How do you pay off debt when you’re living paycheck to paycheck and don’t have any extra money?
You’re barely making ends meet, and it just seems impossible to pay down debt when you have a low income and little or no extra money to work with. When it comes down to it, paying off debt is rarely about how much money you make. Most of the time getting out of debt is more about how you manage your money and less about how much you have.
In this article I’ll show you some great tips to help you pay off debt, even if you have a low income. You’ll discover there actually is a path to debt freedom even when you have only a small income to work with.
Paying Off Debt With a Low Income
When you have a small income and you’re paying down debt, things can get really tight. You probably can’t cut your expenses much, if at all. So it might take you longer to get out of debt than if you had a higher income, but it’s definitely not impossible. You’ll have to pay extremely close attention to where every single dollar goes, and you may have to find ways to earn extra money. But when you’re diligent, your efforts eventually pay off!
Paying Off Debt With a Middle Income or High Income
If you have a middle or higher income, paying off debt will be a little easier for you. Simply cutting expenses saves a lot of money you can put toward paying off debt without sacrificing any basic needs. If you have huge amounts of debt, you may have to resort to some of the tips for paying off debt I’ll talk about below that are over and above just cutting back on expenses.
Things You Can Do to Start Paying Down Debt
So there are a few things you absolutely have to do if you want to be successful at paying off your debt. They’ll set you up for permanent success so that you’ll never have to live paycheck to paycheck again!
1.You Have to Believe You Can Pay Off Your Debt
When you have a modest income and/or live paycheck to paycheck, it’s hard to believe that it’s even possible for you to get out of debt. But in order to get the job done and pay off debt for good, you have to believe your goal is achievable.
Tune into the mindset that there are tons of people that have gone before you and achieved the financial success you’re looking for. In fact, some of them were in worse shape than you before they started. It might be helpful to go online and get inspiration from other’s stories.
You can do this!
2. You Need to Know Where Your Money is Going
One of the most basic reasons over 2/3 people live paycheck to paycheck is because most people don’t keep close track of their money.
Money flows in and out of their life without a lot of forethought, then at the end of the month they have no clue why they wound up with more month than money.
Below are the first two things you should do to seal your money leaks.
a. Keep Track of Your Spending for 30 Days
Keep track of every dollar you spend for the next 30 days. You can use the note taking app in your smartphone or a little notebook you carry with you. It doesn’t really matter which method you use as long as you record every single purchase, no matter how small.
This is a simple but powerful exercise. It helps you start to understand where your money goes. Plus it gets you ready for the next step, which is learning to do a budget.
b. Learn to Do a Budget
Once you’ve written down every transaction for the last 30 days, you’re ready to start doing a written budget. You don’t have to use a pen and paper if you don’t want to. Use a spreadsheet, an app, or whatever works for you. Your budget has to be very detailed if you want it to work. Just writing down your bills ain’t gonna get it. The point of doing a budget is to plan your spending for the next month so every dollar has a specific place to go.
Many times just the act of doing a written budget helps free up a few hundred dollars a month you were otherwise wasting. If that’s the case for you, then you can use that money to start paying down debt faster.
If you’ve done your budget, cut every expense to the bone, and your income is still not enough to pay everything, don’t panic! There are still ways you can make your budget work.
3.You Can Devise a Strategy to Pay Off Your Debt
Once you know how your money flows, then you can start putting together a plan to pay off debt. It’s very important to have a written plan to work from. Most people have a tendency to “wing it”, which usually doesn’t turn out well. When you have a good solid plan for getting out of debt, it’s easy focus on paying off debt by working your plan.
It doesn’t matter if you don’t have a lot of extra money. You can still get your debts paid off in due time just by working your plan.
What if You’re Low Income Isn’t Enough to Pay Down Your Debt?
You might be in a position where your income just isn’t enough to pay the bills. It doesn’t mean you’re in an impossible situation and you’ll never get out of debt. It just means you have to do a few things differently and maybe make a few more sacrifices to get the job done. You CAN do this!
Here are a couple of things you can do to increase your income and get the extra money you need to pay off your debt.
a. Sell Your Stuff
Everybody has stuff they don’t need and don’t use. You can sell your old stuff in a garage sale, on Ebay, or even on Amazon!
Sell everything that’s not bolted down!
Get rid of so much stuff that the dog is afraid he’s next!
Sell the stuff that got you into debt in the first place!
Of course, you likely won’t be able to sell enough stuff to pay off all your debt, but it’s a good start. It’ll get you the traction you’ll need to start making some progress in your situation.
b. Find Ways to Earn Extra Income to Pay Off Debt
The next thing you can do is find ways to make extra money. Even $50-$100 every month helps to accelerate paying off your debt that much faster!
But I’m betting you can do even better than that…
Why?
Because in the history of the world, it has never been easier to make extra money than it is right now. With the exponential power of the internet, you can literally run an international business from your living room!
You have access to literally billions of people who want to buy products and services that you can offer with little or no startup cost at all.
c. Excel at Work to Increase Your Income
One good thing you can do to increase your income is to find ways to be more valuable to your employer. If you’re just average at your job you can only expect to be compensated with an average wage. When you find ways to excel at work, eventually you’ll earn more because you add so much value. Here are a few ways to make that happen:
· Get more certifications and training than your coworkers.
· Do the types of jobs your coworkers shy away from.
· Develop a reputation as the “go to” person in one or two particular areas at your job.
· Develop advanced skills that your coworkers lack.
Also, if you feel like you’re not getting paid as much as you should and your employer just won’t budge on a salary increase, then you can always search for a job that pays more.
Of course, these are long term strategies for making more money. But they can still help you pay off debt in the long run.
it doesn’t matter how much money you make, it’s about the plan. Whether you have a low income or make well into six figures, you can be broke if you don’t manage your money right.
The great thing is that lack of income doesn’t have to keep you trapped living paycheck to paycheck for the rest of your life!
Even if you don’t have any money you can still pay off debt and live life on your own financial terms. It just takes the right strategy, some hard work, and some patience. But once you take the leap and do what it takes to achieve debt freedom, you will NEVER go back!
