When you’re in debt, it can feel like an impossible hole to dig yourself out of. When just working hard daily to make ends meet seems like all you can do, the idea of getting yourself out of debt can feel at times insurmountable. But even if you aren’t making more money than you’re spending, you can learn how to get out of debt on a low income.
Read on to discover the steps it takes to get out of debt.
First off, you are not alone in feeling the weight of debt bearing down on you. We are as a nation all in a heap of debt. Whether it’s to college loans, banks, or credit cards, it’s something that most adults are familiar with. More than half of Americans actually spend more than they earn each month and are looking for ways to bridge the gap of debt.
So whether you are dealing with known financial challenges that are contributing to your debt or are looking for ways to reduce your manageable but lingering debt, there are things you can do to help you out of the financial hole.
How To Get Out Of Debt Faster
Paying off debt can take some time, so looking at strategies to work off that debt quicker can be of great benefit.
1. Pay More Than Your Minimum Payment
If you carry the average credit card balance of around $15,000, pay an average of 15% in interest or APR, and are paying in the range of $600 a month, then it will take you around thirteen years to pay off that debt. However, if you can manage to make even slightly more than the minimum payment required it can speed up the payment process substantially. You’ll end up saving on interest charged to the credit card and improve your credit score, as well.
2. Try the Debt Snowball Technique
This method involves listing all of the debts you owe from smallest to largest. Then you put all your excess funds on the smallest balance while continuing to make the minimum payments on the larger loans. Once the smallest balance is paid in full, start putting that extra money toward the next smallest debt until it is paid. Rinse and repeat on all your debts. Over time, your small balances should be alleviated, allowing you to work on your larger debts, thereby giving you the “snowball effect”.
3. Pick Up An Added Source Of Income
Another way how to get out of debt on a low income is to work on increasing your income sources. Consider picking up a side hustle to supplement your current income. This will help to amplify your efforts to get out of debt sooner. Whether it’s babysitting, mowing yards, cleaning houses, or working in the ever-growing and evolving gig economy, there are ways to make a few bucks on the side to help offset those expenses. Remember to take the extra income and immediately pay off the loans so you can use it as a step to get out of debt.
4. Create A Streamlined Budget
Another way to get out of debt on a low income is to create a bare-bones budget and cut out unnecessary expenses as much as you can. With this strategy, you’ll cut your expenses as low as they can go and live on little as possible for as long as you can. This can look different for everyone, but to be effective it may mean not eating out, spending extra on entertainment, clothing, or extravagant items. With discretionary spending, you can keep your spending more in check and put that money towards paying down your debt.
5. Sell Everything You Don’t Need
If you’re also looking for ways to earn some quick cash to pay down your debt, consider selling belongings that don’t have vital meaning or aren’t a necessity. Most of us have copious amounts of stuff laying around that are rarely used and we could probably live without. So consider selling things that have financial value, but are not enriching your life in some way. Then take that cash and pay down some of those debts. It’s also an incredibly freeing feeling to let go of unnecessary baggage and clutter in your life!
6. Ask For Lower Interest Rates On Credit Cards
Try calling your credit card company and discussing your rate. If you’ve been paying down your card on time consistently, they may consider lowering your monthly interest rate, especially if you’re threatening to consolidate and move to another company. Also consider negotiating other existing bills such as your internet, cable, automotive insurance, medical bills, and more. Often if you are a good customer and if they value your business, these bills can be negotiated. And the worst they can say is no!
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