My wife and I are both 29 years old and struggling. We made a series of bad financial decisions about three years ago, and they still haunt us today. We owe more on our house than it’s worth, we have a giant car payment ($500/month), and we have about $6,000 in credit card debt, which we pay about $450/month on. I honestly feel like we’ve turned the corner in terms of decision-making, but still need to deal with the ramifications of our past. I’m considering taking on a second job, to make the debt pay-down process go faster. Thoughts?
Rob, your thinking has shifted. And it has shifted to a beautiful place. Now we need to shift your cash flow. A second job is a great strategy for doing just that. Once you’ve cut wasteful spending, fixing cash-flow struggles with a second job is almost a perfect solution. If you could somehow virtually promise me you’ve cut wasteful spending, I can almost guarantee your second job will be the genesis to your financial success.
We must first rewind. There are two ways to fix a “more going out than coming in” problem — decreasing expenses or increasing income. Anecdotally, most people feel like the best solution is more income. It’s not. What can more resources provide the unresourceful? More ammunition to do themselves even more damage. I have never witnessed more money solving a resourcefulness problem. “I’m bad with money! Give me more!”
Yeah … no.
This is exactly why you must always begin a financial reclamation project with cutting expenses. A financial culling is transformative. When your use of money damages you and those around you, then more money isn’t the solution. But once you’ve become efficient with money, more money can solve your problems. Don’t join the countless others who bang their heads against the wall for years wondering why they can’t get ends to meet, even with consistently increasing income.
When ends meet, and you can eliminate a lack of resourcefulness as the protagonist, get a second job. As you surmised, a second job will speed along the process. Whether you turn your car into a car service, work at the mall on the weekend or listen to people’s problems as you hand them beers, this additional income will eliminate your debt forever.
Rob, once you secure your second job, give your job a job. Your job’s job is to systematically eliminate your credit card debt and car loan. Do not, under any circumstances, throw your additional income into the pot of money with your other household income. Each dollar you earn must do its job. If you absorb the new income and increase your lifestyle, you’ve just made your problem worse. Assigning your second income solely to debt reduction is trickier than you think. Increased hours can lead a person to look for conveniences to make life a bit easier. Remember, convenience is when you exchange money to buy time. You can’t afford to make that exchange in this scenario. You gotta promise me, Rob. A dollar earned is a dollar paid toward your debts.