How can you save money and pay off debts when you’re just getting by each month? That’s a question that millions of Americans ask themselves.
Only 30% of Americans are financially secure or financially healthy. The rest of the population struggles with debt while making ends meet.
If you’re in the making ends meet and want to pay off your debts once and for all, you’ll want to keep reading.
Find out how to get out of debt on a low income.
1. Make a List of Your Debts
The first thing you need to do is get a list of all of the debts in front of you. You want to make a list of the balance owed, the type of debt, the minimum payment, and the interest rate.
That will give you the information you need to make smart choices about paying down your debt fast.
2. Use Momentum to Pay Down Your Debt
Have you seen in movies or TV shows where a snowball rolls downhill and it gets bigger and bigger? You can use a similar approach to pay off your debt.
Here’s how it works. Take a look at your list of debt and find the debt with the lowest remaining balance. Pay the minimum payments on your other debts and take all of the extra cash you have to pay down the debt with the lowest balance.
You’ll pay off that debt faster and you can move on to the next debt with the lowest balance. As you pay off each debt, you build up momentum and pay off your debts faster.
Your confidence will go up with each debt that’s scratched off of your list.
3. Stick to Your Debt Budget
If you have several credit card balances and pay one of them off, you might be tempted to take the money and put it towards a purchase that you really want.
For example, you previously paid $500 a month towards your debt. Now that you have one credit card paid off, your debt budget is now $400 a month.
Don’t spend that extra $100 a month on something else. Keep applying that extra money towards your remaining debt. That’s how the momentum really builds.
4. Consider Debt Consolidation
When you looked at your list of debts, did you discover that you have several high-interest credit card bills?
You can take out a debt consolidation loan, which will be enough to pay off the credit cards. You’ll have one monthly payment, and the loan is usually at a lower interest rate than the credit cards.
Even if you have bad credit, a debt consolidation loan is still possible. Some lenders offer a guaranteed debt consolidation loan.
How to Get out of Debt on a Low Income
It can seem like an impossible task when you’re in debt and you have a low income. Once you learn how to get out of debt on a low income, you’ll begin to see the opportunities.
It does take commitment and consistency, but it is possible. You have to take it one debt at a time.
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