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8 Ways to Pay Off Debt When You Have a Low Income

A commonly asked question for people who don’t make a lot of money is, “How do I pay off my debt when I have a low income?”

The bad news is there is no easy way to pay off your financial debt when your earnings aren’t high. The good new is that it is possible! I paid off my $25,000 student loans while earning $30,000 a year. It wasn’t easy to get rid of my debt, but it was worth the sacrifices I had to make.

If you want to make more money, read 10 Highest Paying Jobs for College Students. If you want to pay of your debt with a low income, know that sacrifice is part of being debt-free. “One half of knowing what you want is knowing what you must give up before you get it.” ~ Sidney Howard.

To pay off your debt with a low income, you gotta give up something – whether it’s time, energy, recreation, sleep, or socializing with friends.

One way to stay motivated to achieve your money goals is to learn how other people overcame their financial debt — such as by reading The Simple Dollar: How One Man Wiped Out His Debts and Achieved the Life of His Dreams.

Relate your money goals to your overall life purpose

What do you want to do with your life — where do you see yourself in 5 years, 10 years, 20 years? Your thoughts become things, so stay focused on the positive things you want to achieve in your life. Relate your life goals to specific money goals. Say, for instance, that your life goal is to live in a home with a view of the ocean. Use that vision as motivation to pay off your current debt. Remember that people with low incomes can achieve big life and money goals!

Write your goal in the present tense

Don’t say “I will pay off my debt with a low income” — it’s too future-oriented and uncertain. Instead, repeat your money goal as if it already exists. Say, “I am paying off my debt with my low income” — or even “I have paid off my debt with a low income.” Your logical mind knows it’s fiction, but your spirit listens to the truth in the words. Your spirit dictates your actions, which will work towards achieving your financial goals.

Tell three supportive people that you’re paying off your debt

Ask one person to be your accountability partner — to keep reminding you of your goals and intentions. Ask the second person to be your cheerleader, to be proud of you no matter what. Ask the third person to keep your life and money goals in their prayers or meditation — to keep lifting you up in thoughts and spirit.

Reach for the stars — but don’t set yourself up for failure

Another way to pay off debt with a low income is to set money goals that are ambitious, but not impossible. For instance, if paying $20 a week towards your debt is too easy, then pay $50 or $75 a week. The idea is to set money goals that aren’t too easy or too difficult. When you’re setting your money goals, it helps to know your credit score.

Break your money goals into three stages

Stage One is the starter and momentum builder — it’s a money goal you can achieve in a few weeks (eg, paying $20 a week towards your debt).

How to Pay Off Debt When You Have a Low IncomeAfter a few weeks, step into Stage Two: a mid-point measurement that requires you to put your low income to work. Stage Three is the final achievement, and includes the celebration! This final stage doesn’t necessarily mean you’ve achieved your money goals and paid off your debt — but it could be the highest level of achievement that pushes you to the pinnacle of success.

Put your blinders on – focus on paying off your debt

Make achieving this money goal the focus of your life. It doesn’t have to stay #1 on your to-do list for years — but if you put this money goal front and center for a few weeks or months, you’ll be more likely to achieve it.

Savor the benefits of paying off your debt

Paying off my student debt was one of the best days of my life! The freedom and sense of accomplishment was unreal. Get serious about paying off debt with a low income by listing the benefits of achieving it. Your primary motivation for achieving your money goals comes from within you — so get real about it. Make this goal worthwhile!

Write a press release that announces you’ve paid off your debt

Create a press release that describes your accomplishment in detail: the ways you paid off your debt, the low income you were earning, how this money goal fits into your life’s purpose, and how you overcame all obstacles by setting immediate, mid-range, and long-term goals. The first paragraph emphasizes the benefit you (will have) derived from achieving this goal. Read your press release at least once a week until it becomes reality!

Here’s how a guy I know paid off his debt while making a low income: When Your Wife Maxes the Credit Cards and Depletes Your Bank Account.

If you’re a woman, you might want to read about the money mistakes women make.

And if you have any thoughts on paying off debt with a low income, please comment below…


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4 thoughts on “8 Ways to Pay Off Debt When You Have a Low Income”

  1. I just got my first cell phone – it’s an iphone, and it costs $70 per month. Our only debt is our mortgage, and I’ll only make about $30,000 this year from my Quips and Tips blogs. Of course, I hope to make more – I made $60,000 last year – but it’s very unpredictable.

    If I had more debt, I’d get rid of the cell phone. But, if you’re locked into a two year contract, it’s just more debt.

  2. I truly think this is the worst advice I have ever read. Get someone to be my cheerleader? Pathetic. This one is the worst: Ask the third person to keep your life and money goals in their prayers or meditation — to keep lifting you up in thoughts and spirit. Yes, praying for me is going to help get out of debt. Brutal. If you want to get out of debt, get a second job. Don’t spend your money on food, snacks, movies, hookers, drugs, booze, and other erroneous things. If you have a high interest credit card, get out a line of credit and transfer the money to that, saving you interest payments. Get a better job? Steal? There are plenty of ways to do it without a cheerleader and prayer.

  3. Laurie Pawlik-KIenlen

    To achive your money goals and pay off debt, you need only imagine your future self…

    A new study in the Journal of Consumer Research finds that consumers have trouble feeling connected to their future selves. This causes them to spend more money by acting on impulse, instead of saving and paying off debt and planning for the future.

    Research shows that picturing your future self will help you achieve your financial goals.

    “This willingness to forego money now and wait for future benefits is strongly affected by how connected we feel to our future self, who will ultimately benefit from the resources we save,” write authors Daniel M. Bartels (Columbia Business School) and Oleg Urminsky (University of Chicago).

    When we think of saving money for the future, the person we think of can seem different from the person we are now, the authors explain. People have trouble sacrificing in the present for that stranger in the future.

    In one study, the researchers had graduating seniors read one of two narratives: the first indicated that their self-identity was already fully formed and would not change after graduation. The other passage indicated that graduation would change their self-identities. “When seniors were told that graduation would lead to major changes in identity, they reported feeling less connected to their future selves,” the authors write. “Those thinking about changes in identity were also more impatient, choosing less-valuable gift certificates that would be available sooner over higher-valued gift certificates that required waiting a year.”

    In a subsequent study, the authors asked people to evaluate their sense of connectedness and similarity to their future selves. Three weeks later, they were asked them to choose between smaller gift cards they could use right away or larger gift cards that would require waiting. “Those who had felt more connected to their future selves then made more patient choices and were more willing to wait for a higher-valued gift card,” the authors write.

    When people fail to save for the future, they may not be making a mistake or failing to exercise self-discipline; they don’t fully recognize benefits that their future selves will receive. “Countering this tendency, by helping people recognize the enduring aspects of their personal identity, may hold the key to making people more patient and more willing to sacrifice, save, and invest for the future,” the authors conclude.