You can conquer your debt even if you don’t make a lot of money!
I know how hopeless it can feel to be in debt. I was right there too when I started my Spending Fast all those years ago. A lot of us find ourselves in debt (seemingly) by accident. Nobody wants to owe so much, but, we all know… it’s extremely common. It seems like debt is a problem just about everyone has to deal with. What’s so frustrating is that the lower your income is, the easier it is to fall deep into debt… debt that can seem like a mystery to figure out how to get out of. It seems like an endless task, BUT! THERE’S GOOD NEWS! YOU! YES, YOU! can get out of debt fast, even if you have a low income!!!
I know how when you’re in the depths of your debt it can be SO hard to see the light at the end of the tunnel. I know it can feel REALLY tempting to give up. Honestly, I can’t tell you how many times I thought to myself “I’ll always be in debt, I might as well enjoy myself!” Trust me, I get it 1,000%!
AND… If you feel super overwhelmed you may even be considering bankruptcy as a way out, (and for some people in some situations that really IS the best decision to make!) Please know, you can get out of this stronger than ever and you can get out of debt fast, even if you don’t make much money! The only thing stopping you is the lack of information that got you to this point. You can win this battle with knowledge and determination to get out of debt fast then go onto the next phase: starting to build wealth.
Let’s start at where you’re at today and how to tackle that debt:
Learn to Budget
It’s not your fault if you don’t quite understand how to budget. It’s shocking to realize but less than half of the states in the USA teach financial literacy in high school. Economics may have once been common education, but now it’s become a niche segment of academia that most of us don’t have any interest in pursuing. Unfortunately for us, economics is an essential skill we must teach ourselves if we are going to successfully navigate consumer culture and emerge victoriously. It all starts with learning how to budget and then taking the time to create a home budget.
What’s a Budget?
That’s a fair question. While we’ve all heard the word “budget” most people have no idea what it really means or its importance. What it all boils down to is the difference between what you make and what you spend. The key is to spend less than you make in order to stay out of debt. (It sounds so easy right!?;) However, in order to do that effectively, you must budget your money so that every cent you make is accounted for. That means you pay your important bills (rent/mortgage, utilities, etc.) then assign a certain amount for food and the rest of your income goes to either paying off debt or adding to your savings. When you budget you want to allocate portions of your earnings where they need to go. Then, direct the rest so that no amount of money falls through the cracks.
Pro Tip: Read my book, The Spender’s Guide to Debt-Free Living to learn how to do a Reverse Budget. I’m tellin’ ya… game-changer!
Credit Cards
Got some tough love coming your way… at minimum, you need to stop using credit cards. They make it too easy to spend without consideration for cost. I know there are some money experts that advocate for using credit cards for airline miles or money back but that is a slippery slope. Doing so can cause A TON of damage if you already have a problematic history with debt and overspending. Please, take it from me and just stay away from them. That’s not even to mention the fact that credit cards have obscene interest rates that will only drag you deeper into debt if you aren’t paying the cards off IN FULL every month. Shopping with credit cards is a terrible idea. Bring cash for your spending so you can keep better track of your budget. Also, spending with cash makes spending feel more REAL and way less abstract. So, when you go to the store, take out the amount you expect to spend and don’t go a penny over. This may be hard to do if your money is already allocated to debt and I’ll get to that in a moment.
Credit Cards for recurring payments may be a good idea if you are sure you can pay off the balance every month. I’d advise you to be aware of the interest rate and keep a watchful eye on the account. It’s also useful to have a card to funnel your payments through so that you don’t have to worry about overdrafts. This is a good trick while you are still adjusting to a household budget. Be sure to not rely on it too much and try to eliminate the card as soon as you can.
Stop Spending to Get Out of Debt Fast
I know. I know. You thought “no credit cards” tip was tough… But, you really have to look at your spending habits if you want to get, and STAY, out of debt. When you go on a Spending Fast you can start to quickly make a dent in your existing debt. With the Spending Fast Bootcamp, I lay out a detailed guide for how to commit to a spending freeze where you only pay for essentials. You’ll learn how to roll over what you save into a payment plan that quickly gets you out of debt just by staying committed and sticking to the program.
Where Do I Start?
Start by writing down your monthly income on a sheet of paper. Then go through your bank and credit card statements to see what you pay out every month. Look for withdrawals and charges that can easily be cut. Next, make a note to cancel any subscriptions/recurring payments you don’t need. That will stop the hemorrhaging. Then make a list of the costs for only the essentials and subtract it from your income to get your budget.
Commit to not spending any money on things you don’t need and instead use the room in your budget to pay down the balance you owe that has the highest amount of interest. Attacking interest is the key to getting out of debt quickly. It requires a lot of resolve and a lot of help. For motivation learn more about the amazing resources I have for you here.
No room in your budget?
All hope is not lost if you can’t make enough money to pay for all of your essentials. Finding ways to make more money is only one solution. If you are truly stuck without enough hours in a day, a side hustle or a new job search may not be in the cards. If that’s the case, you may need to consider a big life change in order to get your numbers to work. That could mean selling your home, moving somewhere smaller, or getting a roommate. If you’ve already cut out everything you can from your monthly expenses a drastic change may be necessary. On the plus side, the freedom it gives you to get out of debt fast is well worth the sacrifice.
P.S. You might also like: 6 Signs You Aren’t Making Enough Money and How to Get Out of Debt: 7 Tips That (REALLY!) Work