Most people think paying off debt is painful and involves big loss – but it doesn't need to be. If we could show you a way to get a 10% increase in your income today, would that help? Well we can – so read on.
First you've got to stop debting, of course. There are two things you can do to pay off debt.
1) Reduce your spending 2) Increase your income
3) Even better, do both.
Let's take the first one first.
1. How to reduce your spending.
Here's our challenge for you – where can you save money? Most people can save at least 10% without trying too hard, and 25% with a bit of cleverness.
a) This is simple – just look at what you're spending and make sure you're getting it for the best price. Your mobile phone is probably the best place to start – remember if you get a new package you can often take your number with you.
b) Next, look at ways you can get creative and cut back painlessly. Cast a beady eye over how much value and enjoyment the different things you spend on actually give you. Look at the things you're paying for and not using. Then refine accordingly. Keep the things you really love, ditch or cut back on the wasters that don't bring you joy. Stop buying one big thing you wouldn't miss that much e.g that £500 you've just wasted over the last 6 months on unused gym membership. Ideas we've come across so far include:
• Stop buying newspapers and read them online instead, or in the library.
• Check out moneysavingexpert.com for tips on getting the best deals on everything.
• Mix up your shopping with 'value' or 'own-product' brands rather than the top-price so-called quality stuff (they're usually made by the same places anyway)
• Seize buy one, get one free and two-for-the-price-of-one offers and freebies (but only for stuff you really want and will use)
• Never shop when you're hungry, drunk or stoned. And when you go food or clothes shopping, work out what you want first and stick to a shopping list.
• Save £100 a month by taking your own packed lunches to work with you.
• Be a more demanding consumer: take things back to the shop if they don't work; haggle; swap mobile phone companies to go for cheaper options.
• Tempted by a big expensive purchase? Wait 24 hours and see if you still feel the same. If you really still want it you'll have upped the anticipation factor like a kid at Christmas.
c) Invest in a cool little notebook, and write down everything – and we mean EVERYTHING – you spend in one week. Then try it for another week. Then tot the sums up and look at the results. You may be both shocked and fascinated as the previous fog of confusion and "dunno really" starts to lift and you find out exactly where your money's going – it tells you loads about yourself and your behaviour. Are you spending a third of your income on fags and booze? Really? Yes you are. Is your daily Starbucks habit really costing you £40 a month? Yes indeed it is.
The funny thing is that with this new consciousness, you quickly start choosing more carefully. Having to write it down creates an extra filter between what you want and what you actually buy. Your spending may change quite quickly – you stop and ask yourself – "Do I really want this?" and may well find that the answer is no. You start feeling smug when you avoid a silly purchase and don't have to write it down. Even not spending that 50p a day on a choccy bar makes a difference – over a year that's £182.50 that you could be putting to better use (as well as losing the lard) . Try it for a little while – it's not rocket science.
That's just a starter – no doubt you can come up with a list that's totally individual to you – feel free to spread the word and get inspiration in the Discussion Forum.
No doubt you're already getting the sense that cutting your spending and upping your income doesn't need to be boring and painful at all – here's to a richer, more creative, clever and stimulating adventure – go you!
2. Getting more money.
Increasing your income is all about adding value. So don't look for more money, look instead at creating more value. That means start thinking like you're self-employed and your employer is just your main client. Who else will pay you? How can you give them things or skills they'll value?
• Look at what you love doing – your expertise, passions, hobbies, skills – can you turn them into work that's so enjoyable it's like play? Or a service you'll be passionate about providing?
• Work on your ability to earn money – seek out extra training and qualifications to make yourself more marketable when you promote yourself to companies and clients. One guy we know took on doing an MA at the same time as clearing his debts – increasing his value and credentials in the marketplace while keeping him so busy he ended up spending less.
• Can you freelance or be an adviser/consultant, become an E-Bay specialist seller, or take on a part-time or weekend job on top of what you're already doing, and earn more money that way? Even if it's just babysitting once a week, or walking the neighbours dogs? Work smarter, not necessarily harder or longer, and look for ways in which you can help other people.
• At work, you can either just do your job and clockwatch or get curious about what you can do to move your and the company's goals forward by adding value. Bosses reward, promote and give payrises to people who contribute to the overall goals rather than staying in their own little parameters.
