![\"How](\"https:\/\/wealthbytes.co\/wp-content\/uploads\/2018\/03\/paying_debt_low_income_img.jpg\")
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Paying off debt is hard for anyone. It’s always on your mind until it’s gone and wiped clean. Debt hovers over you like a dark cloud just waiting to storm. Those clouds seem to be even darker when you have a low income. Without the necessary funds to pay down debt quickly, it can feel like an eternity working off debt.<\/p>\n
When you have a small income, it feels like climbing Mt. Everest is easier than getting out of debt. I know because I\u2019ve been there myself, and while paying off debt with a low income isn\u2019t the easiest thing in the world, it\u2019s still very possible. These steps will help you make a plan to pay off your bills sooner than later.<\/p>\n
Our annual household income is around $35,000 and we have a family of four, we use the tips below on a monthly basis to keep us on track with paying off our own debt.<\/p>\n
Above anything else, you need to keep a positive attitude. Looking at life optimistically can truly mean the difference between getting out of debt and remaining in debt.<\/p>\n
Think how hard you\u2019ve tried to accomplish something in your life. Maybe it was being able to bench press 150 pounds, getting a promotion at work, or starting a family. It doesn\u2019t necessarily matter why you moved mountains to accomplish a goal, you did it because you believed in yourself.<\/p>\n
Whether you lost motivation from your New Year\u2019s Resolution to pay off debt or you\u2019re just now deciding that being in debt isn\u2019t fun and you want out, never forget to believe in yourself.<\/p>\n
Are you ready to hear the secret about how to get out of debt and stay out of debt?<\/p>\n
Spend less than you earn each month.<\/p>\n
Knowing how you spend your money each month is the first step. There are a few different ways you can track your spending:<\/p>\n
This exercise feels tedious at first, but it\u2019s essential when you\u2019re serious about getting out of debt<\/b>. You need to have a good idea of knowing how much you spend on the following categories:<\/p>\n Your goal is to have fewer expenses than income. Assuming you bring home $3000, your expenses need to be $2999 or less to make more than you earn. If you\u2019re not there yet, look at where you can reduce your spending to avoid living paycheck to paycheck.<\/p>\n You might consider downgrading to a cheaper phone plan or cable tv subscription or packing your lunch instead of going out to eat with the guys or using Trim Financial Manager (it\u2019s free!) to renegotiate or cancel your monthly subscriptions so you pay less each month.<\/p>\n Cutting your spending is the easiest way to get an instant pay raise!<\/b><\/p>\n As you can only cut your expenses so far, making more money in your free time is another way to earn more than you spend. Here are 101 ways to make extra money<\/a> to get out of debt.<\/p>\n At the end of each month, continue comparing your spending to your income to make sure you\u2019re still on track.<\/p>\n After you know how much you currently earn and spend in a typical month, you now know how much extra money you have each month. While you could set this money aside to pay for a Hawaiian vacation, it\u2019s better to focus on building an emergency fund<\/a> first and then focusing on getting out of debt.<\/p>\n Why shouldn\u2019t you skip the emergency fund and pour all your extra dollars into debt payments?<\/p>\n Because 40% of Americans<\/a> can\u2019t afford a surprise $1,000 expense.<\/p>\n If you don\u2019t have at least $1,000 set aside to cover life\u2019s surprises, use your extra monthly income for this first. I\u2019d hate to see your debt repayment progress undone because you need to borrow $1,000 to pay a bill because you didn\u2019t have enough in savings to cover it.<\/p>\n Continue making the minimum monthly payment on your current loans and use your extra income to build a $1,000 emergency fund. I suggest keeping your money in a high-yield online bank account that you don\u2019t pay your bills with so you remove the temptation of pulling from your emergency fund to pay for life\u2019s non-financial emergencies.<\/p>\n Also, consider stuff you no longer need to raise the cash quickly. Maybe, you can sell an extra vehicle or boat that you don\u2019t really need and depreciates in value each day. And, it can be an easy way to lower your monthly insurance premium besides getting some extra cash in your wallet and paying off a loan if you\u2019re still making payments on it.<\/p>\n This is when the fun begins! You have $1,000 is a separate \u201cno touch\u201d account to hedge against life\u2019s unexpected surprises so you can plug away at your debt payments uninterrupted.<\/p>\n You\u2019ll need to choose the option that works best for you, but the two best debt repayment plans<\/a> are the debt snowball and debt avalanche. \u00a0Either choice is excellent, but you might prefer the debt snowball<\/a> where you pay your smallest loan balance first to score regular emotional victories that make it easier to maintain your positive, \u201ccan-do\u201d attitude.<\/p>\n Here are the three simple steps to start your very own debt snowball:<\/p>\n Put any extra money each month to the smallest loan balance with the highest interest rate. Continue making the minimum monthly payment on your other loans so you don\u2019t incur any late charges. After your first loan is paid in full, give yourself a high five and focus on the next smallest balance.<\/p>\n To supercharge your debt payoff plan, combine the money you spent on your old monthly payment plus your extra disposable income for each consecutive loan. You\u2019re already in the habit of setting aside the money for a monthly payment so why stop now?<\/p>\n You might only be able to contribute an extra $100 now, but as you pay off your smaller loans that extra monthly payment will \u201csnowball\u201d into a $500 additional payment in time.<\/p>\n Once all your loans are paid off, imagine what you can do with all the extra money that used to make a monthly payment. For some motivation, we\u2019ll have an extra $1,000 a month when we finally pay off our mortgage; that\u2019s an instant $12,000 increase to our disposable income for the year!<\/p>\n How soon you\u2019ll repay your loans depends on several factors:<\/p>\n Cutting spending and increasing your income are two methods of having extra money each month to repay your loans, but you also need to stop borrowing. Others you\u2019ll only continue to \u201cbreak even\u201d and never escape the debt cycle.<\/p>\n If you anticipate having to borrow money while you\u2019re still paying off your existing debt, reduce the size of your extra payment and set aside the difference until you have enough to pay for the purchase with cash instead of credit.<\/p>\n It can take some mental adjustments as you change your focus to getting out of debt instead of continually having to make a monthly payment, but the reward is well worth the effort.<\/p>\n","protected":false},"excerpt":{"rendered":" Paying off debt is hard for anyone. It’s always on your mind until it’s gone and wiped clean. Debt hovers over you like a dark cloud just waiting to storm. Those clouds seem to be even darker when you have a low income. Without the necessary funds to pay down debt quickly, it can feel…<\/p>\n","protected":false},"author":15,"featured_media":18150,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"limit_modified_date":"","last_modified_date":"","_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false},"categories":[790],"tags":[11,905,553],"acf":[],"yoast_head":"\n\n
<\/span>Set Aside $1,000 for Emergencies<\/span><\/h2>\n
<\/span>Make a Debt Repayment Plan<\/span><\/h2>\n
How to Start a Debt Snowball<\/h3>\n
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<\/span>Continue to Live Within Your Means<\/span><\/h2>\n
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