How to Pay Off Debt With a Low Income
Low income does not mean you cannot get out of debt. However, it does mean that emergencies can ruin your financial progress. Here's how you can get out of debt making a low income:
1. Start an emergency fund first
Starting an emergency fund is essential to getting out of debt. Why? So you can pay cash for your unexpected expense instead of reaching for your credit card furthering yourself in debt. Start funding an emergency account that you put money in every month until you reach $1,000. You can start with small amounts - even $25 a month can make a difference.
2. Pay off the smallest debt first
Paying off debt can get addicting if you do it right. Do not try to pay off your massive student loan as your first debt payoff. Start with your smallest dollar amount so that when you pay off your debt you are excited to tackle the rest. Money has psychological and emotional ties so do what works and pay the smallest first.
3. Buy what you value
Most people look at budgeting as cutting things out. Instead, focus on what you love and where you want your money to go each month. Think to yourself "Do I really want to be spending money on this?, Do I value this enough to buy?" When you change the way you look at budgeting it becomes easier to do.
4. Make more
At the end of the day, if you are unable to survive on the income you have please explore other options to making earn more money. You can only save so much money when you have bills and expenses that keep piling up. The gig economy is growing and there are many opportunities to switch careers and/or explore freelancing or side hustles. Check in with your local community center for free counseling and career options.