7 passive income ideas to help you get out of debt

Young woman sitting on steps outdoors and looking at her cellphone.Image: Young woman sitting on steps outdoors and looking at her cellphone.

In a Nutshell

If you’re looking to pay off debt or want to save a little extra cash, adding passive income to your cash flow may help. But before you decide which passive income stream is right for you, consider how much hands-on effort it’ll require and whether it’s a good option to supplement your income without committing to a second job.

Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted.
Advertiser Disclosure

We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

Need a little extra cash to help pay off your debt?

Passive income streams can help you earn some extra cash to supplement your day job. They may be useful for people looking to pay off debt faster or those who want to stash away money for a rainy day. Let’s define secondary income and look at seven passive-income ideas that can help get you started.



What is passive income?

Passive income is money you earn through little or no effort of your own — unlike a side hustle or an independent contractor job, where you’re typically doing a task for money and the IRS considers you to be self-employed.

According to the IRS, these “passive activities include trade or business activities in which you don’t materially participate.”

When to consider secondary income streams

If you’re looking to add extra income to your monthly earnings without a lot of extra work, adding a passive income stream might be a good option. You can use the money to help pay off debt, beef up your rainy-day savings or even to save up cash for a large purchase. Since passive income opportunities generally require little effort, they can also help you earn extra cash without committing to a part-time job.

7 passive income ideas

1. Sell your previously loved goods online

If you’ve got clothes, accessories, jewelry, electronics and other used items collecting dust in your closet, you might be able to sell them online for extra cash. Websites and apps such as Poshmark, TheRealReal and Mercari make it easy to list your item and get paid. In most cases, all you need is your cellphone’s camera to take photos and access to the internet to manage your account online or through an app. Some services, like TheRealReal, even do the selling for you.

Keep in mind that the apps tend to take a commission for using the platform, and additional fees may apply. Make sure you understand all the costs before considering any platform to sell your goods on.

2. Turn stock photos into extra income

Like to take photos as a hobby? You may be able to put that photo library to work by sending your pics to online stock photography companies to sell. Sites like Alamy, Adobe Stock and iStock by Getty pay contributors for their photos, meaning you make money off the photos you upload when someone licenses them.

Each site has its own unique guidelines and terms, so do your research before selecting a site to partner with. And if you’re a student, check to see if you’re eligible for extra perks such as the 100% commission rate offered by Alamy.

3. Cash in on your expertise

If you have some special skills or knowledge — and a little time to put in some work upfront — you might be able to monetize your expertise selling content to skill-building and course apps like Udemy, SkillShare or Teachable. You’ll be tasked with creating your own presentation or course, but the platforms are there to share your content with thousands of participants. Topics can range from business coaching to technology and even lifestyle topics such as cooking and crafts. And in most cases, you’ll even be provided with free support to help you plan engaging content to share your knowledge.

4. Earn money while online shopping

If you tend to shop a lot online already, you may be able to save money on what you buy and earn extra cash just by shopping through an online cash-back portal like Rakuten or BeFrugal. Whether you’re buying groceries, toiletries or clothes, these sites will share the commission they get from big box stores (such as Target or Macy’s) with you every time you make a purchase through their platforms. Check out each platform’s requirements for earning cash back to see if it works with your shopping style.

5. Rent out your car

Sharing your car when you’re not using it could be a great way to earn extra funds. Sites like Turo and Hyre Car make it easy to list your vehicle to drivers looking to rent a car. Turu caters to individuals with car rental needs, while Hyre Car serves gig workers driving for rideshare services like Uber or Lyft. Both platforms offer insurance to protect your car while it’s on the job.

You’ll want to weigh the costs of adding insurance, miles, and wear and tear on your car before deciding whether this passive income stream makes sense for you.

6. Lend a helping hand

If you have a bit of extra cash lying around, you can opt to invest it in a peer-to-peer lending network such as Prosper. Not only will you have the opportunity to earn money on your investment, your cash goes toward helping borrowers secure loans funded by their peers. And it doesn’t always take a lot of money to invest. For example, Prosper’s minimum investment is just $25.

7. Rent out your extra space

You don’t have to be a full-time landlord to make a little extra cash renting out some unused space. With sites like Airbnb or VRBO, you can choose to rent out a room in your house or even add something cool on your property, like a treehouse, to earn passive income on. The platforms make it easy to set your own price, pick your available dates and even create rules for your guests to follow. You’ll likely also be able to opt for insurance to protect yourself from property damage and liability. Before deciding to rent out your space, make sure you’re familiar with all of the required safety precautions.

And if you’ve got an extra parking spot, you might even be able to rent that out, too, through sites like Spot Hero.

Passive income can be taxed

Now that you have a few ideas on how you might be able to earn some passive income, take note that since passive income is still income, you might be taxed on any earnings. But how much you may have to pay Uncle Sam depends on the type of passive income you’re generating. For example, earning passive income from a rental property may be taxed differently than earnings from a side hustle that runs as a business. It’s a good idea to check with a tax professional to see what your liability may be before diving into a passive income opportunity.


What’s next?

If you’re trying to save money or pay off debt, adding a passive income revenue stream to your bottom line might help you build some extra funds. But before you decide to go that route, consider a passive income source that fits in with your lifestyle, schedule and financial needs. If you need money quickly and steadily, you might consider a part time job or side hustle instead.


About the author: Sarah Archambault is a freelance writer based in New England. She enjoys learning new ways to spend money wisely and helping others figure out how to make smart financial decisions. Sara… Read more.