Being self-employed doesn't always come with the freedom it should. Learn how to break the shackles of crippling debt while being your own boss.
Did you know that self-employed workers in the US account for 30% of the nation's workforce? That's about 16 million Americans! Those self-employed workers make up an astounding 44 million jobs. These are astonishing numbers.However, there are some other numbers to consider—numbers regarding our nation's crippling debt problem.
The typical American household has an average debt of $137,063. The debt-to-income ratio, or DTI, is staggering, too—especially if you're self-employed. The average person ages 35-75 carries a deficit of at least $66,000. Even if you make a high income as a self-employed person, you can still have high debt. Higher incomes lead to more significant spending, which commonly results in more considerable debt. But we're not going to be a part of these numbers anymore. It's time to get ahead of your debt and start reaping the benefits of being self-employed: things like freedom, for one. So, what measures can you take relieve some of the debt pressure? Try these ideas.
Optimize Your Payment Process
Spend less time tracking down your money by automating your invoices and having better payment practices. As a freelancer, you likely know how people try to nickel-and-dime you. It's time to put a stop to this. Make invoices with clear instructions. For example, layout late fee costs on your invoice and follow through with charging these late fees if you don't receive payment on time. Make your ‘due date' visible, so there's no disputing. You can also request deposits for large-scale projects, ensuring you get some starting cash to work with.
Consider Debt Consolidation
Companies like Debthunch offer a solution in the form of debt consolidation. What is debt consolidation, and how can it help you? This practice is exactly as it sounds—combining your several debts into one easier-to-manage payment. If you have debt that's not excessive, and you want to keep it in check, this method could be for you. This tactic of reorganizing your debt also includes low-interest rates, so the numbers are easier to swallow.
Reduce Your Monthly Bills
This rule may sound obvious, but it's not. Many Americans are currently living beyond their means. Not only are they living paycheck-to-paycheck, but this leaves no money left over to pay off debt or save for emergencies. It's time to evaluate your finances and build a doable budget. You know those free subscriptions that auto-renew and wind up costing you hundreds of dollars over time? Cut the cord. Bad spending habits are one of the most significant factors when it comes to shaky finances. Target and track your spending—starting today. Then, focus on paying off the debt that includes the highest interest rate, like credit cards, instead.
You Can Get Out of Crippling Debt
With the right tactics, smarts, and budgeting, you can get on the other side of this. Plan your month-to-month, limit unnecessary spending (have you vetted your subscription list yet?), and be more diligent about getting paid. Crippling debt doesn't own you—and after some careful spending practices, you won't it own, either. We have more exceptional advice for freelancers and entrepreneurs where this came from. Keep scrolling our page!
