Debt elimination – the next leg. Generating a second income.

On the other hand you might talk to someone who has tried a couple of different ways and has had bad experiences. They may have lost money. They may be cynical and negative on even trying anymore. They would probably advise you to work hard and stay focused on your 9 – 5 job.

I think the truth lies somewhere in the middle of these two extremes. I don’t believe it is easy to make millions in my spare time yet I do believe that with a lot of hard work and motivation it is possible to make a nice second income. You may not be able to retire or quit your day job but it could be the key factor that allows you to be rid of your debt burden. After all that is the focus here – eliminating debt. Once the debt is gone we can worry about where we will put all our money after that.

Before you decide to pursue a second income you will need to put a lot of thought how you are going to do it. More importantly you need to consider what method is best for you given your preferences and needs.

How badly do you need the money? 

There are two aspects to this – if you need cash badly enough you will do almost anything to get it and I discuss this further in the next section. The second aspect and the one I want to discuss here is the time lag. If you are badly in need of cash then there is little point in trying to build a website or buying a rental property. The reason why is because of the time lag between when you start your website or buy a property and when you begin to generate income. By the time you receive your first bit of income you could be further in debt.

If you are in need of money you need to look at the time lag and how soon you will get paid. For example if you were to take a part time job waiting tables you can be pretty certain that you will either get paid at the end of the night or end of the week or in the worst case the end of the month. With a website/rental property it could be months before you generate any income.

If you need money urgently then you must pursue the method that will allow you to generate income fastest. You may have to swallow some of your pride. No it won’t be easy and yes it will be a lot of hard work but what you have to always do is think of the prize. The prize in this case is eliminating all your debt.

What are you prepared to do for the money?  

Nothing illegal I hope!

What you are prepared to do is directly related to how badly you need the cash. As I mentioned above if you are desperate you will do almost anything. But let’s imagine that you are not desperate but you do need additional income. In order for you to successfully generate a second income you need to think strongly about what exactly you are prepared to do for the money. If you are an accountant by day would you wait tables at night? If you were a waiter by night would you work in construction during the day? I’m not saying there is anything wrong with these jobs – nothing whatsoever. What I am trying to point out that in order to generate a second income you may have to do things that you would not normally be prepared to do.

Aside from getting your hands dirty so to speak what else are you prepared to do? Are you prepared to give up TV? Spending time with your friends? Going to the Gym? The reason I ask is because when you make a determined effort to generate a second income a lot of what you currently do in your spare time will have to take a back seat. If you go to the gym three times a week you may find that you simply don’t have the time to go anymore. For someone trying to keep in shape this can be tough. Remember this doesn’t have to be a permanent lifestyle change. It only has to be until you get your debt situation sorted out.

Do the logistics make sense? 

Imagine that you were working your normal 9 to 5 but you have taken a second job working for 4 hours each night in a call center. You finish your day job at 5 and the call center job starts at 7. Now let’s say that it takes an hour to drive from your place of work to the call center but that most days you don’t actually finish work until 5:30 and that the traffic is really bad and sometimes it can take up to two hours to drive to the call center. So you end up arriving at 7:30. This isn’t sustainable.

The logistics have to make sense. The method you use to generate a second income has to fit well with your current environment. By environment I mean the physical buildings, roads and transport. You need to get from A to B fast. But by environment I also mean the emotional environment. Does the fact that you will be very tired from working late on a second job fit well with the people around you? Will your partner support you if you arrive home late and cranky demanding to be fed?

Do the numbers add up?

This is a crucial thing to consider. You may think that by working twenty hours a week in a job that pays $15 an hour makes sense for you but you need to consider the numbers. How much do you make after tax? How much does it cost to get you there and back? How much do you spend on food? Do you have to pay a baby sitter? Before you decide to try to generate a second income you need to look very closely at how much of the income you generate do you actually get to keep?

A lot of the focus in this article has been on generating a second income by getting a part time job. There is a reason for this. For many people in debt there is a pressing need to generate income quickly. Apart from selling your possessions getting a second job is the quickest way to get money fast.

Learning how to trade shares online or learning how to build a property portfolio are great ways to generate income. The problem is that there is a lot involved in both and it takes years of learning and experience to be able to do it effectively. That is why I pointed out that time lag is crucial. If you have a long term perspective then by all means go and learn about shares and property but if your focus is on the short term removal of debt then you should focus on those activities that will generate money fast.

The key thing to remember with generating a second income is that it only has to be for a short time. What would be the point in spending all your day working and all your night working too? You would eventually burn out. The goal you should have is to only continue with generating a second income if it makes sense for you – physically, financially and emotionally. Only do it as long as it takes to repay your debts. Once you have achieved that goal then reassess your situation. Take some time out and think about your next financial goal.