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How to Get Out of Debt On A Low Income

If you are overwhelmed by debt, don’t just ignore it. The longer you ignore it, the larger your debt becomes. Instead, take steps to get out of debt and stay out of debt.

Getting out of debt will not only save you thousands in interest payments, it will make you a more attractive applicant to lenders when it’s time to apply for new credit or loan, like a mortgage loan.

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Find out how to get out of debt by following these tips:

1. Review your credit report.

The first step to get out of debt is to know how much debt you have. And the best place to know that is through your credit report. So, get a free copy of your credit report and fix any errors immediately. If there are past due accounts, delinquencies, make plans to pay them off or have them removed from your credit report.

By law, you are entitled to know what’s in your credit report and to correct any wrong information. Although you are entitled to receive a credit report once a year from the 3 credit bureaus, I would recommend getting your credit report from Credit Sesame. At Credit Sesame, not only you get unlimited free credit reports, you also get free credit scores as well.

If you’re interested in getting a free credit report and a free credit score through Credit Sesame click here. It’s completely free.

2. Come up with a plan to pay off your debt.

For example, if you have credit card debts, decide how much extra cash you can put towards those credit cards. You will be surprised how fast you can pay off your debt in a year by making extra payments on your credit cards and how much interest you will save.

To decide how much extra money you can afford to go towards your debt, create a budget using a free budget planner like Personal Capital.

In that budget, list all of your monthly expenses and see what and where you can cut back so that extra money can go towards your debt. Perhaps you don’t really use that gym membership or you don’t have time to watch Cable TV. Cut back on these unnecessary spending.

If you need help creating a budget and tracking your day to day expenses, use Personal Capital. It’s completely FREE.

3. Consolidate your debt.

Get a debt consolidation loan to pay off your debt. What is debt consolidation? Debt consolidation is when you merge multiple debts into one debt. Debt consolidation helps you pay off debt faster. See, the quicker you pay off your debt, the more money you will save and the quicker you will be deb free.

You can use a low interest debt consolidation loan to pay off: credit card debt, personal loans, student loans, medical bills, etc. The way it works is that you apply for a debt consolidation loan, the lender gives you the loan in a single lump sum, you use the loan to pay off debts, and you repay the lender who issued the consolidation loan.

If you have debt on a house or a car, you should look into an auto refinancing loan or a mortgage refinancing loan.

4. Make your payments on time.

The whole point of trying to become debt-free is to make sure you don’t add more debt on top of the debt you already have.

Late payments or missed payments add ‘late fees’ on your debt, which results in more debt. So avoid unnecessary fees by making on time payments. Most credit providers allow you to make automatic payments through their website. So, enroll to make sure you pay your bills on time.

5. Pay off the debt with the highest interest rate.

In addition to making on time payments, pay off debt with the highest interest rate first. This way you can save more money in interest. Then, work on paying off the next highest interest rate debt.

6. Ask for help.

If you can’t make your payments, ask for help by calling your lenders. Don’t just ignore your debt, because that would prolong your debt. You and your lenders can work out a plan to pay off your debt. Maybe they can stretch out the payments for you or waive late fees if you can’t pay your debt on time.

If you cannot come up with an agreement with your lenders, consider calling the National Foundation for Credit Counseling (NFCC). It’s a nonprofit financial counseling service that helps you to come up with a repayment plan and negotiate with your lenders to reduce your payments. You can call them at 800-388-2227, or go their website at NFCC.org. 

Click here to check your credit score with CreditSesame. It’s completely FREE.

7. Make Extra Money.

Your paycheck from your job may not be enough.  With your monthly expenses, you may not have any money left at the end of the month.

So making extra money by doing side hustles or completing surveys can help pay off debt faster. Here are some ways to make some extra cash.

  • InboxDollars pays you in cash to watch fun videos, take surveys, play games, shop online, search the web and more.. They’ll also give you a $5 bonus for free just to give it a try. By spending just 5 to 10 minutes on your free time, you can earn $50 to $70 a month with InboxDollars.
  • Swagbucks. Just as Inbox Dollars, Swagbucks pay you to watch videos, shop online, take polls etc.. 
  • Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. Also, when you sign up through my link, you’ll receive a free $10 gift card bonus to stores like Macys, Walmart, Target, etc.

Related Articles on How to Get Out of Debt:

Work with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your saving goals Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

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