Saving money can be difficult, especially when you’re struggling with debt and barely making ends meet. Occasionally, however, you may come across some unexpected money and choose to put it towards reducing your debt. While this does lower your overall debt, it also means that the money you found is no longer available for other purposes.

Getting unexpected money can sometimes feel like a windfall, but creating opportunities for yourself is also possible. Here are several ways you might come across unexpected money:

• Sell Unused Items: Sell things you no longer need or use on platforms like eBay, Facebook Marketplace, or Craigslist.
• Freelance or Part-time Work: You can offer your skills as a freelancer on platforms like Upwork or Fiverr or consider part-time work your expertise.
• Surveys and Market Research: Some companies pay for consumer opinions. Websites like Swagbucks, Survey Junkie, or Vindale Research offer cash for completing surveys.
• Rent Out Space: If you have an extra room or property, consider renting it on Airbnb or a similar platform.
• Cashback and Rewards Programs: Many credit cards and shopping apps offer cash back or purchase rewards, effectively giving you ‘free’ money.
• Investing: While this involves risk, investing in stocks, bonds, or real estate can potentially bring in unexpected returns.
• Inheritance: Although it’s not something you can control, receiving an inheritance can be a source of unexpected money.
• Tax Refunds: If you’ve overpaid on your taxes throughout the year, you may receive a refund after filing your tax return.
• Class Action Lawsuits: If a product or service you’ve used is the subject of a class action lawsuit, you could be entitled to compensation.
• Unclaimed Money: Check with your state’s unclaimed property office to see if you have any forgotten money from old bank accounts, insurance policies, or deposits.

I Discovered a Savings Hack

I discovered a savings hack that can reduce your debt and, at the same time, allow you to save money for a rainy day. It will require you to have a credit union savings and checking account. Before I share this hack, you’ll need to know about debt repayment strategies and how credit unions work. This way, you’ll better understand how to prioritize your debt repayments and how you will pay off your debt.

Debt Repayment Strategy

A debt repayment strategy is a method of tackling your debt in the most efficient way possible. The most common strategies are the ‘debt snowball’ and the ‘debt avalanche’.

Debt Snowball

The debt snowball strategy involves paying off debts in order of smallest to most significant balance, regardless of interest rates. This approach gives you smaller wins and can help build momentum as you work towards achieving financial freedom.

Debt Avalanche

On the other hand, the debt avalanche strategy involves tackling debts with the highest interest rates first. This approach has the potential to save you more money in the long run since high-interest debt accrues quickly and can be costly.

Basic Steps

No matter which strategy you choose, there are some basic steps you should take to make sure your repayment plan is successful:

1. Make a budget: This will ensure that you spend only a little on unnecessary items each month and help you identify areas where you can save more money.
2. Track your progress: Keep track of how much debt you have paid off and the amount of money left to pay off so that you know when it is time to move on to the next debt.
3. Automate payments: Setting up automated payments will ensure all your debts are paid, and you can complete all critical deadlines.
4. Keep your eye on the prize: Remember why you are doing this and focus on the goal of being debt-free.

Creating and following a debt repayment strategy can be intimidating, but with some planning and dedication, you can reduce your debt.

What Are Credit Unions?

Credit Unions are financial institutions that their members own. These non-profit organizations usually offer products and services similar to those of banks, including savings and checking accounts. One of the main differences between credit unions and banks is that credit unions typically have lower rates on loans, higher interest rates for savings accounts, and fewer fees.

Credit Unions also have this cool feature called a shared-secured loan, a loan with an interest rate lower than a regular loan but still higher than the interest rate you would receive in your savings account. The shared-secured loan uses your savings as collateral to secure the loan amount. Your available balance in your savings account is reduced by the money you borrow. Part of your loan payment will return to your savings account, increasing the available balance. Once your loan is paid in full, your available balance in the savings account will be restored in full.

I like that you still get interest on your savings account even when you borrow from it.

The Hack

Now that you understand debt repayment strategies and how credit unions work let’s make it happen.

You know those unexpected funds you came across? Let’s put them to work.

Step One

Put these unexpected funds in your credit union savings account.

Step Two

You can use the unexpected funds you deposited to take out a shared-secured loan from your credit union. Deposit them in your checking account. NOTE: You cannot use them if you deposit them into your savings account.

Step Three

Utilize the funds from the shared-secured loan to tackle your debts effectively. Doing so can significantly decrease your total debt and interest payments. Moreover, you can continue earning interest on the additional funds you initially deposited in your savings account.

As you progress with your loan payments, a portion will be allocated toward your savings account’s available balance. This means you’ll have more money for unexpected expenses or a rainy day.

Conclusion

This hack will help you reduce your debt, save money, and still have a small emergency fund. It’s an all-around win!

So, the next time you come into some unexpected funds, consider using this hack to get ahead of your debt and build up your savings account. You might be surprised by how quickly it works.