How to Manage Your Debts to Have Extra Money
Various strategies you can try to manage your debts and have extra money.
Know the Total Amount of Your Debt
The first step should always be about awareness. Make a list of all of your debts, including the creditor, the total amount due, the monthly instalment, the interest rate and the due date. With all of your debts in front of you, you’ll be able to see the big picture and stay aware of your entire debt situation. If you just have a little debt, you have to keep up your payments and make sure it doesn’t get out of control. Update your list every few months as the total amount of your debt changes.
Key Points:
- To help yourself stay focused, track your progress at regular intervals such as weekly or monthly check-ins.
- You will see a broad image and be mindful of the whole debt state if you keep all your debts list in front of you.
- Once you’ve tamed your expenses and are sticking to your budget, it’s time to focus on increasing your income that help you get out of debt.
Figure Out Your Budget and Reduce Your Spending
If you don’t have a budget, you may not realise if you are spending more than you earn. Getting a grip on your earnings and spending will assist you in determining if you have enough spare money to pay off your debt. A budget also helps identify how you will use the left-over funds after all of your expenses have been covered. Find out ways to cut back and reduce your expenses if you’re paying more than you earn or if your budget doesn’t have enough breathing space. Have an emergency fund, as even a small emergency fund will cover little expenses that come up every once in a while.
Pay Your Bills On Time Each Month
Find a payoff method you’ll stick with to pay off your debt, as paying off debt is a financial commitment. Late payments make it more difficult for you to pay off your debt, and for any payments you miss, you will pay a late fee. If you miss two payments in a row, your interest rate and finance charges will increase. Create a Monthly Bill Payment Calendar to help you figure out which bills to pay with which paycheck. Write each bill’s payment amount next to the due date on your monthly Calendar. You can set an alert to remind you several days before your payment is due.
It is often possible to pick up extra work and put the additional income earned towards reducing your debt.
Pay Off Debts with the Highest Interest Rates First
A trick to save money when it comes to repaying debt is to knock out the debts with the biggest interest rate. The first thing and always is the safest option is to pay down credit card debt because credit cards have higher interest rates than other debts. This is known as debt the avalanche plan as Paying off your debts with the highest interest rate first can save you time and money. After that, you can apply the debt snowball plan because debts are ordered from the smallest to the biggest balance in the debt snowball plan. The debt snowball will help you change your behaviour with money to never get back in debt and give you power over your debt.
Make sure to always pay your bills on time to avoid increasing interest rate and finance charge.
Sell Your Stuff and Reduce Your Outings
The good thing about selling stuff is you can get cash fast. Sell unused furniture, clothes and toys to make some cash. You may be able to sell them for some money if they’re in good condition. Preparing your own meals and eating at home will help you save money, but it’s still a good idea to buy with a list and stick to it to avoid making unplanned buys. Sell items on Facebook Marketplace or other selling websites to make some extra and quick money. Try to ignore social norms when it comes to birthdays, Christmas, anniversary, weddings, and social obligations that would have you buy things or spend money.
Increase Your Income
Find ways to increase your income by finding a side job or look for a part-time job that you can do on the side in addition to your regular job. If you’re a stay-at-home parent, there are a lot of opportunities for you to work from home and earn money so you can find jobs that are flexible or that you can do from home. If your job allows for overtime, actually working extra hours is a perfect way to maximise your income. Take an extra shift or two when they’re available, such as covering for co-workers who want to take time off. If you are anxious to pay off your debt, there are plenty of ways to make extra money to pay it down more quickly. With a bit of creativity and ambition, you will find many extra cash sources available. If you’re good at any language or subject, you can earn extra money by tutoring students. You can ask for a raise from your boss if you have good relations with your current boss, but make sure you spend a few months documenting what you’ve done to help the company.