Your Talent Can Be Your Side Hustle

Dave Says –

Dear Dave,

I’m currently in Baby Step 2 of your plan, and I’ve been intense about paying off debt. I make about $80,000 a year in sales and recently received a tax refund of $4,400. I have an idea to use the refund money to open a trailer rental business as a side hustle to pay off debt faster. Do you think this is a good idea, or should I use all the money to help pay off debt?

Mike

Dear Mike,

I like that you’re trying to find a way to pay off your debt even faster. But no, I wouldn’t use the tax refund to open a trailer rental business.

I want you to get rid of your debt as fast as possible. But the problem with throwing all that money at two or three trailers is that you might not rent them one single time. That’s a very real possibility. You’ve got to consider all the downsides and all the possible negative scenarios. If there are more negatives than there are positives, your idea’s probably not going to work.

Now, I don’t mind the idea of you taking a small part of the $4,400 to get something going on the side. I’d rather see you take $400-$500 of the refund money and put it into something where you’re pretty sure you’re going to get $500-$1,000 back within the first month or so. In that kind of situation, even if the idea doesn’t work out, you’ve only burned a little bit of the money. You’d still have around $4,000 left to help pay off debt.

But here’s something else I want you to think about: It sounds like you’re making a pretty good living as a salesman. If I were in your shoes, I’d find a part-time job selling a quality product I was excited about and believed in, something that doesn’t compete with what I’m selling at my day job. I mean, selling is selling. If you could get with a company that would let you sell on nights or weekends, you could probably make a nice chunk of cash. That’s a lot better plan than setting a couple of trailers in your yard and hoping someone rents them.

And hey, adjust your W-4 so you don’t get a refund next year. A tax refund isn’t free money, and there’s no reason to give Uncle Sam an interest-free loan for a year — especially when that money would do more good in your own pocket.

Good luck, Mike!

— Dave