Innovative solutions to debt problems
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If the amount of your debt is getting on top of you and causing real anxiety then it's time to cut it down. And what better way to do it than with an innovative two-pronged approach? For, as well as cutting the level of your debt, you could also boost your income or save money by taking on a second job.
However, before embarking on supplementary employment it is always best to consult your contract and have a word with your boss, to make sure that you are not breaking your current terms of employment. Also, remember your tax liability and if you are being paid gross, be sure to put aside enough cash to pay any extra income tax and national insurance payments that you will incur.
Although not strictly classified as second jobs, you can earn extra cash by taking part in market research focus groups, being a mystery shopper or, despite the recent scare involving the 'Parexel' trial in London where several unfortunate test subjects experienced severe discomfort and lost digits, being a medical guinea pig can be a lucrative and popular way of generating more cash.
Another way of boosting your income without taking on a second job is by renting out a room in your house. If you are a homeowner it may be worth taking in a lodger under the tax efficient Rent-a-Room scheme, where any rental income amounting to under £4,250 per year - equating to almost £355 per month - is not considered as part of your income tax liability. This amount would be cash straight into your bank or pocket. Indeed, just to highlight what a great benefit this is, if you are a basic rate taxpayer you would have to earn £5,666 before tax to net the same benefit after tax.
Of course, increasing income is only one half of most debt solutions; reducing your debt liability must go hand-in hand with that. There are many ways of overcoming debt; if you can afford it then a debt consolidation loan would allow you to reorganise your debt into one amount and then you would pay one convenient monthly repayment, and by continuing to pay back your debt each month, would ensure that you maintain your credit worthiness. If you feel that it’s gone beyond that then consider debt management schemes. More drastic solutions would include entering into an Individual Voluntary Arrangement or opting for bankruptcy. Both of these offer protection to those deep in debt as well as a possible solution, but should be considered last resorts. If you are unsure as to what step to take in your battle against debt then make your first step on the road to recovery the Citizens Advice Bureau, who will outline all your options.
Paul McIndoe is an online, freelance journalist
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