If you’re working hard for a low income, it may be challenging to afford everything you need for yourself and your family, let alone pay off outstanding debts. Thankfully, you’re not alone since everyone makes debt at some point in their lives and debt tends to become a burden for most.
Implement what you learn, sit down and review your financial situation and then stick to your new strategy to overcome your over-indebtedness and you’ll soon be living debt-free.
Here are some actionable steps which will allow you to get out of debt even if you’re a low-income earner.
To get out of debt, you’ll need to use a strategy that allows you to take control of the situation without feeling overwhelmed. The avalanche method works well as you’ll list your debts based on how much interest you’re paying. By paying off debts with high interest first, you won’t end up further in debt. If you want to speed up the process, you may need to take on extra work, develop a side income, sell some of your belongings, or you can contact a debt counsellor to help make things a whole lot easier for you.
Here are some tips to help you live debt-free:
Sit down and work out exactly how much you owe. The first step may be scary, but it’s essential to assess your financial situation before working out how to pay off your debts.
Write a list of all debts, including credit card debt, car, and student loans, and mortgages. Then list all your debts based on interest rate so that you can pay off the most critical first.
How debt review can help: The debt review process consolidates all of your debt into one simple, more manageable, and easier to track repayment amount.
It’s a wise idea to start tracking your spending if you have a low income and are in debt. This powerful habit will allow you to see exactly where your money goes. You’ll also be able to see if there are any areas where you can make cutbacks. Tracking your spending might be easier if you use a debit card for your purchases. You can then view your expenses every evening using online banking.
How debt review can help: A certified debt counsellor will help you create a record of all of your expenses and will help renegotiate a more affordable repayment amount on your behalf.
Start budgeting. Work out exactly how much you need each week for food and other essentials and stick to your budget. Cut back on things you don’t need, such as streaming services, at least until after you’ve paid off your debts. You could also take up free hobbies such as running in the park rather than paying for a gym membership.
You can also find free budgeting and spending trackers online, which will help you manage what you spend.
How debt review can help: Your expenses are considered for your new reduced repayment plan, which means that debt review could save you from having to make unnecessary cutbacks or changes to your lifestyle.
If you’re in debt and only earning a low income, you may like to brainstorm ways to make more money. Perhaps you can take on extra freelance work, find a new higher paying job, sell things online.
Be creative and start a side hustle; you may even find that you end up so successful that you’re able to quit your day job in the future. Bringing in extra money will allow you to pay off your debts faster, and you’ll have to make fewer sacrifices.
Throughout the whole process, you’ll have to work out how to stop yourself from getting into debt. Cut up your credit cards, make sure you don’t run into your overdraft and don’t take out more loans. You won’t be able to pay off your debts until you stop yourself from spending more money than you’re earning or than you can afford.
How debt review can help: When you under-go debt review, the credit bureau is notified, and your status is temporarily updated. This status change protects over-indebted consumers from making more debt – which, in the end, means that the existing debt gets paid off faster.
Check out: How Will Debt Review Affect my Credit Rating to learn more
Don’t just casually pay off your debt when you feel like it, start winning financially and pay off as much of your debt as you can. Paying off your debt faster will allow you to become debt-free as soon as possible. First, reduce your spending habits and then pay off more of your debt.
How debt review can help: Your new repayment plan makes it clear how much you need to pay each month, and it makes it easier to repay. Now, you can use the lower repayment amount as your minimum benchmark.
Once you successfully get out of debt, it’s wise to change your spending habits and lifestyle to ensure you don’t end up in debt again. Aim to live within your means and don’t splash out on expensive items that you can’t afford.
As you can see, there are plenty of tactics that you can use to get rid of your debt, despite a lower income. So get started today!
If you’re struggling with debt and financial worries, we’re here to help. Check to see if you qualify on our website. If you qualify, our consultants will contact you to help guide you through the process and to answer any questions that you may have.
Find out if you’re eligible to reduce your debt and protect your belongings.
Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.