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Struggling to conquer your debt? Feel like you’re drowning? Not sure how to climb out of the pit with the income you’re making?

Don’t let these things be the anchors that weigh you down! Even just a few simple lifestyle changes and budgeting techniques can help you out. 

Evaluate your current financial state

In order to figure out where you’re going, you need to know where you’re starting from! Evaluating where your finances stand now is important in order to address your debt problems.

Do you have an emergency fund to cover unexpected expenses without having to take on new debt? If you don’t have one yet, focus on building up a starter fund before you start paying down debt. 

Once you have that emergency fund in place, you’re ready to tackle that debt of yours.

List your debts out individually and take note of the total amount remaining, as well as your interest rate for each one. 

Create a (realistic) monthly budget

To get started, jot down your sources of weekly and monthly income. Add up your total monthly income, break your expenses into categories, and allocate funds to each category. Be sure to include a line item in your budget for savings!

Add up your total monthly expenses. Deduct your monthly expenses from your monthly income to figure out your balance.

If your number is negative, this means you’re spending more than you earn. Try taking a look at the expense categories you can cut out completely, or at least cut back on, to live within your means. 

However, if your number is positive, this means you’ll have money leftover to put toward paying off your debt!

But you’re not out of the woods yet…

…you’ll still need to find ways to cut your expenses. And your options are endless, too! Here’s a couple of things you can do:

  • Buy off-brand items: There usually isn’t a difference between branded and generic products. Most generic items are significantly less expensive than branded products.
  • Brown bag your lunch: Try making your own healthier lunches at home and bring them with you to work to avoid spending money.
  • Make your own coffee: Sure, it may not be coffee shop quality right off the bat, but it’ll definitely be “saving money” quality! Plus, you can find tons of copycat recipes for your favorite drinks online. 
  • Don’t buy bottled water: Invest in a refillable water bottle with a filter to drink at home and on the go! This way, you’ll have something you’ll only have to pay for once, instead of continuously buying bottled water at the store. 
  • Adjust your thermostat: You can lower your monthly energy bills by lowering your thermostat a few degrees in winter, turning it up a few degrees in summer, and changing it when you leave the house.
  • Cancel unused/unnecessary memberships and subscriptions: These include gym memberships, cable/satellite TV subscriptions, and so on. 
  • Renegotiate your contracts: You’re just a phone call away to negotiate lower rates with your service providers! You can even use websites to compare prices or apps like Trim to do it for you.

And now, to tackle debt…

…here’s a couple of more direct approaches!

Pay off monthly credit card balances in full

If you use credit cards but don’t pay them off in full each month, you’re wasting money by having to pay interest on outstanding balances. These interest amounts can vary depending on the credit card provider and your credit score. 

PSA: It’s extremely difficult to get out of debt when you’re only paying the minimum payments. If paying your cards off in full every month isn’t an option for you, it may be best to stop using them altogether and maybe use cash instead.

Reduce your credit card interest rates

If you have high-interest credit card debt, try requesting your credit card issuer to lower your interest rate. With a positive payment history and low credit utilization ratio, they may be more willing to reduce it!

Lower interest rates can potentially help you save hundreds or thousands of dollars on interest payments every year, depending on your credit card balance. 

Prioritize your debt

Here’s a little secret: make more than just the minimum payments on your existing debt.

Do you have multiple sources of debt from credit cards, personal loans, car loans, etc.? If so, you might want to prioritize your debt; basically, focus on paying off one debt at a time by making payments above the minimum requirement, while still continuing minimum payments on any other debt.

A good idea is to start with the highest interest rate first. In that case, you’ll pay off that specific debt as quickly as possible by making more than just the minimum payments. This debt repayment method is known as a “debt avalanche.”

Another popular debt repayment method is to pay down your smallest debt first, regardless of the interest rate. This one is known as the “debt-snowball” method.

Save those windfalls

As hard as it might be, don’t be quick to spend bonuses from work, tax refunds, returns on investments, and other things of the sort. Save it to pay off debt!

Consider balance transfers

If it’s tough for you to pay off high-APR credit card debt, an ideal solution could be to apply for a balance transfer credit card that offers a 0% interest-free period. You might get a 0% balance transfer card that allows you to move your balance(s) from your high-APR credit card(s) onto the new card.

The issuer of the balance transfer credit card will pay off your transferred balance(s). You can then pay on them (interest-free!) for a fixed period of time.

If you can’t get a 0% balance transfer deal or credit card, you might consider one that offers a lower interest rate than your existing credit card provider(s).

Consolidate your debt

You might consider this option if you have several card balances with high interest rates.

With debt consolidation, all of your outstanding balances are combined into a single, more affordable loan, offered by a new lender. This new lender pays off all of the balances to your existing debtors, and you owe them the total debt amount plus interest (which is usually lower than what you’re currently paying). 

This approach makes the payments slightly more affordable and more manageable because you’re paying one lender instead of multiple!

Increase your income

Just because you’re currently on a low income doesn’t mean you can’t increase it a bit or do something on the side. You can then pay off debt with the extra money you bring in.

Lucky for you—there’s more earning potential now than ever thanks to the internet and the gig economy! Try some of these options: 

  • Work overtime (If it’s OK with your employer!)
  • Negotiate a pay raise
  • Get a traditional part-time job
  • Freelance online
  • Take advantage of the gig economy
  • Sell things you no longer use or don’t need
  • Rent out one of your spare rooms on Airbnb

YOU GOT THIS. 🙂

Living with debt on a low income can be a traumatic experience, but I hope you find at least one of these tips helpful! Figure out what works for you, and you may be on your way to living a debt-free life in no time.

As a friendly reminder, once you get out of debt, be very wise with your money so you don’t fall back into the cycle.

I’ll be cheering you on every step of the way. Good luck!

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