Consolidating debts successfully means you need to have a stable financial situation. Does that mean shifting into a freelancing career should be put on hold until you complete the debt solution you started?
Not really. If you want to start becoming a freelance writer or graphic artist because an opportunity presented itself, you do not have to pass up the opportunity. You just have to make certain preparations that will ensure your new career will not compromise your monthly debt payments.
The freelancing economy is still rising and as of October of 2018, there are 56.7 million Americans who do freelance work. If you plan to start a freelancing career, these people are proof that it is possible. A lot of them are doing it full-time and are actually quite happy about it. They seem to be doing well financially. That means it has a lot of potentials.
Of course, your situation will be a little more difficult because of your efforts in consolidating debts successfully. That means there is more pressure or you to do well as you transition into a freelancing career.
Fortunately for you, it is not impossible to do this. You can start a freelancing career and still succeed in consolidating your debts.
Start a freelancing career while consolidating debts successfully
It might feel impossible but you can stick to your debt consolidation plan even while starting a freelancing career. You just have to make sure that you are fully prepared to make this change in your life. Since it is a major change, it should not be done impulsively. Everything should be well-planned and approached cautiously. It is important for you to make smart decisions all the time. That means you need to take your time to study your options and come up with worst-case scenarios so you can prepare for any event.
Here are the things that you need to do so you can start your freelancing career without compromising your efforts in consolidating debt successfully.
Analyze your current financial situation
Before you make any major changes in your life, it is always a good idea to look at your current financial position. This is especially if this change will affect your source of income. First of all, you want to make sure that you are financially capable of surviving this change. Do you have enough savings to sustain your monthly expenses? Since you are new at freelancing, you can expect that it will not pay a high amount immediately. You might have to wait until you have enough experience or gained enough positive reputation as a freelancer to expect bigger pay. That means you need to make sure that you have enough savings to pay for your monthly needs while you wait for your freelancing career to take off.
One way to do this is to start your freelancing career while you are still in your day job. Unless it violates a contract that you have with your employer, you can work on your freelancing career after you clock out from work. This way, you still have a steady source of income while you wait to earn more from your attempts at freelancing.
Adjust your budget plan
If you are expecting your finances to be tight as you start your freelancing career, you need to change your budget plan. You want to use a bare-basic budget that will only pay for expenses that you need to survive. The rest of your money will be used to stick to your plan of consolidating debts successfully. If you chose the right strategy, your debt consolidation program should have a lower monthly payment. That way, you will not feel too stressed when your freelancing jobs do not pay much for a couple of months.
Make sure freelancing pays enough
It may not pay enough in the beginning, but you have to make sure that the freelancing career you have chosen will eventually pay off. Your savings may be able to sustain you but it will not do so for long. This is why you need to ensure that the niche you have chosen will earn you enough money as you gain more experience.
According to statistics, 3 out of 10 freelancers are able to earn at least $75,000 a year. But this depends on what type of career you will go for. Usually, freelancers working as programmers or developers earn a lot. Online writers earn a consistent income but it is not as much as the former. Graphic artists can also demand higher pay if their output is really good. Read about these niches and see if you can survive the freelancing competition. Have a plan so you can build your reputation as a reliable freelancer.
Know the financial obligations of freelancers
Apart from the pay, you should also know how to meet the financial obligations of freelancers. Just because you are not employed, that does not mean you will not pay your taxes or your Social Security. You need to learn the important contributions that you need to make to secure your future. This includes taxes, Social Security, and your own retirement plan.
Learn to manage your finances with an irregular income
Once you have an idea about your financial obligations, it is important to learn how to manage your finances. This time, you will have an irregular income. What will you do during lean times? Consolidating debts successfully may be more challenging if your freelancing career is failing to earn enough for your basic needs.
This is why you need to have a budget plan that is perfect for your irregular income. Usually, the best budget is a bare-basic one that will leave you a lot of room for savings. An emergency fund is the best way for you to survive the lean months. When the month is exceptionally fruitful, you can put aside the extra money for savings. If you want a reward, you can use some of it – but be smart about how much you will use. That extra money can be used during the lean months. As you continue to work as a freelancer, you should be able to identify which months are the lean ones and the ones when you earn a lot. It will help you be prepared.
Do not let an irregular income compromise debt payments
Admittedly, consolidating debt successfully will be harder to achieve as you build your freelancing career. But as mentioned, it is not impossible. There are various techniques that will help you complete the debt relief strategy that you started. Even the irregular income that usually comes with a freelancing career will not stop your success – as long as you have the following.
Have a repayment plan
Whether you have a stable income or an irregular one, you need to have a repayment plan. This plan will guide you as you make one payment after another. It can also give you a progress report. Sometimes, when times are tough and you need motivation, you simply have to look at your repayment plan. Knowing how far you have come might give you the determination to finish consolidating debts successfully.
Have a backup plan
Since you have an irregular income, it is always wise to have a backup plan. In case your lean months are extended and it is harder to reach your income targets, what will you do? You need to research your options. For instance, you can research how to get a debt reduction if consolidating debts is already unaffordable. Know what other options you have so you can act on it immediately. When debt remains unpaid, you might end up with a bigger problem.
Have an emergency fund
An emergency fund is a huge lifesaver. If your freelancing career is just starting and you are doing everything you can to succeed in debt consolidation, your emergency fund can really be a huge help. If your income is not enough, it can help sustain your monthly payments – including your debt consolidation obligations. Make sure you have enough to get you out of tough financial situations.