If you have a large amount of debt (or any debt for that matter), want to get rid of it but are not making nearly enough money to make ends meet, life could be tough.
And paying off your debt on a low income can make things even that much harder. But what constitutes a low income?
For my personal financial situation, the amount of our debt in relation to our yearly take-home pay constituted to “living on a low income”. We were bringing in a yearly salary which at one point was very close to the amount of debt that we had to our name, about $73,000.
Everyone’s Situation is Different
Everyone’s situation is different. Not every person is capable of making the big bucks, make more than the minimum payments, or even allow one parent to stay at home with the children.
After advancing in our careers, we were proudly making over six figures a year. However, after deciding to stay home with our new daughter, we had to cut about 50% of my income of that so I could stay home. We opted out of utilizing a full-time sitter or daycare center for our childcare needs.
How did we do it? Well, because we do live below our means, we were able to transition my working schedule from 40 hours a week down to about 20-24 hours a week. All while maintaining our household budget and upholding the mommy role myself.
If you aren’t willing to live below (or even within) your financial means, you’ll probably have a hard time paying off your debt.
I never give unsolicited financial advice to any of my friends or family, even though there are times where I just want to intervene and say, “That’s not a good idea”.
In all reality, it is up to you to make the decision to want to pay off your debt. Don’t wait for a second longer!
Where do your priorities lie? Would you rather attack your student loan debt or lease that super nice vehicle?
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Are those yearly (and unbudgeted) vacations worth bypassing in order to make that extra payment on your credit cards? These are some decisions that you have to make.
You literally have to cleanse your mind of all the rubbish that blind you from realizing you’re bound by your debt.
So, if you have the desire to pay off your debt despite having somewhat of a low income along with a variety of expenses, here are some ways to achieve that:
1. Believe You Can Pay Off Your Debt
No matter the amount of debt that you have…you’re the only person who can convince yourself that paying it all off is possible.
Start off simple. Tell yourself that you can pay off your debt. Set up vision boards, Post-It notes, or daily reminders on your phone that you’ve got this.
Sounds cliche, I know. But positivity goes a long way. Negativity will only keep you in a rut.
Most importantly, don’t look at this journey from a “time” perspective. It may actually take years to become debt free depending on your income and the amount of debt that you have.
Instead, look at your own personal debt free journey as a rewarding process. Celebrate the small wins, be patient for the wins that may take a little longer.
2. Create a Savings and a Budget
While some people don’t believe in saving money or budget budgeting, but I do.
Creating a budget and accounting every earned dollar (if you choose to do so) toward an expense will help you maximize your debt pay off plan.
When it comes to our savings account, we keep a pretty hefty sum of money set aside for emergencies ($1,000 just isn’t enough for us…but that’s our personal feeling about it). Beyond that savings, we budget for our variable and fixed expenses. Each month is different, so we do our best to keep on top of what we plan to spend vs. what we save.
Beyond that savings amount, we budget for our variable and fixed expenses. Each month is different, so we do our best to keep on top of what we plan to spend vs. what we save.
So find which budget and savings plan works for you and go for it!
Side note* If you break your budget or need to dip into your savings for unnecessary reasons – try, try again!
3. Eliminate Luxuries
Now that you have created your budget, go back and reassess the items which you have budgeted for that aren’t necessarily a means to your survival.
Did you budget a large dollar amount for making clothing purchases each month? Shoes? Expensive purses?
Whatever luxury items you’ve budgeted for, I highly suggest you challenge yourself and cut it out partially, or even completely. Even if it is only for a short while.
Even if it is only for a short while. You’ll survive, I promise.
4. Sell Items and Pay Off Your Debt
If you have debt, and you’re selling old belongings…it’s doesn’t mean you have to go out and buy something to replace said item.
Sure you may be earning close to or even more money than you’ve originally purchased the item for, but what’s more impactful? Throwing that money toward your debt or buying something new, that you’re likely to sell later on?
I say pay off the debt, even if it makes a little dent. It still goes a long way.
5. Be Aware of Your Weaknesses
The usual around-the-calendar purchases: coffee, shoes, salon appointments, etc. Call them luxuries, wants, personal needs…whatever. If you can’t resist it, it’s a weakness.
Instead, find alternative routes to achieve these wants/luxuries of yours. Can you budget for them? Do them yourself (make coffee, do your own nails, etc)?
Explore your options!
I Will Leave You With This
Yes, getting out of debt is going to be very challenging. We are creeping up on two and a half years of attacking our debt and we are still going.
There are a lot of factors that tie into reasons why your journey is going to be different than the person(s) next to you: Household income, dedication, your drive, household expenses, the amount of debt you have to your name, etc.
No matter your situation, it is possible to crush your debt even on a low income. If anyone tells you otherwise, I say block out the negativity (not the person) and pursue your goals.
As I have said before, it may take years before you are debt free. But the last thing you want is five years from now, you look back and realize you’ve made zero progress.
Happy debt free journey to you, friend!
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