13 Tips to Pay Off Debt Now on a Low-Income
Are you tired of living paycheck to paycheck due to your debt? Whether you have credit card debt, student loans, auto loans, or personal loans, now is the time to finally pay off your debt to avoid wasting money on interest.
In this post, I will share thirteen simple tips for paying off debt now on a low income.
By applying some of the tips below, I was able to pay off $18,000.00 in an auto loan and credit cards in twelve months on a low income.
However, this is your debt payoff journey, so it can take you less time or a few months more. What is important is that you get started today.
Why pay off your debt now
We all think of debt differently. Some believe that debt is the only way we can afford to have things, while others will save money before purchasing and avoid getting into debt.
If you have debt, you should see how much of your minimum payment goes to your balance and how much is on interest. When I looked at my statements and realized how much I was paying on interest, I tackled my debt aggressively.
When you have debt, your income is not all yours because you owe money. Paying the minimum payment is what keeps you living paycheck to paycheck. Instead of giving your hard-earned money to interest, save that money for the future.
Living debt-free can help you live the life you want. I can stay home with my toddler since I got rid of all my debt.
Benefits of being debt-free
There are so many benefits of living debt-free.
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- Increase your savings– When you are debt-free, you have money you can save and increase your savings.
- Take more vacations– If you want to travel more, being debt-free can make it easier.
- Do what you enjoy– Debt-free can help you take the leap and look for another job, start a new business, or side hustle if you are stuck at a job you do not enjoy.
13 tips to pay off debt fast on a low-income
1. Know your “why”
If you decide to pay off debt, there might be a reason you are tired of your debt. This can be to save money for a house or vacation, or you have a significant life-changing event coming up, like a wedding or a baby. Whatever your “why” is, this can help you keep your end goal in mind.
For me, it was to stay home with the baby when she was born. Suppose you do not have a “why” yet, and then think of your future. Also, think of all the interest you are paying on your debt that should motivate you to pay off debt quickly.
2. Make a plan
Find out exactly how much debt you owe. Write down who you owe, the amount you owe, and the interest rate. Divide the total amount of debt you owe into the months you plan to pay it off.
For example, I had $18,000.00 in debt. I wanted to pay it off in twelve months, so I had to pay around $1,500 a month towards my debt, not including the minimum payments of the debt I was not tackling at first since I used the avalanche method.
By knowing exactly how much debt you owe and how you plan to pay it off, you’re setting yourself up for success.
3. Avalanche or snowball method
Now that you have an amount that you plan to pay towards your debt, decide what method you will use to tackle the debt. The avalanche method is paying the debt with the highest interest rate first, saving you money on the interest.
The snowball method starts with the lowest amount of debt you owe. You make minimum payments on all your debt and pay as much as possible on the one with the lowest amount until you pay that amount in full. Then you start on the next lowest, paying the minimum payment on all except the one next to pay off.
I used the avalanche method, but instead of paying the highest interest, I paid the one with the highest amount owed. Decide what method will keep you motivated to pay off your debt.
4. Cut expenses
Look at all your monthly expenses and cut on everything and everywhere you can. This includes gym membership, subscriptions, eating out, shopping, etc.
You will be surprised at how much money you will have once you cut all the expenses. You will use that money to pay off your debt.
5. Increase your income
There are plenty of ways to increase your income. You can do Uber or Lyft, resell items you no longer use on Poshmark or a familiar platform or get a part-time job. This will be used to pay off your debt faster.
6. Live off one income
This may not apply to everyone if you are not married, but if you are married, live off one income. You can live off the income of the one who earns more. The second income is used to tackle all the debt. Once you get rid of all the debt, continue to live off one income and invest or save the rest.
Living off one income can also help you be prepared in an emergency like a job loss or health problems. Also, it can help you work less in the future, or if you want to be a stay-at-home mom, living off one income can help.
7. No-buy challenge
It can be tricky not to spend and use that money to pay off debt, so you should do a no-buy challenge. You can start a no-buy challenge for three months and then take a break and do another no-buy for three months.
Trust me, it gets a little easier as time goes by. Doing a no-buy challenge will help you pay off debt faster.
You can read my low-buy, no-buy challenge here.
8. Loud Budget
Loud budgeting is a great way to reach your financial goals faster. This trend, which originated on TikTok, was popularized by writer and comedian Lukas Battles. It’s a unique approach to managing your finances that empowers you to communicate openly with your loved ones about your spending habits.
You can read my article on how loud budgeting can help you achieve your financial goals here. 
9. Pay more than minimum
You need to pay more than the minimum to pay off debt fast. As I mentioned, plan how long you want to take to pay off your debt and then pay as much as you need towards your debt.
Paying way more than your minimum payment will get you out of debt faster.
10. Change old habits
We need to pay attention to the habits that got us into debt and stop those habits. Also, changing habits can help us save money and use that money to pay off debt.
For example, when trying to pay off debt, I stopped driving to my house during lunch hour. I enjoyed the drive home, ate leftovers, and did one house task. I stopped driving home during my lunch hour, saving me gas. Instead of buying lunch two times a week, I would only buy lunch once a week for no more than $7.
Those small changes helped me pay off my debt fast.
11. Living arrangements
This may not work for everyone, but try changing your living arrangements. Get a roommate, move in with a family member, or move in with your parents for a few months.
You can offer to contribute a certain amount each month and use the rest to pay off your debt aggressively.
12. Stay motivated
Watching YouTube videos on other’s debt-free journeys can help you stay motivated and on track. You will be able to get ideas on how they are paying off the debt and what to do when you are feeling stuck or finding it hard to stick to your plan.
By following others’ journeys, you will know that you are not alone and that it is possible to be debt-free in no time.
13. Do not use your credit cards
It is best to get rid of your credit cards and not use them when paying off debt. I suggest keeping one in case you feel uncomfortable getting rid of your cards.
If you decide to keep one card, keep it to make you feel comfortable not to be using it. Remember, we are paying off debt and not adding more debt.
Final thoughts
Paying off debt should not be difficult if we apply these tips. Knowing your “why” will help keep you motivated on your journey to being debt-free. If I could pay off $18,000.00 of debt in one year on a low income, I know you can also pay off debt when you make a plan.
Comment below and let me know how you plan to pay off your debt or, if you are debt-free, how you achieved it.