Getting into debt is easy but clawing your way back out can present a bigger challenge. There’s no such thing as a ‘magic bullet’ for eliminating credit cards or student loans. Some people may find ways to increase their income providing more money to put toward their debt. If increasing up your monthly cash flow could help you get pay off debt faster, here are a few things you can consider.
Ask for a Raise
Asking for a raise may be intimidating but it can have a profound impact on your debt payoff if you can convince your employer, you deserve a salary increase. For many people, the fear of having a conversation about money with their manager can deter them but if you can get over the hump, you stand to reap some serious rewards.
When it comes to asking for a raise, timing plays a big role in determining the success of your efforts. For example, don’t want to make your move if the company is stuck in a sales slump. Wait until you’ve completed a major project or are presenting the subject on the heels of a positive performance review. This is when you’re in the spotlight and it puts you in a stronger position to make your case.
Be prepared to provide evidence supporting your request for a raise. It’s not enough to argue that you’ve been with the company X number of years and you’ve “earned it” by showing up every day isn’t going to cut it – that will come off too much like whining. Pointing to measurable results and tailor your request so that it corresponds with your level of achievement. This gives you the strongest foundation possible to work from. Also, consider the compensation plans and even speak to someone in HR regarding your thoughts.
Take on a Part-Time Job to Pay off Debt
If getting a raise doesn’t prove to be an option, then taking a second job may generate the additional income you need to pay off debt. Make sure you check the Company policy regarding “Outside Jobs” or OSJs as you don’t want to violate Company policy and don’t choose anything that can create a conflict of interest with your current position. Consider the additional stress of working a part-time job on top of a 40-hour or more schedule. This isn’t an ideal solution, but if you’re staring down a huge pile of debt it may be the only way to really make a dent. That doesn’t mean, however, that you need to jump on the first thing that comes along.
As you scope out part-time job opportunities, look for something that suits your interests and your skills which can make it a little more bearable. For example, if you’re good at talking to people and you love the smell of coffee brewing, a part-time gig at Starbucks might be the perfect fit. Juggling two jobs is enough to wear anyone down but it’s not as difficult to get through the work week when you enjoy what you’re doing.
The other advantage of working part-time is that it may come with some nice perks. Big-name retailers like Whole Foods, Lowe’s and Costco are just a few examples of companies that extend benefits like health insurance, retirement savings options and vacation time to part-time employees.
Consider a Side Hustle
A side hustle is anything that brings in extra income but doesn’t fit into the typical mold of a full- or part-time job. Side hustles can center on a particular skill, such as writing or website design, or they can be based around a specific service like mowing lawns or acting as a virtual assistant. The size and scope of your side hustle really depends on what it is you want to do and how much time you must devote to it.
When you’re stuck for a side hustle idea, start by looking at what you’re good at. From there, ask yourself ‘what kind of need is there for what you can provide.’ Don’t think you have to limit yourself to just one side hustle either. The more creative you are about finding ways to turn your time and expertise into cold hard cash, the closer you’ll get to debt freedom.
One thing to remember about starting a side hustle is the potential impact on your taxes. If the IRS considers your little venture to be a business rather than a hobby, you’ll be on the hook for paying income tax and self-employment tax on the money you make. If your side hustle transforms into a bona fide money machine, the result could be a much bigger tax bill.
Use What You Have
Sometimes, the key to cranking up your income is sitting right under your nose. If you’ve got a house full of stuff you’re not really using, selling it online is an easy solution for cleaning up the clutter and raking in a few bucks to use for paying off debt. The same goes if you’ve got an extra car sitting in the driveway that you could feasibly do without. Whether you’re putting a lump sum towards your debt or just a few pennies at a time, it all makes a difference in the long run.
You may also have an asset at your disposal if you own a home. Leasing it out and moving into a smaller apartment is one option if you’re not squeamish about the prospect of becoming a landlord. If you don’t want the added responsibility, you could rent out a room to travelers on Airbnb®.
You could even throw in the use of your car through a service like RelayRides®or one of the delivery services likeUber®, UberEats, GrubHub®, DoorDash®, or others.
If you like shopping, then perhaps being a Personal Concierge may be just for you – after all doing what you already love makes it seem less like a job. The key is to look at all of your assets, tangible and intangible, and figure out how to leverage them to bring in the extra money you need.
Increasing your income to pay off debt by itself isn’t a magic bullet. You need to take a serious look at your budget to see where you can cut or reduce spending. Doing one without paying attention to the other could end up sabotaging your debt payoff strategy and just make the situation worse.
For additional information and how FICO scores can affect your ability to obtain a mortgage see our page on Credit Solutions. If you are interested in buying a home, and need assistance with your credit, please call Geni at 469-556-1185 to be referred to a financial specialist.