How to Fix Your Credit Report Part 8
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Part 7 of the series, How to Fix Your Credit – Personal Finance Series, was about my favorite trick of eliminating debts fast – 0% balance transfer offers. Now let’s touch on something that you should be able to do fairly easy, using nonrecurring/unexpected income towards your debt.
Put All Nonrecurring Income Towards Your Debts
So now that we have established that you can pay more than your minimum payment, the question is – how. Well, for starters put all nonrecurring income towards your debts. Do not wait and try to apply it on the next billing cycle due date.
If you just made a payment, you may need to wait 1-2 business days, but then go ahead and submit it. The more you reduce your principle balance by, the less interest is charged on it.
Examples of non-recurring income would be:
- Income tax return
- Accident settlement
- Freelance income
- Selling items from your home
- Commission bonus
Usually, when you receive these types of one-off payments, you see this as an opportunity to go on a shopping spree. You must break this mindset if you want to easily pay down your debts.
Now, once you know this money is coming in, I advise you to transfer it to an account you are not going to look at! Once that money has dropped, schedule a payment immediately so it can transfer out. Otherwise, if it lands into your main checking or savings account, you just keep looking at it as though it’s burning a hole in your virtual wallet!
Stay tuned next week for a few final options of eliminating these debts.
Be sure to keep up with the series. Below, you can check out the series on Pinterest and pin them for later.
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What great advice! I have some non-recurring income coming in soon and I will put it towards paying off my truck! Thank you.
susan quackenbush recently posted…goPURE Naturals Giveaway
You are right, we don’t usually use non-recurring income as a way to pay down debt! Good idea to plan ahead and use that extra cash wisely.
Wendy recently posted…Running Out Of Time
Solid advice! I rarely use these funds towards debt reduction but I am working on being more disciplined about it.
Yanique recently posted…What Do Stay At Home Moms Do All Day?
So true. A shopping trip sounds like much more fun, but you won’t enjoy it knowing that you still have looming debt.
Donella Crigger recently posted…Crock Pot Asian Porkchops – Low Carb Recipe
This is great advice. All that extra money should go towards your debt so you can start building wealth once your debt is gone.
Kristen from Practical Mommy recently posted…Introducing A New Baby To The Family (Parenting Lounge #5)
Yes, and being a stay at home parent, I need to save as much as possible. I so miss my 401k benefits!
Thats a great point if you can avoid the urge to splurge when you get those one time payments you will save yourself thousands of dollars down the line. I hold a yard sale every spring and all the money I earn no matter how much it is goes towards paying off debt. Over the past couple of years I have earned around $2,700 just from holding yard sales! Now we are one credit card paid off closer to being debt free!
Tennille recently posted…How To Bake Brownies Inside An Egg Shell
Awesome advice! When we got this years tax return I made the payments the day we got the refund! That way it didn’t sit in there tempting us to spend it!
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