I do a little random work on the side in order to bring in a few extra dollars in addition to my day job. Luckily, most of this “extra” income is over and above my expenses for the month. I generally use the income to pay for business-related expenses, but even afterwards I have some left over. The money sits in an ING Direct account, which is less of a hassle to deal with than other, higher-interest savings accounts.
So what should I do with the money?
- Pay off my student loans faster. This is the most likely candidate. Some of these funds are being paid back at very low rates of interest, but not all of it.
- Pay off my car loan faster. I am paying 2% APR on my loan, so this is not the best choice. However, the money was borrowed from a family member (who insisted I borrow). He also insists there’s no need to pay back any faster than our agreement stipulates.
- Save up for a down payment on a house. I don’t know where I want to live yet, or many of the other details that should be necessary to know before making this commitment. I do know that I’ll need money–much more money than I have. I already have a savings account earmarked for “Relocation,” to which I add $55 from every paycheck.
No matter what I do, a good portion of the side business income should be saved for taxes, just in case I find myself with a large bill in April. I should also set aside a portion to invest in my SEP IRA.
Updated June 16, 2011 and originally published September 28, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.