So you want to reduce debt but you earn a low income and the budget is tight. It is possible to get out of debt in this situation. It takes discipline and effort, but it will be worth it when you are out of excess debt. One of the first things you should do is look for ways to boost your income. Thanks to the Internet, multiple opportunities abound to make extra money. You can be a freelance writer, virtual assistant or seller of used items on eBay. Another option would be to seek a second part-time job.
Set up automatic bill pay
For those who tend to forget when certain bills are due, you can reduce the debt load by setting up automatic bill pay with these creditors. By doing this, you can pay bills without the hassle, and it reduces your chances of paying late fees or other service charges that accrue because of failure to make timely payments. Be sure to always have enough funds in your checking account to avoid overdraft fees.
Ditch the excess spending
If you are on a tight budget and working toward debt reduction, then you will need to make changes to your spending habits. Make coffee at home instead of buying the pricey lattes before heading to work. Visit thrift stores to buy cheaper clothes for the kids. Have a no-spend week where you only cook with what is in the pantry. This puts you further toward your goal.
Build emergency savings
Now that you have paid off some of your debts, you want to make sure that you do not re-enter the same debt trap. Build an emergency savings fund so that you will rely less on credit cards or payday loans to get you through financial hardships. You can add funds to the account every pay period and when emergencies come, you will be prepared.
Sell the car if necessary and feasible
If your debt is too much and your budget is still tight after you used the above mentioned steps, then you can sell the car and use other means of transportation if it is feasible for you. If you live in a city where there is wide access to public transportation, you can sell the car and ride the bus to and from work. If you live within walking distance to work and the main shopping centers, you can walk to and from most places.
Hold a garage sale
Sometimes you can find cash for debt repayment by selling things you no longer need at a garage sale. Have everyone go through their clothes and other items to determine what they want to sell at the garage sale. Purchase boxes and hangars for displaying the sale items as well as price tags. At the sale, offer some light snacks for shoppers and enjoy yourself.
By taking these steps, you can reduce a heavy debt load even when your income is low. You want to be disciplined and get help from other members of the household.
5 Tips for Getting Out of Debt on a Limited Budget
How to get out of debt on a low income