Michelle has been doing an amazing job with extra income lately. Her blog has been taking off and that’s helping her make a ton of side income every month. Due to this, she’s been getting a boat load of emails about blogging for side income and has even written a few great posts about how to make money blogging. Hopefully her readers have benefitted from her tips and are starting to make money at their own blogs.
One thing she hasn’t covered is what to do with all of that extra income. One of my favorite things about extra income is that it’s not included in the budget, so you can really do anything you want with it. That said, it might not be the best idea to blow it on shopping. So what should you do with your extra income?
Use Your Side Hustle Income to Pay Off Debt
This is probably my number one suggestion for extra income. I make a bit of cash every month through staff writing and my own blog, My Alternate Life. Up until a few days ago, I’ve thrown everything I’ve earned at my debt. This has been a huge boon to me because it’s shortened my debt pay off window. When I first started trying to pay off the $38,000 of debt I’d accumulated through school, my best calculations had me debt free in five years.
Now it looks like I’ll be debt free before my the two year anniversary of Operation Pay Off Debt. This is partly due to me putting all of my extra income towards my debt. Michelle is employing the same strategy to pay off her $38,000 in student loans, and she’s managing to get rid of them amazingly quickly.
Use Your Extra Income to Build Up an Emergency Fund
Using extra income to build an emergency fund and insurance is a great way to use your side hustle to make yourself more secure. While most experts suggest that an emergency fund consisting of 3-6 months of expenses is ideal, very few people actually have this on hand (including me, until I get my debt paid off). Using extra income to fund your emergency fund is a great way to beef it up without having to re-balance your budget.
Take Your Extra Income and Start a “Fun” Fund
This is one of my eventual goals with my emergency fund. Once my debt is paid off, and my emergency fund is fully funded, I plan on shoveling everything I make in side income into a “Fun” Fund. I’ll probably use it for travel and furnishing our 400 sq. ft. house properly. I can’t wait! The best thing about this is that I can have lots of fun without interfering with my other goals, like saving for a house and funding my retirement.
Side Income is Dead Useful
Side income is a great way to achieve your goals faster than you thought possible. My side income has helped me pay off a crazy amount of debt in a very short period of time, which has kept me motivated and interested in those goals. Your side income could work the same wonders in your financial situation, if you’re smart about how you spend it.
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I started ramping up my side income efforts again over the summer once I decided to commit to travelling in 2013 – so all of that has been channeled right into the travel fund 🙂
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Whatever extra income I get goes straight to my investment account.
I don't have any income from this, yet! My books (I was a novelist) are still bringing in foreign royalties now and again, and my first products will be out next month on my Frugal Guru site, but I'm in a loooong dry spell. 🙁
My money goes first to retirement, then it's split between remodeling/fun stuff and paying down the mortgage.
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We are using our side income to help pay off our mortgage!!! We paid an additional $8700 a few weeks ago and it felt crazy because that was the first time that we had ever touched any blog money.
Thats great I wonder how many years you took off the term?
We're using our side income for a number of different things, investing and for stuff we need done around the house.
We're still trying to figure that out. http://nicoleandmaggie.wordpress.com/2013/04/01/a…
It would be easy if we had just one goal, or if our goals were smaller, or if we had a lot more income! (Or if we had any debt other than our mortgage.)
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I think side income is a great way of paying down debt, but also adding to a house downpayment savings. I guess it depends on where people are in life, and what their goals are.
It's just going into savings for now, but as it (hopefully) increases I'll have to make more decisions!
My extra income is going towards 2 things right now. My upcoming cross country trip in July and also my debt snow ball plan.
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I completely agree with you on side income and its usage. The problem for me is the lack there of. Hopefully we get the debt down a little more and I will definitely be looking into something.
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I think another option is to create an opportunity fund for potential opportunities that you may not have on your radar. Ever looked at a stock, thought it would go big, but didn't have any money to invest, and of course it did exactly what you thought? Sometimes having a fund for opportunities that may not be direct goals is a nice thing to have if you have the flexibility.
Right now my side income is funding a very expensive sewer drain-out repair. Not the funnest way to spend your hard-earned side income :/ Having side income and seeing how it has benefited me has really motivated me to keep at it, though, even if it isn't always fun to work on stuff on nights/weekends.
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Well… right now I have earned just enough for a candy bar in my first month, but I have big plans.
The smart side of me says that I will pay off as much of my debt as possible..
While the other side of me says that I should party with hookers in Vegas.
I think I will save my marriage and go with the debt thing.
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The obvious choice is to pay down debt when you have it, but one thing that we all should do to avoid losing focus is to have a little play money fund, for example 5% – 10% of all income should be allocated to whatever floats your boat.
It just goes into the general pool for us. We'll invest what's left over.
If we have consumer debt, I would use the extra money to pay it down.
Great job with the xtra income.