If you are in the midst of a debt consolidation program, that should be enough reason for you to increase income so you can achieve debt freedom faster. There are so many strategies for you to improve your earning potential. You just have to be prepared to make the sacrifices that are needed to make it work. Because if you want to increase your monthly earnings, it will involve time, effort, and a lot of determination. You may have to say no to a lot of social events, get rid of things you own for the longest time, etc. You have to be more than willing to do all of the changes necessary to get rid of debt and improve your finances in the process.
According to statistics, Millennial households earn more than what previous generations did during their age. The report revealed that this trend is possible because more women are also working – thus increasing the number of two-income households. Not only that, people are being paid more compared to previous decades.
These statistics tell us that there are opportunities for you to increase income – you just have to know the right strategies that you can implement to make it happen.
Tips to increase income during debt consolidation
If you really want to prioritize debt consolidation, you need to get serious about increasing your monthly income. Fortunately for you, there are many options for you to add some extra money into your funds. Here are some of them.
Declutter and sell off possessions
Start by looking at all your possessions. Your debt situation is the perfect time to reassess your lifestyle too. If you have a lot of items, you might want to go through all of them to see if you really need them. If not, it might be time to downsize. Get rid of the possessions that you do not need and sell them. This is a good strategy to increase income too. Any amount that you make from selling your things can be used to pay off your consolidated debt.
Ask for a pay raise
Another option for you to increase your earnings is by asking your boss for it. If you know that you are qualified to get a raise anyway, why not request to get it right now? Some companies give their employees an annual increase. You might want to explain your situation with your employer. If you have proven yourself to be a great employee, they should hear you out. You can even negotiate to be given more responsibilities. Make sure to make a list of your accomplishments and the reasons why you deserve the raise. There is nothing wrong with asking for higher pay if you have helped the company be more profitable.
Start another source of income
There are many opportunities to increase income. According to reports, the gig economy is growing and it is being pursued across all industries and by people of all ages. Freelancing is no longer limited to just writing or creating websites. Even industries like finance, education, construction, healthcare, and agriculture are now open to freelancers. And it does not matter if you are experienced or not. People of all ages and levels of experience are finding freelancing jobs easily. This is something that you can really take advantage of if you want to improve your earning potential. If this goes well, you might be able to continue this until after you have paid off your debts. This can really improve your financial situation significantly.
Lower your expenses
Finally, another strategy to increase income is to lower your expenses. This is actually one of the first things that you can do if you are in need of extra money. Just stop spending on things that you can cut back on. These include food, transportation, clothing, and entertainment expenses. If your debt payments are too much for you to handle, you might want to downsize even your home. With a smaller home, your monthly expenses will decrease significantly. It can be a really effective way to support your finances even if it becomes hard to increase income immediately.
Why an increased income can help with debt consolidation
If you are in the midst of a debt consolidation program, it is not hard to understand why it is helpful to increase income. Here are the reasons why this is important if you want to improve your financial situation.
It can increase your monthly debt payments
The extra money that you will get from the increase in monthly cash flow will also increase your debt payments. At least, you have to be disciplined enough to make sure that the extra money will be used wisely. Some people might be tempted to use it on something else. But unless that something is savings or investments, then you need to put all the funds you earn on the side into your monthly debt payments.
It can help pay off debt faster
Since you are putting all your extra money into your debt payments, you can pay off all your balance faster. If you want to get out of credit card debt within a year, that is possible as long as you increase income. The higher the amount, the more of the principal balance will be paid off – effectively making your repayment plan shorter.
It can save more money
If you can get yourself out of debt faster, that would mean you will save money on the interest amount. The longer the repayment period, the higher the interest that will be paid. But if you can shorten the time you will pay off the debt, you will end up saving a lot of money. Every payment is divided into the interest and the principal payment. The interest amount is usually fixed. That means a higher monthly payment means you are chipping off more of the principal balance.