My wife and I have a pretty strict budget due to the bills we have to pay and our goal for financial independence. If we weren’t making some extra money I would probably not be investing right now. It’s not that I cant afford it but as Mark Cuban puts it paying off your debt is the best investment you can make.
“Whatever interest rate you have — it might be a student loan with a 7 percent interest rate — if you pay off that loan, you’re making 7 percent. That’s your immediate return, which is a lot safer than trying to pick a stock or trying to pick real estate, or whatever it may be.” -Mark Cuban
I have taken this to heart. My household has 2 car loans, 1 mortgage, and a student loan. We are paying off the cars and student loan faster than the monthly minimum. The first car will be paid off in later this year and we will debt snowball that money into the second car payment. Once both car payments are complete then we will debt snowball both those payments into the student loan.
Debt snowballing is a method I read about by David Ramsey. Essentially as you pay off one loan you take that principal payment and add it to the next one. Your budget remains unchanged but you are paying off your loans faster. The mortgage is last as I have a very low interest rate and my return on investment right now is about 25% and climbing.
This brings me back to side hustles. Once my wife and I have reached financial independence I want more than a 401k nest egg sitting for me. I want to create wealth by more than just owning my home. As a part time investor it is buying stocks and looking ahead it will be real estate investing. By doing side hustles my wife and I generate a few hundred dollars a month for me to invest with. When we really put our nose to the grinding wheel we get close to $1k a month.
For me it is primarily through driving for Lyft. I can easily earn $200 a weekend by just driving for 4-6 hours. I tend to drive during the day on Saturday and Sunday in San Diego. It tends to be peak hours and the drunks aren’t out in full force yet. I like to listen to podcasts as I drive and the company makes for some pretty enjoyable car rides.
My wife became a Posh beauty product consultant. Her earnings fluctuate on product launches but the more events she hosts on Facebook the more our social network buys from her. I can’t say for certain what my wife brings in monthly but it does cover her daily Starbucks run and her own personal Posh products.
By having side hustles we justify investing our money even though we have outstanding debt. If we didn’t there would be a choice of living pay check to pay check, making minimum monthly payments on our debt for years, or not investing our money. I choose to invest to create wealth and secure our financial independence.