Most Americans face the same problem in personal finance: they are in some type of debt. Debt gets harder to deal with when you’re trying to get out of debt on a low income.
But even with a low income status, you can still find ways to clear yourself from debt ownership.
And if you are dealing with a debt problem, we’ve gone ahead and made up a list of proven tips that can help you get out of debt on a low income.
There is light at the end of the tunnel.
Here, you’ll learn the necessary steps to cleaning away debt for good. But before we get there, understand how you and many other Americans relate to this ongoing problem.
Americans Must Get Out Of Debt
Here are some facts that might freak you out:
- Over $7,500 remains in credit card debt for each U.S. household alone.
- Nine percent of all income gets spent on interest.
- The total household debt–not just credit cards–is hovering around $130,922.
Watch out for the nature of debt. The more you have, the harder it is to get rid of. Rising costs and lower wages are making it more of a challenge. And it’s not because of spending that gets us carried away with interests rates and loans.
There is a certain mindset and ambiguity behind the accumulation of debt. Consumers underestimate their own debt. Add in a higher cost of living, and that increases the difficulty of paying off debt for everyone.
It’s because of these alarming stats that we’ve put together some tips that can help people deal with these type of financial situations. Below are ways to get out of debt on a low income.
Cut Expenses
We know how much you love shopping at your favorite stores and getting Starbucks frequently. Going out with your friends or going out to eat dinner can take a big hit on most of your income. It’s time to cut out the things you can live without.
You will save hundreds of dollars by shopping at the grocery store and cooking your own dinners. Cancel your gym membership and go out for a run instead. Cancel your cable subscription and start reading more books.
Take a look at how much money you’re spending on items that you don’t need to survive. It’s a pretty safe bet that all that money can go into paying off your debt instead.
Know How Much You Owe
Find the courage to deal with your debt. Own up to your circumstances. You know how you got yourself in this situation, and now you’re going to fix it.
Let the feeling of embarrassment exit your life completely. Once you know your total debt amount, you can then do something about it.
You can then create an action plan and spearhead your effort with no delays. Solutions that will get you out of debt on a low income are closer than it seems.
Prioritize
Prioritizing is ensuring that you’re spending money on things that matter. You not only want to prioritize specific items on your credit report, but you want to prioritize paying off your debt overall.
Most people who eventually clear their lives of debt have other goals in life they want to pursue. The reason they succeed in getting their debt down to zero is because they put it first on their personal list. So before moving to the next stage of your life, clear your debt.
Budgeting: Defining the Difference Between Needs and Wants
You can start by devising a plan that organizes daily, weekly and monthly spending. This way you can break down your income and learn how much you can set aside for your debt.
Having the numbers right in front of you should keep you from going over your budget. This is an important step to keep you on the right track to get out of debt on a low income. If you go over your budget, you will have less money to pay off your debt.
If you have a hard time budgeting your finances, there are budgeting tools like Mint that help break all of your expenses down for you.
To enhance your budgeting tactics, be sure to identify items in your budget as needs and not wants. Make a clear distinction between the two.
Needs are what you must live with to survive and have basic comfort as a human being. Wants are desires that only cut into your spending and don’t keep you alive.
There is no shame in living on a budget. It is how you get out of debt on a low income or any income.
First Target High Interest and Don’t Miss a Payment
This is best done by making your payments more precise. By giving them a clear target to hit. Ensure your payments are decreasing your principal and not just going into your interests. One way you can do this is by consolidating your debt unto one credit card.
Interest continues to hurt you the longer you have it. The more you pay off high interest debt, the less it will be a factor to your overall finances. Free up your money by paying your higher interest.
You’ll find it easier to pay off the lower interest you have on debt. Keeping this practice strong and not missing a payment does wonders for your progress.
So there you have it…
I’ve just shared with you some of the proven tricks to help you get out of debt on a low income. Stop blaming your situation on your income. There are people that make more more have no idea how to get out of their financial situation.
