Can Side Hustles Help You Survive Inflation, Debt, and Delinquencies?

You’ve felt it in your wallet. With persistently high inflation pushing prices up at rates not seen in over 40 years and incomes struggling to keep pace, your checking and savings balances keep dwindling, while your credit card balances spiral ever higher.

Meanwhile, billionaires are laughing all the way to the bank.

Is it any shock that when Silicon Valley Bank went belly up, the government was quick to reassure everyone that all their money is safe, not just the FDIC-insured $250,000 per account type per owner?

Because when tech-sector-bigshot money is on the line, it seems suddenly everyone is “too big to fail.”

Is it fair?

Of course not.

But that doesn’t stop it from happening, does it?

Debt Is on the Rise, Big Time…

If you’re not a multi-millionaire or billionaire, things aren’t so easy.

Back in July 2022, a LendingTree “Dealing with Debt” survey found that 43% of Americans expected their debt to increase in the second half of the year, mostly credit card and auto loan balances.

Credit cards because that’s how we pay for our groceries, gas, and utilities. Auto loans because cars keep getting more expensive.

And how’s this for fair — when asking parents of young kids, 58%(!) expected higher debt levels, a third again as many as the general population.

The study also found that over 60% of us deal with debt, and if you’re one of those, chances are (7 out of 10) credit card debt is part of the unpleasant mix.

Want to know why all these folks are in debt?

The top three reasons are necessities (think housing and cars), emergencies, and medical problems. Not exactly being reckless with financial choices.

So, how prescient were those who thought they’d go deeper into debt?

Pretty spot-on, says the New York Fed.

In the second half of 2022, non-housing debt jumped by $190 billion (4.3%) to $4.64 trillion, and housing-related debt soared by $550 billion (4.7%) to $12.26 trillion.

Annualizing, those increases clocked in at 8.7% and 9.6%, respectively!

… And Delinquencies Surely Follow…

What happens when debt surges and incomes lag?

You guessed it — delinquencies!

According to the NY Fed, the “serious delinquency rate,” defined as payments being 90 days or longer past due, surged nearly 50% during 2022.

• Serious mortgage delinquencies nearly doubled, from 0.3% to 0.57%, with home equity loans close behind, rising from 0.3% to 0.51%. That’s nearly half a million homeowners struggling to pay back their loans.
• Auto loans? Notched up from 1.6% to 2.22%. That means over a million people who may not be well-off enough to own a home but bought a car with a loan are falling behind.
• Credit cards? Up from 3.2% to 4.01%. That’s over 4 million Americans failing to make timely (or nearly timely) credit card payments of at least the minimum due — which is far less than you should pay — and becoming seriously delinquent.

And what happens then?

Homeowners may lose their homes to foreclosure.

Delinquent car owners may find their cars repossessed.

And credit-card holders get hit with punitive interest and late-payment fees (not to mention their credit scores dropping like a lead brick). 

Because obviously, if you can’t afford to make even the minimum payment due on your cards, charging you up to 2% monthly interest and adding fees of up to $50 will make it that much easier to afford your next payment…

And according to the NY Fed, it’s younger borrowers, who have the lowest incomes and fewest assets, who’re most likely to struggle.

Things Are Indeed Getting Worse

A LendingTree survey released this month says almost two in three Americans admit they periodically live paycheck-to-paycheck, and nearly half do so all the time.

According to a LendingTree bill-paying study, 40% of Americans say it’s harder to cover their bills than it was a year earlier. And if you make under $35k a year? That statistic jumps to 54%. Further, more than half of us overdrew our accounts at least once to pay a bill, with more than half of those saying they’ve had to do it more than once.

And you know what your bank does when you overdraw your account, right? 

They charge an overdraft fee. 

Because, just like with credit-card late-payment interest and fees, if you can’t afford your bills this month, surely paying an extra $35 fee will make it that much easier to afford your next bill…

Side Hustles Soar as a Potential Rescue Path

We’ve all heard and read so much about side hustles so it should come as no shock that so many of us have started a side gig.

Indeed, a recent LendingTree side-gig survey found that side hustling soared to the point that more than 4 in 10 of us have at least one. Looking at the younger crowd, that fraction is higher still, with 55% of millennials and 62% of gen-Zers saying they have a side gig going to bring in some much-needed extra cash.

More than two-thirds of those who side hustle say they have to do it because inflation pushed prices so high. And even when inflation moderates, that doesn’t mean prices go back down. They just go up a little less rapidly!

What Side Hustles Do the Most People Go For?

People do various things to make some extra cash on the side.

Here are 10 of the most common gigs (though even the single most common, selling on Etsy and other sites, is done by just 8%).

1. Selling stuff online
2. Babysitting, pet sitting/walking, and/or house sitting
3. Grocery and food deliveries and driving for ridesharing companies
4. Part-time/seasonal gigs
5. Handyman
6. Online freelance work
7. Day-trading stocks
8. Online content production (writing on Medium, anyone?)
9. Tutoring/teaching
10. Property rentals (including Airbnb)

Christine Luken, Financial Dignity® Coach, and Founder of 7 Pillars LLC says, “Side hustles are like seeds — with the right amount of time, effort, and care, they can grow into profitable ventures.

“But not all side hustles are equal!

“Two potentially lucrative side hustles are online tutoring and freelance writing. One of my friends makes $25 an hour tutoring online and can decide exactly how many hours she wants to tutor each month. In the past, I wrote freelance articles for personal finance websites and earned $150-$200 per piece.”

I agree.

When I was in college, I earned $50/hour for (in-person) tutoring, and that was in the mid-80s so it would be $140/hour in today’s dollars! As for freelance articles, I’ve earned up to $500 each!

The Bottom Line — Side Hustling Can Rescue Your Finances

Inequality in the U.S. is higher than ever, with the three wealthiest Americans (Elon Musk, $147 billion; Warren Buffet, $108 billion; and Jeff Bezos, $107 billion) having more wealth than the 166.6 million Americans who make up the lower half of our wealth distribution combined.

And as CBS News puts it, “The 3 million people who make up the wealthiest 1% of Americans are collectively worth more than the 291 million that make up the bottom 90%.”

And clearly, the lower you are on that totem pole, the harder inflation has hit you.

But since nobody else seems to be doing much to solve your problems, it’s up to you to do something about them, and side hustling is the likeliest thing you can do.

But first, in fairness, not everyone can side hustle.

Many of us are too busy with our main job and/or taking care of kids and aging parents. Others may simply find it too stressful on top of already-stressful lives.

However, if you can do it, it can be eminently worth it. 

LendingTree found that, on average, side hustlers bring in over $5600 a year from their side gigs.

That may not sound like all that much if you make a multi-six-figure income, but if you make less than $35,000 a year, another $5600 increases your income by over 16%, and it could mean the difference between falling thousands of dollars deeper into debt each year vs. having an extra few thousand dollars available to pay down balances and start climbing out of the hole!

You can’t control inflation.

You can’t (easily) control what your employer pays you.

You may or may not be able to trim your expenses enough to get out of financial trouble.

But if there’s one thing you can (very likely) control, it’s what (if anything) you do on the side to rev up your income to outstrip inflation, debt, and delinquencies.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.