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How To Find Extra Cash To Pay Off Your Credit Card Debt
This article was originally on GET.com at: How To Find Extra Cash To Pay Off Your Credit Card Debt.
Nobody likes the feeling of sinking under a pile of debt. And even Singaporeans with a good income can fall into debt due to poor money management and overspending on their credit cards.
If opening up envelopes of unpaid bills every month becomes a stressful event, it's probably time to devise a strategic plan to get out of this situation.
Believe it or not, getting out of debt is a bit like losing weight – it's difficult but taking baby steps and being disciplined will eventually let you reach your goals!
Here, we at GET.com will show you 4 ways to find the extra cash you need in order to pay off your debt.
But before you embark on "looking for extra cash", there are some rules you need to follow to stop the situation from spiralling out of control.
3 Rules To Stop Credit Card Debt From Escalating
1. Transfer Your Credit Card Balance
If you're struggling to pay off your credit card balance and your interest payments are accumulating, the first thing you should do is stop using that card to make even more purchases.
The next step is to transfer your balance to a card that offers a low interest rate for a certain amount of time. These cards are called balance transfer cards, and some of them let you pay off your balance interest-free for a certain period of time.
After transferring your balance to the new card, you should try to pay it off before the interest-free period ends. This way you will save money on interest payments and get rid of your debt sooner.
There are several banks in Singapore that offer balance transfer cards, such as ANZ credit cards, Citibank credit cards and HSBC credit cards.
For example, ANZ Platinum Visa Credit Card let's you transfer a balance to this card and pay no interest on it for 6 months. The only thing you will have to pay is a 1% processing fee, which is very low. Citibank DIVIDEND Card VISA also lets you transfer a balance at 0% interest rate for 6 months. Although you will need to pay a 2.5% service fee upfront.
If you transfer your balance to a new card, don't rush to cancel your previous card as it may affect your credit score. What you can do is to call up your bank and tell them about your situation. Be sure to also ask if there's any way to waive off any extra fees and charges. There's no harm in trying!
2. Pay Your Debts Strategically
If credit card debt isn't the only type of money you owe, you need a plan to pay your debts strategically. This means paying off debts that may cause a larger negative impact first, such as your home loan.
The last thing you want to do is to lose the roof over your head. After this, you might want to prioritise your debts by paying off those with the highest interest first.
For credit cards, it would be wise to consolidate all your debts to a single card so that you can focus on repaying one debt with low interest. You can do this with a balance transfer card, as explained above.
3. Cut Your Spending
Paying off debts usually requires a two-step process: cutting expenses and increasing income. There are many small ways for you to cut out extra spending on all areas of your life – entertainment, food, shopping, utilities..etc.
For example, an everyday expense like grocery shopping can burn a hole in our pockets if we're not careful. That's why learning how to budget is a great way to save money. Here are 5 useful ways to save on your groceries when you're shopping on a budget.
There are so many ways to cut your spending, and each small effort counts. Taking small steps to change your lifestyle can create an extra few hundred dollars a month. For instance, bringing a home-made lunch to work and eating at home twice a week could easily save you an extra $100 each month.
4 Ways To Get Extra Cash To Pay Off Your Debt
There are myriads of ways to earn extra income, it's about being creative and working a little harder than usual. Here we will show you 4 ways that you can easily make some extra cash.
1. Make Use Of Your Existing Resources
One of the best ways to make use of your existing resources to earn an income is to rent out one of your rooms or your apartment. Singapore provides a great rental market due to the large number of foreigners working here.
Do a simple research online to find out what others are charging for the type of room/apartment you can offer, according to your location and size. You should also do a bit of cleaning up to ensure you get the best deal for the room you have.
If you are able to stay with your parents/relatives for a while, renting out your entire apartment will make you an even better deal, and it can be a real lifesaver to help you escape debt. Here are some helpful tips for renting out your existing rooms to make some extra cash.
Other ways you can make use of existing resources is to use your car to make an extra income. With the proliferation of the sharing economy, you can now easily register to be an Uber or Grabcar driver and drive during your off-work hours or during weekends!
Here are some things you should consider if you'd like to become a part-time Uber driver.
You can also register on sharetransport.sg to offer paid rides to people who live near you or/and work near you!
If you own your own vehicle and want to get paid for going shopping, there are also companies that are looking for people to shop for groceries and deliver them to the customer.
One of these companies is Honestbee, where you get to manage your own schedule to help customers shop for their groceries and deliver it to them according to their scheduled delivery time.
2. Cash In On Your Investments
If you have an investment account and have earned some money from your investments, you might want to consider selling them to tide you over your debt crisis.
Or for instance, if you have an endowment insurance policy that offers yearly bonus payouts, you can consider withdrawing these to help pay off your debts.
Under normal circumstances, it might be better to roll your bonuses to help accumulate compound interest over the long term, but paying off a debt is a more urgent situation since it might impact your credit score or even cause insolvency.
3. Hold A Garage Sale
One of the easiest ways to earn some money and de-clutter your place is to hold a garage sale to sell things that you no longer need or want.
These can be clothes, accessories, electronic appliances as well as furniture. The key to holding a successful garage sale is to advertise it.
With the advent of social networks, you don't even need to pay for advertising! Just create an event on Facebook, invite your friends and ask them to share it.
If you think you do not have enough stuff to sell to hold a garage sale, you can always list separate items on free sites such as Craigslist, Gumtree or Carousell.
Here are a few more ways to make some extra cash without working.
4. Earn A Second Income
You may need to work a little more to repay your loans, but it doesn't have to be the hard way. You can use your existing skills or passion to make it work for you.
For instance, if you've got the flair for writing, register on freelancer websites to try out some freelance writing. Or perhaps you know a friend who has their own business. If you do, ask them if they need some help that could use your skills.
For more ideas, here are 5 part-time jobs that you can do from home that can help you earn a second income.
As credit card debt can pile up quickly due to the high interest rates, clearing it should be a priority.
So use the tips mentioned above and take some time to come up with a strategy that will help you pay off your debt as soon as possible.
Grace Cheng is co-founder and editor in chief at GET.com, a personal finance and lifestyle website. Email: g@get.com
This article was originally on GET.com at: How To Find Extra Cash To Pay Off Your Credit Card Debt.
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