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Debt can be a heavy weight around your neck, pulling you down and making you lose your sense of perspective. However, debt is rarely the disaster that it may seem on the surface. If you can just take a step back for a moment you will realise that there are ways and means of extracting yourself from the chains.
Here are a few suggestions to start you thinking about solutions. From negotiating a raise to selling structured settlements, take your pick from the following six cash-raising tips (or, even better, pick and mix them!)
Negotiate a Raise
Assuming you are in paid employment, when was the last time you got a raise? Asking your boss for one now might be the last thing on your mind but it could be the ideal time.
Don’t go into that meeting with a begging bowl though. No boss will pay you extra out of pity or because you are desperate. Instead, explain in clear terms why you think you are worthy of a bigger pay packet. Have you been there longer than anyone else (that shows staying power and commitment)? Do you always hit your targets? Are you the best seller? The most conscientious? The best people manager?
Don’t be disheartened if your request is denied. Be proud that you tried. If you are successful you will have some good news to share with the family, a boost in confidence and, of course, extra money to tackle that debt!
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Ask for Help
There is a thin line between humility and lack of self-respect but most people who get into debt play safe by avoiding asking for any help. When was the last time you approached friends or family for help?
If the answer is ‘never,’ then it could be time to swallow some pride and admit to someone you trust that you could do with a favor. This doesn’t have to be monetary (although a low interest loan could be the answer). Help given in kind (invitations to dinner, a ride to the store, a place to sleep, etc.) can all add up to savings.
It is important to be honest though. Don’t make promises you can’t keep (“I’ll pay you back that 50 bucks plus an extra 10 next Friday,”) and put the work in your end to get back on your feet as soon as possible.
If you really can’t stomach asking your nearest and dearest for a hand (or you’ve been back to that watering hole too much already), consider accessing help in the form of debt counseling. A debt management plan can help to reduce servicing debt to a manageable level.
Liquidate Structured Settlement Cash
Some people are unfortunate enough to be put out of work or lumbered with medical expenses due to no fault of their own. If you’ve been awarded a structured settlement due to a previous court claim but you are currently in debt, you may be able to sell the future payments as an asset in return for a chunk of cash now.
In the same way as a loan would incur interest, selling your structured settlement will cost you a discount percentage. You need court approval to liquidate a structured settlement so only consider this option if it is a realistic strategy for paying off debt without harming your ability to support yourself in the future.
Manage your cash flow
Overcoming debt can seem a complex knot of correspondence, phone calls and meetings tied together with anxiety, fear, hope, desperation and anger. Strip away the emotions and the red tape though and you are left with some simple math. If subtracting outgoings from incomings leaves you with money in the bank, you will climb out of debt. If you need to borrow money to make up the shortfall, your debt will increase.
If you have a smartphone, budgeting apps such as “Mint” and “PocketGuard” will help you to play with those numbers until you achieve the first scenario. If you don’t have a smartphone, you will find something online or you can use a simple spreadsheet. You can even resort to pen and paper if you have to.
In almost all cases, you will find that you can cut down on expenditure (switch expensive takeout’s for a few quality ingredients; downgrade your cable package, make full use of your coupons, etc.). If you are tight to the bone already, consider selling some of your assets to give yourself a cash injection.
Stop borrowing money
There is no candy-coated way of putting this. Except in some very specialized cases (set out below), you have to stop borrowing money to get out of debt. Sure, it’s not going to be a walk in the park but the idea that you can somehow use the borrowed money to stimulate extra income is best left to the politicians.
Credit cards, store cards and loans may seem attractive, especially when they have tempting introductory deals attached to them, but it is the underlying pattern of spending more than you earn that needs to shift.
Except maybe in these two cases!
When it comes to borrowing, the main consideration is the interest rate. If you already owe several organizations money, a one-time consolidation loan, from a reputable bank or credit union, may help your case IF the interest rate is lower than all of the others. You then have one creditor to service at a relatively low rate.
A consolidation loan won’t clear your debt but it will usually help you to manage it better. Treat this as a ‘play once only’ card though. Hopping from lender to lender will only keep you in debt for longer and harm your credit score.
On the subject of credit scores, there are some credit cards which specialize in credit repair. They are designed for people with poor credit scores or insufficient histories to learn how to borrow money responsibly. The catch is that the interest rates are sky high due to the risk. Only go down this route if you are disciplined enough to pay the full balance off by each due date (not just the minimum amount). This option is best left until after you have begun to climb out of debt and are budgeting sensibly.
By helping you to demonstrate your ability to handle credit, these cards will quickly boost your credit score. This will help in the future when you want to, for example, take out a mortgage at preferential rates.
Good luck in removing the debt chain from around your neck. With perseverance and sensible decisions, it can be done!