side hustle may be worth considering. However, this means having to work more and will require discipline if you want to make a significant impact on your student loan debt, so be sure to pick something that aligns with your existing skills and current schedule.
Key Takeaways
- A side hustle can provide additional income that can be put toward paying off your student loans, reducing the amount of time you’ll be in repayment and how much interest can accrue.
- It’s important to pick a side hustle that aligns with your expertise, interests, and lifestyle so you can stay motivated and potentially earn more.
- Setting SMART financial goals can help you decide on an appropriate side hustle.
Choosing the Right Side Hustle
A side hustle is essentially anything you do to earn money outside of your primary source of income. It could be a second job or it might be more ad-hoc, such as babysitting on the weekends, writing a few freelance articles per month, or even something like reselling collectibles if you have the knowledge and connections to do so profitably.
Note
Paying off student debt early typically doesn’t carry any penalty, but you should confirm with your loan servicer first and request a payoff statement, which should list the amount needed to fully pay off your debt.
The key is to find a side hustle that works for your situation. Moreover, consider what you’re already good at and what you like to do. Since this is secondary work, you’re probably going to have limited time and energy to devote to it, so if it’s not something that feels like a good fit, it’ll likely be hard to stick with.
Having a unique skill might help you earn more. If you’re a guitar player, for example, you may be able to make more money providing a few music lessons each month than if you spent the same amount of time on a more accessible industry, such as being a delivery driver.
Your schedule also matters a great deal. If you have a demanding day job, a side hustle that you don’t need to show up for consistently may be easier to manage. In the prior example, instead of just teaching guitar lessons one-on-one, you could instead package them into a video course that you sell online.
Implementing a Side Hustle Strategy
Because you may have built your budget around your primary source of income, side hustle money can feel like a windfall. While putting all your side hustle earnings toward your student loans might be ideal, you shouldn’t just assume that you’ll be able to do so, nor can you count on earning a lot.
To that end, one of the best ways to tackle big challenges like paying off your student loans is to set SMART goals, meaning those that are:
- Specific: Instead of deciding you want to earn more to pay off your student loans faster, set a more specific goal, such as earning an extra $500 a month after taxes to pay off your student loans 30 months earlier.
- Measurable: You need a goal that you can measure to assess progress. For example, earning a net $500 more per month is measurable. If you’re halfway through the month and have only earned $100, you know you need to pick up the pace.
- Achievable: You might want to pay off your loans in the next six months, but you only have so many hours in the day, and that might not be achievable for your situation. It’s OK to come up short, but don’t set yourself up for failure with an unachievable goal that’ll stifle your momentum.
- Relevant: Any goal needs to be relevant to your ultimate goal of debt payoff. A goal like “make my family proud” sounds great, but it’s not directly relevant enough to put you on a clear path toward becoming debt-free. However, you might have a smaller goal that’s relevant to your larger goal, such as “become CPR certified” as the first step toward becoming a personal trainer.
- Time-bound: Goals need a time constraint. Saying you want to repay your loans in five years provides a clear North Star, compared to a goal like “earn more to pay off debt sooner,” which doesn’t provide a clear timeline.
Important
Don’t forget about taxes. Even if it feels like a hobby, if your goal is to turn a profit, your side hustle may be considered a business and might affect how you file your taxes and how much you owe.
The Bottom Line
A side hustle can provide a helpful income boost so you can put more money toward your student loans. When combined with cutting back on expenses, you can really accelerate your repayment and pay less interest overall. However, side hustles require extra work and a clear strategy in order to be successful. Consider what makes sense for your skills, schedule, finances, etc.
