Sounds simplistic, doesn't it? Just pay down your debts, your credit score will raise, and all will be fine. But if you're in debt, there's probably a...
Sounds simplistic, doesn't it? Just pay down your debts, your credit score will raise, and all will be fine. But if you're in debt, there's probably a reason - such as spending in excess of your income.
If you want to build a good financial reputation - otherwise known as a good FICO score - you'll have to make the effort to bring your spending in line with your income.
You have two simple choices, and they should be used in combination with each other:
- Earn more and use the extra to pay down debt - or stop going further in debt
- Spend less
Start with earning more. How many extra dollars per week or per month would it take for you to begin paying off credit cards? $10, $50, $100, or maybe $500?
Remember, even an extra $10 per month paid on a credit card account will make a difference over time. This is a simple example, because it doesn't take into account that the money will be paid in a little at a time and will begin reducing the amount of interest you pay from the first "extra" payment onward. Your savings will actually be more than the following example.
But look at it this way: If you're paying 18% interest, and you pay an extra $10 monthly for one year, that's $120 less that you'll pay interest on the next year - That's $9.60 per month, or $115.20 per year that won't slide out of your checking account into the hands of a credit card company.
So how can you earn that extra money? Here are a few suggestions:
- Take a part-time job in addition to your regular job. Here are a few that could easily bring in an extra $10 or $20 per week without taking up much time:
o Put up and take down signs for a real estate agent
o If you're good with a camera, take property photos for that agent
o Walk dogs for a neighbor who works long hours
o Pet sit for people on vacation
o Clean offices at night or on the week-end
o Hire on to shop or do yard/garden work for an elderly neighbor
o Do on-line blogging for pay
o Do on-line surveys for cash
- Begin doing extra tasks at work - take on more responsibility - work a little harder and longer than anyone else - and then ask for a raise.
- Begin looking for a new job that pays more
- Go through the attic and start clearing your clutter - through eBay
- If you can write, sign up on a site like Helilum.com and enter the writing contests
- Put some Google Adwords links on your own web pages
- Teach a class about something you do very well
The most important thing is to immediately set aside all funds generated from these extra activities - and use them to pay down debt. It won't help you if you increase your spending to match the additional income.
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