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Debt Elimination: Step 2 – Creative Ways to Maximize Income

image by Brad_Chaffee

This is the second post in the series regarding the five steps to debt elimination.  In the previous post I discussed how to cut expenses to minimize your outgo of money each month.  Today we’re going to focus on the income side of things.  Let’s talk about how to bring the income up as high as possible as quickly as possible.  First, let’s recap the five steps so you can see where we’ve been and where we’re headed.  The steps, in order, are:

  1. Cut Expenses
  2. Maximize Income
  3. Get Current on Everything
  4. Use the Dave Ramsey Debt Snowball to Arrange Your Debts
  5. Make a Call Every Time You’re Ready to Pay Something Off

Even though we’re talking about maximizing income, don’t go and sign up for every 12-hour shift and all the overtime you can get at your normal “day job” (killing yourself in the process of trying to work enough hours).  Spend some time brainstorming ways to make some cash that don’t involve so much time or energy!

Brainstorming Activity

When you’re looking for ways to maximize income, explore your entrepreneurial side.  What are things you can do that people will pay you to do?  When Stacy and I were trying to kill off the last of our mortgage debt, she worked as a public speaker, guest author, advertiser (through her blog), etc.  I worked as a construction laborer (self-employed), web designer, public speaker, author and business consultant.  We were able to bring in an extra $1,500 or more every month just by working little side projects.  What is it that people want you to do for them?  A couple of thoughts on that before we continue: make sure whatever you take on is legal and that your time is worth it.  If you’re going to end up in jail for taking on a project or if you’re only going to make $5 or $6 per hour on some monumental task, you may ought to see if there is something else you could do that would let you sleep at home each night and make you $50 or $60 per hour.  Even if you could only do 25% as much work at those tasks, you still make a lot more overall and avoid a criminal record. ;0)

What to Do With the Cash

We’ll get into the details of how to spend this extra income in the next few posts, but for now, let’s settle on this: if extra income is going to be coming your way, please make a plan for it.  The moment you get some money in your hands without a plan of what to do with it, I promise it will disappear.  Instead of working a lot of extra projects or hours at work with no plan, sit down and map out some priorities.  If I gave you $1,000 today, what would you do with it?  Don’t just go out and start earning a bunch of extra cash without first knowing what you plan to do when you get it!

Summary

So there you have it: another simple step toward gaining financial freedom.  As you can see, we’re working in logical order toward cutting expenses, maximizing income and ultimately beating our debt to a pulp.  Coming up next, we’ll talk about getting current (up to date) on all your debts.

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