How to Stay Out of Debt with a Low Income
You do not have to be in debt because you have a low income. It does take a bit more hard work to stay debt free when you don’t earn much, but it can be done. If you have worked hard to get out of debt and have had the taste of what it is like not to have a monthly interest payment for maybe the first time ever, you should do your best to avoid bad debt and move forward.
What is the best way to stay out of debt with a low income? If you are facing debt issues or have just got over you debt, here are some practical ways to stay out of debt with a low income and make you build wealth while staying out of the poorhouse.
- Making a budget is not something everyone likes but it is a necessary evil. It is the best way to know exactly where your money is going and tracking every dollar you spend. You could also save every month. You could use different budgeting software available on the internet or just use the traditional pen and paper method.
- We should remember the mantra “Everything in moderation.” The only way to find extra money is to keep your discretionary spending to the minimum as every dollar counts. You need to take a good look at what you could at least save like cutting back on subscriptions, gym, a music streaming service, buying generic products, or anything else which is very expensive and less used and having a “staycation ” instead of a vacation.
- Find more ways to increase your income like taking on more hours of work, finding a second job, taking online surveys, doing odd jobs and more. Even just selling some items to pay a debt can help.
- Do not just make minimum payments on your credit cards as your interest charges will accumulate quicker than you can pay down your debts. If you make more than the minimum payments it will help you to become debt free quicker. But be sure to save some money for an emergency.
- You should at least invest 10% of your income. To get an accurate amount, you should use a retirement calculator to see if you could afford to retire. It takes only a minute to plug in your financial vitals and retirement goals and see if you are on track.
- Consider downgrading your car to a cheaper one. By selling your car you may be able to cover the remaining payment or have enough left over with a much lower monthly payment.
Getting out of debt is not easy and sacrifices will have to be made but if you can follow the above-mentioned steps you will not only save money but will have much more money at your disposal to move forward to a debt free life.
