If you’re in debt and are drowning in bills and demands, there are two important things you need to do. The first is to find ways to reduce your outgoings – which may involve asking yourself if you are packing the right credit card – in order to save money to put towards clearing your debts.
The second thing is to boost your income, so it exceeds your outgoings and gives you some spare cash with which to pay your creditors. You might think that unless your boss gives you a pay rise, there isn’t really any way to boost your income. This isn’t necessarily the case, as there are lots of things you can do to make the most of your income and get your hands on some extra cash. Follow these tips to get started:
- Check that you’re getting all of the extra help you’re entitled to. When you’re in debt, you need to make sure that you’re getting every penny of the benefits, tax credits and grants (i.e. to pay for household costs or fuel) that you are legally entitled to claim. You should also check whether there is any extra financial help you can get towards education costs if you have children. It is always worth checking, just in case there is a way to lighten the load on you financially.
- Let out a room or a car parking space. If you have a spare room or a parking space (either allocated in a residential car park or on your driveway), this could potentially be an extra source of income if you let it out. There are schemes you can join such as the government’s Rent a Room Scheme which ensure that everything is done securely.
- Sell unwanted or unused belongings. A thorough rummage around the house may produce lots of things that you don’t want, need or use anymore, and selling these on online auction sites or car boot sales can give you a little extra cash for household expenses or to put towards your debts.
- Check you’re paying the right amount of tax and National Insurance. Many people pay too much tax without realising it. Just by checking your tax code and getting in touch with HM Revenue & Customs (HMRC), you could get a hefty tax rebate.
- If you really need to borrow, use a 0 per cent balance transfer card. If you need to borrow to pay an urgent debt or to tide you over until payday, make sure you do it the right way. You should apply for credit cards that allow you to transfer your debt over and offer 0 per cent interest for 12 months – this will give you enough time to pay back what you owe without accruing interest and getting yourself into more debt.
- Build a second source of income. You can do that by working longer hours at your job or finding a second job. The extra money goes a long way in your debt reduction plan. Sometimes monetizing your hobby online can yield surprising results. There’s no loss in trying, that’s for sure.