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How To Shift Into A Freelancing Career While Consolidating Debts Successfully

October 14, 2019 By editor

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?

How To Shift Into A Freelancing Career While Consolidating Debts Successfully

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.

5 Truths About Debt Consolidation Programs

September 26, 2019 By editor

Debt consolidation programs can be an effective way to free yourself from the clutches of debt. If you look at the current debt situation of the country, you will realize that a lot of consumers are in need of an effective debt solution. The Federal Reserve keeps track of household debt and as of the 2nd quarter of 2019, the total debt reached $13.86 trillion. This means the debt grew by $195 billion after just one quarter. The debt has grown so much that it is already higher than the consumer debt back in 2008.

5 Truths About Debt Consolidation Programs

With the signs pointing towards another recession, you need to make sure that your debts will not make things harder for you. During the Great Recession, people got into a lot of mess because they had a lot of debts to deal with. When their source of income was compromised, it forced them to lose everything they have worked hard to build. Their debts demanded to be paid and it left them in a huge financial problem.

Fortunately for you, there are debt consolidation programs that you can use to make debt payments easier. However, you need to make sure that you understand completely what this program can really do for you. What you know about the debt solution you will choose will give you a clearer picture of how it can improve your financial situation.

5 important truths about consolidating debts

Consolidating debts involves the combination of your multiple credit accounts. The goal is to have just one monthly payment that hopefully, has better terms like a lower interest rate and lesser fees.

Before you assume that this is the perfect solution to deal with your debt issues, you might want to get to know the 5 important truths about debt consolidation programs first.

It is basically a refinanced loan

One of the ways to consolidate debts is to open a new credit account that you can use to pay off your multiple credit accounts. This is like refinancing to consolidate your debts. Some people may not think that it is a good idea to use debt to pay off another debt. However, it can make sense if you can get better terms on the debt. For one, it will simplify your payments because you now just have one monthly payment to track. It makes the debt relief process less stressful. Not only that, if you can get lower fees or interest rates, that will help you save money.

It does not guarantee a lower interest rate

While the goal is to get a lower interest rate, this will depend on the debt consolidation programs that you will use. If you will use a personal loan to combine your high-interest credit card debts, then the lower rate is possible. However, if you opt for debt management, the credit counselor cannot guarantee a lower rate. They will do their best to negotiate for a lower rate. But this will not be guaranteed.

It will not eliminate your debt

It is also important to note that debt consolidation programs will not eliminate what you owe. The original debts will be paid off when you refinance the multiple debts into one loan. That means you just transferred your debts. You still owe the same amount as before you consolidated your debts. You see, debt consolidation programs will simply act as a tool that will restructure your repayment plan. The payments will still come after the consolidation is done. You still have to make the monthly payments. Whether it will take a long or short time, that will depend on the new repayment plan.

It cannot reduce what you owe

Another truth that you need to know about debt consolidation programs is that it will not reduce the amount that you owe. At most, you can get a reduction on the interest rate and you can negotiate to lower the fees and charges. But both of these are not guaranteed. If you know that you cannot afford to pay off all your debts, consolidating it might not be the best solution for you. It may be better to opt for debt settlement if you want to reduce your balance.

It can put you in debt longer

Finally, debt consolidation programs can put you in debt longer. This will depend on the strategy that you will use. If you want a lower monthly payment, you will need a longer repayment plan so your debts will be distributed over a longer period. But if you prefer to get out of debt faster, you need to pay more. The more you pay each month, the more you can save. So this really depends on how much you can afford in terms of debt payments.

One thing debt consolidation programs cannot change

While debt consolidation programs can bring a lot of improvements to your credit situation, there is one thing that it cannot do.

Debt consolidation cannot change your behavior with money.

Most of the time, our finances take a turn for the worse because we do not know how to manage our money wisely. It is not how much we make that will influence our financial success. It is more of how you use that money that will define if you will be a success or not.

Of course, your income will still be important in keeping you out of debt. But if you cannot do anything about your current income, you need to ensure that you will only spend what you can afford. Lower your lifestyle if you have to. Unless you change your behavior about money, there is a high chance that you will land in the same debt situation.

Here are some tips that will help you change your money behavior so you will no longer need debt consolidation programs in the future.

Understand the behavior that led you to debt

There is usually a specific behavior that led you to debt. Obviously, it is overspending. But what led you to overspend? Was it your lack of emergency funds? When an unexpected happened, you had to rely on debt to get you through tough times. Another reason is having the urge to always have the latest things. You need to analyze and reflect on what you did wrong so you can make the necessary changes that will ensure it will no longer land you in debt.

Change your belief about money

You should also try to identify the deep-seated money beliefs that you grew up with. Sometimes, these are the beliefs that we grew up in. Research reveals that how our parents handle their money influences how we manage our own. You may want to go back to what you remember about how your parents managed their finances. It may give you clues about the money beliefs that you now have. In case you have the wrong money beliefs, you should try to correct it and develop new ones.

Know the habits you need to develop to manage money better

Finally, you should make sure that you know the right money habits that will allow you to take care of your finances. That way, there will be no need to use debt consolidation programs to get out of debt. Among the habits that you can learn includes saving, budgeting, smart spending, and even investing. Hopefully, when you have the right money habits, you will learn how to make better financial decisions that will lead you towards a better state of personal finances.

About Low-Interest Loans To Consolidate Debts

September 17, 2019 By editor

Low-interest loans can help you save money when you use it to consolidate debts. This is more evident when you are consolidating high-interest credit card debts. With personal loans having an interest rate range of 5% to 36%, you need to aim for the lowest interest rate possible so you can maximize the savings that you can get as you pay off your debts. The lower the interest, the less you have to pay.

About Low-Interest Loans To Consolidate Debts

Of course, that is easier said than done. You cannot demand to get the lowest rate when you borrow personal loans. You need to make sure that you qualify for it so that the lender will view you as a low-risk borrower. That means there is a high chance that you will complete your loan payments. This will prompt them to give you a lower interest rate.

Tips to get low-interest loans to consolidate debts

So how can you get approved to get low-interest loans? There are a couple of tips that you can follow to make this possible.

Know your options

This is important. There are lenders that usually offer a lower interest rate compared to others. This is why you need to do your research. Go online and look at your options. If you are given a pre-approval, use that as your reference and do more research. Make sure you consider at least three lenders before you make a decision.

Have a good credit score

While this will not be the only reason why you will be given a low-interest rate on the loan, it is one of the primary reasons. According to reports, a credit score is “fair” if it is between the low and mid 600’s. At least, this is for the FICO score. The higher the credit score, the higher the chances that you will be given a lower rate.

Improve your debt-to-income ratio

This means you need to either have a lower credit balance or a higher income. Lenders look at this ratio to determine your ability to pay back the loan. If your debt is a lot lower than your income, they will know that you have more extra money to back them back.

Use a collateral

Another option to get the low-interest loans is to use collateral to borrow a secured loan. The collateral will give the lender a sense of security. In case you fail to pay them back, they can seize the collateral as payment. It will also ensure that you will be more motivated to complete your loan payments.

Get a co-signer

Another option is to get a co-signer to borrow the loan with you. Of course, that co-signer should have a great credit score. If you do not have one, the co-signer will increase the chances that you will be approved to get low-interest loans. Your co-signer will also be equally responsible for the loan. If you fail to pay it back, the lender can come after them. This is why some people hesitate in becoming a co-signer – no matter how close your relationship is.

Sign up for discounts

Some lenders offer a lot of options for you to get a lower interest rate. For instance, if you agree to an autopay setup, that can result in an interest rate discount. The autopay will ensure that they will be paid even if you forget a due date.

There are other things that you can do – like asking them to waive the origination fee. While this is not part of the interest rate, it will help lower the cost of borrowing the whole loan.

If you can effectively lower the interest rate on the loan that you will borrow, this can really be a welcome relief for those wanting to consolidate high-interest credit cards.

How to use low-interest loans wisely

Once you get approval for low-interest loans, that is not the end of your efforts. You have to remember that you are still in debt and you still owe the same amount of money. Only the interest will be lower. But in terms of the monthly payments and your debts, it is still there. You still have to go through long months of paying off your debts.

Here are important reminders that will help you use low-interest loans wisely.

Borrow only what you need

Start by borrowing only what you need. If you borrow more than what you need to consolidate, you will only increase the balance that you owe. The more debt that you have, the longer it will take for you to achieve debt freedom.

Include it in the budget plan

Once you have consolidated your debts, you will probably have a new monthly payment. Make sure this is aligned with your budget. You have to get used to using your budget plan – especially when you are in the midst of a debt consolidation program. This plan will ensure that your monthly payments are funded.

Stick to your monthly payments

Finally, you should also make sure that you can stick to your monthly payments. The danger in debt consolidation is the fact that you might feel a false sense of debt freedom. Even if you paid off your original debts, you still have the same amount of debt. You still have to start paying it back. So do not falter in your payments to avoid penalty charges.

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