Ask anyone around why they like to be self-employed, the first response will be ‘freedom’. When self-employed, you have the freedom to set your working hours and even choose your working days. You’ll be your own boss, with no one breathing on your neck about deadlines and such stuff. Besides that, you’ll be able to earn as much as your energy allows.
However, to be successful as a self-employed person, you’ll need a high level of discipline. You must learn how to pay off credit card debt when you’re self-employed. Since your income will be irregular, you’ll be at a high risk of defaulting.
Here are some tips for paying off your credit card debts when self-employed.
Stop Adding More Debts
When struggling to clear your debts, there’s no need to add more debts. Even if you have an appetite for debts, take a break. Try to live within your means. Stop using your credit cards or even asking for soft loans from family and friends. Create a budget that eliminates the unnecessary expenditures in your life and stick to it. This will help you save some cash that you can use to pay your debts.
Some self-employed individuals find it difficult to budget because their income is irregular. But this shouldn’t be the case. What is required of you is to list down all your expenses, including loan obligations, then setting up deadlines to clear them.
Consider a Debt Consolidation Loan
If you have multiple high-interest rate credit card debts, consider consolidating them into one low-interest rate loan. There are many credit unions, banks, and online lenders that offer debt consolidation loans.
The greatest advantage of debt consolidation loans, apart from their low-interest rate, is that they are unsecured. When you have a good credit score, you can get these loans at very competitive rates. What the lenders will consider are your credit score, credit history, and income (debt-to-income ratio). When you qualify, your loan can get approved instantly. It is strongly advised to use your debt consolidation loan to settle your debts, and not for any other reason. This way. You’ll boost your credit score.
Pay Debts Several Times Within The Month
Since you aren’t salaried, you don’t have to wait until the end of the month before paying part(s) of your debts. Whenever you earn some amount of cash, use some part of it to settle some loans, no matter the date. At the end of the month, you’ll realize you’ve met or even surpassed your monthly obligation.
Paying your debt this way will also encourage you to work hard. Once you use part of your earnings to pay a loan, you’ll work hard to fill the dent. Keeping money for long waiting for the end of the month is risky. You never know what may come up in the course of the month.
Use “Found Money” To Pay Debts
“Found Money” is that money you get somewhere apart from your regular work. It could be a bonus from a happy client or a rebate on one of the products you bought. Whatever the source of the money, don’t use it to throw a party to your family or friends. Instead, use it to pay your debts. Remember, this is something you never worked for and wasn’t part of your budget. So, using it to pay your debts is the best decision you can ever make.
Increase Your Rates
If you are a freelancer, you can increase your rates so you can earn more. The extra earnings can go towards your loan repayment. Before you increase your charges, consider how your clients will react. If your charges become too high, some clients may look elsewhere, and this will put you into a financial crisis.
Now that you’ve learned how to pay off credit card debt when you’re self-employed, go ahead and apply these tricks. The sooner you start, the better. To emphasize once more, don’t continue taking more loans as you struggle to settle the existing ones.
