If you're in debt — especially if you're in significant debt — frugality will only get you so far. To really make a dent, you have to increase your income.
The option recommended most frequently on personal finance blogs I have read is freelancing or consulting on the side. Another option is a second job (usually hourly work of some kind).
However, side jobs aren't always the most effective way to increase your income. Freelance work is often sporadic and part-time/hourly work doesn't typically pay all that well. Time and mental energy are finite resources. Focusing too much on your side gig(s) may come at the cost of your career or interfere with your balance between time and money.
When I think about increasing my income in a sustainable, long-term way, I am usually thinking about getting a higher-paying primary position (a.k.a. “day job”). Earning more at my day job would have significant benefits:
- The more I can make at my day job, the less I have to earn on the side.
- By focusing my mental energy on my day job and improving my performance, I become a better candidate for advancement (read: the next higher-paying job) on my career path.
- Higher-paying jobs tend to mean more responsibility — which, for me at least (and others might feel differently), means greater job satisfaction.
My philosophy of job-hunting
I've been in my current position just over four years. During that time, I've applied for 11 other positions. Out of those 11 applications, I've had four first-round interviews, two second-round interviews, and one job offer.
I could be casting a wider net, of course. However, I try to apply only for jobs that I think I'd actually be a good fit for. I think a 36% first-round interview success rate says that I'm doing a pretty decent job at that.
I am lucky enough to work in an incredibly supportive and healthy environment with great people. I enjoy what I do and who I work with. Maintaining a good work-life balance is encouraged and appreciated.
I've heard enough horror stories about toxic environments to conclude that higher pay isn't the only factor when considering job opportunities. I'd rather take longer to pay off my debt (but be happy) than pay it off quickly (but be miserable every day).
However, money is a factor. Since I know I'm happy where I am, I try to apply for jobs that entail significantly more responsibility (and therefore command higher pay) than my current position. I consider higher pay my best hedge against the possibility of not enjoying a new job as much as my current situation.
Ideally, I wouldn't accept an offer unless it paid 20% more than my current position. What's your cutoff? All but one of the positions I've interviewed for exceeded my requirement. Sadly, my most recent experience (which ended with a job offer) didn't have such a happy outcome.
Was it a promotion or not?
I currently make $40,000/year. The position listed was a promotion in terms of classification and had a posted salary range of $36,900-$47,990 DOE. I seriously considered not applying, since the maximum end of the range was slightly less than my usual 20% cutoff. However, since it was in many ways my dream job (running a writing center), I decided to apply.
I assumed that if I received an offer, then it would be for the maximum listed salary. Generally speaking, departments at my institution would rather not make an offer at all than make one to someone who doesn't meet all the desired criteria (which implies the highest salary listed in the job ad). The desired criteria for this position was five years of experience and an M.A.; I had 11 years of experience and a Ph.D.
The position was originally listed in May; my first interview was at the end of July (they contacted me long after I'd given up hope on the position). They contacted me regarding my second interview three weeks after my first interview (again, at this point I'd given up). Two weeks after my second interview, I received the offer. And the offer?
$40,607. Ugh. For a position on another campus that would increase my commute from 15 minutes each way to 45 minutes. Accepting the position would have also meant spending an additional $30 a month on a light rail pass.
In the end, it entailed significantly more responsibility than my current position for an insignificant raise. I tried to open salary negotiations but was totally shut down; I declined the offer.
What I've learned going forward
First and foremost, unless the minimum salary posting is at least 10% more than my current salary, I'm not going to apply for a position. I feel bad that the search committee went through an almost four-month process only to have the search fail.
If I had the slightest inclination that they never intended to offer the highest salary in the posted range (which is NOT the impression I was given during the interview process), I wouldn't have wasted everyone's time. The only way I can guarantee a significant raise is to base my decision to apply for a position on the bottom of the range, not the top.
Second, there is value for me in splitting my limited cognition and willpower between my side gig and my day job until such time as I'm not under-earning. There may also be value in it for people who are trying to build up a client base via freelance work so they can eventually leave their day job. However, that's not me — I love getting out of the house and thrive in a traditional office environment. I think I'd be extremely depressed if I was a full-time freelancer.
Third, even though it didn't end up working out, it was extremely gratifying to be the best applicant. Additionally, more interview experience can only help me be better prepared for the next time around.
- Do you have a side gig(s) in addition to your primary source of income?
- If so, do you freelance? Work hourly serving or in retail? Something else?
- What percentage of your income does your side gig make up?
- What is your goal in having a side gig? Debt payoff, increased savings, diversification of income, ability to someday quit your day job? Something else?
- How often do you apply to other day jobs? What's your yield rate in terms of interviews and offers?
Honey Smith has been reading GRS since at least 2008, right when she got her first â€œrealâ€ job and started getting serious about finances. She and her husband Jake are in their mid-30s and recently bought a home together. Currently, she manages graduate programs at a large state institution, and he is an attorney at a mid-sized firm.
Between them, they have paid off approximately $30,000 in consumer debt since she started writing for GRS in 2012. However, they still have nearly $200,000 of student loan debt, so she will continue to chronicle their debt-paydown journey. In addition to personal finance, Honey is interested in vegetarianism and cooking, gardening (despite living in the desert and having a black thumb), issues in higher education (including the student loan bubble and the slow death of tenure), and animal rights; however, her heart lies with fantasy novels, trashy TV and Skyrim.