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Dear Olga: Debt Repayment

Dear Olga,

I am trying to get out of debt asap. I am looking at getting a part time job to supplement my income. If it rains we don't work. We have been slow at work so I am not earning enough to pay extra on anything at the moment.

Thanks for any advice,



Dear Anna,

I have several suggestions to point you in the right direction. While you're looking for a part-time job, focus on making the most of your situation as it stands right now.

My first suggestion is review your budget and the process you follow to put together your budget each month. I recently worked with someone who has an erratic work schedule and it was really challenging to budget each month because one week there could be double income of a regular week that is followed by a slow week. Unless you've had to rely on sporadic income, you may not realize that budgeting the way you would budget for salary income in this situation doesn't work.

Try my budget template for freelancers and self-employed individuals. This template looks at your monthly budget with a weekly breakdown. Using this approach, when your income changes week to week, it's easier to visualize how the varied cashflow impacts your expenses and goals for the month.

My second suggestion is start working on an emergency savings fund. You may not have a lot to put aside right now but that doesn't mean you should put it off. Having $150 to put towards an unexpected bill or to cover a dip in income for the week, is better than having $0. Try starting small first and as time goes on, keep pushing yourself to save more. You'll notice, as soon as you reach your first savings goal you'll be hooked and want to save more!

Many people don't focus on building savings while they focus on repaying debt. Most say, "I will worry about savings when I'm debt free." While this approach can pay down your debt quicker, it's not a good idea to ignore your savings completely, especially if you don't have any emergency savings.

If your budget is already tight, a money emergency can be a big burden. If you have nothing in your emergency fund, an emergency can end up setting you further in debt. You also don't have to pick one goal over the other, you can work on your debt repayment while you build your savings.

My last suggestions is to take a moment to review your total debt, consider using my debt snapshot template to see how long it will take you to get out of debt. The key to this debt repayment strategy is after you pay off one debt, use the payments you made each month to that account and add it to the payments you're making towards the next debt account. You have been getting by without that payment each month, so make most use of that discipline and use it to continue paying your debt.

I've given you quite a bit of homework and it may seem like a lot, but I know you can do it! 💪 Take it one task at a time and you'll get through all of it. I'd love to hear from you in 3 months to check-in on your progress.

Best of luck!



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