Editor’s note: This article was first published in November 2011, during Spain’s economic crisis; its comments on the housing and job markets, the Social Car peer-to-peer car rental platform and the example rates for web articles (1–3 euros each) reflect that time.
People often write to us about all sorts of things, looking for answers to specific problems or questions. As a rule they are very easy to answer, but for some time now we have been getting the same question again and again, and it is a real headache to answer concretely, because it reflects a genuine problem that many people are suffering as a result of the crisis. The problem is simple:
“I’m in debt, I work overtime, I work weekends, and even so I can’t save anything. Everything goes on paying off the debts I’ve taken on. Once I’ve paid for the car, the credit cards and the mortgage or the rent on my home, there’s nothing left, so I can’t save, and sometimes I can barely make the payments. If I lose my job, I’m done for.”
We have always taken a realistic line. We can’t offer magic formulas, because they don’t exist, and some of the problems families face are, if you’ll pardon the expression, a lousy situation: an unsustainable position in which there is rarely much you can do except, in some cases, spend 5 or 10 years gradually paying off some of the debts you’ve taken on. Of course, if we said there was no possible solution to a situation like this, we would be contradicting one of our own articles: “There is always a way out; it’s a matter of knowing how to find it“. So, well… let’s look for possible ways out through different options. Here we go.
It’s hard to clean up a household’s finances by thinking like a private individual, so we are going to try to bring a business mindset to the family economy. We’ll compare the household economy with a company that is in debt and owes money to its suppliers, with one exception: in our family we can’t lay off part of our non-productive workforce (obviously we’re not going to throw our young children out of the house).
1. Identify the debts charging you the most interest
These debts are usually the credit cards. We have already explained why credit card debt seems never to get paid off. We also gave some ideas for getting rid of personal debt, although of course that would require extra income, and in this case we’ve said there’s no time to work more. We are also assuming that changing to a job that pays a little more may not be feasible, since the job market is not at its best.
2. If something can be sold or rented out, sell it or rent it out
Obviously, a house, or a car you don’t need to get to work, can be a good option, although the housing market isn’t at its best either. If you have the chance to sell your home and buy a cheaper one, keeping a positive difference in your favour, don’t think twice, but study the transaction carefully, because sometimes taxes can eat up that difference. If you don’t have that option (which is the most likely case), a desperate situation calls for somewhat more desperate measures. We wrote an article with some ideas for making money from home or with your home. Many of them may not work in your country; it’s a matter of analysing them.
A vehicle can become an asset, since platforms are now appearing that let you rent out your car by the day or by the hour. One well-known platform for making money with your vehicle is Social Car. Even so, as we’ve said, if you don’t need your vehicle right now, try to sell it and use the money to build up your account and/or pay off part of your debt.
3. Identify the luxuries
Some families can’t make it to the end of the month, yet they have a gold watch, jewellery or some object of sentimental value their grandmother left them. It may be time to trade sentimental value for monetary value.
4. Healthy austerity
Another way to earn extra money is by not spending it. You are probably already doing this, but it never hurts to remember that if you have breakfast at a café outside the office and stop to eat at a restaurant, you can save something by bringing food from home (my apologies to restaurant owners). Bear in mind that this measure will be temporary. Keep an eye on your supermarket basket. Perhaps it’s time to eat more fruit and vegetables and avoid other supermarket products that are not only more expensive but also unhealthy.
5. There’s business in your storage room
A wedding dress, a groom’s suit, baby clothes, a cot… Many people today can’t afford to spend money on a brand-new wedding dress, so they would look to buy a second-hand one or rent a wedding dress for the day. I’ve seen online ads renting out wedding dresses for 50 euros and even 200 euros. You set the price. It isn’t a lot of money, and the dress may also have sentimental value for you, but the current situation may call for it.
In the same way, “family flea markets” are becoming fashionable in some countries, and online you also have the option of selling second-hand clothes in good condition at token prices: 1 or 2 euros per garment. Again, it isn’t much, but it’s something. The point is to keep adding up small amounts of income. Second-hand baby cots and pushchairs, for example, are certainly selling very well on eBay.
Honestly, on the internet you can sell anything. Even old objects that are no use for anything somehow tend to find buyers.
6. Other measures some people use to earn extra money
Some people work out incredible sums. I have come across the following situation: a family living in a four-bedroom duplex rented out their home for 550 euros and moved into a two-bedroom rented flat for which they pay 300 euros. Clearly they did this to pocket the 250-euro difference, which helps them “unload” their credit card debt.
Others have rented a room in their own home to a person or couple going through a similar financial situation.
7. Earn some money online
The internet opens up the possibility of earning a little extra money or a great deal of money, although some ways of generating income are faster and others are slower but more profitable in the long run. If you have writing skills or consider yourself an expert on a particular subject, these days you can earn money writing for some websites. Some sites pay 1 euro per article, others 2 euros, and I imagine there are some that pay 3 euros or a bit more. It isn’t much money, but by the end of the month it could be another 70–100 euros.
In case you’re interested, we have also explained the ways people usually make money online, although many of them would also take up part of your time.
In a recent email, a reader asked me whether to sell an asset and invest the money in the stock market to earn some extra. I don’t recommend it, because in this situation you are not investing money to generate more money, but money you need, and that is one of the main mistakes in stock market investing. Unless you are absolutely sure that the stock you buy is going to take off, and it’s hard to be sure of that, if things didn’t turn out as you expected your situation would be considerably worse.
I’m sure I’m forgetting hundreds of things you could do to earn extra income. It’s a matter of racking your brains until you squeeze out some ideas. We know it isn’t easy, and we also know that hard times are coming (even harder ones), so the less debt we carry, the better.
I hope I have been able to contribute something, or that this has been of some help to people who are being financially strangled by the current situation.
Note: you will often find hundreds of offers online promising quick, effortless money. On this point I want to be blunt. Quick money is very hard to come by, and money without effort on your part is impossible, so distrust these offers by default, and if you do find the formula, be sure to tell us about it.
Further reading
Featured image: Phil Parker, CC BY 2.0, via Flickr.
