When you are in debt, you need to concentrate on growing your disposable income. This is what’s left of your monthly salary after you put aside what you need to spend for your basic necessities. Anything in excess is considered to be your disposable income. This is actually not dedicated to debts alone. It can be used to grow your savings or to finance your entertainment activities. But since you are currently in a debt relief program, it is usually wise to use it solely for debt payments alone - at least, to get out of debt as fast as possible. But of course, if you want to grow your savings at the same time, it is not a bad idea to split your disposable income to fund that as well.
The bottom line here is, you need to grow your disposable income. The question is, how can you do that. There are two ways to do this.
The first is to literally grow your income. This can involve working longer hours in your current 9-5 job or you can set up a supplemental source of income. It can be a second job that is totally different from your day job or you can set up a small business.
One of the best sources of supplemental income can be found online. You can get consultancy jobs, freelancing gigs and other projects that will allow you to practice your profession. If you are a great writer, you can get writing jobs from clients all over the globe. You can charge by the hour or per word.
The Internet also brings possibilities for passive income. If you have a skill that you think you can share with others, you can create a self help eBook that will teach others about your craft. You can sell it on Amazon. Or, you can take great photos and upload them in photo sharing sites. You can charge the rights to use your photos and that will generate you some income. You can setup all of these and you should be able to get a hefty income even though you only worked on these sources once.
The second option to grow your disposable fund is by cutting back on your expenses. This involves sifting through the list of things that you spend on every month and deciding not to spend on those that you do not need to survive. For instance, you can choose to pack a brown bag for lunch everyday. Or you can choose to ride your bike to work instead of using your car. You also have the option to terminate subscriptions that you do not need.
There are many expenses that you may be surprised you can live without. All of these add up to be a significant addition to your disposable fund.
In truth, you don’t really have to choose between the two. You can increase your income and lower your spending at the same time. The important thing is to identify how you will manage your finances from now on so you do not land in the same debt situation in the future.
The bottom line here is, you need to grow your disposable income. The question is, how can you do that. There are two ways to do this.
The first is to literally grow your income. This can involve working longer hours in your current 9-5 job or you can set up a supplemental source of income. It can be a second job that is totally different from your day job or you can set up a small business.
One of the best sources of supplemental income can be found online. You can get consultancy jobs, freelancing gigs and other projects that will allow you to practice your profession. If you are a great writer, you can get writing jobs from clients all over the globe. You can charge by the hour or per word.
The Internet also brings possibilities for passive income. If you have a skill that you think you can share with others, you can create a self help eBook that will teach others about your craft. You can sell it on Amazon. Or, you can take great photos and upload them in photo sharing sites. You can charge the rights to use your photos and that will generate you some income. You can setup all of these and you should be able to get a hefty income even though you only worked on these sources once.
The second option to grow your disposable fund is by cutting back on your expenses. This involves sifting through the list of things that you spend on every month and deciding not to spend on those that you do not need to survive. For instance, you can choose to pack a brown bag for lunch everyday. Or you can choose to ride your bike to work instead of using your car. You also have the option to terminate subscriptions that you do not need.
There are many expenses that you may be surprised you can live without. All of these add up to be a significant addition to your disposable fund.
In truth, you don’t really have to choose between the two. You can increase your income and lower your spending at the same time. The important thing is to identify how you will manage your finances from now on so you do not land in the same debt situation in the future.
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