Personal finance is a balancing act.
When your outgoings are higher than your income, you end up in debt. To get out of debt and make sure you stay there, you’ll need to change the balance and be sure that your income is higher than expenditure.
There are two ways to ensure that your income is higher than the money you’ve got going out. First, you can reduce your outgoings by making sure you only buy what’s needed. If you’ve already done that and it’s still not enough (or if there are things that you’re simply not ready to sacrifice!), you can instead increase your income.
Here are some of the best ways to increase your income to stay out of debt…
Claim Everything You’re Entitled To
Are you already claiming all that you’re entitled to? Many people could have access to more money and don’t even know that they’re missing it. See if you could be getting more money without doing any extra work.
Turn2Us and entitledto
Many people aren’t aware of the benefits they could claim to give their income a boost. Benefits aren’t just for the unemployed, but also for people on low income and with disabilities.
You can use the entitledto website to see if you might be missing out. You’ll be asked questions about your personal income, your total household income and your lifestyle. Answer every question to see if there’s money that you could be claiming but aren’t.
Another similar option is the Turn2Us website, which has its own benefits calculator. Either of these options will make you aware of income that you could be missing.
Claim Expenses at Work
Your employer should cover any work expenses that you’ve paid from your own pocket. Often, they’ll ask you to fill in a form and provide the receipts as evidence. If you’re buying things for work, or using your own car for work-related travel, always make sure that you keep your receipts and submit an expenses claim.
If you have outstanding claims, chase them up and make sure they’re being paid. You’re entitled to get your own money back.
Some people may feel like they can’t be bothered to fill out the expense form, but even the occasional purchase here and there could make a big difference to your income.
Make Sure Invoices Are Paid
If you’re self-employed or run your own business, make sure invoices are promptly paid. Get them out quickly when you’ve finished the work and chase them if they’re not paid in time. You have a legal right to start applying interest from the day the invoice is overdue, so set a fair deadline and consider adding interest if you often have problems with non-payment.
Keep on top of outstanding invoices so you always know how much you’re owed. If you’ve done the work, you’re entitled to get the money that you’ve charged for it.
Claim Back Payday Loan Interest
If you’ve taken out any payday loans, you might be entitled to claim the interest back. This could be the case if a payday loan sent you into a debt spiral, where repaying one loan led to problems that caused you to take out another.
Even if you managed to repay a loan in full, if it was classed as unaffordable you could have a right to claim. Lenders shouldn’t keep giving you money if there are clear signs that you’re struggling, like borrowing soon after your debt is repaid or increasing your debt over time.
First, get evidence from your credit report and the lender’s website. Take screenshots that show your loans, as these may disappear from the records once you start taking action. Then, write a letter that’s a clear affordability complaint. Provide information about the loans you had, your budget and how the lender should have known that your debt was unaffordable. Some lenders will offer compensation straight away, whilst others will have you running around trying to get a response. If your complaint gets you nowhere, you can go to the Financial Ombudsman for help.
Earn More Money
If you want to earn a lot more money and make a difference quickly, the answer isn’t to worry about claiming payday loan interest back. Do that as well, if there’s money you’re owed, but you might want to think even bigger.
The very best way to increase your income is to take on more work. Get a second job, or ask your current employer for more hours. Alternatively, ask your employer for a pay rise if you think you deserve one. If you’re going down the route of asking for a pay rise, make sure that you’re making a good case for this money with evidence to show you deserve it.
There are lots of ways to earn a bit more money even if you already work. Consider employment as an Uber driver or delivering takeaways. Many delivery jobs can be done outside of your usual working hours. You could also work freelance in your free time, or become a babysitter to put some extra money in your pocket.
Run a Business
Quitting your job and running your own business could really increase how much you earn. You could also run a business outside of your usual part-time or full-time working hours.
There are many different ways to start running your own business and you can follow your interests. Popular choices include dog walking or dog grooming, running an online blog, vlogging on YouTube or cleaning. You could also become a painter, decorator or someone that builds flat pack furniture.
Spend some time thinking about what you’re good at. What skills do you have that you could use to start your own business and earn money?
Remember that starting your own business, or earning money through self-employment, means that you’ll need to be registered self-employed with HMRC. You’ll have to fill in annual tax returns, and will probably need some initial funds to get your business started. You might need stock or money for a website, but if you’re short on cash then Facebook adverts could be enough to get things going.
Rent Something Out
You might have valuable assets that others would pay to borrow. Renting your property is a great way to bring in some extra income. Try:
- Renting out a room
- Renting out a parking space
- Renting out a vehicle
Here’s a little more detail on each option…
Rent a Room
If you’re short on cash, you could take in a lodger by renting out your spare room. You need to be happy to have someone living in your home, and should take precautions to maximise your safety and reduce the risk of problems like theft.
Accepting a lodger is a big commitment, but could provide you with a lot of extra money if you own your own home. Make sure there are clear ground rules in place, and remember that your lodger is likely to need access to communal spaces like the bathroom and kitchen.
Rent a Parking Space
If you have your own driveway or parking space, but don’t have a car to go in it, you could make money by renting out the space to other people. JustPark is a great place to start. You’ll choose when the space is available and how much you charge, so you could even rent out a parking space just when you’re at work. You don’t need to have contact with anyone, because you’ll take bookings online.
Spaces are needed anywhere, but will particularly be in high demand in cities and near major venues. People might book for a one-off visit, or a regular commitment. You could also consider renting space to students if you live near a college or university with limited on-site facilities.
Rent Out a Vehicle
It’s possible to rent out your car, camper van or caravan. Renting out a vehicle comes with some risks, but if you do it through the proper channels you should be protected by insurance. Don’t rent out any vehicle that you depend on day to day, but if you have a car that you’re not using then you could earn some extra money.
Renting out your car can also help to make sure it’s in regular use, so it doesn’t sit outside the house with the battery drained and in disrepair, though of course this will mean that the mileage increases and your car may be prone to increased wear and tear over time. Make sure that the amount you charge makes this a worthwhile decision.
Become an Airbnb Host
If a long-term lodger isn’t your thing, why not rent a room or property out as an Airbnb host? You’ll provide accommodation for short-term stays, like holidays or business trips. Being a good host can be as simple as leaving a key somewhere private, and making sure that the place is clean before your new guests arrived. Or, you can be actively involved and be a tour guide and share your local knowledge.
With Airbnb you set your rules and prices, so you’ll have some control. You’ll just want to make sure that you provide the essentials at least, to keep your guests happy.
Ask for Rent from Adult Children
Home ownership isn’t as achievable as it might have been in the past. This means that many children, when they reach adulthood, must live with their parents for longer. If you’re a little older and have adult children living with you in their home, it could be a good idea to ask them to contribute and pay rent.
Asking adult children for rent might not be something you’re comfortable with, but if you need the financial support then this is a good source of income. Your adult children will still have a roof over their heads for far less than the cost of renting privately, and should be happy to contribute to the household as they ease into independence.
Bits and Bobs
There are lots of other ways to make a bit of money. Most of these provide a quick cash injection rather than reliable income, but when you’re paying off debt it’s these little extra bits that make a difference to your success.
- Sell on eBay or Facebook Marketplace
- Sell old clothes
- Become a mystery shopper
- Look for Online Surveys
- Enter Online Competitions
- Join Focus Groups
Here’s a little more detail on each one…
Sell on eBay or Facebook Marketplace
It’s easy to list your items on eBay, or add them to Facebook Marketplace. With eBay now offering more free listings than ever offered before, you can earn money for things you don’t need without any initial investment. With eBay, you’ll just pay some fees once your items have sold.
You can sell almost anything online. Get rid of your old bike or sell CDs and vintage records that you no longer want. One man’s trash is another man’s treasure. If you’re not sure how much to charge for an item, eBay auctions can find the going rate.
Sell Old Clothes
Visit websites like Depop and Vinted to sell clothes that you no longer wear. The second-hand fashion market has exploded in recent years, as conscious consumers do their bit for the environment and to stop sweat shops. This means that your old clothes could be given a new lease of life.
As people lose and gain weight, they often want cheap clothes for the short-term transition period. People might also look for pre-loved clothes because children grow out of clothes so fast.
In short, there’s a market for all your old clothing even if it might be out of fashion or in well-worn condition.
Become a Mystery Shopper
There are lots of different companies hiring mystery shoppers. This job provides money and free items, though you’ll need to be subtle and discreet. Your job will be to visit a shop or other retail location. Carry out a few small tasks, perhaps including a review of the service, and take a picture of your receipt.
Usually, mystery shoppers are given a small payment and reimbursed for a small purchase. You might get a free takeaway, or a new item of clothing, as well as a small cash contribution to thank you for your undercover efforts.
Look for Surveys Online
To make a bit of extra money to help reduce your debt, sign up to one of the many online survey websites. Results will be hit and miss. Some people are candidates for surveys every week, which means they’ll earn a fairly good income, whilst others are rejected after answering pre-screening questions. Filling in surveys can be a waste of time, but if you’re lucky it’s a good way to earn a bit of extra money each month.
You can’t live on the money you’ll make from surveys, but they can provide a little cash boost to help you claw your way out of debt. There are loads of different websites and the more you sign up to, the more chance you’ll have of being picked for surveys.
Enter Online Competitions
Some people make a living out of ‘comping’. Become someone that enters competitions for things they don’t even need, and you could earn a surprising amount by selling any unwanted prizes. As soon as you enter your first competition, you’re in with a chance of winning. The more competitions you take time to enter, the more chance you have of winning some freebies.
If you like a prize, you can keep it. If you win something you don’t actually want, why not put it on eBay?
Join Focus Groups
Joining focus groups is a lot like doing surveys, but it requires more commitment. You may need to travel and meet someone in person to test and review a product, or could have to commit to sharing your thoughts on a few different occasions. Usually your travel costs will be reimbursed and you’ll receive payment for your time. For one-off focus groups, this payment is usually above the minimum wage.
In most cases you’ll only be needed for an hour at most, so if you agree to join a focus group make sure that it’s worth the time and effort for the money you’ll earn.
Who is this advice suitable for?
If you’re trying to get out of debt, or you want to stay in control, it’s almost always a good idea to earn some extra cash.
Most people can use our advice to add some extra money to their bank balance. Just watch out for a few potential problems if you start to increase your income.
If you’re using a Debt Relief Order, an IVA or going bankrupt, increasing your disposable income might lead your agreement to fail. An increase of about £50 per month is enough to affect a DRO, whilst any extra income will need to be poured into your IVA if you’ve gone down that route.
If you’re going through bankruptcy, any extra money you earn is likely to need to be paid to your Official Receiver. This will happen if you have an IPA. If you don’t have an IPA set, and you’ve been discharged, you should be able to keep the extra money you’ve received.Always remember to look out for scams and be careful with your personal details. If something feels too good to be true, it’s very likely that it is. If you plan to do a lot of surveys and comping, it’s wise to set up a separate email address. You’re likely to be flooded with marketing and adverts, so make sure that these don’t take over your everyday inbox.