Everyone has goals and dreams they want to execute within a precise timeframe.
Goals like owning a car, getting a mortgage and getting debt-free are the keys to financial independence. These goals improve lifestyle and help one lead a life on their term. Individuals with regular income budgets according to the goals achieve them more quickly than part-time workers.
It is because they have a fixed and high income that helps them settle debt gradually apart from achieving goals. Alternatively, part-time workers earn a minimum only to meet basic lifestyle requirements. It takes a good time to clear debts and ensure a desirable lifestyle.
Believe it or not- Debts are the most significant obstacle to growth and success. It impacts the potential to leverage opportunities and improve the financial position. If you can relate to that as a part-time worker, the blog is just for you. It lists the best ways to manage debt as a part-time employee and embark upon new aims quickly.
6 Ways to counter debt as a part-time worker
Part-time work is standard for students studying at a university, tenants, or unemployed individuals. It grants them minimal freedom to meet regular requirements without bothering their loved ones. However, paying debt alongside meeting liabilities and emergencies is challenging.
One method to do so is by budgeting for the high-interest debts first. It will help you gradually clear debt and improve your credit score. Here are other ways to manage debt as a part-timer:
Analyse your credit situation
The first thing is to know your finances. Identify the most important debts that you must pay, or you may face consequences. It could be credit card debt, utility payments, car loans, etc. If you have missed payments on any of these loans, it could threaten you from a financial and credit point of view.
Next, analyse the total amount you owe on these, contrasting it with your monthly income. Check which of these you can clear first comfortably while meeting your other liabilities.
Moreover, clearing debts will improve your credit score. It is essential for several reasons, such as securing loans, low-interest credit cards, affordable car loans, etc. Precisely, a good credit score saves you high interest costs. So, analyse the debts you must pay to boost it.
Set up direct debits
Direct debit is a structure that allows you to pay debts automatically. Be it a utility bill, credit card bill or subscription, you can pay it immediately with automatic transactions. The money reaches the service provider account without you having to memorise the payment.
However, your income account must have a direct debit facility to leverage the facility. If not, consider adding another account that has one. Moreover, your direct debit account must have a minimal balance for automatic transactions. It would not work otherwise.
Alternatively, if it is a small amount, you pay to pay off the debt and check loans with no guarantor from a direct lender nearby. It helps one clear the debt in a one-off payment. You can utilise the loan amount to pay different debts at once. Moreover, without a third-party influence, accomplishing debt-free goals becomes more accessible.
Get another part-time job
Explore relevant part-time jobs if you need help managing debt efficiently. Sometimes, more than one part-time job is mandated to lead a satisfied lifestyle.
Thus, explore jobs that meet your skill and qualification spectrum. Moreover, finding part-time job opportunities becomes more accessible with a full-time job experience.
Check the pay and eligibility requirements before applying for the job. Moreover, analyse the company’s authenticity before providing crucial bank account details. Some part-time jobs are risky. Thus, research well before application.
Take up jobs you can manage comfortably and help you cover up debt quickly. It is the most suitable pathway to secure financial balance and pay debts.
It is the quickest way to get debt-free. You need to analyse the debts to consolidate. It is about benefiting from debt consolidation by merging debts you find hard to budget for. It could be student loans, payday loans, doorstep loans, credit card debt, etc.
Consolidating these debts helps you achieve a financial equilibrium, improve your repayment credit score, and lower your liabilities towards the debts. However, this is also a loan that you must pay by the agreement’s end. Here, you only deal with a lender for your payments and then pay.
Access your credit reports for accuracy
Reviewing your credit report for accuracy is essential to manage your debt wisely. You may get your credit report from Experian, TransUnion and Equifax credit reference agencies. Accessing it is equally vital as accessing your financials.
Inspect your credit report for inaccuracies or delinquencies that may influence your credit score. Additionally, analyse debts that you paid recently and their status. If it is pending, then report it to the respective credit bureau.
Next, identify personal information like- address, name, phone number, account history, and loan applications made in the past. Check whether an unknown loan exists in your name. If yes, report and enquire about it from the credit bureau.
Ensuring accurate credit reports is essential as lenders, landlords, and financial institutions analyse this before discussing the loan requirements. Under this, existing credit delinquencies may impact the loan approval.
Try to increase your savings
It is one of the best ways to remain on top of your finances. The best way to do so is by eliminating unnecessary expenses and curbing most of your income. Yes, initially, it may be difficult for you to spot these.
However, you can analyse your recent purchases and expenses in the bank statements, like food orders, new credit cards, frequent overdraft usage, etc. If you have too many of these, it indicates numerous unnecessary expenses impacting your savings.
To counter this, be watchful about your purchases. Avoid buying up things just because of decent discounts. It may hamper your credit and financial progress. Instead, prioritise saving at least 30% of your income. You can add some percentage to an emergency fund or investments and keep the rest as extra money.
These are some of the best ways to manage your debts as a part-time worker. You can counter and manage debts with any income bracket. All you need is a strategy, financial knowledge, and income to clear debt slowly.
Moreover, freedom from debt helps rationalise other aspects of lifestyle like- home renovation, buying a car, etc. Before that, it simply remains a dream. Thus, follow these tips to get debt-free quickly.
Williams Adams is the Senior Content Writer and Loan Advisor at Loansevents. He is passionate about finance writing and has written thousands of blogs for the top platforms worldwide. In more than 13 years of experience, he has worked with leading lending firms in the UK providing various loans. At Loansevents, Williams does the major task of writing researched-full blogs on multiple loans and financial concepts. He has done MBA in Finance in the UK to back his finance skills.