Debt is easy to accrue yet difficult to get rid of. The problem for many people, millennials included, is that they barely get by from paycheck to paycheck and simply don’t have the extra money to make more than minimum payments on what they owe. The solution may not be in your debt, though, but in your income. A part-time job that fits your schedule may be the fastest and simplest way to eliminate debt.
The Right Job
The first thing you must understand about using a part-time job to pay down debt is that the job shouldn’t cost you more than it’s worth. That means your search for a debt-busting job should be centered around your schedule and lifestyle.
The last thing you want to do is take a part-time job that puts your primary source of income in danger by making you too tired to perform your regular job. Another lifestyle consideration is your family life. A part-time job that forces you to pay a sitter 50% of your new salary is not a good idea.
In your search for a part-time gig, you should carefully weigh all your options, including working from home or starting a small business. Remote job opportunities are available in nearly as many fields as traditional jobs, and they usually have far more flexible scheduling choices.
Also, freelancing is not only for writers and artists; it can be for anyone with a skill to offer in exchange for payment. From washing windows to running errands, the possibilities are almost limitless, and you are free to yes or no based on your other responsibilities.
Have a Plan
While you’re looking for your source of extra income, you should also be developing a plan for paying down your debt. Simply increasing your monthly payments to all creditors will lower your debt, but it is not the most efficient way to do it. Because not all debt is equal, you should start by organizing it by the amount owed as well as interest rate. You should then pay off your biggest balances with the highest interest rates first and work your way down from there.
Paying off your highest interest rate debts first is a sound strategy because interest accumulates more debt, and the higher the rate you are charged, the faster it adds more debt. Paying off the most expensive debt first does not mean ignoring your other payments, though, so you must make sure you don’t miss making at least your monthly minimum payments on them.
If you are concerned about the effect on your psyche of not seeing your balances decrease fast enough, consider splitting your extra payments between your highest cost debt and your smallest balances. This will enable you to eliminate some of your small balances and have a sense of accomplishment.
Keep Your Eyes on the Prize
Whether you set a budget for just paying down your debt or for all your expenses, avoid the temptation to spend your extra cash on indulgences. Stick to your guns and your debt repayment plan. If you must reward yourself with something, immediately add it to your budget rather than doing it ad hoc. This will ensure that you don’t over-indulge and end up heading down the road to even more debt.
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