When month to month is a struggle, it can be a challenge to get out of debt. Many live paycheck to paycheck, and putting some money aside is difficult. Along with making ends meet and paying off any debt you may have.
If you can use some helpful advice on how to deal with getting out of debt while living on a low income, you might find the following tips to be of value to you.
Where to Start
The ideal place to start is taking stock of your financial situation, so you know where you are and what you have to deal with. While you might think you know, it’s best to start from the beginning and make notes. How much do you owe in total? What is it broken down? What has the highest interest rate? What is the largest amount owed? Getting some clarity on your debt will help you in the long run.
You do have a budget, right? If you are really committed to getting out of debt, a budget is not an option, it’s a requirement. While most don’t enjoy creating or living on a budget, it is an essential part of managing your money so you can pull yourself out of debt. You can either go old school with paper and paper, but it’s advised to use your computer and create spreadsheets to manage and monitor your finances.
Trimming the Fat
Once you have your budget created, one of the first things you need to do is start trimming the fat. By this, we mean looking at your outgoing costs or expenses and determining what is not essential and consider getting rid of it to reduce your costs. One place many start is reviewing and reconsidering the subscription services you are currently using. Also look at how often you eat out, and any other changes you can make. These could allow you to make more payments towards any debt you have and pay less interest over the long run.
About the worst thing you can do when trying to pay off your debt is only making the minimum payments. This often barely covers the interest, and you won’t see the amount owed shrink for a very long time if you do this.
Working with what you have (or start earning more) is where to begin. If you have fair credit or better, you might look at a debt consolidation loan. Especially if most of your debt is related to credit cards and your credit score is decent, there’s a good chance you can come out ahead.