The Key to Paying Off Debt Quickly, Even with a Low Income

Jenn Leach

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Debt is a serious. This top money skill should be mastered and when you do, you'll be surprised that you may be able to live more richly.

In uncertain economic times like these, we need a plan and we need it fast.

Here are a couple reasons why you should pay your debt off as quickly as possible.  

1. INCREASE YOUR CREDIT SCORE

Reducing your balance-to-limit ratio on your credit cards can increase your credit score.

Your credit utilization should be no more than 30% but the lower the better!

Paying off your cards each month is ideal.

For expert help with your credit, I recommend Lexington Law.

I have friends and family that used them with amazing results. They have multiple plans available and they help you track your credit monthly, crush credit errors, dispute items on your credit, increase your credit score, and more.

Highly recommended.

2. MORE FINANCIAL SECURITY

Having no debt leads to greater financial security.

Monthly payments tie up a good portion of your expendable income. You could be spending the extra money on things you want instead of just things you need.  You could be saving for college, retirement, or a down payment for a house or car. You could begin building wealth by making smart investments.

No amount is too small.

Now that you’ve got ample motivation to get started eliminating your debt how are you going to do it?

Get out the paper you wrote you’re the reasons you want to get out of debt and now add the part about how you’re going to get that accomplished.

It’s been proven that if you write down your financial plans and goals you are more likely to reach them. Let’s get started!

3. GO OVER YOUR BUDGET

Find ANY area you can cut back. I would strip back that budget to what Finance Guru, Dave Ramsey, calls “beans and rice”. You get the idea?

Strip back your budget to the items you have to pay, and get the expendables to as little as you can.

Cut out and turn off ALL non-essential-to-life items. These would be the “wants” like cable, manicures, dinners out, vacations, etc.

4. LIST YOUR DEBTS AND BE HONEST WITH YOURSELF

All of them! It doesn’t matter if it’s a $3 library fee, or a $10 loan from Mom or even a $20,000 car loan write them down from lowest to highest.  Note: for the purpose of this exercise we are only dealing with consumer debt in this article- do not include your mortgage at this point.

Take all of the money that you have from stripping back your budget to essentials and start putting it towards your lowest (dollar amount) debt paying the minimum only on the rest.

Paying off your littlest debt first will give you a sense of immediate freedom.  Once that debt is paid off take the increased money you now have and apply to your next biggest debt. It’s called “Snowballing” and it works well.

The snowball gets bigger as it rolls. In the same way, the more funds that become freed up, the more you will be able to add to the next debt and so on.

5. MAKE A PLAN

Plan out (on a calendar) how long it will take you to pay off each debt. Build in little incentives in your budget for each debt paid off, (or if you have a lot of debt, or will take a long time, celebrate ¼ milestones, or ½ milestones on debts). 

It will help you to see progress. Don’t go crazy though.  Only use $10, or $50 (whatever is reasonable) of your snowball debt money to treat your family (maybe dinner, maybe more grocery money, a movie, etc.) when you have hit a goal. 

Your family will be sacrificing for a period of time so it’s good to reward them for short-term goals to keep the long goal in view.

6. LOOK FOR EXTRA MONEY FOR HOW TO PAY OFF DEBT FAST ON A LOW INCOME

Find ways to add more money to help your snowball grow so you can pay off your debt sooner.

  • Yard sale
  • Start a side business
  • Walk dogs
  • Wash cars
  • Mow lawns
  • Surveys
  • Online studies
  • Freelancing

Figure it out! You can do this!

I hope you found this article on how to pay off debt fast on a low income inspiring. This is within reach for you!

With dedication, hard work, and sacrifice, you can get out of debt- quick! And then work a plan to stay that way.

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Millennial entrepreneur and writer bringing you fresh content and ideas about making money, side hustles, personal finance, budgeting, and lifestyle. Connect with me: www.millennialnextdoor.com

Houston, TX
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