Debt Therapy Scotland give us some advice how on to Clear Your Debt Faster by Earning an Extra Income from Home
If you only make the minimum payments on your credit card, it could take you a very long time to clear your debt. Not only does common sense tell us that this is very much true, it’s actually a (depressing) financial fact too.
The minimum payment trap catches many people out at some point in their lives. On one hand, it’s great to be able to borrow money and pay back a low and manageable monthly payment. The debt even looks to be decreasing month on month because the minimum payment keeps reducing slightly. But on the other hand, what’s really happening is that the actual debt balance is only decreasing by a tiny amount each month but the interest is still adding up, meaning that it’ll take an age for the debt to be repaid!
To give you an example of how evil credit card debt can be when you make just the minimum payments, let’s look at an example below.
Example 1: Ms Alice Flatbroke
Alice has a credit card debt of £5000 with an APR of 17.9% and she’s currently making the minimum repayment each month which equates to £100 (2% of the balance). Based on these numbers and according to this online credit card calculator, it’ll take Alice 93 months (just over 7.7 years) to clear her debt of £5000 and she’ll have paid a ton of interest along with it.
However if Alice doubled her monthly payment to £200 per month, she could expect to clear her debt in as little as 32 months (2.6 years) – shaving off almost two thirds of the original payback time. What about if Alice increased her payment to £300 per month? In this case, she could expect to clear her debt in just 20 months.
Seeing as credit card providers allow you to make over-payments whenever you like (as do many loan providers), paying more than the minimum is definitely a wise thing to do then in order to clear your debts fast.
Sometimes though, it’s just too tricky to get enough money together to make even a small overpayment, never mind a substantial one. This is especially the case if you’re already struggling to make ends meet each month on your regular salary.
So how could you go about finding some extra money each month to pay your debts off faster? Luckily, it is possible to create extra income in addition to your usual salary and you don’t necessarily need to leave the house. As well as making a little money from numerous survey sites online, there are also certain jobs you can do which are flexible and allow you to work from home. Here are just a few ideas to get you started.
Ways to make money from home so you can pay your debts off faster
1. Write for cash
If you enjoy writing and you have a good level of English spelling and grammar, you could consider earning money by doing freelance writing jobs from home. There are plenty of jobs available on sites such as oDesk, Elance and People Per Hour. To get started, you’ll need to price yourself low in order to get work. Once you’ve got a few successfully completed jobs under your belt (and some good client feedback), you can increase your rate. You can expect to earn anywhere between £5 to £150 for freelance writing jobs, depending on what and how much you’ll be tasked with writing about.
2. Become a social media expert
If you know your tweets from your hashtags and are familiar with Twitter, Facebook and Pinterest for example, you could find part-time work from home as a social media manager. You’d be promoting your client’s products or services whilst building up their social media profiles and you could charge an hourly rate for this type of work. To find clients, you could search for companies that would benefit from your services locally via websites like Gumtree or even globally via some of the freelancing sites mentioned in the point above.
If you are qualified in a particular subject, you could offer tutoring services from home. You could teach Piano, English or Maths for example, for young or adult learners. Again, you could charge an hourly rate which would depend on the subject you want to teach. Tutoring can be a great source of regular income and you’ll find work through word of mouth once you get one or two students through advertising.
4. Sell your handmade crafts
If you enjoy knitting, sewing, making jewellery, or carpentry even, you can do more of what you love and sell your handmade creations online. Many hobbyists turn to selling their crafts in order to generate an income stream from home. You can use online handmade marketplaces like Etsy, Folksy or Coriandr to sell your products online. The listing fees are cheaper than eBay, plus the buyers are geared up to appreciate handmade products.
5. Offer an ironing service
Lots of people hate ironing or they don’t have much time to do it themselves. If you have a little time, this is a golden opportunity to make some extra money to pay towards your debts and best of all; you can do this job in front of the TV if you wish. You could set an hourly rate or charge per item type and quantity.
6. Pet sitting
If you love animals, you could earn money as a pet sitter in your spare time. This might involve pet sitting at your client’s house but this is absolutely something you can do from home too. You’ll need a home boarding license which you can obtain from your local council. Once you get established, you’ll likely get repeat clients asking to use your services.
7. Take in a lodger
If you have a spare room in your home, a great way to make money is to take in a lodger. The best part about this particular income stream is that you can earn up to £4,250 per year tax free under the Government’s rent a room scheme. Using the example of Alice’s debt above, she would have cleared her £5000 debt in just over a year if she used income from a lodger to top up her minimum
Earning extra money is a great way to break the minimum payment cycle and get your debts cleared as quickly as possible. These are just a few ways in which you can earn some money around your day job, in your spare time and from the comfort of your home.