In a country saddled with outstanding balances, every solution is on the table when it comes to getting out of debt. Crowdfunding sites like Indiegogo, Kickstarter, and GoFundMe have helped lots of people secure funding for their projects and initiatives, but what about getting people out of debt?
Let’s examine the feasibility of crowdfunding your debt away.
As popular as crowdfunding platforms are, using them to raise funds for consumer debt isn’t. If you have medical debt or other balances that were inflicted upon you, then your campaign will probably be well received. But if you’re looking to raise money to pay off credit card debt stemming from your mistakes, you’ll inevitably rub some people the wrong way. Be prepared to face a little backlash.
Is Your Story Compelling?
Crowdfunding success rates vary depending on the platform, but generally, less than one-third of projects reach their goals. If you’re expecting your story to float above the others and gain a following by sheer virtue of making your campaign live, then you’re setting yourself up for disappointment. Whether your debt story is self-inflicted or the product of bad luck, you need to communicate it in a way that resonates with people.
Speak from the heart, highlight your shortcomings, and inject humor if or when it’s appropriate. Most of all, be relatable. If people can put themselves in your shoes, their empathy could bring them to donate.
And it should go without saying, but any crowdfunding campaign that includes inaccurate information or attempts to deceive could not only result in your campaign being canceled, but it can also lead to legal ramifications.
How Large Is Your Network?
As convenient as it’d be to launch a crowdfunding campaign and watch the donations roll in, this is far from reality. The vast majority of successful campaigns have one thing in common: a robust social network. Family, friends, and other online contacts are the seeds that germinate fundraising projects around the web.
A compelling campaign can convert potential donors, but those donors need to see the project. This happens through social sharing, emailing, and even blogging.
What Will You Offer Donors?
Crowdfunding campaigns typically offer a gift of some sort to entice donations. Offering financial incentives don’t make as much sense if you’re raising money to get out of debt, but that doesn’t mean you can’t offer something to sweeten the deal. If your campaign story tugs at the heartstrings (and is true), a donation incentive could be follow-up entries about your story and post-debt progress. Whatever you decide to offer, including something instead of nothing will show people that you’re serious about hitting your goal.
Know the Risks
Scams are an everyday reality in our world, and crowdfunding campaigns are no different. To protect yourself against fraudulent activity, never accept any donations outside the platform. It might be tempting to avoid the platform fees, especially if someone is promising to make a hefty donation, but people have been scammed in the past.
Additionally, your crowdfunding campaign is clear for anyone to see, especially if you’re successful in hitting your goal. If you’re on any public assistance or receive subsidies due to your financial situation, achieving your fundraising goal could lead to your benefits being canceled.
Account for the Fees
Every crowdfunding platform carries fees. This is understandable; after all, they’re giving you the medium and interface to raise money. However, those fees can be expensive, and many people fail to factor those fees into their fundraising goal.
According to Fundly, if you use one of the top seven funding platforms, you’ll be giving anywhere from 8 percent to 18 percent back via fundraising and processing fees. Be sure to account for the trust cost of fundraising into your overall goal.
Crowdfunding can certainly offer advantages for the indebted, but it’s far from the only solution. Depending on the severity of your debt, you can ask friends and family for help, declare personal bankruptcy, try to settle the debt for a lower amount, or even use a peer-lending platform.
Asking people you know for help might hurt your pride, but it can be the quickest way out. Declaring personal bankruptcy means you have to go to court, but it is a means to an end.
Attempting to settle your debt can be successful, but according to Freedom Debt Relief reviews, you’ll have to pay taxes on any canceled debt. Peer-lending platforms have many willing investors, but you’ll need the income to pay back your loan and interest.
Living with debt is no way to live, so feel good that you’re brainstorming ways to improve your financial situation. If you are to experiment with crowdfunding, factor the fees into your goal, craft your story from the heart, and share far and wide with your network. You never know what can result when you put something out in the universe!
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