5 Best Hacks for Eliminating Credit Card Debt


Acknowledging debt may seem like a small thing, but it’s the first step toward handling it responsibly. So, good job!

Debt sucks—it’s complicated and confusing for almost everyone. For self-employed contractors and freelancers, how you manage your debt is especially important, since your personal credit directly affects your business credit, and therefore your ability to work and earn a living.

So, here it is—Lifesaver’s “cheat mode” for crushing debt.

#1: Stop Piling On the Debt

Back away from your credit cards. That means all of them—the personal and business cards.

One of the fastest and most effective ways to start tackling credit card debt is to stop adding to the amount you already owe. You may find it harder and harder to reach for your wallet when you know that it means dipping into your hard-earned cash.

This may sound obvious, but you’d be surprised by how many people attempt to combat debt while continuing to rack it up. So, resist the urge to swipe while you strategize and implement a plan to help you conquer your debt.  

#2: Confronting Your Debt

If you want to slay the debt dragon, you have to start by knowing exactly how much you owe and to whom. Gather all of your credit card statements, open a spreadsheet, and let’s start crunching numbers. Start by detangling your debt, separating out your personal credit card debt from your business debt. Go card by card, entering the balance for each. List important details like the amount owed and the annual percentage yield on that credit card.

Hopefully, you’re relieved by what you see. But if you’re feeling slightly depressed after knowing exactly how in the red you are, take comfort in knowing that we’re halfway there toward putting together a solution.

#3 Creating a Budget

Understanding your income and expenses allows you to start planning and experimenting with a few differents ways to save and lower your debt. We’ve got a step by step guide here. Once you’ve listed your total monthly income and expenses, subtract your total income from your total fixed expenses. The formula couldn’t be simpler:

(Total monthly income) — (Total fixed monthly expenses) = Money left over for spending (fun) or saving

Unfortunately, debt sometimes does require you to cut back, and that likely means you have to reallocate some your discretionary spending toward paying off your debt. Monthly subscriptions are a good place to start. Individually, their cost seems minimal, but these costs add up at end of each month. Besides, do you really need all three or four paid memberships to those music/movie/TV streaming platforms? Determine a monthly percentage of money that you’re comfortable with putting toward paying off credit card debt. Ensure the amount you choose works even when your income fluctuates. Ideally, you want to pay over the monthly minimum, so you can reduce the interest and the principal you owe.      

#4: Maximize Your Cash Flow

There are several ways to increase the amount of cash you have each month. You can start simple by reducing your spending. Put yourself and your business on a spending diet for a couple of weeks or months. Easy things like brewing your own morning coffee/tea, or preparing lunch at home, help avoid unnecessary expenses—for some, this alone can help save upwards of $200 a month. Spending diets are a test of wills and wallets, so tailor it to your financial specifications.

Try to make more money. OK, have your eye roll, but hear us out. It might be time to monetize your side-hustle. Maybe you‘ve been cooking, singing or making your friends laugh for free. Consider trying to generate revenue from your passion on the side.

You could also consider adjusting your fee or payment structure for gigs. This is easier and more flexible than it sounds. You could start by getting paid faster. Maybe you have a recurring gig or client that’s mostly great, but takes forever to pay you. Automating your invoicing system may help minimize the time it takes to get your hard-earned cash. Requesting partial payments for projects upfront is another way to increase your monthly inflows.

#5: Work Smarter

Working smarter means realizing that your credit card habits need to change for the better and, more importantly, for the long term. If you don’t want to find yourself buried in credit card debt again, you have to start incorporating these tricks into your regular money management routines.

Working smarter also means using the right tools for the job. Are you being eaten alive by monthly checking account fees? Alternatively, maybe your savings is just sitting in an account collecting dust—rather than accruing interest. Lifesaver makes it easier than ever to find the financial institutions and services that fit your wallet and lifestyle, so take advantage.


Saving While Self-employed: Tips from the Trenches


Let’s start by admitting that budgeting and saving when you’re a self-employed freelancer or artist is exceptionally hard. How do you set a monthly budget when your income changes from month to month, or week to week? Having to figure it all out on your own is no joke, so that’s why we’ve put together a few tips to help you save. You’re at your best when you can focus on chasing the dream without stressing over your wallet.

When you can’t predict your income with certainty, focus instead on what you can predict. Setting a budget like a pro begins with figuring out fixed expenses.

Setting a Budget

It all begins with identifying fixed expenses: the cost of being housed, fed and with access to the things needed to keeping you hustling. Carefully—and honestly!—distinguish these from other variable types of discretionary spending: happy hour drinks, eating out, movie tickets or Netflix, online shopping, Lyft rides—the usual suspects for those times you want to treat yourself.

Identifying and Calculating Fixed Expenses

Fixed expenses are usually:

  • Education or childcare costs, including things like tuition or daycare

  • Transportation costs such as car notes, insurance, and gas, or public transit fares like Metrocards and bus passes

  • Housing costs, such as rent or mortgage

  • Outstanding debt payments like student loans, credit card debt

  • Utilities (gas, heat, water, phone, internet)

  • Groceries and food

  • Healthcare costs (insurance premiums, plus any prescriptions or medicine)

  • Taxes: As a self-employed artist or freelancer, you’re solely responsible for withholding and paying employment taxes so alway, always, alway set aside money for taxes. If you’re unsure how much to set aside use a recent tax return as a basis for your estimate.

(One easy way to remember these is by looking at the first letter of each: ETHOUGHT.) Calculate your total monthly fixed costs by adding all individual fixed expenses together.

Living on a freelance or self-employed artist’s budget often means relying on last month’s previous earnings. Because income can fluctuate, it’s mission critical to know exactly how much money to put aside each month to cover expenses for the following month. Tracking fixed costs lets you know exactly how much of your monthly income you need to save in order to cover living and work-related expenses for next month.

List and Calculate All Your Sources of Income

Tracking your income is as important as tracking your expenses. Figuring out exactly how much you bring in each month helps you plan and manage your budget effectively. Your sources of income include earnings from any jobs, residual income from royalties, income from any disability benefits or government programs, and any financial help you maybe receiving.

Calculate your total monthly earnings by adding all your sources of income together.

Identify Patterns in Your Income

Budgeting is always easier when it’s more predictable.

As a freelancer, you expect your income to fluctuate, but these fluctuations aren’t necessarily random. Tracking your monthly income overtime gives you the historic data necessary to recognize patterns and make inferences on your earnings. Look for trends in your monthly income. Do your lean months correspond with off-seasons or low-demand periods in your industry? Do you travel more frequently at certain times in the year? These types of questions help make your income and expense more predictable. Harmonize your wallet and your hustle by anticipating expenses whenever possible, and saving for them when times are good. Incorporate any trends you discover into your budget planning.

Building Your Budget

Now that you’ve listed your total monthly income and expenses, subtract your total income from your total fixed expenses. The formula couldn’t be simpler:

(Total monthly income) — (Total fixed monthly expenses) = Savings & Fun

50/30/20 Rule

Okay, so you’ve crunched the numbers, and even looked over your expenses and found a few places to cut back (seriously, you should!). Now what? How do you know if you’re saving enough, or spending too much?


A great rule of thumb for budgeting is the 50/30/20 rule. The idea here is to:

  1. Limit your fixed expenses to a maximum of 50% of your total monthly income

  2. Limit your discretionary spending to 30% of your total monthly income

  3. Allocate the remaining 20% of your income toward savings

For many freelancers in New York, the cost of housing can make hitting these budget specs pretty tricky, but aim for as close to this breakdown as possible—especially for saving.

Other Tips and Tricks

Save Money by Automating Bill Payments

One of the easiest ways to save money is to avoid late fees, penalties and, if possible, interest associated with past due or late payments. Falling behind on payments can have a ton of expensive side-effects, all potentially ruinous to your hustle. These range from expensive fees to increased interest and lower credit scores, and even potential repossession of property. Automating your bill payments is a great set-it-and-forget-it way to avoid late fees, but does require you to have a good handle on both your income and expenses. Avoid potential overdraft fees from your bank by ensuring you have enough funds in your account to cover automatic bill payments.

Start an Emergency Fund

Open an account dedicated to potential emergencies and unexpected expenses, or anything else Murphy’s Law might have in store. A separate account is a great place to put some extra cash when times are good. Your emergency fund is a safety net for emergencies and unexpected expenses only! Consider an online savings account if you’re tempted to dip into your emergency stash.

Fight the Urge to Splurge, and Use Credit Cards Wisely

Resist the temptation to swipe your way out of a financial rough patch by leaning on your credit card. Each time you swipe your card, you’re increasing debt expense—a fixed expense!—and therefore reducing your available monthly income in the future. The same of course holds true for treating yourself: splurging today means less savings for tomorrow. Don’t stick Future-You with the stress and responsibility of solving financial problems created on a whim!

Find the Best Financial Offerings for You

As previously discussed in our post The 6 Best Banks for New York City Freelancers and Artists, discovering banks and credit unions that jive with your lifestyle can be tricky. But all the clever planning in the world might still go awry if you're not using the right tools for the job. Lifesaver makes finding the right tools easier than ever before by intelligently matching you with the very best financial offerings from your community, and with technology companies from around the web. 

Questions? Comments? Feel free to get in touch!