Hopefully, you’re now at the point where you can make significant contributions to paying down your debt. But what if you’ve completed the first five steps and you still can’t free up enough money to repay your debts in a big way? Now it’s time to find ways to grow your income so you can get out of debt quicker and start saving for the future.
Part 1: Make Hard Choices
First and foremost, look at the “big-ticket” items in your life, and determine if you can get rid of them or downsize them in order to free up more money to pay off debt. Here are some options to consider:
Move. A lot of people have a very hard time making their mortgage payments. Are you one of them? If so, selling your house may be a viable solution. A home can be an extremely valuable asset. But if you know you can’t afford the house you’re in, then consider selling your house and getting a cheaper one, or renting temporarily until you can find more affordable housing.
Go carless. You can probably think of a less-expensive way to get back and forth to work each day. Going without a car for a while could save you the cost of paying for the car itself and it’s upkeep, as well as gasoline, auto insurance and parking. Even if you can’t go carless, consider trading in your expensive car for something used and less luxurious, as long as it runs well.
Put your children in public school. If you’re not willing to do that, consider applying for financial assistance from your current school.
Part 2: Sell Assets
Large corporations use this strategy all the time in order to lower debt and boost profits, and you can do it too. Americans have more “stuff” than any other nation in the world. Do you have any possessions that might be valuable? A boat? A second car? A second home? A time share? Art and jewelry? Would you be willing to part with them in order to secure your financial security?
In order to get the most out of what you’re selling, you need to know what it’s worth. You should get truly valuable items ($5,000 or more) appraised to make sure you’re not giving away the farm and also for tax purposes. To estimate current prices for less expensive items, try looking on eBay to see how much money people get for similar items.
If you don’t have any particularly valuable items, but lots of little things to sell, two great methods are selling on eBay or having a good old-fashioned garge sale.
Part 3: Earn More
You probably already work very hard. But what if you could earn an extra $100 to $500 of income per month? How about $1000? You probably think it’s impossible, but I promise you, people are doing it every day. Even just an extra $100 per month can have astronomical effects on your ability to get out of debt quicker and eventually become rich.
Here are some ideas to get you started:
- If it’s been at least a year since you got a raise, it’s time to ask for one. If you don’t get it, ask your supervisor what you need to do to make it happen. Try a direct question like, “What do I need to do to get a raise within the next 90 days?”
- Consider getting a second job. A part time job, mowing lawns or painting houses on the weekend and work-at-home Internet businesses are all examples of extra work you can do to earn more.
- If you already have your own business and it’s been a while since you raised your rates or your prices, do so today by 10%.
Step 6 Summary
You can now grow your income by:
- downsizing on your big-ticket items
- selling off some of your assets
- earning more money
Congratulations! That’s the end of Step 6.
Now you’re ready to go on to Step 7: Prioritize Your Debts and Raise Your Credit Score
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