When you’re working for minimum wage, tackling your debts can seem almost impossible – unless you know a few strategies.
Today, we’re going to tell you about some tried and true methods that can help you to take charge of your debts. This way you can get them resolved and start building a stellar credit score.
Consider a Financial Advisor
First off, consider a financial advisor. While the movies have led most of us to believe that financial advisors are only for the ultra-rich and for buying stocks, this is not the case. You should start taking advantage now.
Even if this is your first job, a single visit with a financial advisor can open you up to a world of options.
- They can help you to set up a budget.
- Let you know about opportunities from your job benefits that you should be taking.
- Help you set up a proper strategy for dealing with your debt.
Financial advisors are there to help you to grow your money. This is why you need to get in touch with one as soon as possible.
It’s a definite advantage to have a pro on your side. Go in for a single session and you can see for yourself what a financial advisor can do for you.
Don’t Pay Too Many Debts at Once
One common mistake that can do you more damage than good is trying to pay off too many debts at once. It’s an honest mistake.
If you’ve got a lot of debts, the phone calls from those collectors can work you up into a panic. And you end up spreading your budget too thin trying to deal with it.
Don’t do this.
Instead, take the approach that will get the job done and save you the most money in the process. You’ll need to take a closer look at all of the debts that you have to identify which ones have the highest interest rates.
These are the ones that you want to target first. If you don’t, those small payments will get eaten up in the interest and you’ll be paying forever. Find the debt with the highest interest rate out of all of them and tackle it. When you’ve got that handled, move on to the next one, and so on.
If you don’t believe us, try calculating the yearly interest and compare it to those monthly payments you are making on all of your debts at the same time. You’ll find that the high interest is going to eat up most of your overall payments, so tackle that debt now before it gets you in more trouble!
Pay a Little Extra on the Highest-Interest Debt
Now that you’ve identified the nastiest debt on the list, you want to make sure that you can wipe it out as fast as possible. The way to do this is by paying just a little bit extra every time that you get paid.
Even just a few extra dollars per paycheck is going to eat up the total. In the long run, it will reduce the number of monthly payments due. Every little bit counts and it builds up over time, so tackle the highest interest debt first and go at it with a vengeance.
Autopay Can Help to Avoid Costly Mistakes
One of the easiest mistakes to make is to set up a solid monthly payment plan on your debts and then forget – or neglect – to follow through. The reasoning behind it is simple and sounds sensible on the surface. If the payments aren’t automatic, then the money will be there when you need it.
This is a strategy that can bite you, so you need to resist the urge to do this and set up autopay. Autopay is going to make sure payments get made and reduce temptation. If you are worried about autopayments tying up your account, then there is a simple solution.
Just get a second account. With a second account specifically for your debts, you can funnel a percentage of your paycheck to that account through direct deposit and keep your debt payment separated from your main account. You’ll still be paying the same amount, but you’ll have an independent account to keep worries to a minimum.
Autopay is your friend. Yes, it’s a little scary until you get used to it, but meeting those monthly payments is what is going to get you through this debt and build your credit so you’ve got to start trusting it now!
Take Advantage of Balance Transfers
Want to reduce your monthly payments in one fell swoop? This little ‘hack’ might be just what you need. If you have more than one credit card, then you need to check the interest rates for each. The goal here is simple.
If you have debts on one credit card that are at a higher interest rate than one of your other cards, consider paying that off so that the balance you owe is transferred to the card with the lower interest rate. This is commonly referred to as a balance transfer. Many cards offer a promotional 0% APR for balance transfers and this can be a godsend.
By moving the debts to where the interest rate is the lowest, you can greatly reduce what you will have to pay and make those monthly payments much more manageable in a single shot.
Remove Your Card Information from Online Stores
Impulse buys are the worst for setting us back financially. In this mighty information age, you can go online and find just about anything that you can imagine and buy it with a single click.
With great power, unfortunately, comes great culpability and so you need to cut back on your impulse spending NOW.
One simple way to do this is to log on to those stores that you tend to use the most and REMOVE your credit card information from them. If you need to buy something, you can always re-add your information, but at least this way you know that if temptation strikes then you’ve added some extra steps to the process.
Sometimes giving yourself a few extra minutes to think is all the time you need to make the right decision. So, cut out the temptation by getting your cards offline. Trust us on this one, you’ll thank us later!
Grab Some Extra Work Online
Getting yourself a ‘side gig’ is easy and can make a huge difference. Websites like Upwork, Guru, and Fiverr can give you access to small and even larger projects that you can do in your free time to earn some extra cash independent of your full-time job.
If you have a little talent as a writer or an artist, for instance, you can easily get some work on the side. But don’t fret if that is not the case. There are also data entry gigs, voice-work, and all kinds of other jobs.
Best of all, you’ll be working from home and making your own hours!
So, if you want to get an edge in dealing with your debt, consider the good old-fashioned method of having an extra job on the side. You can deal with your debt faster and start back off with a clean slate.
Today, we’ve talked about how to tackle debt with a minimum wage job. As you can see, you’ve got a lot of options for getting the job done!
And for your records, here is the too-long-didn’t-ready summary:
- Consider a financial advisor and avoid the mistake of paying off too many debts at once.
- A better strategy is to tackle the high interest rates first and to pay a little extra on them now. This will help to avoid paying a LOT extra later.
- Autopay can keep you on track and balance transfers can lower your overall interest, just be sure to take your credit information away from retail stores so that you can stick to the plan.
- Finally, consider a side-gig for now until you can get a better handle on things.
Paying off your debt is an uphill climb. But if you use the tips that you’ve learned today then you’re going to be just fine. Set up a debt-payment strategy using what you’ve learned today and you can see for yourself what a difference it can make.
Stop worrying… You’ve got this!
Image credit:[KAROLINA GRABOWSKA]